Where does Distributism fit in?

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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One thing that seems to confuse many people looking at distributism is that they really can’t imagine a society beyond our current conservative/liberal or right/left paradigm. I believe this is the source of a good deal of the criticism against us. If we’re not conservative, then we must be liberal. If not liberal, then conservative. If not capitalist, then socialist. We are not liberal in the modern sense, nor are we Classical Liberals. We are not Modernist, nor are we Post Modernists. We are not Libertarians and we are not totalitarians. I believe the root of the problem is that people don’t see the connecting thread between all of these views. They not only think several of these positions are fundamentally different things, but that these are essentially the only things that are. For myself, even though there are significant differences between these views, they are fundamentally the same, and the reason I say so is that they are all various forms of Liberalism. Distributism is not a product of Liberalism, so they really have a lot of difficulty understanding it. It just doesn’t fit into any of the neat little categorizations that have been the basis of their political and social arguments for more than a century.

The foundation of Liberalism, the so-called “Classical Liberalism,” is that existing social/cultural norms needed to be broken in order to have a more liberal society. Now, people who say they are Classical Liberals will argue many positions that they believe to be the foundation of their view. Things like the value of the individual, the idea that people should be able to improve their state in society through education and work and frugal living, the idea that women have rights and slavery should be abolished. The reality is that these ideas were not only around before the advent of the Classical Liberal movement, but they were more than just ideas. They may not have been implemented in a perfect way, but they were in play in Western societies before the rise of Classical Liberalism. Unfortunately, societal disruptions during the Renaissance reversed many of the advances that had been made in regard to these ideas. I do not deny that the Classical Liberals brought these ideas back into society, but I do deny the claim by today’s self-identified Classical Liberals that these ideas were first introduced by Classical Liberalism.

The method Classical Liberals used to break the existing norms was to become part of the existing institutions that teach what the norms are and also the institutions that enforce those norms through its laws; in other words schools and government. (They did also resort to literal warfare, but that would be a topic for another article.) This has been the method from its beginning. However, the true flaw of their view was, and continues to be, that the basis for determining what needs to be changed is rooted in a philosophy of materialistic individualism, a philosophy that essentially removes the ability to look outside of ourselves for this determination. In other words, there are no true and external norms based on natural law, on morality, or especially on religion, which are not subject to being changed. Each individual gets to decide what is right and wrong with society and therefore, what needs to change. The problem for the original Classical Liberals was the same as it is for today’s “moderate” liberals; When you combine this philosophical view with the acceptance of the method, you end up with no argument against those who want to change what you have established based on the same philosophical view and using the same methods.

The original Liberals had modest goals, they only wanted a few changes to the social norms and they accomplished those changes. However, they failed to prevent changes beyond what they wanted. The reason they failed is that they seemed to assume the movement as a whole would not “progress” beyond what they believed were reasonable changes to society. They were wrong. The movement always contained “progressives” who wanted a more “liberal” society than the they did. The Liberal movement was always “Progressive” because it always argued that the changes they were advocating were progress for society. They simply had no accepted means of agreeing to any limits to change. This is just as true between the moderate Liberals and the Woke today as it was between the original Classical Liberals and those who wanted even more change during the Enlightenment era. Because this movement has no standards external to itself, there really is no defense against those who what more change. Every change, it is argued, is “progress,” and the more change that takes place, the more rapid the next change seems to become accepted.  

In the early days of Classical Liberalism, this led to a split in the group between those who wanted to conserve the new norms, and those who wanted more change. In other words, the “Conservatives” and the “Progressives.” What a lot of people today don’t realize is that the Conservatives have always been Liberals, just not as liberal as the other factions of the movement. In today’s political environment, all of the predominant political and social positions are various levels of Liberalism. As the Progressives continued to change society, the terms “right” and “left” were adopted from the French revolutionary period, where those on the “right” oppose new change and those on the “left” advocate for it. The adoption of this terminology allows us to picture the spectrum of this movement as it spreads out over time, with the more Conservative position to the right and the more Progressive positions to the left.

The Conservative faction also became known as “reactionary” because they were always reacting to the new changes being advocated. Ironically, those who label others as “reactionary” eventually become the ones reacting to the changes that go beyond what they imagine. This has been the experience of the academics at the center of the Grievance Studies project, and at the heart of the controversy that rocked Evergreen State College in Washington State several years ago. They seemed to find it a cruel irony that they were no longer viewed as part of the vanguard group for real Liberal progress in society. Instead, without realizing it, they had become the reactionaries who could only find what they considered to be a reasoned response among those they considered to be very Conservative. They view the Woke Left as Post Modernists and therefore not really Liberal. However, the Woke Left has clearly labeled them as “right wing,” especially since they dared to talk to those on the Conservative side of the spectrum. I view the Post Modernists and Woke as simply the latest phase of Progressive Liberalism that has left these academics behind. What they fail to realize is that, while the current tactics of the Woke Left are far more extreme than they ever used, some form of those tactics were always used by Progressives. Why is it only now, when they find themselves excluded from the academic elite, that they are seriously questioning the fact that the universities have become institutions that only present one side. Even if “speakers” from the other side were invited in previous times, the overwhelming majority of the actual tenured professors have been Progressives for many decades. As they have said, “the right cannot fix the universities.” The reason for this is that the right has been excluded from real representation in the universities. Now, some of that exclusion was self-imposed, but not all of it. And if you think it’s bad for the right, imagine what it is like for those who hold traditional religious views! Ironically, they sincerely believe that they and the universities were open minded when they were in charge. The right cannot fix the universities. The right cannot even fix itself.

The reason Conservatism will always fail is that it is just the right-most faction of the Liberal spectrum. They view themselves as “Classical Liberals.” However, as the overall spectrum of Liberalism continues to “progress” more and more to the left, so does the scope of what is considered “Conservative.” The Conservative Right today includes positions that were promoted by the vanguard of the Left, the leftest of the Left, just twenty years ago. The Conservative Right of twenty years ago included positions that were considered very liberal a generation before that, and so on. Just think of the different changes in social norms that have been accepted by the so-called Conservatives in the last few decades. 

“The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of Conservatives is to prevent mistakes from being corrected. Even when the revolutionist might himself repent of his revolution, the traditionalist is already defending it as part of his tradition. Thus we have two great types – the advanced person who rushes us into ruin, and the retrospective person who admires the ruins. He admires them especially by moonlight, not to say moonshine. Each new blunder of the progressive or prig becomes instantly a legend of immemorial antiquity for the snob. This is called the balance, or mutual check, in our Constitution.”
 – G. K. Chesterton, Illustrated London News, 19 April 1924.

For just about all of the changes that have occurred, those advocating change argued that the change was slight. No one is talking about substantial changes. No one is talking about changing the law, or the definition, and no one is talking about imposing their views on you. They may have been completely honest in regard to themselves, but the claim doesn’t take into account the faction of their movement that actually does want more change – a faction that always seems to exist, a faction that seems to always grow beyond what the old majority imagined. The “slippery slope” argument may be a logical fallacy, but that doesn’t mean it isn’t true.

Today’s “moderate Left,” those who continue to protest that they are ideologically on the left and therefore not Conservative, but also not extremist like the “Woke,” those who say they are “Left” but not “leftist,” are struggling in what I believe to be a futile effort to save the “true” Liberalism from what they seem to view as an infiltration by “Post Modernism.” While they view Post Modernism as something different than true Liberalism, I simply see it as the latest step along the overall path of Liberalism. A step that is consistent with what Progressives have done throughout their history. Just as the original Liberalism was supposed to be “progress” for pre-Liberal society, the modern “Woke” movement is supposed to be “progress” for the current liberal society. Just ask them.

So where does Distributism fit into all of this? Well, it just doesn’t. It has no place in the spectrum of Liberal ideas. Conservatism, Liberalism, Progressivism, Capitalism, Socialism, Communism, Woke ideology, Critical Race Theory, the Social Compact theories of society, and many other things that are rampant in our society are all based on some level of acceptance of the foundational philosophical view of Liberalism. Distributism is based on an older view. A view that accepts that natural law and morality are based on something outside of ourselves, and that we are subject to them rather than their master. What happens when we refuse to be subject to them? You end up with something like the Woke movement of today. Distributism is based on a view that political and economic life are categories of ethics and therefore subject to ethics; a view that has no problem with profit, but also teaches that profit cannot be the highest motive; a view that has no problem with wealth, but also teaches that wealth has a broader social purpose and implication than just the individual person or family; a view that accepts that government can have a role in helping those who are destitute, but that role is limited and subordinate to the role that others in society have; a view that teaches that it is immoral to refuse to work when you are capable, and immoral to refuse to assist those who are need of it; a view that believes that parents have more rights over the raising and education of children than society as a whole; a view that believes that government should interfere with business as little as practical, but that there are also moral limits to business practices; a view that is not rooted in a philosophy of materialistic individualism.

This is the difference. To really become a Distributist is to reject the Liberal aspects of the other views. While some of our positions may sound similar to some Liberal positions, they are founded on a completely different reasoning. While some of our positions may sound similar to Conservative positions, they are also founded on a completely different reasoning. This is why I have repeatedly said that our greatest difficulty in presenting Distributism is that Distributism is truly a fundamental shift in how to view government, economics, and society as a whole.

Our Usurious Economy

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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By Thomas Storck (and can be found here)

What is usury and is it of any relevance to people today? For the most part, in modern times the term usury has come to mean the taking of excess, often outrageous, interest on a loan. But the classical definition in Catholic theology of usury was something a little different: the taking of any interest, in any amount, and no matter what the loan would be used for, simply because there is a loan contract. The most complete papal statement of this is found in the 1745 encyclical of Pope Benedict XIV, Vix Pervenit, the relevant portions of which run,

The nature of the sin called usury has its proper place and origin in a loan contract. This financial contract between consenting parties demands, by its very nature, that one return to another only as much as he has received. The sin rests on the fact that sometimes the creditor desires more than he has given. Therefore he contends some gain is owned him beyond that which he loaned, but any gain which exceeds the amount he gave is illicit and usurious.

One cannot condone the sin of usury by arguing that the gain is not great or excessive, but rather moderate or small; neither can it be condoned by arguing that the borrower is rich; nor even by arguing that the money borrowed is not left idle, but is spent usefully, either to increase one’s fortune…or to engage in business transactions. The law governing loans consists necessarily in the equality of what is given and returned; once the equality has been established, whoever demands more than that violates the terms of the loan….

By these remarks, however, We do not deny that at times together with the loan contract certain other titles – which are not at all intrinsic to the contract – may run parallel with it. From these other titles, entirely just and legitimate reasons arise to demand something over and above the amount due on the contract.

For many today, and perhaps especially for economists, this sounds absurd, a relic of an outdated approach to economics that the world discarded when it entered into modernity. For is not money something which any enterprising person can usefully employ in making even more money, and therefore is one not justified in charging something for the use of his money?

