Distributism, Socialism, and Syndicalism, What’s the Difference?

We’ve mentioned a number of times before on this blog that we like it when people ask questions that are easy to answer.  It makes us look smart, and it doesn’t take too much work to put a posting together.  That’s why we were so delighted last week to get the following question: “I just came across the word ‘syndicalism’.  It sounds very much like distributism.  How do they differ?”

More Malthusian Madness: Scarcity

Last week we mentioned the Thomas Malthus in a posting or two in connection with the reverend sir’s lamentable effect on economics — he is, after all, credited with getting it labeled “the dismal science.”  Our comments last week, however, had to do with Malthus’s rejection of Say’s Law of Markets, which brought forth Jean-Baptiste Say’s best explanation of the “law” that bears his name . . . and that many people reject flat out without knowing anything about it.

News from the Network, Vol. 9, No. 34

As of this writing, the Dow is down over two-hundred points, probably due to the various noises about the possibility of the Federal Reserve raising rates, making it more expensive to create money to pour into the stock market.  The possibility of eliminating “interest” altogether for any money that creates new owners of capital instead of to make the rich richer doesn’t seem to have occurred to any of the powers-that-be.

Distributism and Population Growth, III: Mean Ol’ Adam Smith

Distributists almost always have one political economist they detest more than all the rest . . . which is saying a lot.  That is that Mean Ol’ Adam Smith, whose “invisible hand” argument has sometimes been characterized as attempting to substitute for the Hand of God.

Why Did the U.S. Go Off the Gold Standard in 1933?

The other day we took a poke . . . or maybe that was a peek . . . at what people mean when they say “gold standard.”  Today we look at why the U.S. abandoned the gold standard in 1933.  It might surprise you.

What is “Capitalism”?

As we mentioned a short time ago, we seem to be getting more and more questions from distributists.  Not from the official organizations, of course.  They have their Party Line and they’re sticking to it.  There are, however, a growing number of people interested in the subject who seem to be increasingly dissatisfied with the Party Line, which bears a strong resemblance to a somewhat skewed or off-center version of social justice.  As CESJ co-founder Father William Ferree put it,

Distributism and Population Growth, II: Who Has Rights?

Last Thursday we looked at the question of whether a program of expanded capital ownership requires adherence to a particular belief system, or any belief at all.  We concluded that, as long as someone adheres to the basic principles or precepts of the natural law, his or her personal beliefs — or lack thereof — are (or should be) a matter of complete indifference to others.

News from the Network, Vol. 9, No. 33

Things seem to be picking up a little as the summer draws to a close.  That being the case, we won’t waste time, but get straight to this week’s news items:

Distributism and Population Growth, I: A “Catholic System”?

We’re not sure why, but we keep getting questions about distributism, the rather loose proposal by G.K. Chesterton and Hilaire Belloc that was developed in the early twentieth century as an alternative to Fabian socialism with its heavy reliance on State control of the economy, of the law, of individual lives, and of anything else it could get its mitts on.  Distributism, by the way, is more or less defined as a system in which most people own capital, with a preference for small, family-owned (meaning members of the family have defined ownership stakes, not that the family unit owns) farms and artisan, worker-owned businesses.  That’s “preference,” by the additional way, not “mandate.”

Another Taxing Question, III: Why Tax at All?

Everybody hates taxes.  Or, rather, everybody hates paying taxes.  Everybody loves what taxes do, especially when it’s done for them.

Another Taxing Question, II: The Most Just Way to Tax

Yesterday we looked at the income tax as a tax.  Is it unconstitutional?  Is it just?  We decided that if you can believe the United States Supreme Court, the income tax was constitutional prior to the Sixteenth Amendment . . . but only if it was levied unjustly.  If it were administered justly, then it would be unconstitutional!  The Sixteenth Amendment fixed that little problem, making an income tax levied justly constitutional.

Another Taxing Question, I: Direct v. Indirect Taxation

We may have said once or twice on this blog that the Sixteenth Amendment did not make a previously unconstitutional income tax constitutional.  Rather, the Sixteenth Amendment made a direct tax constitutional without apportionment among the states on the basis of population.  Before that, however, the Congress had already enacted an income tax twice, only the second of which was challenged in court.

News from the Network, Vol. 9, No. 33

Some important events happened this week, as you can see for yourself, so we’ll get straight to the news items:

Is the United States the Enemy of Freedom and Democracy?

Recently we came across a (relatively) new weekly webzine, the New World Standard Critique (Many Perspectives, One Focus).  One of the most recent articles was “Gorbachev Accuses U.S. for Preventing Russia from Becoming a Strong Democracy.”  Gorbachev is quoted in an interview as stating that the “goal [of the U.S.] was . . . to prevent the emergence of Russia as a powerful democratic state.”

