Wednesday, June 18, 2014

Distributism, Neo-Distributism, and the Just Third Way, I: The Basics


About the middle of May of this year we got a comment from someone who seems to believe that he knows a bit more about the Just Third Way than people who have decades of experience working with and developing it.  He kept insisting that it’s too complicated, and we should simplify it.

Unfortunately, the commentator’s comments revealed that his simplification approached the simplistic.  Frankly, the Just Third Way operates on different assumptions than the ones the commentator was using.  We can’t just present a summary of the Just Third Way and expect to be understood, for anyone reading it (or hearing it) will automatically assign personal accepted meanings to our terms, and not realize that we mean different things than they by terms such as money, credit, banking, finance, property, and even justice.

This was evident in the commentator’s comment.  As he declared,

I read Chesterton, Aquinas, Day, The Catholic Worker....

“I have sent the CESJ principles to many autoworkers. My experience is that most of us have trouble understanding Capital Homesteading. My brother who is an orthopedic surgeon​ who follows Bankstering [sic] and believes in Distributism, has trouble understanding CESJ principles.

“What I think you need is a single page re-defining the program in simple, common sense terms. Then the small print made large.

“I'd do that myself but lack the time.

“Buck” [Not his real name.]

It will become obvious as we proceed why a single page redefining Capital Homesteading would be insufficient to address “Buck’s” concerns.  There are some fundamental differences between applications of basic principles, and even the principles themselves, that do not make for quick or superficial presentations or discussions.

That being the case, Norman Kurland assured us that, if “Buck” would give him a call, or provide him with a number where he can reach “Buck”, Norm would answer any and all questions “Buck” might have.  He only asked that “Buck” be prepared to state exactly what he finds wrong in Capital Homesteading or the Just Third Way, and not simply say that the presentation is inadequate or confusing.

Unfortunately, “Buck” did not bother to call, or give Norm a number where he could be reached.

To begin, Capital Homesteading, an application of the principles of the Just Third Way, differs from the “classic” distributism of Chesterton and Belloc on three points.  None of these preclude the two schools of thought from reaching an accommodation and understanding, or even cooperation.

Both the Just Third Way and classic distributism differ from what we call “neo-distributism” on many points.  There are far too many of these to examine briefly.

“Neo-distributism” is our term for the school of socio-economic thought that, while derived from the principles of the classic distributism of Chesterton and Belloc, changes the basis of those principles (and thus the principles) from reason, to faith.

Thus, the Just Third Way and classic distributism differ from neo-distributism on first principles.  This, as Aquinas explained in the Prologue to his treatise On Being and Essence, is the seemingly small error from which much larger errors grow.

The differences between Capital Homesteading and classic distributism are:

·      Money, credit, banking, and finance,

·      Optimal size of enterprises, and

·      Understanding of justice: i.e., the act of social justice, distributive justice, and the confusion with charity.  (In the case of the neo-distributists this results in a complete redefinition of the terms and concepts of justice, and thus the natural law, particularly property, the basis of the “Distributist State.”)

Money, Credit, Banking, and Finance

Classic distributism accepts the “currency principle” as a given.  That is, “money” consists of claims issued by the State, private individuals, or institutions against existing wealth, i.e., “savings,” defining “savings” exclusively as the excess of income over consumption.  (Cf. John Maynard Keynes, The General Theory of Employment, Interest, and Money, 1936, II.6.ii.)

Within the framework dictated by this “slavery of past savings” (Cf. Louis Kelso and Mortimer Adler, The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings.  New York: Random House, 1961), there is only one way to finance new capital formation and thus production: produce more than you consume.  This contradicts Adam Smith’s basic postulate of economics: “Consumption is the sole end and purpose of all production.” (Adam Smith, The Wealth of Nations, “Part III, Ch. 8, “Conclusion of the Mercantile System.”)

Assuming that you can only finance future production out of past savings also begs the question that, if the only way to produce is to consume less than you produce, where production comes from in the first place.  Effect cannot precede cause.

It also contradicts Say’s Law of Markets.  Say’s Law is that we do not purchase what others produce with “money.”  We can only purchase what others produce by means of their labor and capital, with what we produce with our labor and capital.  Money is only the medium by means of which we exchange what we produce for what others produce.  If we do not produce, we cannot consume.

Limiting money to a contract conveying a property right only in existing wealth means that credit can only be extended out of existing money savings.  A “bank” is defined as a financial institution that takes deposits and makes loans.  (This is the definition of a “bank of deposit.”)  Financing of new capital is limited to the amount of money savings in the system, most of which by definition belongs to the currently wealthy.

Property, of course, is not the thing owned, but 1) the inherent (inalienable) right to be an owner built into human nature, and 2) the bundle of socially determined rights that define how an owner may use his or her possessions.

The socially determined rights of property must be limited and defined according to the needs of the owner, other individuals, the institutions of society, and the common good as a whole.  The inherent right to property, that is, the natural right to be an owner, is part of human nature itself and cannot be taken away.

Thus, while in an emergency the State can justify a temporary redistribution of goods to meet the emergency, instituting redistribution as a permanent solution to anything is contrary to the natural law and is, in fact, the abolition of private property.  Not even for the gravest reasons can private property be abolished, whether by redefinition, manipulation of the law, or by outright confiscation.  A good overview of the concept of property in the Just Third Way can be found in Louis Kelso’s critique of Das Kapital, “Karl Marx, the Almost-Capitalist.”

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