Capitalism and Economic Liberty, and the aims of Distributism

I could do a great many things before I came to definitely anti-social action like robbing a bank or, worse still, working in a bank.

-G.K. Chesterton

One of our opponents, is still confused by a modern myth, the idea that wages (which are not within his control) and renting (something which is owned by others and consequently not within his control) are more "stable" and provide more "freedom" (over things he has no control over) than owning one's own means of production (which he does have control over) and owning his own property (which surprise! he also has control over). If that is the case, then by all means, let us call unstable "stable" and restriction "freedom". For that matter, let us also call the spend crazy "frugal", and that which is poisonous "healthy", or, that which is cheap "good quality". In fact, industrial capitalism does all that too!

In attempting to make various terms clear in the debate between Distributism and Capitalism, he says (note: all emphasis mine)

The capitalist tends to define an economic system by what the legal apparatus does and does not allow. This point of view defines capitalism as the system in which economic freedom maximized, i.e. where goods and services are bought and sold freely without government interference. (source)

This is entirely false. If Capitalism maximizes economic freedom, it does so for only one group: the wealthy owner. This is because one type of freedom is maximized within the capitalist system: the freedom to buy. It turns the traditional understanding of freedom into a materialist, like an angel dressing up as a devil. The traditional understanding of freedom is the ability to choose to do the good. For the capitalist, it is to buy, and only one group in society benefits from this, that is the owner. The owner decides what is made and consequently what men will buy. Men then basically have the freedom to do what the owner wishes them to. Perhaps we are not so far from Belloc's servile state as we may think.

The reality is, the standard by which freedom is judged is entirely false, which is why everything else in the Capitalist system is false. Furthermore there is no other area of society in which freedom is judged by this standard. To be true to reality, this view in fact represents a minority of the thought within Capitalist economics to begin with, which makes the idea that it could be a science more laughable. There are numerous different schools of capitalism, some favoring tarrifs and trade protection, some favoring high taxes and government made social services (which are not tantamount to socialism per se), and some, those of the economic liberals, which favor no government action of all in the realm of economics, that somehow, a hidden hand will make markets smooth and all men rich.

Of course when we come back to reality not many men are rich. In fact, not many men are well off. Some are better off than others. Now some have nice trinkets and goods, nice computers, nice televisions (which they don't really own, some bank owns them through funds it lent them via a credit card). Most struggle to get by and require their spouse to work in order to pay the bills. They are not free to start a business venture, because a bank will not give them a loan, or if one does, it is on such unfavorable terms as to make the venture impossible or so risky as to be foolish. A company which is already millions of dollars in debt with a proven track record for inefficiency and poor customer service on the other hand has no problem getting large loans, much more money than what is proposed to be given to those who start a small business. Why is this state of affairs? Because without any interference in the economy, there is only one motive: greed. The larger businesses, indebted as they are with debts bigger than the economies of 3rd world nations, have the illusion of permanence, and thus the bank invests in the large businesses, because the interest on large loans (that will never be paid off) will yield more money than the small business will ever see. It may be that the small businessmen will never have economic freedom, will work until they are dead, and be forced to buy from the big shops where the bank invests, but that scarcely bothers the businessman, or the banker. It is quite simple, human beings, when left to themselves, operate according to a wounded human nature. This human nature so wounded, places an immediate good in place of a final good. As such, the immediate good of enrichment is far more desirable to most men than the overall good of a healthy society, or helping the poor not with a handout but with a share in ownership, which Pope Leo XIII described as the only way to cure the social evils addressed in Rerum Novarum.

Capitalism in all of its forms necessitates toward the same end, what Belloc and Chesterton called the "Capitalist paradox". What this means is that the laborer will become so poor that he is unable to buy the goods he produces, and the owner will be unable to find a market for the goods. Is that any surprise since wages are now lower than they were in the previous generation? Mortgage loans are defaulting at a staggering level, which had caused a free-fall in the stock market until recently when the government borrowed money from other countries to put money in the banking industry. As men have less money at their disposal, they are unable to meet usurious rates of loans, which are now necessary to own property in this country. Then of course no one will have economic freedom. Given the high cost of the basic means for getting to a job, gas and a car, can we seriously maintain there is a high level of economic freedom simply because the wealthy can market their products to us without the government keeping open a window for us to enter the playing field?

Thus, the definition given by Belloc, that capitalism is the concentration of wealth and the means of production in the hands of the few, is entirely correct for this reason: In every capitalist society this is the net result of so-called "economic freedom". Arguing this point is almost like arguing with Communists about the evils of Communism. They often deny that Communism is intrinsically bad, they will just say it got corrupted by Stalin (ignoring Lenin's murderous rampage). The fact is that wherever Communism has been tried it requires a murderous rain of terror to concentrate property in the hands of the state. Likewise in Capitalism, wherever it is tried it concentrates society's wealth into an elite: a small class of owners and a group of bankers whose interests are international. If you doubt that consider World War II. International banking and oil interests bankrolled both the Nazis and the Allies throughout the war. J.D. Rockefeller helped produce tank engines for Roosevelt and sold fuel additives from U.S. standard oil to Hitler through a partner, I.G. Farben which allowed Hitler to bomb Britain. Union Banking Corps, based in New York City, gave millions to Hitler, funded his rise to power, and at last after the war was discovered with tons of Nazi money in their vaults. American business and banking interests supported both sides, because in war, governments borrow from banks, and enrich banks, they buy from big business, and enrich them, which is why big business necessitates toward war. That is why we had a World War twice, and have been involved in umpteen billion wars since. What of the economic freedom of the men putting their lives on the line for these business interests? In war, no wealth is produced, though it is often destroyed. Governments borrow money, and money produces more money, for the elite, which they hold from the community and invest in the interests which they alone wish to invest. It is not the common man who is economically free.