The answer to this is No – unless a lender can point to some gain he will likely forgo or some loss which he will likely suffer on account of being temporarily deprived of his money, the lender is entitled to nothing above the principal loaned. For some centuries before Pope Benedict’s encyclical theologians and jurists recognized the fact that a creditor might miss some opportunity for gain or suffer some kind of loss on account of his having loaned someone money. Accordingly, they recognized two chief possible titles to legitimate interest which correspond to these two possibilities, and which were known as lucrum cessans and damnum emergens. These, while they “are not at all intrinsic to the contract – may run parallel with it,” and when they are present “entirely just and legitimate reasons arise to demand something over and above the amount due on the contract.” And of course, in the past and especially today, there do exist numerous investment opportunities on account of which someone might claim to take advantage of one of these parallel titles. So, one might argue, the modern practice of regularly charging interest is fully justified according to the most severe tenets of Catholic moral theology.

And perhaps in an abstract way this contention is correct. In a highly commercialized society opportunities for investment are always present and surely by loaning money to one person, I miss out on some other profitable investment I might have made. But what makes this somewhat unreal as a reason for the taking of interest as the norm of economic life is that for the most part all the investment opportunities involve some kind of interest taking. So is an investor entitled to claim lucrum cessans on account of a loan he makes which deprives him of an opportunity to make a different loan? Can he claim a right to interest because of other interest forgone?

When the parallel titles of lucrum cessans and damnum emergens were originally formulated the economy was such that in many places there were hardly any opportunities for legitimate profitable investments. So a usurer’s money would otherwise sit idle if it were not loaned to someone – say a craftsman or a farmer who needed to buy tools. In such a case the lender clearly had no right to receive more than the face amount of the loan, for he had forfeited no opportunity for gain at all. And even in commercial centers, financial opportunities tended to be more distinct acts, such as investing in a particular trading expedition, rather than ringing up one’s broker and telling him to buy a certain security.

The problem then comes back to our economy. We have allowed an incredibly complex economy to arise over the last several hundred years, an economy in which interest taking is simply routine. Some of this interest can doubtless be justified by one of the parallel titles to which Pope Benedict XIV alluded. But it is difficult to disentangle just interest from unjust. This is why, in my opinion, that in the first half of the nineteenth century the Church began allowing confessors to absolve penitents who took interest on loans. It was not because the Church’s doctrine had changed, but because it became increasingly difficult to separate legitimate interest from usury. Most ordinary confessors, or even moral theologians, lacked sufficient knowledge of the workings of the financial system to do so. It was easier just to allow moderate interest taking and presume that in most cases there was some excusing title.

What happened is that an economy had emerged in which morality played hardly any role – except for force or fraud both narrowly defined, the economy was more and more seen as a field where self-interest ruled. Indeed, early theorists of capitalism, such as Adam Smith, openly proclaimed this.

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. (Wealth of Nations, book I, chapter 2)

And with this self-interest came Adam Smith’s “invisible hand,” for the economy was conceived as a vast mechanism with self-interest as the mainspring of its action. And, so the theory went, if the government interfered with this self-acting economy, this would hamper economic efficiency and ultimately generate waste and a lower standard of living – at least for the rich!

How should Catholics in the twenty-first century approach the question of usury then? If we realize that interest taking is subject to the moral law, can we sufficiently distinguish between legitimate interest and usury? Just as in the early nineteenth century, so today, it would be difficult to examine each type of financial transaction for the presence of usury. But that does not mean that we must simply throw up our hands and acquiesce in our present capitalist system. There is another way.

Easier than ferreting out instances of usury in the economy would be to try to establish an economy in which the need for constant interest taking, and hence the possibility for usurious transactions, would be less than at present. Such would be an economy in which production and consumption were, as much as is feasible, at the local level, and hence there would exist a closer nexus between production and consumption than under the complex system of exchanges that we live with today.

What are some examples of this? Probably the best is farmers’ markets, in which farmers can sell their produce directly to consumers. Here we have a truly local economy, and the simplest sort of economic transaction possible. For the more that goods are shipped long distances between their point of production and their point of sale, the more they change hands between producers, shippers and sellers, the more complex financial transactions will arise, and hence the more likely that interest taking, whether legitimate or not, will be seen as necessary. Any and every economic transaction that favors local production and consumption contributes in some degree to a healthy economy.

But unless there is a profound change in the way that people view the economy, we are not likely to embrace such economic practices. If we ask ourselves why it is necessary for the human race to engage in economic activity, the answer is obvious: to supply ourselves with those goods and services which are either strictly necessary for human life or which enhance our lives appropriately. The economy is not a field for personal enrichment unconnected to the provision of real economic goods, nor does it operate in a mechanical way. The desire to support oneself and one’s family by one’s economic activity is entirely legitimate – as long as that activity consists in providing one’s fellows with necessary goods or services. What is not legitimate is engaging in financial manipulation which provides no goods or services and has no purpose beyond the enrichment of the speculator.

However far we are today from a Christian society or a Christian economy, the duty to seek “to impress the divine law on the affairs of the earthly city” (Gaudium et Spes, no. 43) is always present, and is always a worthy apostolate. Even in the worst of times we cannot give up on our task to make this world a more fitting offering to our Divine Lord.

Is Distributism Socialism?

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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by Thomas Storck References to or discussions of distributism on the internet are not hard to find. This is gratifying, for I would hazard a guess that fifty years ago almost no one had even heard of distributism. But even though the situation today is in most respects an improvement, these online references to distributism are not necessarily favorable. I have not attempted to count whether favorable or unfavorable mentions predominate, but there seem to be some ideas that are common to those critical of distributism. One is that distributism is simply a form of socialism. Now those who make this charge usually have little understanding of what socialism is, and especially of the great variety of economic programs that go by that name. Socialism is simply assumed to be state ownership of property, at least of productive property. That socialists often advocate for modes of ownership such as worker-owned enterprises or cooperatives seems to be largely unknown to the public.

While it may be excusable for the general public to be unaware of the varieties of socialist economic proposals, it is not excusable in a Catholic who attempts to write about Catholic social teaching or socialism or economics. As long ago as 1931 Pope Pius XI in his encyclical, Quadragesimo Anno (no. 113), pointed out that “it cannot be denied that [socialist] programs often strikingly approach the just demands of Christian social reformers.” This encyclical obviously is required reading for a Catholic, and any Catholic who writes on matters of society or economic policy and who is not familiar with its contents is hardly different from a Catholic who writes on marriage but has never bothered to read Casti Connubii or Humanae Vitae.

All this is not written with the intention of justifying or rehabilitating socialism. Socialism is an evil, as I will explain shortly. But if socialism is an evil and socialists are hostile to Christian civilization, and hence in some sense are our enemies, we should recall our Lord’s words that we must love our enemies (Matthew 5:44). And if some find this too difficult a commandment to obey immediately, perhaps they might begin by merely trying to be fair to their enemies. For if socialism is represented as always and everywhere simply a system of government ownership, this is a falsehood. No doubt socialists will usually call for more government ownership than both most supporters of capitalism and many distributists would like. And there can be legitimate debate among Catholics about the degree and nature of state ownership. But Pius XI makes it clear that the economic proposals of moderate socialists are not necessarily out of bounds. After the passage that I quoted above, he continues in this manner:

If these [moderating] changes continue, it may well come about that gradually the tenets of mitigated socialism will no longer be different from the program of those who seek to reform human society according to Christian principles.  
For it is rightly contended that certain forms of property must be reserved to the State, since they carry with them an opportunity of domination too great to be left to private individuals without injury to the community at large. (no. 114)
Just demands and desires of this kind contain nothing opposed to Christian truth, nor are they in any sense peculiar to socialism. Those therefore who look for nothing else, have no reason for becoming socialists.  (no. 115)

If Pius XI’s presentation of socialism is accurate – and a Catholic should hardly be in a position to question this – why is it that socialism is, as I said, an evil? It is, as Pius taught, because “it conceives human society in a way utterly alien to Christian truth” (117). That is, socialism has at bottom a materialistic and even atheistic view of the purpose of the human community and, thus, of human nature as well. As St. John Paul II wrote in Centesimus Annus, “the fundamental error of socialism is anthropological in nature.” Particular socialist economic proposals may or may not be just or wise, but each of them must be evaluated in accordance with the whole corpus of the Church’s social doctrine. But socialism, as a system, as a philosophy of life, is wrong because it denies God, or at best ignores Him. We see, in fact, that in Europe many socialist governments, when they attain electoral power, often make their peace with capitalist corporate economic power, but seldom refrain from attacking the Church or Christian education or Christian marriage.

Interestingly enough, John Paul goes on to note that as a philosophy capitalism shares in the same atheism as does socialism. “The atheism of which we are speaking is also closely connected with the rationalism of the Enlightenment, which views human and social reality in a mechanistic way” (no. 13.) It was of course, the thinkers of the Enlightenment, such as Adam Smith, who viewed the economy as a mechanism, about whom John Paul is speaking here. And from Smith’s conception of the economy has descended the pervasive neoclassical form of economics which imagines it can capture the whole reality of economic transactions by means of graphs which view “human and social reality in a mechanistic way.”

After this long discussion of socialism, what about distributism? Am I attempting to rehabilitate socialism in order to gloss over the charge that distributism is simply a form of socialism? What I am attempting to do is to point out that distributism is not socialism and cannot be. Distributism does not conceive of human society, still less of human nature, as divorced from its divine origins. What distributists desire rather is that the economy, like all subordinate aspects of human social life, receive its proper place in that social hierarchy by which we are brought ultimately to eternal life. To quote
Quadragesimo Anno once more:

If [the moral law] be faithfully obeyed, the result will be that particular economic aims, whether of society as a body or of individuals, will be intimately linked with the universal teleological order, and as a consequence we shall be led by progressive stages to the final end of all, God Himself, our highest and lasting good. (no. 43)

The economy is generally regarded today by both capitalists and socialists as an independent module of human life, subject to its own laws, rather than, like any other sphere of human activity, essentially a field of moral choice. There are, it is true, economic laws, or better, tendencies in human nature, that it is unwise to simply ignore when formulating economic policies. These tendencies, however, do not operate in a vacuum. They are part of social life as a whole, which is why they operate differently according to diverse religious and cultural norms and legal systems. The human sexual drive, for example, although it is based on inherent tendencies in human nature, operates differently according to varying cultures and legal systems. No-fault divorce, for example, has tended to promote the breakdown of marriages, not because a law can change human nature, but because the tendencies of human nature function differently with different incentives of reward and punishment and varying ideals of conduct. If we are told that sexual fulfillment is a person’s unquestioned right we will certainly end up with more disordered sexual activity than if we keep in mind the truth that God created us as sexual beings for the fundamental purpose of procreation and stable families. Similarly, a society in which there exists a robust recognition that the economy ought to serve the common good, and establishes laws and institutions designed to attain that end, will operate quite differently from one in which we are told over and over again that greed is the mainspring of economic action and getting rich is a praiseworthy goal of one’s life.

Distributism is not socialism. The repeated charge that the two are really the same simply misses the point. Yes, there may be some overlaps between some socialist proposals and the ideas of distributists, for example, cooperatives and worker ownership. Just as there are overlaps between distributism and capitalism, such as the institution of private property. But distributism is different from both, not merely in the details of its proposals for widespread ownership, but in its very spirit, a spirit which proclaims

that particular economic aims, whether of society as a body or of individuals, [must] be intimately linked with the universal teleological order, and as a consequence we shall be led by progressive stages to the final end of all, God Himself, our highest and lasting good.

