Beyond Distributism

When the Berlin Wall fell and the Soviet empire began to collapse, decent people everywhere rejoiced. Central economic planning was widely discredited around the world. Yet the triumph of capitalism did not go undisputed. Although the market’s critics acknowledged the mortal blow socialism had suffered following the collapse of the economies of Eastern Europe, they denied that the free market was the only remaining alternative. The market, they insisted, had problems of its own.

Some of these critics write as Catholics in the distributist tradition. Distributism, made popular by early twentieth-century British Catholics Hilaire Belloc and G. K. Chesterton, is a variant of corporatism, a system of political economy born in the wake of the French Revolution that sought the resurrection of various corporate bodies, such as the guilds, that the revolution had suppressed. Corporatists sought to manage economic competition, which they viewed as destructive and destabilizing, by grouping occupations into self-regulating trade associations and granting the central state a supervisory and coordinating role over business and labor.

According to distributists, the unhampered market led to radical economic inequality and the dispossession of the vast majority of the people who lacked productive property and had to rely for their sustenance on the good will of employers. Cutthroat competition destroyed small competitors and led to monopoly. These injustices might be redressed by a return to the less individualistic medieval economy, when productive property was widely distributed, guilds kept competition in check, and the poor and vulnerable were better cared for.

The arguments offered in defense of this system, while perhaps superficially plausible, turn out to be based on logical and economic fallacies, as well as on a serious misreading of European history. Distributists blame widespread indebtedness on the free market instead of on central banks (which are creations of government) that make credit artificially cheap and thus all the more tempting–an abuse whose effects the global financial system is now suffering. The medieval economy that distributism holds up as a model bears little resemblance to that which professional historians and economists have come to understand. Neither land ownership nor ownership of the means of production was widely dispersed under the feudal system. Even urban workers outside traditional feudal bonds often did not own the means of production. Peasants labored exhausting hours and barely made ends meet even with all members of their families working. The guild system, far from being a liberating force, was actually the source of true monopoly and exploitation.

Advocates contend that distributism is a superior form of economic organization and is required by Catholic social teaching. Neither claim is true.

Distributists argue that economic concentration occurs systematically and inevitably under a capitalist system. Larger stores are alleged to win market share at the expense of smaller stores by selling below cost in order to drive out their competitors, and then recouping their losses by raising prices once the rivals have folded.

There has developed over the years considerable literature on predatory pricing as a monopolizing device, very little of which has been favorable to the theory. Economist George Stigler has gone so far as to declare, “Today it would be embarrassing to encounter this argument in professional discourse.” To be sure, there is no shortage of examples of large stores offering low prices, but the windfall that is supposed to occur when they allegedly raise prices again once they have the field to themselves seems to be the stuff of myth.

A great deal of the guild mentality persists in the U.S. economy and can be seen in the behavior of such organizations as the American Medical Association and the American Bar Association. Such bodies lobby the government to institute stiff requirements to acquire a license to practice, and to place obstacles in the path of anyone else who might want to provide medical or legal services. A privileged few reap abnormally high salaries while the vast majority is made poorer by higher fees–and if anyone should attempt to give consumers an alternative to such exploitation, the guild quashes the challenge.

Although distributists promote their reforms as helping to bring economic life more into line with the vision described by Catholic social teaching, these examples throw that claim into serious doubt. The poor would be fleeced and taken advantage of at every turn, with every good and service they need artificially inflated in price. The barriers to entry erected by guild restrictions inhibit the entrepreneurial activity that is one of the most effective and dignity-enhancing avenues for the poor and marginalized to better their situation. Such barriers run contrary to the exhortations of John Paul II to encourage the fuller “participation” of needy people in the economy, “to acquire expertise, to enter the circle of exchange, and to develop their skills in order to make the best use of their capacities and resources” (Centesimus Annus, no. 34).

In a true market system, no one may employ state coercion to gain an advantage at his neighbor’s expense. No transaction can take place without the willing consent of both parties. The market economy thus treats human beings as ends in themselves, a moral principle on which Catholic social teaching insists.

The market economy is the remarkable engine of civilization that people are all too often taught to hate. The less heed we pay to slogans and propaganda, and the more we study the question on its merits, the more attractive does the market become. All other economic systems make fantastic promises that turn out in practice to be cruel and empty delusions. Theory and experience alike testify that the market alone can deliver an economy that is just, humane, and prosperous.

