Monday, December 20, 2010

The Problem With Distributism

No horse is so dead that you can't continue to beat it. (Mmmmmm. Dead horse.) Anyway, for years, even before starting this blog, we've gone into great detail and explained at great length exactly where classic distributism and the Just Third Way differ, and where they agree. It doesn't seem to help. The silence remains deafening — or nearly so.

As a whole, Latter Day Distributists (at least those who don't run away chanting the "I'm not an economist" mantra/copout) may agree that both distributism and the Just Third Way share substantially the same goals: an economically and politically just society characterized by widespread ownership of the means of production. On the whole, however, the LDDs and those sympathetic to their position, such as a determinant number of supporters of Major Douglas's "social credit" and Henry George's program, agree that those who support the Just Third Way "just don't get it." Where we aren't already beyond hope, we're just being stubborn by refusing to abandon our position in the face of repeated assertions, contradictory definitions, and lack of argument from the LDDs & Friends.

That being the case, we are clearly being Deliberately Evil by not coming over to the Light Side and agreeing completely with everything someone else says, with or (more usually) without proof or argument. Of course, the human sacrifices we carry out as the high point of every quarterly board meeting may have something to do with that, too, as well as the ritual cannibalism and the high cholesterol Béarnaise Sauce. (Mmmmmmm. Have a friend for lunch.)

That's why when, over the weekend, we received a question about distributism, we made our response the core of today's posting. Of course, there is that little matter about not wanting to work any harder than we have to, plus the fact that (believe it or not) we have other things to do. So, to cut to the chase, our correspondent asked (slightly paraphrased to protect both the innocent and the outstandingly mistaken),

A quick glance over The Distributist Review blog revealed a number of things that caused me concern, e.g., links to some questionable sites, a number of ads and links that don't seem completely consistent with the natural moral law, and a set of "progressive" goals that appear to have the potential to lead people away from the natural moral law based on God's Essence which is self-evident in His Intellect, not His Will, that is the basis for the Christian, Jewish, and Islamic understanding of social justice from an Aristotelian perspective. I found this both disconcerting and mystifying, given the many references to Catholic social teaching, which is based on Thomism, or a "Christianized" Aristotelianism, just as orthodox Jewish and Islamic social teaching are based on the Aristotelian analyses of Maimonides and Ibn Khaldûn, respectively. This demonstrates to me just how easy it is to get good Catholics — or sincere believers in any religion — going off in the wrong direction. My question is, how did Chesterton a) define distributism (without all the add-ons that seem to have come later), b) get economics so wrong, and c) how did he get hijacked to something so far off the range?
(BTW — despite the "cowboy talk" about getting far off the range, our correspondent is not from Texas, nor are we confirming that "he" is really a "he." There's no sense in opening him up to the sort of "arguments" we typically get.)

Okay, here goes (and that's really three questions . . . but we don't charge by the word, so that's all right). "Distributism" is easily defined, all the more because Chesterton and Belloc insisted that there is no specific program involved, only general guidelines: A policy of widely distributed ownership of the means of production, with a preference for small landholdings and enterprises. When enterprises must be large, the ownership should be broadly distributed.

This is simple, and very close to the Just Third Way. The problem comes in when Latter Day Distributists start insisting that the small landholdings and enterprises are a mandate, not a preference . . . and then the fun starts.

The problem is that Chesterton and Belloc made a fundamental error with respect to finance. This is understandable, for neither one was an economist, financial expert, lawyer, or accountant. Had it been explained to either of them, we are convinced that either one would instantly have seen the problem and corrected it. It was one of those small errors that lead to big problems in the end. Regular readers of this blog can probably guess what it is already: the fixed belief that new capital formation cannot be financed except by cutting consumption, accumulating money savings, then investing. (Vide Dr. Harold G. Moulton, The Formation of Capital, 1935).