They Don’t Really Believe in the “Free Market!”

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here and here:

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It might be assumed that those who believe in the “free market” would be happy and supportive when people engage in that market. You might think this would especially be the case when average people engaging in the market are successful and look like they are going to make a lot of money. After all, isn’t one of the claims in defense of capitalism that anyone can succeed and that it is supposedly the first economic system that allowed people to improve their state in life? Recent events make it clear this is not the case, at least not for those who are already “big players” in the market and who wield significant economic, and therefore political, power.

Of course, I am referring to the GameStop investment strategy of the members of a Reddit group called WallStreetBets. This article will not delve into the question of the GameStop investment itself, but give a general sense of the situation and the people involved. WallStreetBets is not an actual investment group, like financial institutions or hedge funds. It is a forum primarily consisting of ordinary citizens who are sharing their opinions about potential investments in the stock market. Reports I have read about the group indicate that members understand that none of them are actually acting as financial advisors in any professional sense. They are just sharing and debating their reasons for their stated opinions about potential investments. Now, most capitalists I know would have no problem with this. Whether or not GameStop was or was not a good investment isn’t really the issue because the general motto of the stock market is “let the buyer beware.” It is, after all, essentially a huge gambling casino. You place your bets and you might win or lose.

A member of the WallStreetBets group named Keith Gill was carefully examining GameStop’s position in the stock market and the company itself. While the conventional “wisdom” of the market “experts” was that GameStop was a company on its inevitable way to failure, Mr. Gill disagreed. He felt that, not only was the prediction of the company’s demise premature, but that GameStop still had both time and the resources to adjust its business to keep going for a good while. He saw that hedge fund investment groups were “short selling” GameStop far beyond what was reasonable even if the company was in trouble, resulting in the stock price being artificially low. He shared and defended his position to the Reddit group, and many members became convinced that he was correct. Acting individually, the members began buying GameStop stock as fast as they could. You might think this would not have much impact, but WallStreetBets had a huge number of members and the number of purchases they made resulted in raising the price of the stock at what was considered an unbelievable rate.

On the other side of this equation were the hedge funds. Now, to participate in a hedge fund, you have to already be wealthy. A hedge fund is essentially a pool of money contributed by wealthy people who allow the managers to invest on their behalf. The hedge funds involved had bet heavily on GameStop’s failure through a market practice called a short sale. Short selling involves borrowing a stock today with a promise to return it later. This transaction only involves the stock itself regardless of the price. The hedge funds, believing the value of a given stock will drop, borrow large amounts of shares of that stock so they can sell it at the current price. Of course, this large scale selling of a given stock will result in the price going down. In other words, they are not merely “betting” that the value will go down, they are actively engaged in driving that value down. It is generally known that they will also go on financial talk shows and write articles defending their position that the value will drop, which is likely to result in members of that audience who own the stock selling their shares, driving the value even further down. When the stock is due, the hedge funds must buy the stocks back at whatever the new current price is. If the price is less than when they sold it, they make a profit. However, if the price is more, they lose, Since the price can go up much farther than it can go down, the potential for loss is much higher.

So there is the situation. The hedge fund investors wanted the value of GameStop to decrease and the WallStreetBets group wanted the value to increase. The WallStreetBets group was winning and winning big. The value of GameStop stocks were skyrocketing, and it was all according to the established rules of the market. Anyone could buy or sell the stock as they chose as long as they followed the rules. It looks like the average people were going to win; until they were prevented from freely participating in the market.

As financial news reports were accusing the WallStreetBets group of essentially being insurrectionists, and accusing them of being no better than those who had rioted in the U.S. Capitol on the day the electoral vote was officially being counted, the company whose app was primarily being used by the WallStreetBets group prevented all transactions of GameStop and several other companies in which the group had heavily invested. A day or two later, the app was updated again so they could sell, but not buy, shares in those companies. In other words, the app would only allow activity that would result in the price going down – like the hedge fund investors wanted. Now, you can only sell a stock if someone can buy it, so this group was prevented from buying while others participating in the stock market were still allowed to.

In other words, the WallStreetBets group were not allowed to participate in what the Wall Street insiders would argue is the greatest example of the free market in the world today. The same changes were made on other personal investment apps, revealing that this was a coordinated effort to force a particular change to the market that would be advantageous to wealthy insiders on Wall Street and would disadvantage average people trying to participate in the market. This is the important fact of this incident. It doesn’t matter if GameStop or the other companies were actually good investments. These people were following all of the established rules of the market. They had entered the casino and all placed their bets. Because they were winning, the casino chose to shut them down.

There are investigations going on about what happened. Mr. Gill even had to testify before the U.S. House of Representatives. Because of the financial (and therefore political) power of those involved “behind the scenes,” and the willingness of the media to back their side, I think it is unlikely that the real perpetrators will have any significant negative consequence to their actions. Instead, the common citizens in the WallStreetBets group are being vilified and essentially treated like criminals when they did nothing illegal.

If you want to check for further information on this incident, I have included several resources below.
Printable version
Resources:

VivaFrei: From GameStop to Robinhood class action lawsuit?
https://www.bitchute.com/video/6nEtElSMPSk

Forbes Breaking News: Gamestop Investor Keith Gill’s testimony to Congress
https://www.youtube.com/watch?v=BOLN3N3otz0

CNBC: Jim Cramer: Reddit’s ‘WallStreetBets’ is targeting short position
https://www.youtube.com/watch?v=aZHTm0N59Rc

Fox Business: Payne sounds off on Wall St over GameStop: All of this whining is making me sick
https://www.youtube.com/watch?v=uzojHqzm3TU

MarketWatch: GameStop and AMC trading restricted by TD Ameritrade, Schwab, Robinhood, others
https://www.marketwatch.com/story/gamestop-amc-trading-is-now-being-restricted-at-td-ameritrade-11611769804

Tim Pool: Wall Street in panic mode, trading on GameStop and AMC halted as plebs NUKE elite’s hedge fundshttps://www.bitchute.com/video/kz2xDpZoz3o

Tim Pool: Robinhood bans stock buying for Gamestop and others, media cronies smearing WSB as Alt-Right
https://www.bitchute.com/video/vtYRmSPKNqY

Daily Caller: Class action lawsuit against Robinhood
https://dailycaller.com/2021/01/28/class-action-lawsuit-filed-against-robinhood/

Newsweek: Robinhood app blocks GME stock trading, is flooded with 1-star reviews
https://www.newsweek.com/robinhood-app-one-star-reviews-gamestop-stock-trading-announcement-1565171

On the Foundations of Distributism: Property, Family, Politics, Economy. Part 4

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

____________

by Thomas Storck The following is the English version of part four of an article/interview by Thomas Storck, “Sui Fondamenti del Distributismo: Proprietà, Famiglia, Politica, Economia,” published in Bollettino di dottrina sociale della Chiesa, July/Sept. 2020, pp. 73-84. For information on the Italian publication, see here.

Part 3 can be found here.
Political parties and democratic party representation are in crisis all over the world. Distributism considers the corporativism principle the only valid tool on which to base democratic political participation. Can you please articulate further this concept?  In all or nearly all democratic countries today representatives in the legislative body are chosen by voters according to the district or province in which they live. This is in accordance with the fundamental principle of eighteenth-century liberalism, that the political community is simply an assemblage of citizens, and that any smaller or lesser groupings in society have no political significance.
This is in contrast with the medieval understanding of the political community as a community of communities, or corporations, meaning corporate bodies of various kinds, in which individuals had significance and exercised powers and functions as members of these smaller and lesser communities. But these lesser communities, guilds, municipalities, universities conceived as corporate bodies, other social or economic sectors, have largely vanished or lost their character and powers as real corporate entities. As Pius XI put it, with the disappearance of “the highly developed social life which once flourished in a variety of prosperous and interdependent institutions” nothing remains but “only individuals and the State” (Quadragesimo Anno, no. 78). Each citizen is nothing more than an equal atom in a largely undifferentiated mass of other atoms. The corporativist political principle, on the other hand, takes seriously the fact that citizens are naturally members of smaller groups, groups with their own interests, needs and insights. Hence in the legislature representatives are chosen not simply by single individual voters differentiated only by locality, but may represent groups, usually economic or professional groups. So, for example, in the national legislature there may be deputies chosen by, say, the grocers guild or the mechanics guild or the physicians guild or the agricultural sector. In a bicameral legislative body, one chamber may be chosen according to the corporatist principle, while the other may be chosen simply by voters by locality. The Irish legislature operates in part according to such a principle, the upper house or seanad (senate) is composed of representatives of various social sectors and graduates of specific universities. Article 18 of the Irish constitution provides for three members of the seanad to be elected by the National University of Ireland and three by the University of Dublin. In addition the following social and economic sectors receive representation:

1. National Language and Culture, Literature, Art, Education and such professional interests as may be defined by law for the purpose of this panel;
2. Agriculture and allied interests, and Fisheries;
3. Labour, whether organized or unorganized;
4. Industry and Commerce, including banking, finance, accountancy, engineering and architecture;
5. Public administration and social services, including voluntary social activities.

But in the case of Ireland the corporativist principle is considerably diluted, since the seanad has merely advisory powers, with the ability only to delay legislation. The reasons for thinking that the corporativist approach to representation has desirable features are two, one more theoretical, the other more practical. On the theoretical level, it makes concrete the fact that people are more than simply undifferentiated citizens of a political entity, that they have other identities, interests, needs, experiences and knowledge. The body politic, as was widely recognized in the past, is more like a real living body, with different organs performing different functions, all necessary to the smooth operation of the whole, but no one of which can be reduced to another. The second reason is that in actual fact, various sectors of society or the economy do need to have an effective voice in the national legislature, to make known their needs and special problems. In a legislature constituted solely according to the liberal understanding of the body politic, individual representatives or deputies may not understand or may not wish to make known all the needs and problems of all sectors of their constituents. A legislature of the corporativist type is more likely to provide an opportunity for every sector’s voice to be heard. Having said this, and while I think that this kind of representation has much to recommend it, and indeed should probably be embodied in some way in one legislative chamber, I would not say that distributism requires such representation or considers it as the only correct method of democratic politics. Here much depends on the political culture and traditions of a country. Many European and Latin-American nations have some historic experience with corporativist forms of government, or at least knowledge of what the term means. On the other hand, in the United States not only has there been no historical experience of them, but hardly anyone, except specialists in European politics or history, is even cognizant of their existence or meaning. In fact, the term itself, corporation, is generally understood in the United States to mean a limited liability business entity, a società anonima. Of course the question of nomenclature could probably be overcome, but the idea itself would be seen as simply bizarre, especially given the uncritical devotion of so many Americans to their Constitution, a document which knows of no principle of representation other than that of place, by state or district.The finance system seems today to hold much more power than the political system. Distributism has always stated that money and finance should be subjected and oriented to the common good and managed by the legitimate political power for the interest of all citizens. What do you think could be the contribution of distributism in such delicate and important matter?  As long ago as 1931, Pius XI recognized the key place which finance holds in a modern economy. In Quadragesimo Anno, no. 106, he wrote,

This [economic] power becomes particularly irresistible when exercised by those who, because they hold and control money, are able also to govern credit and determine its allotment, for that reason supplying so to speak, the life-blood to the entire economic body, and grasping, as it were, in their hands the very soul of the economy, so that no one dare breathe against their will. 