“A Look at the Future”, III: Financing the Future

Yesterday we looked at a few problems with Harold G. Moulton’s vision of the future.  They were not very important, and are easily corrected simply by adding expanded capital ownership along the lines developed by Louis O. Kelso and Mortimer J. Adler.

“A Look at the Future”, II: Labor Productivity?

Yesterday we started looking at Harold G. Moulton’s vision of the future.  What we saw was good and positive.  Today, however, we look at something with which we disagree, and why we say that, for all his genius, Moulton would have benefited from a conversation with Louis O. Kelso.

“A Look at the Future”, I: Star-Gazing?

Will Rogers once said all he knew was what he read in the papers.  We can’t help wondering how much more people would know today if they could say that much.

News from the Network, Vol. 9, No. 32

Despite the dog days (or, for dog lovers, the cat days . . . except there’s no Cat Star to counter Sirius), there has been a good amount of action this week, starting off with a group that has republished some important articles, and all without having to be asked:

Let’s Talk About . . . Job Creation

It’s a standard political promise.  “Vote for me instead of The Evil Candidate and I will create a gazillion new jobs!”  “Vote for me instead of The Stupid Candidate” and I will create a humongoid number of jobs!”  “Vote for me instead of The Evil or The Stupid Candidate and I will make every child, woman, and man a capital owner so that everybody gets an adequate income from capital, labor, or both, whichever best serves the needs of the individual and the community together!”

The Gold Standard? Which One?

A number of people believe that all of our financial and monetary problems — and economic ones as well — would be solved if we just went back to “the gold standard.”  Some people dismiss this as sheer fiscal romanticism, while others think it’s the only way to go.  There’s enough truth in either extreme to make both positions plausible . . . as long as someone doesn’t understand money, credit, banking, and finance.

About That Income Tax. . . .

Everybody (okay, a lot of people) in the United States think that the Sixteenth Amendment to the Constitution made an income tax constitutional.  If we could just get rid of that, everything would be perfect for everybody, just as it was in 1912 before anybody had even thought of an income tax . . . wouldn’t it?

Usury Question and Answer

As loyal readers may have noticed, we like to get those softball questions to answer . . . you know, the kind from people who clearly don’t know what they’re talking about, but who “jus’ gotta” show somebody else up.  Next best, of course, are those who make a snarky comment asserting something that we know isn’t true.  Take for instance the following comment we got in response to someone coming across our ideas on monetary reform, i.e., interest-free money and the Banking Principle:

News from the Network, Vol. 9, No. 31

This week, for some reason, Illinois has been popping up on the radar.  This is interesting, because a number of Just Third Way projects and initiatives have come out of the Prairie State, such as the proposal to revive East St. Louis and the Metro East area.  Plus, the state covers pretty much the entire U.S. economy in microcosm, with important urban areas not far from agriculture and mining.  That’s why most of this week’s news items are Illinois-centric:

Future Schacht, XIV: Schacht v. Hitler

Up to a point, Doctor Schacht’s career duplicated that of any typical German of his era.  During Hitler’s rise to power, he was an enthusiastic supporter of the future Chancellor, using his prestige in the business and financial community to solicit signatures for a petition to have Hitler appointed Chancellor, going to the length of urging the current Chancellor, Franz von Papen, to resign in Hitler’s favor.

Future Schacht, XIII: Understanding Money

To understand the importance of Hjalmar Schacht, we have to understand money, and that means understanding property.  Money, as it is a medium of exchange of wealth and claims to (i.e., “property in”) wealth, is naturally an extension of and derivation from the concept of property.  Destroying the integrity of property therefore eventually destroys other human rights, as well as the currency, and even the concept of money.

Future Schacht, XII: The Decay of Private Property

As we have seen in this series, while the rest of the world quickly rebounded from the brief recession following World War I, Germany, Austria, and Hungary plunged into what seemed a bottomless pit of despair.  If there is any question as to why a people so eminently civilized as the Germans permitted someone like Adolf Hitler to come to power, one need look no further than the unmitigated horror that the nation endured in the early 1920s.  Ground between the upper and nether millstones of reparations and hyperinflation, people were willing to follow anyone who could promise them order and security again.

“I’m New to Distributism”

Last week we had such a positive response to the “G.K. Chesterton v. Modernism and Socialism“ posting that we decided to do another one.  This is not shameless pandering just to get more readers.  Okay, so it’s shameless, but it’s not pandering.  First, we’re not acting as a go-between in an illicit sexual intrigue, and second, we’re not catering to the lower tastes and desires of others or exploiting their weaknesses . . . unless, of course, you consider a taste for things Chesterton a lower taste, desire, or weakness.  There you might have us.

