Is There A Bellocian Response For Today’s Economic Crisis?

Dear readers of The Distributist Review,

Paul Likoudis, News Editor for The Wanderer -the oldest Catholic newspaper in the United States- recently conducted an interview with yours truly regarding "Bellocian Economics," and has kindly granted us permission to reprint it here. Our thanks go to Mr. Likoudis for the opportunity. We would also like to applaud The Wanderer for their recent defense of distributism.

If you would like to subscribe to the online or hardcopy version of the newspaper, please go to The Wanderer website.

For the benefit of our readers, a Scribd version is below. Please feel free to copy the Scribd version onto your websites, however please add the following link to The Wanderer (www.thewandererpress.com).


Is There A Bellocian Response For Today’s Economic Crisis?
By PAUL LIKOUDIS

One of the signs of the times of the past two decades is a growing interest in Distributism, often de­scribed as a “third way” economic philosophy opposed to both capi­talism and socialism. It was chiefly formulated by the British historian and journalist Hilaire Belloc and is firmly grounded in Catholic social teaching, especially Pope Leo XIII’s encyclical Rerum Novarum.

Belloc never claimed he was in­venting a new system; rather he wanted to return to an economic arrangement of society that pre­vailed in Europe before the rise of post- Reformation capitalism and the big banking houses that pros­pered on the poverty of the masses and war.

With the rise of globalization and the spread of “democratic cap­italism” after the fall of the Berlin Wall, capitalism — as we all see much too clearly today — is in cri­sis. Catholics looking for a solution are looking to Belloc, his associ­ates G.K. Chesterton and Fr. Vincent McNabb, OP, and the Americans Dorothy Day and Peter Maurin, founders of the Catholic Worker Movement.

One sign of the Belloc/Distribut­ism revival is The ChesterBelloc Mandate ( www. distributist. blog spot.com), put up by a 34-year-old New Yorker, Rich Aleman. This of­fers viewers an extensive library of writings by Belloc, Chesterton, Fr. McNabb, Day, papal encyclicals, and other Church documents, and contemporary expositors of Dis­tributism such as John Sharpe, Thomas Storck, John Medaille, Jo­seph Pearce, Dr. William Fahey, among others.

“There is definitely a resurgence in interest in Belloc,” said Aleman, “which can be seen in the growing number of online web sites devot­ed to his work, the reprinting of his books, and many organizations in existence modeled on Distributist ideals. One example is the E. F. Schumacher Society, named after the German economist and Catho­lic convert, E.F. Schumacher. Their development of the Community Land Trust Model has proven itself a terrific method for restoring local farming.

“In such a scheme, the Land Trust purchases the land, while the farmer is responsible only for his home and barn; the land trust then establishes as a lease contract be­tween the farmer and the trust for 99 years, thus removing the mort­gage and tax burden from the farm­er. The benefits of this as a transi­tional solution toward agricultural restoration are multiple.

“Then there are other Distribut­ist ideas offered such as measured and small- scale technology, the creation of agricultural schools, the support for credit unions, micro­lending, and land associations tasked with relieving unemploy­ment and home ownership,” said Aleman.

There are also political ideas that reflect the Bellocian ideal, Aleman added, such as the discontent on the part of the average citizen with the narrow difference between the politicians from both major parties, or that the left and right, Aleman said, “ are fashionable political markers with no true bearing on in­dividuals. Our lawmakers are either pro-life while undermining the ma­terial necessities of the family, or pro-death and at the same time championing the legitimate rights of the workers.

“However, today the individual­ist and collectivist dichotomies of old are fading, and are replaced in­stead with a restored concern for in­dependence for the family and so­cial interdependence for the com­munity, with a proper understand­ing that our material needs are sub­ordinate to our spiritual ones. Thus, the alternative to the materialism of capitalism and socialism is a social and economic policy centered on a wealth- producing society through family and cooperative ownership.

“This last takes the form of work­er- owned businesses, where the workplace is owned by the work­ers who produce the goods and ser­vices of society, such as the Arizmendi Bakery project that started in San Francisco and is spreading across California.”

The Arizmendi Bakery takes its name from Fr. Jose Maria Arizmen­diarrieta, a Basque priest who founded Mondragón Corporation in 1943, a self-managed worker co­operative which currently makes $16 billion in a range of products, including appliances and small parts manufacturing, and has some 77,000 worker-owners.

Another example, Aleman said, is Confcooperative in Bologna, Italy, a Catholic cooperative inspired by Rerum Novarum. That and other cooperatives in the Emilia-Roma­gna region make over 40% of the region’s GDP.

A model of a renaissance in non­industrial local agriculture is Polyface Farms in Staunton, Va., a Protestant endeavor to promote lo­cal farming through their school of husbandry. People who want to learn farming are provided room and board for various terms of appren­ticeship, and upon completion of their term, these apprentices return to their own region able to apply what they learn.

