What’s Wrong with Distributism

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Last week I outlined the views of distributists, identifying four areas of thought in which they offer some wisdom:  1) objections to the divorce of economics and ethics, 2) objections to the collusion of large business and government and the resultant concentration of power, 3) advocacy for entrepreneurism and widely distributed wealth, and 4) objections to the welfare state and its effects on the citizen’s relationship to government. Sadly, distributist thinkers don’t stop at these solid insights. They offer concrete solutions to these social problems—solutions which betray grave misunderstandings of economics and even theology.

 

 Willful Ignorance of Economics     

Distributists tend to deny that economics is a real mode of knowledge in any sense.  They scoff at the notion that there might be predictive laws of economic behavior, such as supply and demand.  But if there are such predictive laws, then it behooves us understand them.  Distributists want third parties, such as governments or guilds, to arbitrarily set wages and prices according to abstract notions of justice. Economics teaches us that there will be real-world consequences to such interference. Predictive laws inform us what they will likely be. (For instance, raise wages and prices, and you will reduce demand, and hence employment.) Many distributists react to this information not by calculating the costs and benefits of such a predictable outcome, but instead by railing against “injustice.” An “unjust” wage, for instance, is any salary that’s insufficient to support a family — even a large one. So they wish to outlaw “unjust” wages. How would employers respond to such a move? Economics gives us the answer: they would either fire workers whose labor was not productive enough to justify such a wage, or else they would jack up prices to cover the extra cost. Who would pay those new, inflated prices? Ordinary workers, whose cost of living would soar—thus forcing another government-mandated rise in the “living wage.” And so on, ad infinitum.

Distributists also tend to dismiss free market arguments as products of the secular Enlightenment, unaware that they were in fact developed not just by Christians, but by priests. Spanish Scholastics of the sixteenth century—Jesuits and Dominicans of impeccable orthodoxy—were the real forerunners of thinkers such as Adam Smith. Sadly, these pioneers’ writings are little known outside the circles of a few economic historians.  The Acton Institute’s Journal of Markets and Morality has been publishing translations of their works for years, however, and a good summary of many of their positions can be found in Alejandro Chafuen’s Faith and Liberty: The Economic Thought of the Late Scholastics.

 

 Borrowed Infallibility

Distributists who are Catholics (that is, most of them) also tend to treat papal encyclicals as if every word in them were infallible—which is not what the Church says about them. Don’t trust me on that. Pope Leo XIII was cautious about the kind of authority he claimed, and how he applied it:

If I were to pronounce on any single matter of a prevailing economic problem I should be interfering with the freedom of men to work out their own affairs.  Certain cases must be solved in the domain of facts, case by case as they occur. . . Men must realize in deeds those things, the principles of which have been placed beyond dispute. . . . These things one must leave to the solution of time and experience.” (171)

Similarly, Pius XI admitted in Quadragesimo Anno #42 that there are limits to what moral theologians can say in the economic sphere because “economics and moral science each employs its own principles in its own sphere.”  In #41 he referred to “matters of technique for which [the Church] is neither suitably equipped nor endowed by office.” Distributists are not so modest; they claim to find in papal statements a ready-made template for using government power to reform the entire economy, for Catholics and non-Catholics alike.

Want to know who denied that popes offer such a program? Pope John Paul II, who wrote in Centesimus Annus, “It goes without saying that part of the responsibility of Pastors is to give careful consideration to current events in order to discern the new requirements of evangelization. However, such an analysis is not meant to pass definitive judgments since this does not fall per se within the Magisterium’s specific domain.” (#3)

Distributists sometimes claim that their economic views, backed by infallible papal authority, offer a “third way” between socialism and capitalism. Again, John Paul II disagrees, writing in Sollicitudo Rei Socialis “The Church’s social doctrine is not a ‘third way’ between liberal capitalism and Marxist collectivism, nor even a possible alternative to other solutions less radically opposed to one another: rather, it constitutes a category of its own.” (41). He goes on:

The Church has no models to present; models that are real and truly effective can only arise within the framework of different historical situations, through the efforts of all those who responsibly confront concrete problems in all their social, economic, political and cultural aspects, as these interact with one another. For such a task the Church offers her social teaching as an indispensable and ideal orientation, a teaching which, as already mentioned, recognizes the positive value of the market and of enterprise, but which at the same time points out that these need to be oriented towards the common good. (43)

In other words, there is no ready-made Christian, Catholic, or papal system of economics. The Church lays out general principles, and leaves citizens the freedom and the duty to apply them—as part of their calling as laymen.