According to Catholic social teaching the financial sector, like every other sector of the economy, ought to be subject to the common good. One obvious way to do this would be to have it be controlled directly by the state, either by the central or local or municipal authorities. And probably none of these arrangements would be unjust. In Quadragesimo Anno Pius XI spoke of “that type of social authority, which, in violation of all justice has been seized and usurped by the owners of wealth,” and which 

in fact belongs not to the individual owners, but to the State…. For it is rightly contended that certain forms of property must be reserved to the State, since they carry with them an opportunity of domination too great to be left to private individuals without injury to the community at large.  (no. 114)

Certainly a good case could be made that the financial sector belongs here, since it supplies “the life-blood to the entire economic body.” But distributism, which advocates decentralization as much as is reasonable, suggests another approach.[i] To understand this we must look again at a subject I have spoken of more than once, the guild or occupational group. A guild is made up of actual producers or suppliers of products, those who are engaged in the primary economic activities for the sake of which the economy exists. For it is the production of real goods and services that the economy is primarily for. Finance, on the other hand, is a subordinate activity, whose function is to facilitate production. Finance should be subordinate to production and financiers should be subordinate to producers and suppliers. A distributist method of accomplishing this would be for occupational groups to have their own financial institutions, similar to credit unions (cooperative banks), which would exist for the sake of necessary financing for that trade or industry or profession. Belloc wrote on this point, “…there should be fostered the spread…of these properly chartered co-operative banks, connected with the guilds of every description.”[ii] If a particular occupational group was too small to have its own financial arm, it could easily join or work with another occupational group. This would also have the benefit that finance would not see itself as a separate interest, apart from or even superior to actual production, and so would not assume unwarranted power in the economic or political system. These financial institutions could also take care of the need for consumer credit or that could be accomplished by ordinary credit unions not connected with occupational groups, but subject to local or municipal regulation. Distributism seeks for well-distributed property as a safeguard for the family, but also as a safeguard for society. The greater the concentrations of property and wealth, the more easily can those possessing that property and wealth misuse it and even seek to divert the political process in their favor. The more divided and distributed property is, the less likely is this to occur. A distributist approach to the financial sector is simply another example of how distributism desires as much as is feasible to make the economy work for families, for the common good and for the welfare of all. Printable versionNotes:[i] On decentralization, compare the important principle of subsidiarity,  originally stated by Pius XI in Quadragesimo Anno (no. 79) as follows: “…it is a fundamental principle of social philosophy, fixed and unchangeable, that one should not withdraw from individuals and commit to the community what they can accomplish by their own enterprise and industry. So, too, it is an injustice and at the same time a grave evil and a disturbance of right order, to transfer to the larger and higher collectivity functions which can be performed and provided for by lesser and subordinate bodies. Inasmuch as every social activity should, by its very nature, prove a help to members of the body social, it should never destroy or absorb them.”
[ii] The Restoration of Property, p. 144.

On the Foundations of Distributism: Property, Family, Politics, Economy. Parts 2 and 3

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

____________

by Thomas Storck

The following is the English version of part two of an article/interview by Thomas Storck, “Sui Fondamenti del Distributismo: Proprietà, Famiglia, Politica, Economia,” published in Bollettino di dottrina sociale della Chiesa, July/Sept. 2020, pp. 73-84.
For information on the Italian publication, see here.

Can you explain in more detail how distributism implements or realizes the fundamental principles of Catholic social teaching?

If one had to articulate the most basic principle of Catholic social teaching it would be that the economy is part of the whole complex of human activities that must be subject to the law of God and must contribute, or at least not hinder, the attainment of our last end, eternal life with God. From this fundamental axiom flow a number of others. Since the economy is part of a hierarchy of activities, it cannot be conceived as something operating solely under its own laws as a self-regulating mechanism. In fact it exists to serve the human race, and if it results in actions that harm more important human goods – such as the “creative destruction” of capitalism usually does – then something is awry. Likewise, given the fallen nature of mankind, the acquisition and possession of material goods is often a source of temptation, a temptation to acquire more than we reasonably need and to manipulate the entire economy for our own behalf and the behalf of our family, friends and associates. Catholic social teaching recognizes that there must be regulation of the economy, regulation that is able to enforce its rules, but at the same time it understands that simply to centralize power in the organs of the state is not wise. Hence the need for intermediate groups. Finally, the Church knows well that man is weak and easily yields to the temptations that abound in the economic field. Thus the need not only for prudent regulation and sound institutions, but for a reform of morals, for without virtuous men the best systems are capable of manipulation and corruption.All those versed in social matters demand a rationalization of economic life which will restore a sound and true order. But this order, which We Ourselves desire and make every effort to promote, will necessarily be quite faulty and imperfect, unless all man’s activities harmoniously unite to imitate and, as far as is humanly possible, attain the marvelous unity of the divine plan.(Quadragesimo Anno, no. 136)How does distributism seek to make these aspects of Catholic social doctrine concrete? The two chief points of distributist theory are well-distributed property and the correct use of property within the economy so that it contributes, according to its own proper nature and function, to the common good.
I have already discussed the idea of well-distributed property, doubtless the most well-known doctrine of distributism. It rests on several fundamental distributist principles. One is that without widely distributed property, individuals and families will be at the mercy of owners of capital, who will usually make decisions based solely on what will benefit them financially. Secondly, large accumulations of property allow their possessors undue influence on the political process, and, perhaps most importantly, tend to corrupt the culture itself, creating a commercial or consumer culture, in which everything is valued or measured in terms of money. One example of this is how, in the United States, education, and especially higher education, is regarded most often as merely an economic investment. Since, at least till recently, those with degrees generally earned more money than those without degrees, this is pretty much the only justification for higher education even offered. Education as initiation into the world of learning and into our intellectual and cultural heritage, as enabling one to be free of the prejudices of one’s time and place and learning to truly think – these are seldom mentioned, and for the most part higher education is evaluated solely in terms of the financial benefit for the individual.
With regard to the right use of property in an economy, both Catholic social teaching and distributism recognize that economic freedom in the sense of free competition is not a sane or just way to run an economy.[i] But if the idea of a self-regulating economy ruled solely by competitive forces is rejected, then the question becomes: Who exactly is to do the regulating? Many socialists and other types of statists argue or simply assume that this is to be done by the central government. An extreme form of this was undoubtedly in the Soviet Union, where government officials would set detailed quotas for factory production, and generally manage the entire economy in the most minute manner. As everyone knows, this was productive of much inefficiency and waste, but the fact that the Soviets engaged in economic regulation in a poor way does not negate the necessity of some kind of regulation. In the Middle Ages this regulation was performed by the guilds, private associations yet with public responsibilities, and whose rules would be enforced, when necessary, by the municipal authorities. While the guilds gradually died out or became impotent beginning in the sixteenth century, in the nineteenth century, when Catholics looked about for some way of addressing the growing injustices brought about by capitalism, they spontaneously turned to the medieval model as a guide. Leo XIII in Rerum Novarum recommended and described in some detail organizations very similar to guilds,[ii] and Pius XI, in Quadragesimo Anno and especially Divini Redemptoris, explicitly called for a revival of guilds, adapted to modern conditions and modern technology.[iii] What would the functions of these guilds be? Msgr. John A. Ryan, one of the greatest of the Church’s twentieth-century theologians on the Church’s social doctrine described them as follows:The occupational group [guild] might be empowered by law to fix wages, interest, dividends, and prices, to determine working conditions, to adjust industrial disputes, and to carry on whatever economic planning was thought feasible. All the groups in the several concerns of an industry could be federated into a national council for the whole industry. There could also be a federation of all the industries of the nation. The occupational groups, whether local or national, would enjoy power and authority over industrial matters coming within their competence. This would be genuine self-government in industry. Of course, the occupational groups would not be entirely independent of the government. No economic group, whether of capitalists or laborers, or of both in combination, can be trusted with unlimited power to fix their own profits and remuneration. While allowing to the occupational groups the largest measure of reasonable freedom in the management of their own affairs, the State, says Pius XI, should perform the tasks which belong to it and which it alone can effectively accomplish, namely, those of “directing, watching, stimulating, and restraining, as circumstances suggest or necessity demands….”[iv]The guild-principle recognizes that those engaged in the same trade or profession are not rivals or enemies, each seeking as much market share as possible, hoping in fact to put the others out of business.    In the Middle Ages practitioners of the same trade or profession saw themselves as engaged in a cooperative project to provide the public with a needed good at a just price, all the while, of course, expecting that they themselves would receive a reasonable remuneration for their work. The guilds thus were more than economic institutions. They were true fraternities and celebrated the feasts of their patron saints and sponsored masses for deceased members and their families. They aspired to cultivate a spirit of harmony, cooperation and charity among practitioners of the same trade and to foster an attitude of justice toward others, such as suppliers of raw material or the consuming public.   
Although the role of guilds in distributist theory is often overlooked, in fact Chesterton, and especially Belloc, were quite clear this point. Belloc wrote, for example,

The safeguarding of the small unit, the seedlings of re-afforestation, the delicate experiments in the reconstruction of property, must take the form of the Guild: not the unprotected guild arising spontaneously (for that would soon be killed by the predatory capitalism around it) but of the Guild chartered and established by positive law.[v]

The guild or occupational group has always been a key element in a Catholic approach to the economy, as it clear from its place in both distributist and solidarist theories. I have already mentioned Pius XI’s insistence that a Christian attitude must accompany any reform of institutions. What we must strive for, along with the concrete institutional and legal changes which distributism calls for, is an attitude toward riches which differs from that existing in the modern world.

