Monday, April 1, 2013

April Fool! Neo-Distributism

Somehow it seems appropriate to post something about real distributism after going through a rather monumental slush pile of neo- this, that, and the other thing.  After all, having been going through all the illogic that seems to characterize modern academia, politics, and Great Pumpkinists, a little common sense can be very refreshing.

We've found that what passes for distributism these days bears little resemblance to what G. K. Chesterton and Hilaire Belloc were talking about. For example, the presumed hostility against advanced technology is a later add-on. Chesterton specifically said that there was a preference, not the presumed mandate, for small businesses and family owned farms. He also specified that, where a large enterprise could not be avoided, then ownership of the enterprise should be spread out via a wide distribution of equity shares.

The problem with distributism (if you even want to call it a problem) is that it accepted as a given the disproved belief that the only way to finance new capital formation is to cut consumption and accumulate money savings. This is incorrect, as Dr. Harold Moulton of the Brookings Institution demonstrated in The Formationof Capital (1935). It is possible, even preferable, to finance new capital formation by monetizing the present value of future increases in production, and not rely on the rich being generous with their savings or the State redistributing what belongs to others. This is what Louis Kelso and Mortimer Adler recommended in The NewCapitalists (1961), although what they described could not really be called "capitalism."

Because Chesterton and Belloc refused to countenance the destruction of what remained of private property by advocating redistribution, and they knew that the rich would never divest themselves voluntarily of their wealth, they could see no ethical and effective means to implement the "Distributive State." Hence they could only sit back and wait for the collapse to come.

That is not necessary if we use the present value of future capital to finance the new capital. This would make it possible for currently propertyless people to acquire ownership of capital without taking anything from the rich. What can potentially exist is far more than what exists in any event, so why fight over a small piece of a shrinking pie when you can have your own pie without taking it from somebody else?

That is the idea of the "Just Third Way" as applied in a proposal called "Capital Homesteading." There's a great deal about Capital Homesteading on the website of the Center for Economic andSocial Justice (and it's better if you don’t know anything about economics — you won't have as much to unlearn), and for Capital Homesteading specifically.

(And the book itself is available as a free download.)


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