 A Secret Lust for Big Government

Distributist confusions go beyond the Church and extend into their ideas about the state. Complain as they will of the evils of crony capitalism—as Adam Smith did, in The Wealth of Nations—distributist solutions in fact amount to crony capitalism on a massive, societal scale. What else were medieval guilds but a system by which certain producers used the government to restrict their competition? That is why people objected to them, and why there was such widespread celebration in every country when they were abolished. Prices fell, productivity soared, and economic innovation was no longer illegal.

The corporatism favored by distributists involves massive intervention by the government in every consumer’s economic choices. Founding distributist Hilaire Belloc did not propose that all property be taken and redistributed by the state—though he was not in principle opposed to this, which explains his and Chesterton’s defense of the French Revolution; he believed that it was essentially a seizure of property that was returned to the peasants.   In Belloc’s Essay on the Restoration of Property he advocated not only the re-establishment of guilds, but also the following long list of state interventions in the economy:

  • subsidies for artisans;
  • progressive or “differential” tax schemes applied to wholesalers—whose money would be put into credit unions, which the guilds would use to finance small businesses that could compete with them;
  • rules and taxes that made it hard to sell smaller pieces of real estate or to buy up farmland;
  • rules for leasing property that include an automatic right to purchase by installment; and
  • a series of state-created credit unions.

The distributist embrace of big government tinkering with everyday economic activity has long outlived Hilaire Belloc. Many distributists advocate that the government buyout failing banks and industries and then redistribute their assets according to “justice.”

When you run the economy through the government, the results are easy to see; we have seen them again and again throughout history: Government agencies will take their share off the top, and funnel wealth into the coffers of the state. The bureaucrats who direct the funds toward one business rather than another will effectively control them—as federal agencies now exert enormous power over Catholic colleges and hospitals, for instance. Worst of all, the continual fiddling with markets, wages, and prices, with no foreseeable end, will result in economic chaos—as government mandates, rather than the choices of consumers, set the costs of goods and services. This is no recipe for freedom.

But then, the devotion of distributists to freedom is open to question. Belloc and Chesterton were beguiled by Mussolini and his promise of corporatism. One of the major distributist writers, A. J. Penty, explicitly defended the Fascist state.  Writes Jay Corrin:

On paper at least, Italian industry was to be controlled by self-governing corporations (which Penty saw as just another name for the regulative guild), large scale industries were closely regulated by a central authority functioning in the public interest, wages were fixed, profits limited, and the state’s governing body—Mussolini’s Chamber of Deputies—operated on functional, not territorial, principles.  Penty also complimented the Fascists for their efforts to foster a prosperous peasantry and their emphasis on national economic self-sufficiency, two ideas close to the heart of all Distributists.  In short [Penty wrote], “Fascism . . . exists to defend tradition and human values while it seeks a wider distribution of property; it is Distributist rather than Collectivist.” [emphasis mine] (191)

Penty and Chesterton gradually woke up to the fact that Mussolini was merely using distributist rhetoric to mask a totalitarian state. Belloc and many of the other distributists were fooled for longer. And no surprise:  to repose so much power in a central government to regulate and redistribute wealth and property is a dangerous game. Giving a state such power is easy, but how easy is it to take it away?

Hudge and Gudge, the names by which Chesterton called big government and big business, are not twins, but perhaps they are brothers.  The trick is to keep big business, or any business, from using the coercive power of its big brother, big government, to win, or even survive.  Distributists like to say that big business and big government have the same coercive powers, but as Friedrich Hayek put it in The Road to Serfdom:

Who can doubt. . .that the power which a multiple millionaire, who may be my neighbor and perhaps my employer, has over me is very much less than that which the smallest functionnaire possesses who wields the power of the state on whose discretion it depends whether and how I am to be allowed to live and work?

Surely there is a vast chasm separating an entity that can fire you—so you’re free to work somewhere else—and one that can send police with guns to haul you to prison. The citizens of Eastern Europe, among many others, would testify to the difference.

 

Are You a Price Slave?

Distributists’ core claim is that political freedom can only walk hand in hand with economic independence for nearly everyone. Belloc spoke dismissively of working for someone else’s business, claiming that it made a man a “wage slave.” But isn’t a small businessman or an independent farmer a “price slave,” dependent on every consumer who chooses to buy from him—or walk down the road to buy somewhere else? Except for the food you grow to eat yourself, every good or service a person obtains is the outcome of bargaining with others, to meet their respective needs. It might be more productive to call this “cooperation” rather than slavery. We have managed to raise living standards across the planet, and support a world population that would have simply starved to death 500 years ago, by increasing the division of labor—by freeing up economies so people can specialize in what they’re good at. Not everyone is good at running a business or managing a farm. In fact, only a minority of people want to pay the price of deferring gratification by saving their money to buy a business, then working the endless hours needed to keep it running, on the risk that they can successfully compete. That’s why most of us choose to work for someone else. Does it really make us slaves?

