THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Monday, December 20, 2010

The Problem With Distributism

No horse is so dead that you can't continue to beat it. (Mmmmmm. Dead horse.) Anyway, for years, even before starting this blog, we've gone into great detail and explained at great length exactly where classic distributism and the Just Third Way differ, and where they agree. It doesn't seem to help. The silence remains deafening — or nearly so.

As a whole, Latter Day Distributists (at least those who don't run away chanting the "I'm not an economist" mantra/copout) may agree that both distributism and the Just Third Way share substantially the same goals: an economically and politically just society characterized by widespread ownership of the means of production. On the whole, however, the LDDs and those sympathetic to their position, such as a determinant number of supporters of Major Douglas's "social credit" and Henry George's program, agree that those who support the Just Third Way "just don't get it." Where we aren't already beyond hope, we're just being stubborn by refusing to abandon our position in the face of repeated assertions, contradictory definitions, and lack of argument from the LDDs & Friends.

That being the case, we are clearly being Deliberately Evil by not coming over to the Light Side and agreeing completely with everything someone else says, with or (more usually) without proof or argument. Of course, the human sacrifices we carry out as the high point of every quarterly board meeting may have something to do with that, too, as well as the ritual cannibalism and the high cholesterol Béarnaise Sauce. (Mmmmmmm. Have a friend for lunch.)

That's why when, over the weekend, we received a question about distributism, we made our response the core of today's posting. Of course, there is that little matter about not wanting to work any harder than we have to, plus the fact that (believe it or not) we have other things to do. So, to cut to the chase, our correspondent asked (slightly paraphrased to protect both the innocent and the outstandingly mistaken),

A quick glance over The Distributist Review blog revealed a number of things that caused me concern, e.g., links to some questionable sites, a number of ads and links that don't seem completely consistent with the natural moral law, and a set of "progressive" goals that appear to have the potential to lead people away from the natural moral law based on God's Essence which is self-evident in His Intellect, not His Will, that is the basis for the Christian, Jewish, and Islamic understanding of social justice from an Aristotelian perspective. I found this both disconcerting and mystifying, given the many references to Catholic social teaching, which is based on Thomism, or a "Christianized" Aristotelianism, just as orthodox Jewish and Islamic social teaching are based on the Aristotelian analyses of Maimonides and Ibn Khaldûn, respectively. This demonstrates to me just how easy it is to get good Catholics — or sincere believers in any religion — going off in the wrong direction. My question is, how did Chesterton a) define distributism (without all the add-ons that seem to have come later), b) get economics so wrong, and c) how did he get hijacked to something so far off the range?
(BTW — despite the "cowboy talk" about getting far off the range, our correspondent is not from Texas, nor are we confirming that "he" is really a "he." There's no sense in opening him up to the sort of "arguments" we typically get.)

Okay, here goes (and that's really three questions . . . but we don't charge by the word, so that's all right). "Distributism" is easily defined, all the more because Chesterton and Belloc insisted that there is no specific program involved, only general guidelines: A policy of widely distributed ownership of the means of production, with a preference for small landholdings and enterprises. When enterprises must be large, the ownership should be broadly distributed.

This is simple, and very close to the Just Third Way. The problem comes in when Latter Day Distributists start insisting that the small landholdings and enterprises are a mandate, not a preference . . . and then the fun starts.

The problem is that Chesterton and Belloc made a fundamental error with respect to finance. This is understandable, for neither one was an economist, financial expert, lawyer, or accountant. Had it been explained to either of them, we are convinced that either one would instantly have seen the problem and corrected it. It was one of those small errors that lead to big problems in the end. Regular readers of this blog can probably guess what it is already: the fixed belief that new capital formation cannot be financed except by cutting consumption, accumulating money savings, then investing. (Vide Dr. Harold G. Moulton, The Formation of Capital, 1935).

This can go in one of two ways. If we shift our understanding of the natural moral law from the Intellect to the Will, we simply redefine private property, money and credit, banking, and so on, in order to get what we want. The substantial nature of private property changes from a right inherent in every human being by nature with socially determined exercise of that right, to a grant from the State. This allows redistribution of "ownership," which ceases to mean anything. As John Locke pointed out a number of times in his Second Treatise on Government, you can't really be said to own anything if someone else (the State or a State substitute) can take it away at will.

