Tuesday, February 12, 2013

The Logic of Distributism

We should call this posting the “Illogic of Neo-Distributism,” for what’s being touted these days as “distributism” is in many cases neither logical nor distributism.  What Chesterton and Belloc were talking about was something substantially different (in the philosophical sense) than what passes for “distributism” today.  The title of today’s posting just sounds better.

Here’s the story.  Last week a “distributist economist” posted a comment on Gary Reber’s FaceBook page.  Gary’s response was pretty good, but having had prior experience with the DE (Distributist Economist), we kind of figured the DE wouldn’t pay any attention.  So we started looking a little more closely at the statement, and modified (slightly) the response that Gary posted.

Confounding the DE was, all things considered, pretty easy.  All you had to do is know a little basic logic, that is to say, common sense.  The DE, after all, is a theology professor at a small Catholic college, and allegedly has some familiarity with Aristotle and Aquinas, and basic principles of reason.  Here’s what the DE said:

“The marginal value of capital without labor is the only precisely known number in all of economics: it is precisely zero. And all capital is merely prior period labor.”

Okay, here goes.  The first sentence boils down to meaning that capital is not productive.  Only labor is productive.  The second sentence boils down to Karl Marx’s idea that capital is really only congealed labor — capital is thus only labor in a different form.

Logically, then, labor = capital, and capital = labor.

Herr Perfessor DE thereby violated the “identity principle.”   He claimed he didn't, declaring that "prior period labor" and "congealed labor" are not the same thing, and therefore the identity principle had nothing to do with the case.

Uh, huh.  Anyway —

The identity principle is the positive formulation of the negative “contradiction principle” that a thing cannot both “be” and “not be.”  The identity principle is that a thing is fully what it is, and is what it is in the same way as all other things in that class — i.e., that which is true is as true, and is true in the same way, as everything else that is true.

The Perfessor, however (we don’t know if Gilligan or Mary Ann agreed), implied that labor and capital are at one and the same time both essentially the same and yet substantially different.  Labor as labor is productive, but capital as labor is not productive.

Thus — according to the DE and going only by his statement — labor both is, and is not productive, and labor is not labor.

According to Aristotle and Aquinas, the first principle of reason is that a thing cannot both “be” and “not be” at the same time.  This is the above-mentioned principle of contradiction.  To deny this principle, considered the basis of reality (as the Perfessor clearly does), is “mental suicide.” (Aquinas, Post. Analy. Lib. 1, Lect. 20.)

The DE also happens to be a fan of G. K. Chesterton, and has been lauded as “the” distributist economist.  (Having a professor of theology installed as “the” distributist economist really doesn’t do much if the neo-distributists are trying to convince people that they’ve based their system on reason instead of faith — see our series on “The Death of Reason.”)

Here, however, is what Chesterton had to say in his biographical sketch of St. Thomas, The Dumb Ox, about people who base their philosophy (or anything else) on the premise that a thing can both “be” and “not be.”  Chesterton first quoted from Rev. Martin C. D’Arcy’s book, Thomas Aquinas (1930):

“ ‘A certain likeness can be detected between the aim and method of St. Thomas and those of Hegel.  There are, however, also remarkable differences.  For St. Thomas it is impossible that contradictories should exist together, and again reality and intelligibility correspond, but a thing must first be, to be intelligible.’ ”

Chesterton then said,

“Let the man in the street be forgiven, if he adds that the ‘remarkable difference’ seems to him to be that St. Thomas was sane and Hegel was mad.  The moron refuses to admit that Hegel can both exist and not exist, or that it can be possible to understand Hegel, if there is not Hegel to understand. . . . And this is what I mean by saying that a modern philosophy starts with a stumbling-block.  It is surely not too much to say that there seems to be a twist, in saying that contraries are not incompatible; or that a thing can ‘be’ intelligible and not as yet ‘be’ at all.”

Of course, most ordinary men (or women) in the street might also be tempted to ask the Perfessor, while capital can (presumably) produce nothing without labor, just how much can labor produce without capital?

This involves another contradiction, for if capital is really only congealed labor, as the DE insists, then there is no problem with saying that only labor is productive.  This is because the added increment we see when labor is combined with capital is clearly due to labor in another form — even if the owner of the capital only gets back his depreciation (the cost of his labor used to produce the capital) as Marx insisted was the owner’s just due, as it compensates him for the labor he congealed in the capital.

If, however, capital is substantially different from labor, as the Perfessor also insists by claiming that capital is not productive, and therefore not to be counted as labor (according to Karl Marx, if labor is expended on something that does not produce something of value, it does not count as labor, see Das Kapital), then we are once again enmeshed in an irreconcilable paradox: where the Perfessor before claimed that labor both is and is not productive, he is now forced to claim that capital both is and is not productive.

And people wonder why we might have one or two difficulties with neo-distributist “logic.”

Credit is due to Fulton Sheen for giving us the substance of these arguments in his book, God and Intelligence (1925) — introduction by G. K. Chesterton.



Bernadette said...

It seems to me that capital is indeed worthless without labor (a tractor can't drive itself), but that labor is just as worthless without capital (a man can't cultivate the land if he has no land to cultivate) as the current unemployment rate makes painfully clear.

Michael D. Greaney said...

Of course. As Pius XI noted in Quadragesimo Anno, labor cannot do without capital, any more than capital can do without labor. Taking this in the broadest sense, this simply reiterates the logic of Adam Smith, who pointed out in "The Wealth of Nations" that the purpose of production is consumption — not saving (reductions in consumption) to finance new capital.

Thus, in order to consume, we must be able to produce — Say's Law of Markets. If we do not produce, we cannot consume.

Consequently, if capital is taking over an increasing share of production, people who formerly produced with their labor must be put in the position of being able to produce with capital.

Chesterton and Belloc understood this, and that is why they advocated widespread, direct ownership of capital. They also, however, didn't see any way to save to purchase capital other than by cutting consumption. They didn't realize that you can also save by increasing production, using the present value of future production to finance the new capital that will produce the increase.

At the same time, both Chesterton and Belloc refused to countenance a redefinition of the natural law that would "allow" people to circumvent the sacredness of private property and liberty (freedom of association/contract). (Belloc "fudged" a little, but I don't think he realized he was doing it, in his 1936 "Essay on the Restoration of Property," which is why I contributed my two cents with "The Restoration of Property: A Reexamination of a Natural Right" to correct Belloc's rather minor flaw.)

By redefining private property and liberty, today's neo-distributists attempt to achieve a society characterized by widespread ownership of capital by destroying what it means to own something. By rejecting the use of future savings they destroy liberty — freedom of association/contract, for, just as all money is a contract (promise), all contracts are, in a sense, money.

These promises can be used to finance new capital that can be broadly owned, or they can be used to concentrate ownership of capital. By using promises to deliver future wealth for what we receive today, we can spread out capital ownership without redistribution of existing wealth.

By restricting financing to what has been withheld from consumption in the past, however, we necessarily restrict ownership to those who can afford to save: the rich (capitalism), or to those who have the coercive power to take: the State (socialism).

To get around this, today's neo-distributists redefine both money and property (the two, as Irving Fisher pointed out, necessarily go together), and end up shooting themselves in the foot by violating the first principle of human reason: the law of contradiction/identity.

The bottom line is you cannot have your cake and eat it, too. Relying on contradiction ultimately, as James Pratt pointed out in "Religious Consciousness," is to build you house on sand.