This can go in one of two ways. If we shift our understanding of the natural moral law from the Intellect to the Will, we simply redefine private property, money and credit, banking, and so on, in order to get what we want. The substantial nature of private property changes from a right inherent in every human being by nature with socially determined exercise of that right, to a grant from the State. This allows redistribution of "ownership," which ceases to mean anything. As John Locke pointed out a number of times in his Second Treatise on Government, you can't really be said to own anything if someone else (the State or a State substitute) can take it away at will.

A distributist who goes this route may end up with widely distributed ownership (although that is doubtful, as the necessary increase in State power will usually prevent this from happening), but the "ownership" won't mean anything. As Keynes quite accurately pointed out, within the past savings paradigm, ownership must be concentrated in order to accumulate money savings, and the small owner eliminated (General Theory, VI.24.ii). This is the antithesis of distributism. Within the past savings paradigm, if ownership is widespread, then people will use their ownership income for consumption, which presumably dries up the pool of loanable funds, bringing economic growth to a halt.

The solution within the past savings paradigm for anyone who has any concern whatsoever for his fellow man is to redefine the natural law, especially regarding private property. As the reasoning inevitably goes, private property may be a right, but (contradicting explicit papal teachings, e.g., Rerum Novarum, §§ 5-6) it is not an "absolute right." The State (or some State-substitute) has the duty to redistribute wealth by some means (usually manipulation of the currency or outright confiscation and redistribution) when people are in need. "The rich" therefore have no right to the income from what they own, except for what is necessary for reinvestment and what some authority has decided is a just return. (Of course, "enjoyment of the fruits," i.e., income, is the essence of private property . . . except that they've redefined private property!)

This is shoddy reasoning, and leads to the economic situation we see today, an economy that, ostensibly arranged for the benefit of everyone, with entitlements, family allowances, welfare, high fixed wage and benefits packages, etc., etc., etc., in reality functions exclusively for the benefit of the wealthy. It is no coincidence that the U.S. just experienced its most profitable quarter in history . . . with the vast bulk of profits in the financial services industry — those whom Pope Pius XI called the despotic economic dictators, who, while they don't, as a rule, own, control money and credit, so that none may breathe against their will. (Quadragesimo Anno, §§ 105-106)

The stock market is booming. Unemployment is near 10% . . . officially; near 20% "unofficially." To a mind that believes the State can do anything just by re-defining truth (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt Brace, 1930, 4), this is not happening because it cannot be happening. There must be a hidden conspiracy somewhere preventing the economy from working for the benefit of all: the rich, whose greed prevents others from enjoying the income and standard of living that God decreed for them.

The other way this can go is to insist that the rights of private property are sacred and must not be infringed upon — which is absolutely correct. Unfortunately, those who take this position also do a "little" unconscious re-editing of the dictionary, as Keynes called it, and make three fundamental errors. 1) They continue to insist that existing accumulations of savings are essential to finance new capital formation. 2) The right to property — that which comes under the natural law and thus is absolutely part of human nature — is redefined as effectively inhering only in an elite. 3) The rights of property — the socially determined exercise of property (but always without prejudice to the underlying natural right to be an owner) — are redefined as absolute. That is, 2 & 3 reverse the natural order, and effectively negate the natural law as surely as those who redefine it in the other direction.

Those people in the first group, i.e., those who redefine natural rights explicitly (which includes most Latter Day Distributists), necessarily view those in the second group (those who reverse the natural order) as heartless fiends who selfishly insist on their rights of property to the detriment of others' right to life. Those in the second group necessarily view those in the first group as idealistic blockheads who would sacrifice the common sense of the natural law (including private property) to a disastrous social theory that can only lead to economic disaster.

The two sides could easily be reconciled if they could be brought to understand that 1) money is anything that can be used in settlement of a debt, 2) existing accumulations of savings are not essential to the financing of new capital formation, and 3) widespread direct ownership of the means of production is essential to the functioning of Say's Law of Markets and its application in the real bills doctrine to finance widespread acquisition and possession of private property in the means of production.

