Equidistant from both Socialism and Capitalism which constantly provoke each other into existence by a curious and dismally failed and inhuman dialectic, Distributism is the viable and moral alternative whose time must come if justice matters.
What is Distributism?
By Thomas Storck
Much of the history of the Western world since the middle of the nineteenth century has been the history of the clash of competing economic systems. Ever since the Communist Manifesto of 1848, when it was claimed that a “specter is haunting Europe,” a specter indeed has been haunting not only Europe, but the whole world. This is the specter not just of communism, but of rival economic and social systems which many times since then have convulsed mankind. But in the minds of many this rivalry of economic systems has come to an end: communism and socialism have both been defeated, and therefore only capitalism is left to reign triumphantly throughout the entire world. However, this is not the casey.
In a neglected passage of the encyclical Centesimus Annus, John Paul II points out that mankind’s choices are not restricted to capitalism and the now discredited socialism. “We have seen that it is unacceptable to say that the defeat of so-called `Real Socialism’ leaves capitalism as the only model of economic organization” (no. 35). If this is the case, then it behooves Catholics to take a look at distributism, an economic system championed by many of the best minds in the Church in the first part of the twentieth century, men such as G. K. Chesterton, Hilaire Belloc, Fr. Vincent McNabb and many others. Let us see exactly what distributism is and why many Catholics see it as more akin to Catholic thought than capitalism.
In the first place, we would do well to make a few definitions of the chief terms we will be using, and especially of capitalism. Too often this word is left undefined, and each person gives it some sort of connotation in his mind, good or bad, depending on his own beliefs, but never clearly defined. Now first, what is capitalism not? Capitalism is not private ownership of property, even of productive property, for such ownership has existed in most of the world at most times, and capitalism is generally held to have come into existence only toward the end of the Middle Ages in Europe. Perhaps the best way to proceed is to take our definition from a very weighty source, and then we will see how that definition does indeed fit the facts of history. We will turn, then, to the encyclical of Pope Pius XI, Quadragesimo Anno (1931), in which capitalism is defined or characterized as “that economic system in which were provided by different people the capital and labor jointly needed for production” (no. 100). In other words, under capitalism normally people work for someone else. Someone, the capitalist, pays others, the workers, to work for him, and receives the profits of this enterprise, that is, whatever is left over after he has paid for his labor, his raw materials, his overhead, any debt he owes, etc.
Now is there anything wrong with capitalism, with the separation of ownership and work? In itself there is nothing unjust about my owning a factory or a farm and employing others to work for me, as long as I pay them a just and living wage. But nonetheless, the capitalistic system is dangerous and unwise, its fruits have been harmful for mankind, and the supreme pontiffs have often called for changes which would, in effect, eliminate capitalism, or at least reduce its scope and power.
Purpose of Economic Activity
Let me explain and justify the assertions I have just made. And in order to do so, I must first make a brief detour to talk about the purpose of economic activity. Why has God given to men the possibility and need for producing and using economic goods? The answer to this is obvious: we need these goods and services in order to live a human life. Thus economic activity produces goods and services for the sake of serving all of mankind, and any economic arrangements must be judged by how well they fulfill that purpose.
Now when ownership and work are separated there necessarily exists a class of men, capitalists, who are one step removed from the production process itself. Stockholders, for example, typically do not care about what the company they are formal owners of actually makes or does, but only whether its stock price is rising or how large a dividend it pays. In fact, on the stock exchange, shares change hands thousands of times a day, that is, different individuals or entities, such as pension funds, are part owners of companies for a few minutes or hours or days, and then the stock is sold to someone else and they become owners of some new entity. Thus this class of capitalists naturally comes to see the economic system as a mechanism by which money, stocks, bonds, futures, and other surrogates for real wealth, can be manipulated in order to enrich themselves, instead of serving society by producing needed goods and services. As a result, men have made fortunes by hostile takeovers, mergers, shutting down factories, etc., in other words, by taking advantage of private property rights, not in order to engage in productive economic activity, but to enrich themselves regardless of its effect on consumers or workers.