We can, therefore, lay down as the first principle of mediaeval economics that there was a limit to money-making imposed by the purpose for which the money was made. Each worker had to keep in front of himself the aim of his life and consider the acquiring of money as a means only to an end, which at one and the same time justified and limited him. When, therefore, sufficiency had been obtained there could be no reason for continuing further efforts at getting rich,…except in order to help others….[vi]

It is difficult to stress too much how the modern world, in some places more than others to be sure, has departed from its Christian past in its attitude toward economic activity.[vii] As the economic historian, Richard Tawney, wrote,

The idea that there is some mysterious difference between making munitions of war and firing them, between building schools and teaching in them when built, between providing food and providing health, which makes it at once inevitable and laudable that the former should be carried on with a single eye to pecuniary gain, while the latter are conducted by professional men who expect to be paid for service but who neither watch for windfalls nor raise their fees merely because there are more sick to be cured, more children to be taught, or more enemies to be resisted, is an illusion only less astonishing than that the leaders of industry should welcome the insult as an honor and wear their humiliation as a kind of halo. The work of making boots or building a house is in itself no more degrading than that of curing the sick or teaching the ignorant. It is as necessary and therefore as honorable…. It should be at least equally free from the vulgar subordination of moral standards to financial interests.[viii]

It should be clear from this that the creation of a distributist economy is not the work of a moment. It would require vast changes, yet at the same time, every small step toward such a state of affairs can be helpful. It is not necessary to wait until we have everything in place. We must do what we can right now. Part 3 can be found here.
Printable versionNotes:i: See Pius XI’s explicit statement that “free competition …cannot be an adequate controlling principle in economic affairs.” Quadragesimo Anno, no. 88. 
ii: See nos. 48-61. iii: For papal statements, see especially Quadragesimo Anno, nos. 81-87 and Divini Redemptoris, nos. 32, 37, 53-54. iv: Distributive Justice (New York : Macmillan, 3rd ed., 1942), pp. 340-41.   v: The Restoration of Property, p. 136 emphasis author’s. See also pp. 35, 75, 136-140.   vi: Bede Jarrett, Social Theories of the Middle Ages (Westminster, Md. : Newman, 1942), pp. 157-158.  vii: This is not to mention the attitude of Holy Scripture toward riches and moneymaking. Most notable is St. Paul’s warning in I Timothy 6:8-10. “…if we have food and clothing, with these we shall be content. But those who desire to be rich fall in temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction. For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs.” But see also, Proverbs 23:4; Micah 6:12a; Matthew 19:24; Luke 1:53b, James 5:1-3a. 
viii: The Acquisitive Society (New York : Harcourt, Brace & World, [1920] 1948), p. 96.

The following is the English version of part three of an article/interview by Thomas Storck, “Sui Fondamenti del Distributismo: Proprietà, Famiglia, Politica, Economia,” published in Bollettino di dottrina sociale della Chiesa, July/Sept. 2020, pp. 73-84. For information on the Italian publication, see here.

Part 2 can be found here.
The natural family based on marriage between a man and a woman is one of the founding paradigms of distributism. Can you elaborate further what is the role of family in distributism? For G. K. Chesterton and most of the proponents of distributism during its “classical” period, this connection with the natural family was one of its most outstanding characteristics. Chesterton was a fierce upholder of family life and saw property as one of its prime supports. It was this fierce devotion to ordinary family life, domestic life, that fueled much of Chesterton’s advocacy of distributism.

As every normal man desires a woman, and children born of a woman, every normal man desires a house of his own to put them into. He does not merely want a roof above him and a chair below him; he wants an objective and visible kingdom; a fire at which he can cook what food he likes, a door he can open to what friends he chooses.[i]

And he drew a parallel between concentrations of property and attacks on the family. In a striking passage he wrote,

I am well aware that the word “property” has been defied [defiled?] in our time by the corruption of the great capitalists. One would think, to hear people talk that the Rothchilds and the Rockefellers were on the side of property. But obviously they are the enemies of property; because they are enemies of their own limitations. They do not want their own land; but other people’s…. It is the negation of property that the Duke of Sutherland should have all the farms in one estate; just as it would be the negation of marriage if he had all our wives in one harem.[ii]

Hilaire Belloc similarly stressed the family’s place in distributism, “When so great a number of families in the State possess Private Property in a sufficient amount as to give its colour to the whole, we speak of `widely distributed property.'”[iii] And in the best formal definition of distributism, one offered by Cecil Chesterton, younger brother of G. K., one sees the same emphasis on family:

A Distributist is a man who desires that the means of production should, generally speaking, remain private property, but that their ownership should be so distributed that the determining mass of families – ideally every family – should have an efficient share therein. That is Distributism, and nothing else is Distributism…. Distributism is quite as possible in an industrial or commercial as in an agrarian community….[iv]

This connection with the family is based on the fact that most of the early English distributists, notably both the Chesterton brothers and Belloc, were Christians. Naturally they sought the establishment of an economic system that would safeguard and foster the family, the natural and fundamental cell of society. In a purely economic sense distributism protects the family because it allows economic decisions to be made while taking into account non-economic factors. Under capitalism labor costs are simply an expense item for owners of capital. But what for capitalists are labor costs, for workers is a living, their living and that of their families. Moving a factory to a cheaper location may make perfect financial sense for someone who merely supplies the capital necessary for production and whose own livelihood will not be affected, but it can hardly make sense for someone who depends on that factory for the job that supports himself and his family. When ownership of the means of production is distributed among workers and families, then other factors besides the purely economic enter into every economic decision. In an economic downturn, for example, workers who are at the same time owners will naturally look upon themselves and their families as more than mere “labor costs,” and hence consider other options besides simply layoffs or plant closings. They will see the economic factors as part of a complex of factors which necessarily impact much more than questions of money. Each person’s family, immediate and extended, his friendships, his parish, his attachment to his own locale, and so on, are quite as relevant considerations as the level of profit that can be made in any particular place. But as long as the capitalist economic structure is in place, the mass of workers will not even have the opportunity to consider such non-economic factors or make these kinds of decisions. But whether distributist owners are proprietors of their own micro businesses, or members of worker cooperatives that jointly own larger enterprises, they will be able to take into account more than simply profits. In making their own decisions, all of the interests of workers and their families will generally be considered in any decision of this kind. Workers will be more than merely entries on the debit side of the capitalists’ account books. They will be real people with families. In fact, if we look at distributism in its broadest sense, we will see that it is much more than an economic system or arrangement. I once heard distributism characterized by Fr. Ian Boyd, editor of The Chesterton Review, as a “different rhythm of life.” Thus at its best it is an entire way of life, a way of life in which God, family, community, intellectual and cultural goods, are valued much more than is usual in modern society. The external goods necessary for human life will be given their due place, to be sure, but hardly the most important place. The benefits of this will be immense, beyond support for religion or family life. A general decrease in the fevered pace of twentieth-century life, including in our globalized economy, would be of considerable help in many areas, for example, in promoting consumption of local food and other goods and in contributing to environmental health. The complex structure of today’s globalized economy is poorly equipped to confront disasters or catastrophes of any kind, whether environmental, economic or military, because it presupposes political stability and the smooth functioning of economic activity everywhere in the world, and depends upon fragile supply chains which can be easily disrupted. Given the many advantages that a distributist economy would bring, one could imagine an attempt to isolate the purely economic principles of distributism, such as well-distributed property, and implement it in a society which had forgotten the necessity of the natural family for its well-being and was not interested in any fundamental alterations in its way of life. This would be akin to what John Paul II in Laborem Exercens identified as economism, the error “of considering human labor solely according to its economic purpose” (no. 13). In other words, if we opt for distributism solely because of the economic and social benefits which can flow from it, we fall into the trap of treating human labor, and the economy as a whole, as simply a means of supplying us with goods and services, as something apart and separate from the rest of human society and culture. It is true that the economy has as its proper purpose the production of necessary and truly useful goods, but always in subordination to the overall goals of human life and society, both in time and in eternity. For even though society and state have as their primary end goods of this world, this does not mean an entire separation from the goods of the next life. As St. Thomas Aquinas wrote in his De Regimine Principum, “It seems moreover to be the purpose of the multitude joined together to live according to virtue…the virtuous life therefore is the purpose of the human community,” and adds that “the ultimate end of the multitude joined together is not to live according to virtue, but through virtuous living to attain to enjoyment of God,”[v] Or as Pius XI wrote with specific reference to the economy,

If [the moral law] be faithfully obeyed, the result will be that particular economic aims, whether of society as a body or of individuals, will be intimately linked with the universal teleological order, and as a consequence we shall be led by progressive stages to the final end of all, God Himself, our highest and lasting good. (Quadragesimo Anno, no. 43)

Thus the economy does not exist by or for itself, but must be embedded in social life as a whole, and must not hinder the society from achieving its own proper goals both temporal and eternal, of which our economic welfare is an important, but not the most important part. In order to understand this better we might look at two other economic systems, socialism and capitalism, and see how each of them, in different ways, fails to subordinate the economy to society as a whole, and thus very often harm family life and the intangible goods which family life needs. Let us begin with socialism. Contrary to what many people think, the Church’s well-known condemnation of socialism is based not on the specific economic proposals of socialists, but on its fundamental anthropological outlook, its philosophy of human nature and society.
The most thorough treatment of socialism by the Church’s magisterium occurred in Pius XI’s encyclical Quadragesimo Anno. He pointed out in the first place that socialism had undergone profound changes since the days of Leo XIII.

No less profound than the change in the general economy, has been the development occurring within socialism since the days when Leo XIII contended with this latter. At that time socialism could be termed a single system, generally speaking, and one which defended definite and coherent doctrines. Today, indeed, it has for the most part split into two opposing and hostile camps. (no. 111)

One section is Communism, clearly hostile to Christian faith, advocating “merciless class warfare and the complete abolition of private ownership” (no. 112). But the other portion of socialism, what Pius called “moderate socialism” has abandoned many of the doctrines against which Leo XIII contended.The other section, which has retained the name of “socialism,” is much less radical in its views. Not only does it condemn recourse to physical force: it even mitigates and moderates to some extent class warfare and the abolition of private property. It does not reject them entirely. It would seem as if socialism were afraid of its own principles and of the conclusions drawn therefrom by the communists, and in consequence were moving toward the truth which Christian tradition has always held in respect; for it cannot be denied that its programs often strikingly approach the just demands of Christian social reformers. (no. 113). The war declared against private ownership has also abated more and more. In such a way that nowadays it is not really the possession of the means of production which is attacked but that type of social authority, which, in violation of all justice has been seized and usurped by the owners of wealth. This authority in fact belongs not to the individual owners, but to the State. If these changes continue, it may well come about that gradually the tenets of mitigated socialism will no longer be different from the program of those who seek to reform human society according to Christian principles. (no. 114)Because of this, some Catholics at that time wondered whether it would be possible for a Catholic to be a socialist. Pius’s reply is a firm no, but the reasons for this will come as a surprise to some: “the reason being that it conceives human society in a way utterly alien to Christian truth.”

According to Christian doctrine, Man, endowed with a social nature, is placed here on earth in order that he may spend his life in society,…and that, by fulfilling faithfully the duties of his station, he may attain to temporal and eternal happiness. Socialism, on the contrary, entirely ignorant of or unconcerned about this sublime end both of individuals and of society, affirms that living in community was instituted merely for the sake of advantages which it brings to mankind. (no. 118)

Hence the definitive judgment of this Pontiff, “No one can be at the same time a sincere Catholic and a true socialist.” But this is because socialists have elevated the material side of man over the spiritual side and made the production of goods the organizing principle of society. Socialism is condemned because it has never abandoned its roots in a materialistic philosophy, ultimately grounded in atheism. And as long as it remains really socialism it will always have that cast to its principles. Incidentally, this is why European socialist parties have so often jettisoned their distinctive economic programs, but do not abandon their general hostility to the Church, to protection of unborn life, to Christian marriage, and so on. The atheism and anti-Christian ideology that lies behind all true socialism remains, even when socialist politicians have found they can live with many of the exploitive economic practices of capitalism. John Paul II repeated this judgment about the errors of socialism in his 1991 encyclical Centesimus Annus. He stated that

the fundamental error of socialism is anthropological in nature. Socialism considers the individual person simply as an element, a molecule within the social organism, so that the good of the individual is completely subordinated to the functioning of the socio-economic mechanism. (no. 13).

