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.”