The popes have indeed justified the ownership of private property, but if we examine how and why they have done so, we will see that the logic of their position is far from the logic of capitalism. Let us look, for example, at a famous passage from the encyclical of Leo XIII, Rerum Novarum (1891).
Men always work harder and more readily when they work on that which is their own; nay, they learn to love the very soil which yields in response to the labor of their hands, not only food to eat, but an abundance of the good things for themselves and those that are dear to them. (no. 35)
But what happens under capitalism? Do men learn to love the very stock certificates which yield cold cash, in response to the labor of someone else’s hands? The justification of private property that the popes have made is always tied, at least as an ideal, to ownership and work being joined. Thus Leo XIII: “The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners” (Rerum Novarum, no. 35), and this teaching is repeated by Pius XI in Quadragesimo Anno (nos. 59-62, 65), by John XXIII in Mater et Magistra (nos. 85-89, 91-93, 111-115), and by John Paul II in Laborem Exercens (no. 14). If “as many people as possible…become owners,” then that fatal separation of ownership and work will be, if not removed, at least its extent and influence will be lessened. It will no longer be the hallmark of our economic system, even if it still exists to some extent.
And this brings us directly to distributism. For distributism is nothing more than an economic system in which private property is well distributed, in which “as many people as possible” are in fact owners. Probably the most complete statement of distributism can be found in Hilaire Belloc’s book, The Restoration of Property (1936). Note the title, The Restoration of Property. For the distributists argued that under capitalism property, certainly productive property, was the preserve of the rich, and that this gave them an influence and power in society far beyond what they had any right to. Yes, the formal right to private property exists for all under capitalism, but in practice it is restricted to the rich.
A further feature of distributism that follows from this, is that in a distributist economy, the amassing of property will have limits placed on it. Before one objects that this sounds like socialism, he would do well to remember Chesterton’s remark (in What’s Wrong With the World, chap. 6), that the institution of private property no more means the right to unlimited property than the institution of marriage means the right to unlimited wives!
In the Middle Ages those quintessential Catholic institutions, the craft guilds, very often limited the amount of property each owner/worker could have (for example, by limiting the number of his employees), precisely in the interest of preventing anyone from expanding his own workshop so much that he was likely to drive others out of business. For if private property has a purpose and end, as Aristotle and St. Thomas would insist, it surely is to allow a man to make a decent living for himself and his family by serving society. But one living, not two or three. If my business supports myself and my family, then what right do I have to expand that business so as to deprive others of the means of supporting themselves and their families? For the medievals saw those in the same line of work, not as rivals or competitors, but as brothers, brothers engaged in the very important work of providing the public with a needed good or service. And as brothers they joined together into guilds, engaged priests to pray for their dead, supported their widows and orphans with insurance funds, and generally looked after one another. Who would not admit that this conception of economic activity is more akin to the Catholic faith than the dog eat dog ethic of capitalism?
I realize that much of what I say here must sound strange to many readers. Most Americans are acquainted only with capitalism and socialism. But a little knowledge of Catholic economic history and of traditional Catholic economic thought will be enough to convince any fair minded reader that there is an entire world out there of genuine Catholic thought on this subject nearly unknown in the United States. And if the current “science” of economics contradicts this thought, then ask yourself, what authority does that “science” have? It arose from the deistic philosophy of the so-called Enlightenment of the eighteenth century, and it is curious that some Catholics, while condemning (rightly) the philosophy of that unfortunate century, warmly embrace its economic theories, not realizing that those economic theories arise from the same poisoned well as Voltaire and the Encyclopedists. But it is not too late to remake our thinking after the very pattern of Jesus Christ and his Church–if we are willing to banish from our lives the idols that are worshiped in our own country and embark on the fascinating journey of discovering Catholic economic thinking.
Thomas Storck is the author of Foundations of a Catholic Political Order and The Catholic Milieu. He is a contributing editor of New Oxford Review and a member of the editorial board of The Chesterton Review.