We have tried on a number of occasions to make this clear to people on both sides of the aisle, but have typically gotten one of several (non)responses:

1) A polite dismissal for questioning the principal tenet of the religion of past savings,

2) No response whatsoever,

3) A pitying shake of the head and a statement to the effect that we could be refuted on every point . . . but that they aren't going to take the time to do so. (Vide Milton Friedman's refusal to debate the Kelso ideas in response to an invitation from Norman Kurland),

4) An outraged attack claiming that we are anti-distributists, anti-social crediters, anti-Catholic, anti-histamine, or whatever else comes to hand.

What we don't get is honest debate, or even argument. A leader in the distributist movement once exacted a promise from this writer not to judge distributists too harshly. That was approximately two and a half years ago, and a number of efforts have been made to reach out to the distributist movement, as well as other movements that consider themselves affiliated with distributism in some fashion.

There has been no response. In consequence, our opinion of distributism is as high as it ever was, i.e., that except for being enslaved to past savings, it is about as close to the Just Third Way as it is possible to get within the current system. Our opinion of distributists, however, is lower than ever before.



Anonymous said...

The 'real fun' will probably begin when some slick commercial barter exchange operator figures out how to issue the exchange's credit for purposes of capital expenditure and have that credit generally accepted.

Little need then to 'own the Fed'and CESJ will then be free to talk to states and cities about installing the Capital Homesteading scheme irrespective of whether Washington D.C. is on board or not.

Michael D. Greaney said...

What Anonymous seems to be saying is that once someone figures out how to turn a barter exchange into a commercial or mercantile bank to discount bills of exchange, then neither a central bank nor national legislation will be necessary.

This would probably not be the case. Commercial banks have already been invented, cir. 7,000 or so years ago, based on what we would consider a barter system and involving commercial barter exchanges, as the vast amount of cuneiform tablets and ancient papyri attest. A central bank is necessary in order to ensure a uniform currency with a stable value issued and regulated in a way that minimizes the risk of dealing in bills of exchange for which only the individual issuer is responsible and possibly unaccountable without recourse to a central authority; a central bank — essentially a bank of issue for commercial/mercantile banks — spreads the risk and minimizes it in a way not possible for a single commercial bank or within a small geographical region or economy.

Finally, because the financial system necessarily employs a standard currency within an economy, however small or large, and currencies are national in scope, national legislation is required, if only to acknowledge the State's essential role in setting standards and regulating (but not creating) the money by enforcing the standards when there is some dispute, as well as enforcing contracts — and a barter exchange, involving money, necessarily involves contracts. A central bank, because it is national in scope, requires national legislation when there is a material change in its operation or policy.

John Médaille said...

Michael, this simply isn't true, and shame on you. I have offered to debate you many times, and your father in law as well. I was told he would only debate in front of a neutral forum. And what was that forum? His board of directors. I have offered to debate you many times and have answered everyone of the questions you posed.

Another debate? Any time, buddy.

Michael D. Greaney said...

Mr. Médaille, your statement is false from beginning to end. The last effort to reason with you resulted in an "unequivocal" statement from you that, because I use the natural law definition of private property and this differs from your own, I am "a liar, probably pathological."

You have never retracted nor apologized for this statement, nor for your earlier claims that Norman Kurland has been "telling lies about [you] for years." Really? Then you should have absolutely no problem with stating what these alleged lies are — although you seem strangely incapable of doing so.

I do not debate with you for the simple reason that I do not trust anything you say, nor do I put any faith in your word. I consider you profoundly untruthful and intellectually dishonest.

For the record, just who is this "father in law" of whom you speak? I am not married. I have never been married. If the rest of your statements are as accurate and factual as this one, I'm afraid I am rapidly coming to the conclusion that you create facts as you need them, and ignore the truth when it becomes inconvenient.

Given that, however, exactly why would you object to an open debate before a neutral forum, or refuse to name an alternate forum if the proposed members are not acceptable to you? And, no, you have not answered all the questions you have been asked, but have avoided responding by asserting that I am a liar, and reasserting that Norman Kurland is a liar, and not once offering a shred of evidence to back up your accusations.