And he pointed out what is at the root of these socialist errors: “we must reply that its first cause is atheism.” The important thing to note about the teaching of both Pius XI and John Paul II is that neither focuses on socialist economic practices. Indeed, Pius XI explicitly approves of some of these practices, and both pontiffs identify an essentially philosophical error as the real reason why no Catholic can be a true socialist. Before we examine the relevance of this to the question about distributism and the family, let us look similarly at capitalism. After pointing out that atheism is at the root of socialist materialism, John Paul notes the following:

The atheism of which we are speaking is also closely connected with the rationalism of the Enlightenment, which views human and social reality in a mechanistic way. Thus there is a denial of the supreme insight concerning man’s true greatness, his transcendence in respect to earthly realities…and, above all, the need for salvation…. (ibid.)

Clearly when John Paul speaks of “the rationalism of the Enlightenment, which views human and social reality in a mechanistic way,” he is referring to the eighteenth-century theoreticians of capitalism, such as the Physiocrats in France or Adam Smith in Scotland. Without necessarily being actual atheists, their mechanistic philosophy of man and society suffers from the same defects as does socialism. This is why, as John Paul further explains, some capitalist countries, in their struggle against Communism after World War II, embraced a vision of man that fundamentally was no different from that of atheistic socialism or even communism.

Another kind of response, practical in nature, is represented by the affluent society or the consumer society. It seeks to defeat Marxism on the level of pure materialism by showing how a free-market society can achieve a greater satisfaction of material human needs than Communism, while equally excluding spiritual values. In reality, while on the one hand it is true that this social model shows the failure of Marxism to contribute to a humane and better society, on the other hand, insofar as it denies an autonomous existence and value to morality, law, culture and religion, it agrees with Marxism, in the sense that it totally reduces man to the sphere of economics and the satisfaction of material needs. (no. 19)

The point of all this is that historically both socialism and capitalism have looked at the economy as something apart from, and even superior to, society as a whole, have championed their particular approaches simply as means to “achieve a greater satisfaction of material human needs” than any other economic system. If distributism is looked at in such a manner, as simply a better way to achieve economic growth or avoid the social pathologies created by inequality, then the connection it has with genuine family life is lost. Therefore distributism cannot simply take for granted that it is immune from being hijacked from its proper role in creating an economic system that serves the overall purposes of human family and social life, and becoming simply a mechanism for producing and supplying material goods.Printable versionNotes:
[i] What’s Wrong With the World (San Francisco : Ignatius, [1910] 1994), p. 49
[ii] What’s Wrong with the World, p. 42. [iii] The Restoration of Property, p. 17.   [iv] Cecil Chesterton, “Shaw and My Neighbour’s Chimney,” The New Witness, May 3, 1917, p. 13. Quoted in Race Mathews, Jobs of Our Own: Building a Stakeholder Society, (Distributist Review Press : Irving, Texas, 2d ed., 2009), p. 101.   [v] I, 14. This work is also known as De Regno. 

On the Foundations of Distributism: Property, Family, Politics, Economy. Part 1

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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by Thomas Storck

The following is the English version of part one of an article/interview by Thomas Storck, “Sui Fondamenti del Distributismo: Proprietà, Famiglia, Politica, Economia,” published in Bollettino di dottrina sociale della Chiesa, July/Sept. 2020, pp. 73-84.

For information on the Italian publication, see here.

The root of distributism can be traced back to the Social Doctrine of the Church, nevertheless distributism is not the Church’s social doctrine. Can you clarify what is the relationship between these two realities?

To put the matter simply, distributism is an attempt to give a more concrete application to the Church’s social doctrine, an application which is at the same time entirely faithful to it. There are two related reasons why such an effort to give a more precise application to Catholic social doctrine, is necessary, or at least desirable.

The first stems from the fact that the Church’s social doctrine, elaborated over one hundred years and addressed to the entire world, necessarily must have a certain indefinite quality. The economy of rural Ireland or Spain, say, in 1891, the year Rerum Novarum was issued, is not the economy of contemporary Germany or the United States. Yet the encyclicals and other documents of the Church’s social magisterium must be able to speak to the very different conditions of all these economies. And this it does very effectively, both by laying down fundamental principles of economic justice, as well as by more specific proposals, even if these latter may need further adaptation to varying circumstances. But all of this social doctrine requires intelligent study and application in light of circumstances of time and place, something which Leo XIII himself called for.

Of course, it is important to recognize that Catholic social teaching cannot be reduced to a few platitudes, such as Be just, or Help the poor, as some contemporary neo-liberal publicists try to do. But it does mean that one cannot simply pick up the encyclicals and extract a set of proposals which a political party could offer at the next election. Even the more specific policies which the popes have advocated, such as the establishment of occupational groups or guilds, something which both Pius XI and Pius XII especially stressed, require a concrete legal and institutional structure which necessarily will differ from country to country. The rather complex German system of co-determination (Mitbestimmung), for example, which following a specific suggestion of Pius XI, provides for significant worker participation in the management of corporations and very effectively embodies the spirit of Catholic social teaching, could probably not just be replicated simply anywhere without important modifications that reflect the varying legal systems and work cultures of different nations.

The second reason why some kind of concrete application is necessary is because of the abundance of matters which the pontiffs have treated in their social documents. For example, the fundamental principle of distributism was enunciated by Pope Leo XIII in Rerum Novarum, “The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners” (no. 46). Yet how this should or could be done, and what relationship such small property ownership ought to have to the economy as a whole – for example, to enterprises that by their very nature require large workforces and intensive capital investments – is left an open question which will require political prudence in order to implement it in any specific society.

The popes were primarily laying down moral principles for the economies actually existing at the times they wrote. Thus Pius XI devotes a section of Quadragesimo Anno to evaluating Italy’s then fascist economy, obviously something of chiefly historical interest now, while in Centesimus Annus St. John Paul II discusses in depth the global capitalist economy in light of the recent collapse of the Soviet bloc. Thus while the fundamental moral principles of economic justice are timeless, the popes were not engaged in writing theoretical treatises on economic morality. Even Pius XI, who exhibited perhaps the most interest of any pope in offering a systematic presentation of the functioning of a just economy, was primarily interested in responding to the grave crisis of the Great Depression and the threat of Communism. But distributists are seeking to set forth an economic system or a set of economic proposals which are more than a commentary on or a critique of present conditions, and which can compete intellectually with the capitalist paradigm. Our intent is to offer proposals which, while requiring adaptation to the widely varying conditions of different continents and countries, is based on fundamentals, on man’s need for external goods and services, and hence on the necessity of economic activity to supply these goods and services, and on the principles of justice and political prudence which allow economic activity to work for the common good and common prosperity. Distributism stresses certain elements of Catholic social teaching, not because it disregards or neglects other aspects, but in order to formulate a more concrete plan which could be translated into an economic and social program.

If we examine the other serious attempt to apply modern Catholic social teaching we can see the necessity for this more clearly when we note the obvious similarities between it and distributism. This other attempt was Solidarism, a system formulated by a remarkable German Jesuit, Heinrich Pesch (1854-1926). As a young seminarian Pesch spent the years 1885 to 1888 near Liverpool in England because Bismarck’s Kulturkampf had driven religious orders out of Germany. In England Pesch witnessed the exploitation and degradation of the working class by industrial capitalism which made him resolve to devote his life as a priest to the social apostolate. He authored a number of works on the social question, his chief work being the monumental Lehrbuch der Nationalökonomie, which appeared in five volumes between 1905 and 1923.

Both solidarism and distributism were formulated in response to the new social and economic order created by capitalism and industrialism that had triumphed in Europe and elsewhere during the nineteenth century. What was unique in capitalism, or more correctly, in the classical liberalism that stood behind capitalism, was the notion that the economic order was divorced from its place in the hierarchy of values that had hitherto been seen as the organizing principle of all of social life. Economic life, and consequently greed for gain, were now seen as legitimate and free from all but the most rudimentary ethical restraints. Prohibitions against force and fraud, narrowly defined, were pretty much the only misdeeds which the apologists of the new order recognized.

Both distributism and solidarism, on the other hand, since they are rooted in Catholic social thought, perceive that the economy must serve mankind as a whole and that economic activity must be part of the hierarchy of human goods, not an independent thing divorced from its place in social life, to be pursued according to the desire and cleverness of each individual economic actor, motivated solely by a desire for unrestricted gain. Pesch stated this principle at the outset of the Lehrbuch, when he wrote that “man must always and everywhere be the subject and end of the economy.”[i]

If solidarism and distributism are compared one will find that the differences between them are chiefly a matter of emphasis. As such, they both witness to the fact that all serious attempts to apply Catholic social doctrine will resemble each other much more than they will differ. Both systems take their program from Pope Leo’s Rerum Novarum, the solidarists from the passage “capital cannot do without labor nor labor without capital,” (no. 19), and distributists from the passage I have already cited, “The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners” (no. 46). But just as there is no contradiction in the mind of Leo XIII who wrote both these statements, so there is little contradiction in the fundamental thought of Pesch on the one hand, and of Belloc and Chesterton on the other. In fact, there is a clear convergence with regard to how both systems treat important economic points, such as property or employment and wages. With reference to property, for example, Pesch wrote of “the need to do away with the individualistic concept of private property,”[ii] and that “property is not an end in itself…but it is only a means designed to provide for mankind in a manner appropriate for the well-being of the individual, the family, and political society.”[iii]

Although the original distributists placed great emphasis on private property and the freedom which property ownership affords to families, likewise the distributist understanding of property was fundamentally the same as that of Pesch. The limits on private property for the sake of the common good which Belloc and Chesterton, as well as contemporary distributists, have championed, presuppose that property ownership is a right only when it is consistent with the common good. Property has a purpose, the support and sustenance of families, and indirectly of the whole society; it is not a free-standing right to amass as much as possible with no reference to the common good. Because of this understanding, distributists have suggested a variety of means to break up large concentrations of property, such as Hilaire Belloc’s suggestion to use graduated taxation to force the division of large concentrations of property.[iv] And of course this is hardly alien to Pesch’s thought. There are even passages in Pesch which could have come from the pen of Belloc or Chesterton: “While socialism calls for the abolition of private ownership of the means of production, the motto of solidarism is: increase the number of owners!”[v]

Another crucial point where the two systems can be compared is the question of employment and wages. Here Pesch considered that for the most part the employer/employee relationship would continue even in a just economy. He was concerned to insure that workers received a just wage and that owners and workers were bound together by solidarity, both in spirit and in concrete institutions such as occupational groups which sought to embody the spirit of justice and charity fundamental to Catholic thought on society. Belloc and Chesterton, for their part, often spoke as if they thought that every worker would become an owner, so that the owner/worker relationship would disappear. But as we saw above Pesch could go so far as to say that “the motto of solidarism is: increase the number of owners!” And on the other hand, Chesterton and Belloc recognized that it was likely impossible to do away entirely with large entities requiring large workforces. In The Outline of Sanity, when Chesterton wrote about possible means for achieving a distributist economy, he included “the gradual extension of profit-sharing [or] the management of every business…by a guild or group….”[vi] Neither he nor Belloc were absolutists in insisting that every individual or family must own its own small farm or small business.