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  • Joe DeVet

    I believe Woods is correct. The problem with Distributism is that it promises something it does not deliver, because of inherent contradictions within the system itself. It claims to be a “third way” of organizing an economy, rejecting both socialism and capitalism. However, the first 3 words of a popular summary (by Chesterton, I think) of Dist. betray a fatal self-contradiction: “Give a man [a decent home, and a small shop to keep or a subsistence farm] and [wonderful results will ensue.]” The words “Give a man” beg the important questions, “who gives?” and “whose property is given?” The answer to the first is that the State is the only entity with the power to do the giving, because the answer to the second is “someone else’s property.” A third question is, once you “give a man” property, does he really perceive that he owns it? No, he realizes it is, in an important way, not his own because he did not earn it. He knows the State can take it at will, as it did to the former owner. Distributism, therefore, betrays itself quickly as Socialism by another name.

    We who so admire the wit and wisdom of Chesterton are baffled by his promoting Distributism. But it may be understood in the context of his experience of late-19th-Century England, a rigid class society in which the lower classes were still suffering the transition to industrialization. We can pardon Chesterton for catching a glimpse of heaven and mistaking it for an economic system. For us, the ensuing hundred years of demonstration of the good effects of the market system should help us to avoid the same mistake. We can honor Chesterton’s memory by, like him, using our heads and rejecting popular myths (like, now, Distributism) that don’t conform to reality.

  • BerenCamlost

    I do not agree. I think the guild system actually is superior.

  • gk

    100% Capitalism equals the NY Yankees. It makes it impossible for the average father to take his children to the ball game. Instead corporations buy seats and treat clients. Therefore, the game is given to greed and not the children/people.

    Distributism is also a bad idea.

    What can be done to improve the economy and the average person’s fate? How can the economy be managed so that the economy grows as well as the human person? (i.e. JP II’s call for the poor “to acquire expertise, to enter the circle of exchange, and to develop their skills in order to make the best use of their capacities and resources.”)

  • Richard Bell

    The two ‘guilds’ brought up the author are very bad examples. If the AMA did not lobby for strict entrance requirements, common people and malpractice insurers would. We expect that an accredited allopathic doctor of medecine is not a quack.

    Nothing stops any gifted orator from representing a buddy in court. However, there are rules of what can and cannot be done in a court of law, and an accredited lawyer is certified as knowing them, and is professionally liable if they do not. Law firms are not corporations. There is a name, and that name is personally liable. Law firms do not go bankrupt, lawyers do.

    It should be noted that not all lawyers earn high salaries. A great many subsist on writing up wills and real estate deals and do stints of public defending, when those dry up.

  • Mary Kochan

    So let all the people who want the tickets to be cheaper stop watching the games on TV or listening to them on the radio. Boycott the advertisers who are advertising while the games are broadcast. People should make it clear that tickets to a Yankee game are no incentive/reward in their estimation and ask their corporation to substitute something else — like cash. They should not buy Yankees licenced products. They should not go to events to get signatures of players, instead where the player show up there should be a protest. In very short order you would see the situation turn around.

  • DWC

    Yes, most every painful economic time period can be traced not to the lack socialistic controls, but from the invisible meddling and govenmental interference in transactions and incentives. Today’s situation rings true as well, given the governments involvoment in Fannie & Freddie and the overly aggressive access to credit. That’s not to say that there is not a place for oversight with checks & balances ….

  • Warren Jewell

    Distributism of course sounds wonderful – but is a form of ‘from each according to his ability (to labor to possess) and to each according to his (presumed, alleged and special-interest) need’. As opposed to national socialism, it is communistic socialism – in its positive ways, think of the voluntary communion of convent and monastery. Such positive communism is, of course, voluntary association with every one else’s success, failures, needs, health, spirit, etc., and, above all, person.

    In large scales of population with little ‘spiritual’ and ‘personal’ connections and attachments (which guilds, of professional and artisan commercial connections, have never per force accomplished), capitalism at least measures out the flattest, fairest playing field. It is not risk-free, but it pays or costs on as-yet-most-just terms.