Free Will Distributism

Distributists have a number of good points to make about what ails our society—both negative critiques and positive solutions.  Much of the positive agenda of distributism is already available in a free market system. You are free to shop only at small businesses, and get your produce straight from family farms. If you agree with distributism’s goals, you should spend your money that way and encourage others to do so. If enough people make those choices, that will help support an ample, thriving sector of independent farms and businesses—just as the free decisions of millions of parents have created the homeschooling movement, with no help (to say the least) from the government. Likewise, the organic food movement grew into a multibillion-dollar industry entirely through free choices made in the free market. Distributists should use that movement as their model.

The last thing that people who oppose concentrations of power, and who seek to keep alive the vital freedoms we cherish as Americans, should favor is a government that interferes in every decision we make as workers and consumers. Experience tells us that power does not elevate fallen men; it tends to corrupt them. The free market, with its price system, distributes power into the hands of every consumer. We shouldn’t help the government claw it back. Our respect for the human dignity of every person teaches us that we should set a very high bar before we use employ the state’s police and prisons to change our neighbor’s behavior. That’s one lesson of the twentieth century we can’t afford to forget.

 

David Deavel is an associate editor of Logos: A Journal of Catholic Thought and Culture and a contributing editor for Gilbert Magazine. He is also currently a Fellow of the Center for Catholic Studies at the University of St. Thomas (Minn.), where he teaches courses in the Department of Catholic Studies and at the St. Paul Seminary.

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  • Steven Schloeder

    Really poorly argued, though I agree with it in principle.

    Chiefly since you don’t name names, it reads like a strawman taking the worst arguments as the typical narrative.

    Also, you missed the major problem of Dist — that some innovations require massive corporations and outside capital financing. While it remains hypothetically possible that a distributist business might have developed the commercial jet airplane or the plasma screen or the artificial hip or any number of life saving drugs or just about any other modern advancement, none of them did but required massive outside capital infusion for R&D, building production plants, manufacturing and distributing, etc., often in partnership with Big Government.

    • Micha_Elyi

      The even more “major problem of Dist”, the major problem of which the one you name is but a subset, is the existence of economy of scale.

      Economy of scale and its inverse, the diseconomy of lack of scale, is the reason it is not true that “a distributive business might have developed the commercial jet airplane”. To name but one roadblock to the corner workshop’s commercial jet airplane, the corner workshop that refines oil into jet fuel in industrial quantities is an economic impossibility.

      In the hypothetical Distributist Paradise there would be no large-scale enterprises. No large-scale power plants. No hydroelectric dams. No coal mines or oil refineries large enough to produce the fuel for boiler-driven power plants. No railroads to carry coal or pipelines to move oil to distant locales. The aircraft built in a bicycle shop would remain the summit of aircraft technology for centuries. The horse-drawn trolley – on wooden rails! – would be the most modern transportation available and would remain so for centuries to come.

      • Steven Schloeder

        Micha– I am of course inclined to agree with you since you are (afaict) saying the same thing with “economy of scale” as I am with “massive corporations…. often in partnership with Big Government”.

        But I do think that there could have been a worker owned model of business that did what Henry Ford, Howard Hughes, Bill Gates, or Steve Jobs did. It was simply that Ford and Hughes and Gates and Jobs wanted the autocratic control and the profits.

        Each *could* have structured their corporations quite differently had they better ethics and principles of social doctrine. They could have created a vast “blue collar” or laborer middle class of wealth, and avoided the problems of unions.

        And I don’t think the Dist per se (depending on the ‘school’) would be opposed to government agency to provide for public works. The problem is that a lot of Dists are pretty unfocused on the big picture of how societies and civilizations more than a village really work.

        Two acres and a mule distributism is naive, but the core principle of worker ownership (“the problem with capitalism is that there are too few capitalists”) does not necessarily limit economies of scale. (or at least, I don’t see the argument of how it necessarily does).

      • TheodoreSeeber

        Didn’t Ford start in just such a workshop with the Model N?

  • Jean Baptiste

    Hmm. Is this where I say to GKC and HB et al., “stick to history and religion” ?

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  • Micha_Elyi

    What IS most salient is this happened in hostile corporate law, tax and regulatory environment that is overwhelmingly biased to the crony-capitalism of “modern-fascism”…
    –stewardman

    The solution to liberal fascism isn’t bigger government or more government meddling or different government micro-management meddling but smaller government and less government meddling. Government has no special expertise or capacities unavailable to any other institution except the use of raw force. And now you know what attracts the crony-capitalist parasites to the government.

    Why are ‘free-marketers’ so reticent to make common cause with Distributists against the evil tax & corporate status-quo?