News from the Network, Vol. 9, No. 30

As of this writing, the stock market is soaring like an eagle on the news that 255,000 jobs were “created” in July (which begs the question of how many jobs were “destroyed”).  For some strange reason, however, the “unemployment rate” (which really doesn’t measure the unemployment rate) stayed constant at an alleged 4.9%.  Does that mean that as many jobs were “created” as were “destroyed”?  Does it mean anything at all?

Future Schacht, XI: How Did Hitler Gain Power?

Although Hjalmar Schacht had performed the seemingly impossible task of stabilizing the German currency and financial system (and thus the economy) during the inferno of the hyperinflation, not even “the Old Wizard” could take away the fear that the hyperinflation and the chaos would return.  The fear, more than the actual economic conditions, was probably more responsible than any other single thing that gave Hitler and his followers the opportunity to consolidate power.

Future Schacht, X: Woe to the Conquered

During World War I, both sides had been reluctant to finance the war by raising taxes.  Consequently, the only option for financing was to sell government debt.  In France, for example, no new taxes were imposed until 1916, and the war debt reached astronomical proportions.  As early as December 1914, the French government had an outstanding floating debt of over US $750 million.  In November 1915, the French government floated its first long term debt — in the amount of US $3 billion.

Future Schacht, X: The Forgotten Hyperinflation in Austria

As in the Second Reich, the lid had been kept on inflation in Austria during World War I through strict rationing and price controls.  As soon as the war was over and the government abolished by the Allies, the situation quickly adapted to the removal of controls, and began to act in accordance with the laws of supply and demand.  This was not helped by the imposition of a blockade that continued for several months after the official end of hostilities.

G.K. Chesterton v. Modernism and Socialism

We’ve been reading Edward R. Pease’s The History of the Fabian Society (London: Frank Cass & Co., 1963, revised in 1926 from the 1916 first edition, with comments and editing by George Bernard Shaw, a long time member of the Fabian Society), an organization to which G.K. Chesterton and his brother Cecil once belonged.  That is, to which they belonged until they saw the light and shook its dust from their sandals.

News from the Network, Vol. 9, No. 30

As always seems to happen this time of year, things are put on a back burner while the weather goes on the front burner (so to speak).  We could, of course, go on at great length about the current crop of presidential candidates, but once we’ve pointed out that they are totally oblivious to anything even faintly resembling the platform of the Unite America Party (no affiliation with CESJ, but CESJ members had massive input to the platform . . . which all candidates from all parties for office anywhere in the world are encouraged to steal), you’ve pretty much said it all, at least as far as we are concerned.  Other than that:

Future Schacht, IX: Infinite Velocity (b)

It was not until November 1923, that effective action was taken to stabilize the currency.  On November 13, 1923, Doctor Hjalmar Horace Greeley Schacht (born in Tingleff in what is now part of Denmark, but his parents, both German, were married in New York City, and, apparently, admirers of that city’s periodicals) was appointed Commissioner of National Currency.  He was given a free hand in all questions of money and credit.  His sole priority was to halt the inflation that by this time had become an inferno.

Future Schacht, VIII: Infinite Velocity (a)

Adding to the problem of mere quantity of currency in Germany during the hyperinflation of the 1920s was the almost infinite “Velocity of Money” that resulted.  The “Velocity of Money,” the rate at which money is spent, went to the maximum as people rushed to spend whatever currency they had before it lost any more value.  As any monetary economist will quickly tell you, this effectively multiplied the amount of currency in circulation immensely, adding to the rate of inflation like pouring gasoline on highly inflammable material.

Missing the Point, II: Why It Was Missed

Yesterday we noted that, on the whole, latter day Chestertonians and distributists seem to have missed some very important points Chesterton made in his thought and writings, viz., that certain modern phenomenon were presaged by some fundamental errors made in the Middle Ages and were carried forward to today, and that the great error of the modern age (again anticipated by events in the Possibly-Not-So-Dark Ages) is widespread acceptance of the shift from the Intellect to the Will as the basis of the natural law. The great problem is the effect this shift has had on civil, religious, and domestic society.

Missing the Point, I: What Was Missed

A short time ago, while we were in the throes of composing the series on Woodrow Wilson and the Federal Reserve, we came across a posting in a FaceBook group devoted to “distributism,” distributism being a somewhat loose theory of political economy developed by G.K. Chesterton and Hilaire Belloc advocating political democracy supported by widespread capital ownership, with a preference for small, family-owned farms and artisan businesses.

News from the Network, Vol. 9, No. 29

A significant number of news items this week, so we will get straight to the substance:

Future Schacht, VII: The Road to Hyperinflation

The only thing that could happen in Germany and Austria-Hungary following World War I and the imposition of virtually unlimited reparations is precisely what did happen: the collapse of the financial system, the ruin of the economy, and complete political chaos.  It was a situation ripe for the rise of anyone who could promise stability and have some chance of achieving it.  As Germania, a large Berlin newspaper, reported on July 27, 1923, “It is a situation for a dictator.  The conditions call for a Mussolini in bullet-proof armor with a revolver in either hand.”