  • c-kingsley

    Yankee ticket prices are still controlled by supply and demand. If people weren’t willing to pay the price (forget about protests making a difference) the price wouldn’t be so high. On the other hand, it may be that it is more profitable for the stadiums to close off sections (where they might sell cheap seats) because those seats aren’t profitable enough to hire the custodial and security staff to be really worth the profit. Anyway, it’s fine for the market to say that “Yankees tickets are a precious commodity” by letting the price rise.

  • kazia

    I am by no means a professional medievalist, but the author (and commentators) of this article makes the same mistakes most moderns do when characterizing medieval life, ignoring almost entirely the profound and pervasive spirituality and commonality of that life.

    The great mass of men would have had far more in common and less of a distance materially between one another than today with much simpler needs to be met.

    Distributism, unlike communism or capitalism, makes no sense outside of the Kingdom of God. All production is directed to God for the benefit of all men, not just the privileged few.

  • BerenCamlost

    For some reason…the two posts (mine and another persons) that were here originally are not now. Anyway, I don’t agree.

  • Mary Kochan

    I haven’t removed your posts, Beren, nor anyone else’s, from this thread. Please try again.

  • BerenCamlost

    You are right! That is weird, was this article posted twice? I searched and the same article is here with only the two comments I was talking about.

  • Mary Kochan

    That is weird. I see it also. I will try to get the comments merged ond the other copy deleted. It can be seen in the category, Money and Economics.

  • Warren Jewell

    Oh, yea, do I stand in confusion (prior and now) with BerenCamlost. I have had a few ‘disappeared’ comments over time, and figured that my comments were just ‘too nasty’ to leave here. For these, I claim no First-Amendment right not to be censored – after all, this is not really ‘public’ in usual governing terms. (Or, were they moved to some hidden section?: ‘dry comedy – get a load of THIS dork’)

    kazia – you seem to infer that at one time the Kingdom of God held sway – medieval times, perhaps. I have to say that God, His Kingdom, His very new Church, have not ever held such sway, since the Ascension. Hypothesize: Maybe, two weak spirited disciples watched Him ascend, and had been doubting/questioning ever since the Resurrection; only to then-and-there decide that “no human (at all) could have done THAT”. Initialize the “He ain’t never were human” heresy; and the Kingdom of God has been sidetracked ever since.

    You write: “Distributism, unlike communism or capitalism, makes no sense outside of the Kingdom of God.” Communism does fine in voluntary realms – convents, et al. Capitalism does fine where voluntarism is not so communal, but contractual. Further: “All production is directed to God for the benefit of all men, not just the privileged few.” Feudalism ring a bell? Mercantilism? Divine-right monarchy? Through ages Dark and Middle, the Church has been more ‘of God’s Kingdom’ than any other institution, and held out until the bishops, orders, scholars, etc., could institute sundry academies (on up to, in time, such as Catholic Exchange), and the like. “held sway”? Hardly at all. The rest of human institutions offered turmoil and confusion, if not as well acceptance of merely-human autocracy, by contrast.

  • Warren Jewell

    All of which of my last 10:14 AM post is to say, dear kazia: distributism as you would want it – so, too, the Chesterbelloc and even the idealist in me – is as unlikely as any ‘good’ form of socialism. Socialism will always require good, old-fashioned tyranny, to ‘succeed’.

  • http://arkanabar.blogspot.com Arkanabar Ilarsadin

    @gk: Major League Baseball is NOT a free market enterprise. Nobody starts a team without the permission of the other MLB team owners. As for the average person, stop requiring him to have the consent of any one but his customers to take up whatever business he wants — require him only to be honest.

  • BerenCamlost

    Ms. Kochan is right about the baseball prices.

  • tegendewereld

    So let’s see if I’ve got this right. Medievalist inspiration is the same as a call for medievalist revival? And that’s just a start…

    It’s no surprise that this writer is in print arguing that Catholics aren’t obliged to the teachings of folks like Leo XIII on economic matters, as they’re not magisterial. Guess John Paul II (among others) got Leo wrong.

    Surely it’s high time we Catholics stop falling to the easy seductions of alleged experts on such critical matters as these in favor of demanding intellectual quality in arguments. We might then start to nurture in ourselves some authentic openness to formation as signs of contradiction to the consumer society.

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