If you wish to spread your garbage in your own forum, you are free to do so — although I should point out that one of the comments I edited out of "The Problem With Distributism" was a statement from my correspondent that could be taken as "attacking" you by calling the orthodoxy of your postings in "The Distributist Review" into question. The main reason I did not reveal that person's name and edited out her comment was to protect that individual from your venom.

Until such time as my faith in your truthfulness and integrity are restored — the means are completely up to you, as at this point I want nothing more to do with you.

Michael D. Greaney said...

(The previous comment was cut off due to length.)

Finally, the lie is given to your offer to "debate" by the fact that, when I attempted to respond to your accusation that I am "a liar, probably pathological," you blocked e-mails from my address, thereby preventing the "debate" that you claim, "buddy," that you want "any time."

When you are prepared to debate honestly, and not before, then I and others in CESJ and the Just Third Way will consider a debate. At such time you should be prepared to use verifiable facts, not insinuation, support your accusations, not simply repeat them, and to make your case "not on documents of faith, but on the reasons and statements of the philosophers themselves."

John Médaille said...

Well, I doubt that you post this, but you never been cut off from any list that I controlled. I, on the other hand, have been kicked off of your lists. You complain that nobody will debate you, but when somebody attempts to, you cut them off. You complain that others "drip with venom" in a post that is nothing but ad hominems. The weakness of your position can easily be shown, and your response is always to end the discussion. You will not debate; you cannot debate. I am willing to debate you at any time, which you will not do because you already know that you cannot win.

Michael D. Greaney said...

Mr. Médaille: I was wondering how long it would take you to come up with a way of avoiding the fact that you have made demonstrably false accusations and refuse to apologize for them. As usual, however, you have changed the subject. Nevertheless, let's take a look at your continued accusations.

I did not say you had cut me off any list of yours. I said you had blocked my e-mails to your address — which you know full well is the truth. You accused me of being a pathological liar. You accused Norman Kurland of telling lies about you for years. You refused to allow me to respond to the former, or to support or offer any evidence for the latter.

You were disinvited from the Kelso Binary Economics Discussion Group by two of the three moderators, Kemp Harshman and Dan Parker, because you refused to support in any way your baseless accusations against me or Norman Kurland, and because your increasingly vile postings were extremely disruptive. Norman Kurland, the third moderator, abstained from the decision as most of your accusations were leveled at him. You violated the clear rules given for participation in civil debate in the forum.

As a result of an article you wrote supporting Kelso's work, we were once open to asking you to join the CESJ Board of Counselors. We were forced to reconsider because you seemed to have reversed your position, but without offering any explanation why, or offering any argument or evidence in support of your apparent shift. Your principles, notably your positions on private property, free markets, and leveraging to finance expanded ownership, are diametrically opposed to those of Kelso and Adler, as well as Father Ferree and our interpretations of Catholic social teaching. Even that could have been overlooked, however, had you not been so vitriolic in your denunciation of others who do not share your views.

Your unexplained change is all the more baffling in that Mortimer Adler, who was a socialist before he and Kelso met, gave due credit to Hilaire Belloc and other Catholic thinkers for their contributions to the theory of expanded ownership, eventually becoming a Catholic himself. Adler, however, went beyond the limited past savings paradigm that has shackled distributism, and that has tied economic growth and development to the unjust social structures described by Belloc in "The Servile State" (1912).

As for cutting you off from debate — Mr. Médaille, I am almost amused at the dexterity with which you accuse others of the very thing of which you are guilty. The self-pity that permeates your note is exceeded only by the skill with which you avoid responsibility for your acts and ignore your own gross incivilities.

Speaking of debate, no one here has any recollection of requiring that you debate before the CESJ Board of Directors — another one of your historical improvisations, or a convenient memory?

Again, I remind you that the main reason neither I nor anyone else in CESJ wishes to have anything to do with you is that you have made yourself obnoxious by leveling false accusations against Norman Kurland and myself. You have never retracted or corrected your statements, nor offered any apology.

Even though you had opportunities for debate, you blew them through your inability to control yourself and adhere to the rules of civilized behavior. If, however, you are truly interested in scholarly, mutually respectful debate, we remain, as ever, open.