Future Schacht, VI: Reparations and Resentment

One thing the German government discovered very quickly after agreeing to an Armistice to end the First World War was the fact that the different sides each seemed to have a different idea of what “Armistice” meant.  To the Germans it meant cessation of hostilities and a return to the situation immediately preceding the outbreak of the war, with appropriate payment for violations of international law.

Future Schacht, V: America’s Political Defection

Having chosen to finance the First World War by taking on debt instead of raising taxes, the Second Reich was in bad financial shape by the time the Armistice was declared.  The country’s commercial banks had been discounting accommodation bills (bills backed only by a general promise to pay, not a claim on a specific asset or revenue stream) at a tremendous rate.  As Hjalmar Schacht recalled,

A Brief Outline of How to Save the World (and Other Modest Goals)

What would you do if somebody offered you $100 million to change the world?  What is the problem you would address?  We got asked that question recently, and — as you might expect — the first reaction was, “Haven’t you read the CESJ website?”  After all, we’ve been saying pretty much the same thing for decades.  Of course, our real reaction was, “Just give us the money and let us think about that . . . which is probably acceptable when you’re talking about something that isn’t real in the first place. . . .

News from the Network, Vol. 9, No. 28

We recently (this week) heard from our correspondent in Germany, located near Ulm, in the state of Hesse, right over the border from Bavaria.  Like you care.  Anyway, one of her questions — all of them rather insightful for someone without an education in economics (or maybe because of that) was to ask why, when obviously many people aren’t being productive, and things are generally on the skids in Germany and elsewhere, why is the stock market booming?  And why are the more conservative financial analysts looking so scared?

Future Schacht, IV: War Financing

After the Great War, as World War I was called before 1939, the Allies were bent on revenge.  The war had begun over the issue of Serbian interference in the internal affairs of Austria, the assassination of Archduke Francis Ferdinand, heir to the Austrian throne with Serbian aid and complicity, and the subsequent refusal of Serbia to make reparations . . . which would, admittedly, have involved a virtual takeover of the country by Austria.

Future Schacht, III: Economic Prelude to the Great War

Guided by the principles of America’s founders and inspired by Abraham Lincoln, during the election of 1912 there was a nearly successful attempt to reverse the disturbing trends in American society.  This was long past due, as social pressure from the new things noted by Leo XIII had been building up since before the Civil War.

Future Schacht, II: Philosophical Prelude to the Great War

At the end of the nineteenth century, the situations of State and Church in Europe and the United States were deteriorating rapidly.  Despite all that popes or presidents could do, the social order was in terrible danger, and for the same reason: loss of personal empowerment through the growing concentration of capital ownership in fewer and fewer hands, and an ever-increasing reliance on the wage system.

Future Schacht, I: A Sound Monetary System

However the details end up being worked out, the Brexit has revealed serious weaknesses not merely in the economic, political, and financial institutions of the European Union, but in the assumptions that guided — and continue to guide — the structuring of those institutions.  This has led to an inherent instability that led, seemingly inevitably, to the Brexit.

News from the Network, Vol. 9, No. 27

The June Jobs Report is out, and the stock market is soaring.  Evidently, if you can’t produce marketable goods and services, you can produce jobs; the jobs market is booming.  The only problem is how to pay for the jobs that are produced, especially government jobs, which are the fastest-growing product in the jobs market.  Be that as it may, a few genuine things happened this week:

Wilson and the Fed, XV: The Fight for Reform

The Federal Reserve Act of 1913 was an epic struggle by progressives and populists against diehard Republicans and the financial interests to overcome the obvious weaknesses of the Aldrich Plan, and establish a long-delayed and critically needed central bank for the United States. This was an essential first step in breaking the slavery of past savings that prevented most people from becoming owners of capital.

Wilson and the Fed, XIV: Response to “The Bankers’ Panic”

Following the Panic of 1907 — known as “the Bankers’ Panic” — caused in large measure by massive money creation for stock market speculation and the failure of an attempt to corner copper by the president of the Knickerbocker Bank and Trust, strong pressure was put on Congress to pass emergency legislation. The Aldrich-Vreeland Act of 1908 allowed for a temporary reorganization of the financial system. Groups of banks were organized into national currency associations and permitted to issue banknotes on an emergency basis.

Wilson and the Fed, XIII: The Silver Question

Reform proposals to straighten out the financial system in the United States began almost immediately following the Panic of 1893. The most feasible was probably the “Baltimore Plan” of 1894.[1]

News from the Network, Vol. 9, No. 26

Quite a few items on the economic and social justice front this week, so we’ll get right to it: