We hear a lot about how beautiful “small” is, and how “human scale” must be the rule for economic life. The problem is, both “small” and “human scale” are a bit subjective, while producing marketable goods and services, whether for your own consumption or to exchange for what others produce (Say’s Law of Markets) tends to be a trifle objective. Either you produce enough to meet your material needs, or you don’t. It doesn’t get more basic than that.
That is probably why classic distributism provides a preference for small, family-owned farms and artisan-type businesses, without mandating it. Both Chesterton and Belloc admitted a necessary role for large-scale enterprises, but stipulated that when an enterprise must be large, it should be broadly owned by the workers, who hold shares in the enterprise. Neither Chesterton nor Belloc offered any practicable means for achieving worker ownership of large-scale enterprises, an omission that Kelso supplied with the ESOP.
The important point here is that classic distributism expresses a preference. It does not impose a mandate. Chesterton and Belloc repudiated Arthur Penty’s “Guild Socialism” (a form of Fabian socialism, a blend of the economics of Henry George and Theosophy) on a number of grounds, one of which was Penty’s insistence that large machinery and enterprises beyond a human scale must be eliminated.
The difference here between the Just Third Way and classic distributism appears to be semantic. The Just Third Way principle for the optimal size of enterprises is that the free market sets the size. This is not, however, the laissez faire-type of free market in which anything goes, but a market bound by clear and understandable laws and ethics which all may freely enter and participate on equal terms as consumers and producers with both labor and capital. Given a truly free market, enterprises will naturally grow to their optimal size, whether that is large or small.
The Understanding of Justice
To some extent, the difference in interpretation of justice, especially social justice, between the Just Third Way and classic distributism is understandable. The “formative” documents and concepts of distributism were written and worked out before 1931 when Quadragesimo Anno was issued.
Classic distributism therefore embodies a much more vague concept of social justice than is found in Catholic social teaching, relating more to the 19th century concept of doing good in a social manner. Consequently, there is some confusion in classic distributism between social justice, distributive justice, and individual charity.
Social justice was covered to some extent under money, credit, banking, and finance, but to reiterate, social justice does not consist of meeting people’s individual goods (“material wellbeing”) directly. Almsgiving, soup kitchens, micro-lending, and so on, even when carried out on a vast scale, are directed to the immediate good of individual persons, and are a form of individual charity.
Social justice consists of organizing for the common good, with the goal of restructuring institutions to allow people to meet their own needs through their own efforts, not in providing for those needs directly. Social justice is therefore the mediate (indirect) cause of individual material wellbeing. An individual’s own efforts directing his or her own labor or capital are the immediate (direct) cause of individual wellbeing.
Even when the common good is in danger, and duly constituted authority redistributes a measure of wealth in extreme cases, it remains individual. True, classifying such emergency distributions by the State gets problematical. It is not justice, for justice is based on what someone is due in some form of exchange or participation. Neither is it charity, for the State backs up such redistribution with the threat of force.
Perhaps redistribution by the State should be regarded in the same way as usury paid on public debt, something that is bad, but not intrinsically evil, but permitted under the principle of double effect to bring about a greater good. Fortunately, this is not a question that need concern us for this discussion, other than to note that even redistribution by the State, or other measures taken by the State to meet individual needs, is not, and cannot be, social justice, for it is individual, not social, whether it is charity, justice, or neither.
Distributive justice is not a synonym for social justice, but is a particular virtue of its own. Distributive justice is precisely defined in Aristotelian-Thomism, and thus in Catholic social teaching. Within the context of the Just Third Way, distributive justice is the outtake principle that holds that the contribution of labor to the economic process should be compensated at the market-determined rate (or “just wage”) for each particular type of human contribution to the production of marketable wealth.
This principle dictates that the contribution of capital should be compensated by the “just profit” generated by the project or enterprise. (Profit is determined by the market-based rental value of contributed capital assets, or by the gross revenues resulting from market-determined “just prices” less the market-based cost of the factors of production, including labor.)
As a rule in all cases in civil society, distribution on the basis of need should be regarded as charity, and must therefore be completely voluntary. “Forced charity” is an oxymoron. (Distribution on the basis of need in domestic society, the Family, is a different case entirely, and has its own special rules in moral philosophy.)
Again, this appears to be semantics. The modern tendency to lump everything desirable under the label of “social justice” obscures the fact that social justice as defined by Pope Pius XI has a precise and scientific meaning. Confusing social justice with distributive justice, and distributive justice with charity, merely confuses matters, and causes unnecessary conflict and animosity.