A distributist who goes this route may end up with widely distributed ownership (although that is doubtful, as the necessary increase in State power will usually prevent this from happening), but the "ownership" won't mean anything. As Keynes quite accurately pointed out, within the past savings paradigm, ownership must be concentrated in order to accumulate money savings, and the small owner eliminated (General Theory, VI.24.ii). This is the antithesis of distributism. Within the past savings paradigm, if ownership is widespread, then people will use their ownership income for consumption, which presumably dries up the pool of loanable funds, bringing economic growth to a halt.

The solution within the past savings paradigm for anyone who has any concern whatsoever for his fellow man is to redefine the natural law, especially regarding private property. As the reasoning inevitably goes, private property may be a right, but (contradicting explicit papal teachings, e.g., Rerum Novarum, §§ 5-6) it is not an "absolute right." The State (or some State-substitute) has the duty to redistribute wealth by some means (usually manipulation of the currency or outright confiscation and redistribution) when people are in need. "The rich" therefore have no right to the income from what they own, except for what is necessary for reinvestment and what some authority has decided is a just return. (Of course, "enjoyment of the fruits," i.e., income, is the essence of private property . . . except that they've redefined private property!)

This is shoddy reasoning, and leads to the economic situation we see today, an economy that, ostensibly arranged for the benefit of everyone, with entitlements, family allowances, welfare, high fixed wage and benefits packages, etc., etc., etc., in reality functions exclusively for the benefit of the wealthy. It is no coincidence that the U.S. just experienced its most profitable quarter in history . . . with the vast bulk of profits in the financial services industry — those whom Pope Pius XI called the despotic economic dictators, who, while they don't, as a rule, own, control money and credit, so that none may breathe against their will. (Quadragesimo Anno, §§ 105-106)

The stock market is booming. Unemployment is near 10% . . . officially; near 20% "unofficially." To a mind that believes the State can do anything just by re-defining truth (John Maynard Keynes, A Treatise on Money, Volume I: The Pure Theory of Money. New York: Harcourt Brace, 1930, 4), this is not happening because it cannot be happening. There must be a hidden conspiracy somewhere preventing the economy from working for the benefit of all: the rich, whose greed prevents others from enjoying the income and standard of living that God decreed for them.

The other way this can go is to insist that the rights of private property are sacred and must not be infringed upon — which is absolutely correct. Unfortunately, those who take this position also do a "little" unconscious re-editing of the dictionary, as Keynes called it, and make three fundamental errors. 1) They continue to insist that existing accumulations of savings are essential to finance new capital formation. 2) The right to property — that which comes under the natural law and thus is absolutely part of human nature — is redefined as effectively inhering only in an elite. 3) The rights of property — the socially determined exercise of property (but always without prejudice to the underlying natural right to be an owner) — are redefined as absolute. That is, 2 & 3 reverse the natural order, and effectively negate the natural law as surely as those who redefine it in the other direction.

Those people in the first group, i.e., those who redefine natural rights explicitly (which includes most Latter Day Distributists), necessarily view those in the second group (those who reverse the natural order) as heartless fiends who selfishly insist on their rights of property to the detriment of others' right to life. Those in the second group necessarily view those in the first group as idealistic blockheads who would sacrifice the common sense of the natural law (including private property) to a disastrous social theory that can only lead to economic disaster.

The two sides could easily be reconciled if they could be brought to understand that 1) money is anything that can be used in settlement of a debt, 2) existing accumulations of savings are not essential to the financing of new capital formation, and 3) widespread direct ownership of the means of production is essential to the functioning of Say's Law of Markets and its application in the real bills doctrine to finance widespread acquisition and possession of private property in the means of production.

We have tried on a number of occasions to make this clear to people on both sides of the aisle, but have typically gotten one of several (non)responses:

1) A polite dismissal for questioning the principal tenet of the religion of past savings,

2) No response whatsoever,

3) A pitying shake of the head and a statement to the effect that we could be refuted on every point . . . but that they aren't going to take the time to do so. (Vide Milton Friedman's refusal to debate the Kelso ideas in response to an invitation from Norman Kurland),

4) An outraged attack claiming that we are anti-distributists, anti-social crediters, anti-Catholic, anti-histamine, or whatever else comes to hand.

What we don't get is honest debate, or even argument. A leader in the distributist movement once exacted a promise from this writer not to judge distributists too harshly. That was approximately two and a half years ago, and a number of efforts have been made to reach out to the distributist movement, as well as other movements that consider themselves affiliated with distributism in some fashion.

There has been no response. In consequence, our opinion of distributism is as high as it ever was, i.e., that except for being enslaved to past savings, it is about as close to the Just Third Way as it is possible to get within the current system. Our opinion of distributists, however, is lower than ever before.