Moreover, it is in a desperate attempt to cling to this false reality, that our opponent must mischaracterize our solution, unless we have been so vague as to cause him to not yet grasp it:

The capitalist defines distributism as the system in which the government prejudices the legal apparatus against the large business, in favor of the small venture (source).

This is also incorrect. Distributism, unlike Capitalism, favors local government. The term "government" is used of course in the pejorative, as if it is a bad thing to have government! With the exception of economic liberals such as our opponent, Capitalism supports big government since the big government necessarily must borrow money from banks, and the interest guarantees a continued indebtedness to the banks and a slave status for government. Our opponent is an unwitting ally of this concept by supporting big business, even though it is against his ideology.

Distributism does not favor big government. It favors strong local government, and mediating economic bodies such as a guild, to set pricing, restrict (though not eliminate) competition,
and protect small business from ruination by the direct actions of larger entities. By applying this controls and checks on the economy, Economic freedom is thus preserved for the family, at the expense of the greedy. No grandiose promises of wealth and fortune are made, they are certainly possible, but something far better is offered within this framework, security for the family.

Distributism is then defined as the economic system in which the vast majority of people have personal ownership of productive capital, ie are running small businesses. The historical exemplar of this is an agrarian farming community with the occasional non-farming specialty tradesman, but distributists stress that they are not advocating that everybody turn to farming or reject technology (source).

This should be expanded and clarified. The agrarian question is a thorny issue. What percentage of society will have to be agrarian in order for the society to have enough food. Donald Goodman, in his e-Book "Distributism, a Catholic system of economics" suggests that it would need to be as much as 50%. This is possible, but perhaps it is lower, maybe 35%. To interject with my subjective experience, the number of people who I have known who wanted to farm but could not meet the financial burden placed by the twin evils of big government and big business suggests to me that it is a sufficient number in society to meet that percentage. Furthermore, most economic liberals (though I believe our opponent is an exception in this) have advocated in recent years opening the borders, getting in as many illegal immigrants as possible to do farm work. Why? Because major bloated farms need lots of workers, but they can't pay a lot of money to attract commuters because Agribusiness is overproducing food, and in the absence of an agent to set prices to a just level, they follow simple supply and demand and drop. When the prices drop, privately owned farms suffer. Because these farms operate on a Capitalist rather than Distributist model, they are big and bloated and removed from habitation, so there are no young children to hire for a few hours of work, no teachers on summer vacation, no townspeople in general to assist, and no local market for the food which drives up the costs to begin with. So abusing Mexicans and paying them low wages seems like the answer to most free market economists! By having farms near markets, that meet the demands of local markets, most of these evils are eliminated or severely reduced.
The historical exemplar is not an agrarian economy per se, because the Roman Empire used such an economy, but it was a slave economy. Distributism's exemplar was the economic model that the Catholic Church built during the middle ages, which transformed the Roman Slave into the serf who inherited rights and protection, and from that into the medieval peasant who was free and who could will his land to his descendants, and no one could take it from him, until society itself broke down, as it did with the Reformation.
Now modern society provides all forms of private enterprise that can be understood as Distributive. The concept of a co-operative for example, where all the employees are owners, would not qualify as a big business, because all the employees were owners. This follows the concept of subsidiary, namely if smaller units can do the work they ought. There are irreducibly complex goods like computers, like cars (although one man could build a car, that would scarcely be possible economically), power equipment and industrial goods. Distributism does not propose thousands of technicians in shops producing these goods night and day to meet demand. Instead we propose co-ownership as the means of "gaining the share in the land". Then workers will receive a living wage verses a minimum wage, and profits according to the goods they produce.

The distributist defines his terms differently, although both competing definitions seem to referencing the same state of affairs in most cases. (Source)

The difficulty here is there are two different applications. There is the society we want to get to, namely a society that can be called Distributist, where the mark of that society is of widespread ownership, and there is the present society, where wealth is concentrated in the hands of a few, which we want to see made into a Distributist society. That means transformation. The principles inherent to a process of transformation do not apply after the transformation is complete. When you have turned flour, oil, butter, salt and yeast into a loaf of bread by applying heat of 400 degrees Fahrenheit in an oven, you do not continue applying that temperature after the transformation! This is true in transforming the character of society, except with Communism, where the murder used in establishing the government seems to continue after it is established. Thus, where Belloc talks about using taxation against large businesses and subsidizing small business for a time, he does not intend that to mark Distributive society, but to establish one. When he talks about taxing heavily the purchase of property by the wealthy from the small man, but lightly taxing if taxing at all the purchase of property by the small man from the wealthy, it is only for an intermediary period. Thus these are the two applications of ideas in establishing a Distributist society. However, unlike Capitalism and Communism, which as far as we are concerned is generally the same thing, one where an elite owns capital, and another where the state owns it, Distributism can not be established from above by a minority on the majority. There must be desire for it in society. You can not entrust property to someone who has no desire for it, the stroke will go rather astray. Thus the first mission of Distributism, is to increase a desire for economic liberty that comes with property amongst the populace, and then, only then, can some reform be enacted.