The point of this is to show that Catholic social teaching does require a fleshing out, an elaboration, to make clear how its chief points can be translated into actual policies and institutions, and secondly, to show that every attempt to do so, every attempt, that is, which takes the Church’s social doctrine seriously, will exhibit many more similarities than differences and as a result make clear that social doctrine does have a solid content and that specific proposals can be deduced from it which translate into real world economic policy.

Printable version

Notes:

i. vol. 1, book 1, p. 18. All references to Pesch are to the translation of the Lehrbuch in ten volumes made by the late Dr. Rupert Ederer and published by Edwin Mellen Press as Lehrbuch der Nationalökonomie/Teaching Guide to Economics, c. 2002.

ii. vol. 2, bk. 1, p. 264.

iii. vol. 1, bk. 1, p. 277.

iv. See Belloc’s The Restoration of Property (New York : Sheed & Ward, [1936] 1946), especially pp. 69-72, 93-118.

v. Pesch, Lehrbuch, vol. 4, book 2, p. 299. Emphasis in original.

vi. In The Collected Works of G. K. Chesterton, vol. 5, Ignatius Press, 1987, p. 97. Belloc in The Restoration of Property makes similar proposals. See p. 88.

Expand Your Business, Increase Your Income!

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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A slogan such as the title of this article seems simply common sense to probably most Americans. If sales are up, then certainly expanding your business is the natural thing to do, or at least to think of doing. If you own one restaurant and it is doing well, consider opening a second – and a third, and a fourth. Except that this logic is totally contrary to real common sense, to the purpose of economic activity, and to our hopes for eternal life.

Contrary to common sense? To the purpose of economic activity? How so? Because the reason why the human race engages in economic activity is to satisfy our need for external goods and services. It is contrary to reason to make the acquisition of such goods and services ends in themselves. So if someone is providing sufficiently for himself and his family with his present business, if he is able to satisfy his own and his family’s need for external goods, what need does he have to expand that business and try to increase his income? Why would he even wish to do so? Has he never reflected on what is the purpose of income and wealth? That they are merely so that we can obtain the goods and services we need for life on this earth? And that if we have enough of them, it is irrational to want more.

But can we say that this is even contrary to our hope for attaining eternal life? How? Holy Scripture is full of instruction and warnings about earthly goods and riches. For example,

…if we have food and clothing, with these we shall be content. But those who desire to be rich fall in temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction. For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs. (I Tim. 6:8-10)

St. Paul is here connecting a desire to become rich with a “love of money” that he terms “the root of all evils.” The desire to become rich, that is, to have more earthly goods than one reasonably needs, indicates a disordered attitude toward one’s possessions. But it does more than that. It places the person who desires to become rich into a near occasion of sin. For it is the rare rich person who does not succumb to an inordinate attachment to his riches, and to an even more inordinate attachment to acquiring more and more of them. It is true that someone born into riches, through no fault of his own, may licitly retain that wealth – provided he remembers his duties of justice and charity toward the other members of the human race, which Pope Leo XIII expressed in Rerum Novarum in the following words:

Therefore, those whom fortune favors are warned that freedom from sorrow and abundance of earthly riches, are no guarantee of that beatitude that shall never end, but rather of the contrary; that the rich should tremble at the threatenings of Jesus Christ – threatenings so strange in the mouth of our Lord; and that a most strict account must be given to the Supreme Judge for all that we possess. (no. 22)

But those who are not rich, yet who are sufficiently providing for themselves and their families, they are those whom St. Paul warns, “who desire to be rich” and therefore “fall in temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction.” If Catholics are serious about their faith, if we really believe that we will be judged after our death and our eternal destiny will be heaven or hell – then who could in good conscience seek to acquire more than is reasonably necessary in this life? Why would anyone risk eternal damnation not merely for transient earthly goods, but for transient earthly goods which are not even needed?

I am not of course denying the uncertainties of this life, of the need for reasonable savings or the high cost of such things as our children’s education. But at some point we surely can say, enough. Beyond that point there is no rational reason for increasing our income. Beyond that point riches are nothing more than a temptation and a snare.

Only if we recover the traditional Catholic understanding that the goods of this life have purposes, and thus are limited by those purposes, only then can we begin to live rightly. In fact, we can hardly understand what the Church teaches and why unless we come to see that the things of this life exist in a hierarchy, that economic activity and the acquisition of wealth do not stand alone but are subordinate to the overall ends of life. If we can do that, then, as Pius XI wrote in Quadragesimo Anno:

If [the moral law] be faithfully obeyed, the result will be that particular economic aims, whether of society as a body or of individuals, will be intimately linked with the universal teleological order, and as a consequence we shall be led by progressive stages to the final end of all, God Himself, our highest and lasting good. (no. 43)

You can learn more about this issue here.

Consumer Choice and Society

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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Those who like to celebrate the contemporary capitalist economy frequently do so in terms of choice. Some are quite open that it is consumer choice that excites them, the ability to pick and choose among an immense variety of products, according to one’s whims and desires. Others, more conscious of the shallowness implicit in reducing man to simply a consumer of goods, are wont to point out that even though our society itself may be preoccupied with material possessions, we ourselves as individuals are free to occupy ourselves with better things, with cultural or spiritual goods, for example.  While of course this is true, one might wonder why so few people seem to manifest much interest in these latter types of goods. But perhaps the real problem here is the attempt to reduce human choice solely to the individual level. It is true, of course, that individuals do have the freedom to choose. Our wills were created by God to desire goods, but we have the freedom to choose among goods, to choose appropriately or not, to make choices that do not interfere with the attainment of our eternal salvation, or that make this more difficult or even impossible to attain. This does not mean, of course, that we must always choose the highest goods; rather, as the collect for the Third Sunday after Pentecost in the traditional Roman rite puts it, in such a balanced way, that “we may make use of [transeamus] temporal goods so as not to loose eternal goods.”

But there is much more to say here than simply to exhort one another to make good choices. For we exist not merely as individual choice-making consumers – even when our choices might be of the most laudable kind – but as members of society, and as such, invariably influenced by that greater social whole. In his 1991 encyclical Centesimus Annus, St. John Paul II offered a penetrating discussion of the connection between individual choice and the society or culture around us. He wrote (in section 36)

The manner in which new needs arise and are defined is always marked by a more or less appropriate concept of the human person and of the person’s true good. A given culture reveals its overall understanding of life through the choices it makes in production and consumption. It is here that the phenomenon of consumerism arises. In singling out new needs and new means to meet them, one must be guided by a comprehensive picture of the person which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones. If, on the contrary, a direct appeal is made to human instincts…then consumer attitudes and lifestyles can be created which are objectively improper and often damaging to the person’s physical and spiritual health. Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality. Thus a great deal of educational and cultural work is urgently needed, including the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities.

Here John Paul makes clear the connection between individual choice and the concept or picture of human good which a culture projects. Consumerism is not simply bad choices made by consuming individuals, for these bad choices do not occur in a vacuum. They presuppose the fundamental things that a society values, what it produces and what it teaches about human needs and goods. John Paul notes four matters that require attention, “the education of consumers in the responsible use of their power of choice, the formation of a strong sense of responsibility among producers and among people in the mass media in particular, as well as the necessary intervention by public authorities.” For now, let us focus on just one of these, “the formation of a strong sense of responsibility…among people in the mass media.”

Here advertising immediately comes to mind, and it is surely one of the most potent methods of teaching that any society makes use of. Advertising rarely teaches by precept, but more subtly creates illusions as to what is a good or satisfying or exciting life, and what products are necessary to share in such a life. It is not simply the promotion of a particular product, rather it is generally the promotion of “artificial new needs which hinder the formation of a mature personality,” for the sake of convincing the public to buy new products or new kinds of products.

It is true that the ability of advertising to influence consumer choice is not unlimited. There have been notable instances of marketing failures because of consumer resistance. But I do not think that anyone looking honestly at our economy today could fail to see that for the most part it is characterized by “artificial new needs which hinder the formation of a mature personality,” which convince people that happiness is to be found in the possession of more gadgets or of some particular gadget.

However, it is not simply by advertising that the mass media influence culture and public opinion. The media as a whole present an image of “consumer attitudes and lifestyles” that, more often than not, “are objectively improper and often damaging to the person’s physical and spiritual health.” They do this by the contents of their shows, certainly, but equally as much by the very images they offer, of apparently successful and happy people, and even by the news items they focus on and the way they analyze news events.

In response to this John Paul rightly highlights the need for “educational and cultural work,” the formation of a strong public recognition of man’s true good and, on the other hand, awareness of those false goods which directly appeal to human instincts and fail to subordinate our “material and instinctive dimensions to [our] interior and spiritual ones.” In this connection both the Church and educational institutions at all levels can play an important part. But he also notes “the formation of a strong sense of responsibility among producers…, as well as the necessary intervention by public authorities.” Here we can ask if the very structure of economic life can contribute to the correct formation or to the deformation of our understanding of the human person. In considering this, if we recall the definition of capitalism offered by Pope Pius XI in his 1931 encyclical Quadragesimo Anno, as “that economic system in which were provided by different people the capital and labor jointly needed for production” (sect. 100), we might begin to see why a society’s ordering of its economy has profound implications for its cultural, intellectual and spiritual health.

Under capitalism, when separation of ownership and work is the norm, there exists a class of persons, the owners of capital, for whom the economy is not so much a way of supplying mankind with truly necessary and useful products, with real means of satisfying genuine human needs, as it is of making and selling anything that people can be persuaded to buy, of working to create “artificial new needs” in order to promote sales of their products. Hilaire Belloc explained this in a striking passage.

But wealth obtained indirectly as profit out of other men’s work, or by process of exchange, becomes a thing abstracted from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth – money – increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or crop, but with the profit he makes between their purchase and sale. In a productive society the superiority of the things produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer is the measure of success. [1]

The small producer is intimately connected with his product, and generally has some interest or pride in workmanship beyond simply how much money he can make. But necessarily those who are one or more steps removed from the productive process will tend to look at their product as simply something to be sold, and sold not necessarily because it is necessary or useful, but because advertising can persuade people to buy it. Under capitalism, “the formation of a strong sense of responsibility among producers” will be unusual, because the cultural climate will focus on “the amount of wealth accumulated,” not on the inherent quality of the product or service.

St. John Paul notes also “the necessary intervention by public authorities.” In many people’s minds, this raises the specter of a Soviet-style command economy. But this is a groundless fear. Any type of economy requires a legal system to support it. Capitalism, as much as any other, both shapes the legal environment and depends upon it for structure and support. For example, were it not for the unprecedented powers and rights given to corporations by courts and legislatures since the second half of the 19th century, advanced capitalism could hardly exist. None of this was inevitable, however, but rather the result of corporate influence over government and the general cultural attitudes endemic to a commercial or consumer society.