    Uh, sorry to break the bad news to you but Distributists are on the side of tax and smash government. The free-marketeers wisely see that crony-capitalists and Distributists both seek to use Big Government as an ally in their attempts to covet their neighbor’s goods. The only difference between the cronies and Dists is which of them gets to distribute the spoils.

    (One is mindful of Protestant & Roman Catholic Christian taking up arms against each other, while western Europe’s secular Statism rushed to fill the void at the center of the public square.)

    Perhaps you don’t know, stewardman, but the Thirty-Years War was fought between princes of one state against the princes of another and most of those princes, whether claiming to be Catholic or Protestant, cared not whether the armies they hired were themselves Catholic or Protestant. The religious affiliation of a given prince was mostly used cynically as a way to gain allies and also, in the case of Protestant princes, as an excuse to ransack churches for their own royal treasuries and to seize church property for distribution to their cronies. For the most part, individual Catholics and Protestants didn’t make war on their neighbors of a different persuasion.

  • http://www.ledgersmb.org/ Chris Travers

    I am not at all sure where you get any of this. Some citations might be helpful.

    Regarding big government, it is true that many distributists do want to see a larger, more powerful government— at the local level. But you can’t have the concentration of power we currently have, and the emphasis on central government that we have, and have any room for distributism at all. I would point to public utility districts as good examples of big government distributism, and note that in three rural counties in Washington State, they run internet infrastructure (but offer services only to ISPs). This does not mean regulating purchasing choices. It means collectively taking over the minimal pieces necessary to ensure there are no natural private monopolies.

    Regarding economics, the Distributists I have known have tended to be very much willing to accept that supply and demand are major factors, much more than many heterodox economists like Steven Keen. Supply and demand though are not necessarily rules which are self-contained. Rather they are aggregates of proxy measurements of other considerations including negotiating power, and the like. Even Adam Smith noted that wages were primarily governed by negotiating power rather than supply and demand. The point is that these measures only work in certain cases. They don’t work, for example, in markets dominated by monopolies (where supply curves are set only by the seller). If this much isn’t obvious…..

    As a small business owner and distributist, I think that Belloc’s criticism of wage slavery is largely correct, but there are two points in context that he makes that I think you omit. The first is that the question is not whether you *do* work for another business, but whether you *must do* work for another business. Someone who works for another because he or she really wants to is no slave if he or she can easily leave and strike out on one’s own. Slavery is defined by Belloc and others, by compulsion. Working for someone else isn’t enough. Working because one has no alternatives, however, is.

    As a small business owner I sometimes do fire my customers. This is what separates me from an employee. I don’t *have* to work for anyone. I just have to work for enough to survive.

    As a Heathen I am no Catholic. I find the encyclicals interesting and thought provoking. They flow naturally from the Catholic Church’s deep connection to classical philosophy, something I look to as I search for pre-Christian spirituality.

    I found this relatively off the mark.

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  • Thomas Storck

    Mr. Deavel,
    You and your readers might be interested in my reply to your articles at:
    http://distributistreview.com/mag/2013/08/whats-wrong-with-distributism/
    Thank you,
    Thomas Storck

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  • Shane

    “What else were medieval guilds but a system by which certain producers used the government to restrict their competition?”

    Well, how about an economic system that: provided stability to its workers, methods of communal ownership, ensured quality, and also fostered community? All economic systems are imperfect–including the medieval guilds. However, this smug dismissal reads like more Whig history than a genuine encounter with the past.

  • Ndiba Kuria

    Mr.Deavel,
    It seems that your main argument in opposing a fairer economic system which will free the common person from the twin evils of capitalism and communism is a fear of the reaction of the big businessmen who exploit people to get a profit.
    Furthermore, the ” free market” system which you claim promotes small businesses in fact promotes the tyranny of a few rich people.
    This is the reason the greed of some bankers in Europe and the U.S.A affected ordinary citizens leading to an economic crisis. The big businesses held and still hold a monopoly over economic affairs contrary to your claims of the great impact of small businesses in today’s economies.

  • pmains

    Guilds, at least in England, were less an attempt by merchants to control competition than they were an attempt by the king to control his subjects. Since all markets and guilds were chartered by the king, there was no difficulty in identifying these organizations for the purpose of taxation. If an “adulterine” (non-chartered) market or guild popped up, the king could count on their chartered neighbors to respond by bringing a lawsuit or violently taking the law into their own hands. The effect was a limiting of competition, but the purpose was regulation and control by the crown.

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  • pbecke

    All Adam Smith was pointing out was that grace builds on nature. He was dead against neoliberal capitalism, and regarded the merchants as incorrigible recidivists. Today, he would have wanted them, tagged.

    Encourage them in their work but don’t let them out of your sight and above all tax them properly, i.e. proprtionately with their income; stopping just short of Communism by today’s standards.