But a legal system could also work in favor of a distributist economy, an economy characterized, as much as is feasible, by a joining of ownership and work, private ownership for the most part, but private ownership of such a kind that producers are generally interested in more than how much money they can make. “The man who makes a table or grows a crop makes the success of the crop or the table a test of excellence.” Of course he needs and expects to make a sufficient return on his work to support himself and his family, but the ever-present connection with real work and real products tends in the opposite direction from the capitalist separation of ownership and work. Moreover, we should note that ownership in a distributist economy need not be individual proprietorships, but can be employee cooperatives. Such cooperatives will generally be necessary for production which requires large-scale machinery or large capital investment.

Of course, due to our First Parents fall into sin, distributist owners will also be affected by greed, by a temptation to cut corners, and so on. This is part of the human condition. But there is a huge difference between a system which facilitates greed, which promotes a desire to cut corners and defraud customers, and a system that does not encourage such evils. Capitalism promotes sin, distributism does not.

Right now the power of capitalists, particularly as embodied in corporations, is overwhelming. For the most part, distributism must manifest itself in nooks and crannies of the economy. We should seek these out and help them to grow. But there is another thing we can do: we can refuse to allow the culture of capitalism of colonize our minds. We can reject “new needs and new means to meet them” which are not “guided by a comprehensive picture of the person which respects all the dimensions of his being and which subordinates his material and instinctive dimensions to his interior and spiritual ones.” We can distinguish in our own thought and life “new and higher forms of satisfying human needs from artificial new needs which hinder the formation of a mature personality.” We can thus carry out, in our own minds, in our own families and among our own friends and acquaintances, some of the necessary “educational and cultural work” that John Paul calls for. In short, we can take small steps to break down the oppressive ideology of consumerism which surrounds us and live in the freedom of that truth which can set us free.

Printable version

Notes:
[1] An Essay on the Nature of Contemporary England (New York: Sheed & Ward, 1937) p. 67.

Practical Distributisim: The Cost of Comparative Advantage

This article is part of my posts on the economic system of distributism.  This is from practicaldistributism.blogspot.com which you can find here:

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The advocates of Free Trade deals between countries frequently cite the fact that more products are made available at a lower cost to consumers as proof that their idea makes economic sense. Their explanation of how this works rests on the idea of Comparative Advantage,[1] the idea that one country can produce a good at a lower opportunity cost than other countries. Based on this idea, if the industries in one country focus on those products where they have the lowest opportunity cost, and import products where they don’t, this provides an abundance of lower priced goods for everyone. For the advocates of Free Trade, price [2] appears to be the ultimate test of what is economically good. They scoff at opponents and critics of Free Trade as if their criticisms of it are completely without merit. Even some economists who have dared to question Free Trade, still try to uphold Comparative Advantage as a reasonable idea.[3] The reality is that the Free Trade ideology ultimately rests on Comparative Advantage. Therefore, it is prudent to examine the criticisms of it to see if they do, in fact, merit consideration. I believe that history has proven that they do.

The United States of America used to have a much more robust manufacturing industry. Critics will immediately respond that there is actually a growing manufacturing base in the U.S.,[4] but let me explain what I mean. It is true that certain types of manufacturing are growing in the U.S. However, these are not the same types of manufacturing jobs as in the past. Historically, U.S. manufacturing employed all levels of workers. High skilled and high educated workers developed and designed products, but our manufacturing industries also employed the low to average educated who worked on the assembly lines and did those aspects of manufacturing work that did not require higher levels of education. Over the last thirty to forty years, we have increased the jobs requiring high levels of education and outsourced jobs for those with an average education.

“The mantra that we’ve lost good-paying jobs to China is exactly wrong,” said Michael Hicks, an economics professor at Ball State University who has studied manufacturing in Indiana. “We’ve lost the bad-paying jobs to China and gained good-paying jobs.”[5]

These “bad paying” jobs supported large numbers of middle class families across the country. The “good paying” jobs were precisely ones that those displaced by this shift were unqualified to get. Essentially, the U.S. manufacturing industry has said that, unless you can get a degree in science or engineering, don’t bother applying to them for a job. The callous disregard of this large, middle class group of workers has caused economic and political tremors in the U.S. in recent years. Why were these hard working people turned out by their employers? The reason is Comparative Advantage. Our largest manufacturing employers are focusing only on those areas with the “lowest opportunity cost” to them. This is done without regard to what happens to their fellow citizens, and then they wonder why U.S. citizens don’t have much loyalty to domestic products.

Industrial heavy hitters who were able to develop and grow during an age of protectionist tariffs, now demand Free Trade on the basis of Comparative Advantage. Tariffs used to provide jobs in the U.S. as foreign manufacturers would open factories in the U.S. to avoid paying them.[6] As the threat of tariffs disappeared, so did the jobs.

… “industries where the threat of tariff hikes declines the most experience greater employment loss due to suppressed job creation, exaggerated job destruction and a substitution away from low-skill workers.”[7]

However, this issue goes beyond assembly line jobs. Comparative Advantage, and its necessary Free Trade deals have spread across all aspects of production in every country that has adopted this economic ideology. What happens, though, when the foreign supply lines are threatened? We have already written about how natural and economic disasters in other countries have impacted the availability of products of supposedly “American” manufacturers. The truth is that this is not as rare an occurrence as some may believe. It is easy to forget, though, when these amount to not much more than an inconvenience or an annoyance to us. For example, past flooding in China has resulted in shortages of computer parts for U.S. computer manufacturers. Because these types of events ended up being a temporary annoyance where people had to wait extra time for these parts, few seemed to really consider the greater implications of such a dependence. The fact that our supply chains have not significantly changed in the decades since those incidents shows that those who had enough foresight to raise an alarm were not taken seriously.

The reality is that the same warnings given about too much dependence on foreign manufacturer of critical technology apply to other critical areas. The same warnings have been raised about this type of dependence for things like medicines.[8] It does seem that a lot of these articles focus specifically on the dependence of Western countries on China. There are two reasons for this.

The first and most obvious reason is that China has become the biggest manufacturer of critical computer technology and medical supplies in the world. European and North American companies have outsourced the manufacture of these critical needs to China; a process that has been enabled by the cooperation of their governments. This is despite the fact that China is widely recognized by these governments as consistently violating basic human rights and having sub-standard working conditions that would not be accepted in their own countries, and these supposedly capitalist companies are moving their production to a socialist country. Some advocates of Free Trade say that China has moved to a more “corporatist” form of business model that is (by implication?) more compatible with capitalism. The reality is that corporatism is a socialist economic model that was adopted by the Fascist and Nazi regimes as part of their socialist economic plans.

However, the warnings against this type of dependence was ignored and, with the unfortunate outbreak of the COVID-19 virus, we are once again having to deal with the reality of this issue. The realities in this case are the same. There are both annoyances as our supplies of non-critical products are delayed.[9] There are also more serious consequences as this circumstance has raised the possibility of critical drugs and medical supplies might also be at risk.[10]

However, let’s consider another serious implication of what Comparative Advantage has done to us. It appears that even some of the manufacturing requiring high skilled and highly educated workers have also been outsourced. We seem to forget just how much of our society has become dependent on computer technology. This goes beyond our government offices, our communications networks, and the systems that run our economic industry. The advanced weapons systems used by the defense forces of Western countries are also completely dependent on this technology.

Even though our economic powerhouses have viewed China as an “economic partner” for several decades, I find it hard to believe that the military and intelligence departments of Western countries look at China as much of a partner. However, those departments rely on computer technology made by the companies that do. As a result, our most advanced weapons and defense systems, as well as our communications networks,[11] are all dependent on advanced computer parts made by a potential adversary.  Is this a real threat?

In 2011, it was reported that the “Government Accountability Office found that counterfeit routers with high failure rates had been sold to the Navy, and that counterfeit microprocessors had been purchased by the U.S. Air Force for use on F-15 flight control computers.”[12] A “scientist at Cambridge University in the United Kingdom claims to have developed a software program proving that China — and anyone else — can, and is, installing cyber backdoors on some of the world’s most secure, ‘military grade’ microchips.”[13]

You might think that this is a lot to blame on an idea like Comparative Advantage, but then you have to answer the question of why we no longer make these computer components for ourselves. The U.S. used computers designed and built in the U.S. to put men on the moon. This was not that long ago. Today our most advanced communications and defense systems are dependent on technology we might design, but no longer make. The same is true for medicines and medical supplies. We use computer components without even thinking about it, in our phones, in our cars, and in our home entertainment systems, and these components are all made by a foreign power that is philosophically opposed to the ideas that founded our societies. How did we get to such a place? We got there because our largest industries, and their partners in government, are believers in the theory of Comparative Advantage and have worked together to implement Free Trade agreements to make that theory a reality.

Printable version

Notes:
[1] https://www.economicshelp.org/blog/glossary/comparative-advantage/

[2] https://practicaldistributism.blogspot.com/2015/08/price.html

[3]  https://economistsview.typepad.com/timduy/2010/07/why-is-the-american-jobs-machine-broken.html

[4] https://www.theatlantic.com/business/archive/2017/01/america-is-still-making-things/512282/

[5] Ibid.

[6] https://www.cnbc.com/2015/02/05/the-rise-of-made-by-china-in-america.html

[7] Pierce, Justin R. and Schott, Peter K. “The Surprisingly Swift Decline of U.S. Manufacturing Employment”. National Bureau of Economic Research, American Economic Review, Vol 106(7), Dec. 2012, Revised Jan. 2014
https://www.nber.org/papers/w18655.pdf

[8] https://www.americanthinker.com/articles/2019/01/exposing_the_risks_of_americas_dependence_on_china_for_medicine.html

[9] https://financemarkethouse.com/2020/02/18/apple-admits-the-coronavirus-will-cause-a-global-iphone-shortage/

https://abcnews.go.com/Business/coronavirus-outbreak-puts-chill-us-businesses-apple-starbucks/story?id=68639376

https://www.just-auto.com/hot-issues/coronavirus-hits-the-auto-industry_id636.aspx

[10] https://www.wired.com/story/the-coronavirus-is-a-threat-to-the-global-drug-supply/

https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/coronavirus-pandemic-threatens-to-cut-pharmaceutical-industrys-lifeline/articleshow/73753415.cms

[11] https://www.cnet.com/news/chinese-spy-chip-reportedly-found-in-server-at-major-us-telecom/

https://www.theguardian.com/technology/2018/oct/04/china-planted-chips-on-apple-and-amazon-servers-report-claims

https://www.bloomberg.com/news/features/2018-10-04/the-big-hack-how-china-used-a-tiny-chip-to-infiltrate-america-s-top-companies

[12] http://www.allgov.com/news/us-and-the-world/counterfeit-computer-chips-from-china-compromised-us-military-equipment?news=843552

[13] https://www.military.com/defensetech/2012/05/30/smoking-gun-proof-that-military-chips-from-china-are-infected

https://www.youtube.com/watch?v=wk5oLLdTkq0

Title photograph by Thorsten Lindner.

Published under the Creative Commons Attribution-Share Alike 4.0 International licens.

Posted by David W. Cooney  

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