In another case, there is the Cath­olic Homesteading Movement lo­cated in Oxford, N.Y., also instruct­ing in the fundamentals of living off the land. Operated by Richard Fahey and his family, day and weeklong workshops are offered on topics ranging from organic garden­ing to fruit-tree grafting.

“People are willing to listen to al­ternatives such as Belloc and Chesterton proposed due to the fi­nancial crisis we are in,” said Ale­man. “I believe the Distributists and other like-minded reformers of their time, spoke clearly to the hearts and minds of the common man, unlike anything seen before or since, and the reemergence of their work is once again popular and necessary.”

Belloc’s Economics

For Catholics who are complete­ly unaware of Distributism, and Catholic social teaching, the basic thing to understand is that Belloc took as a personal mission Pope Leo XIII’s exhortation that “ the law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”

Man always fully dedicates him­self to the work and land that be­long to him, as Chesterton reiterat­ed through the parable of the Good Shepherd. Today most men have been convinced to pick between thousands of careers just to work for someone else, but the Distributists recalled to memory the natural de­sire for man to work and own for himself.

Money has been transformed from a means of exchange backed by commodities produced by the economy, to property. But money in itself is unproductive, as Belloc re­minds us. Only productive proper­ty is a generator of real wealth and strength for the family and the lo­cal community. Land allows us to secure something for ourselves and is a shelter against the gap between poverty and wealth. Most of us work and save money for that purpose, so we can plant our roots and raise our families in a home, because its val­ue to us transcends what the market tells us it is worth. For Belloc, a na­tion founded on micro-property is a stable and fruitful nation.

“Belloc believed that the conse­quences of narrowing the division between ownership and work pre­sents for the family an autonomy from the consolidation of power, and wealth for the community, which man, as a corporeal being would always be partially depen­dent on. This productive property supplies the requisites for domestic autonomy, which in turn provides for a greater means toward achiev­ing the ends of life, e.g., the eternal vision, or our original purpose,” said Aleman.

“By the family and workers own­ing the means of production — the tools, equipment, etc. — needed for labor to transform raw resources into goods and services, the family and the worker could be independent from big business and big govern­ment and pursue thrift as well as en­joy a robust spiritual life. After all, the ultimate goal of the ‘restoration of property’ — the title of another Belloc book — would lead to the Christian reform of morals, just as Pope Pius XI reiterated in Quadrag­esimo Anno, through the quest for a life of virtue, instead of the dog-eat­dog world.”

Through the lens of Belloc’s anal­yses, people today can gain a bet­ter understanding of the economic, political, and social crisis this coun­try is facing.

Belloc formulated his views on the coming of the Servile State, and the need for a Distributist society from the contemporary crisis En­gland was experiencing due to over­producing as a consequence of the embrace of mass production in lieu of the small producer, Aleman ob­served.

“The problem with overproduc­tion is that it creates under- con­sumption; large- scale business needs to churn out as many goods as it can create, while consumers are unable to match the volume of pro­duction dispensed. As a result, wag­es decline as the capitalist cuts la­bor costs in order to maximize profit. This cost reduction and de­sire of the capitalist to increase his purse leads him to ship his labor overseas.

“But of course here is the conun­drum. The consumer and the em­ployee are the same people, so as costs are reduced, the worker finds himself with a declining wage, and the employer expects the same worker to consume the goods he and other capitalists produce,” Aleman explained.

The only “solution” to overpro­duction is usury. The people with the profits lend them to people with the low wages. This sustains consump­tion for a while, but is ultimately self­defeating, so the government ab­sorbs the excess production. It fails because the government cannot per­form this task as the productive base on which its taxes depend has been shipped overseas. So now we borrow money from nations that are making things to sustain consumption. But of course, that can’t go on forever. There is a limit. The results are stag­gering. Today our nation is two­thirds consumption, and one-third production.

Stagnant wages, institutionalized usury, derivatives, impersonal in­vestment, planned obsolescence, waste, and consumer debt trans­formed a nation of small businesses and small farmers into over-indul­gent consumers, pitted between cor­porations passing their liabilities to taxpayers, an obliging government protecting them from liability, and the “stimulus” of Keynesian poli­cies which inflated government in the first place.

Belloc’s solution to big govern­ment is decentralization. “Distribut­ists are decentralists who believe most functions should occur at the smallest level as possible. In a Distributist state, the role of central government addresses challenges outside the scope of locality, such as defense, or international trade, amongst other things. Local guilds and other institutions exist to re­strain the concentration of power or property, whether bureaucratic or commercial,” said Aleman.

The early movement and Belloc believed the implementation of Distributism would not come from above, but from below, in other words, not by government force but by a proselytizing popular move­ment convinced and eager to real­ize the various facets of Distributist living.

The Mandate

“What I strive to do with The ChesterBelloc Mandate,” Aleman said, “is to create a fountain of in­formation for the academic and lay­man on the subject of Distributism and Catholic social teaching. Be­sides the work of Chesterton, Belloc, and Fr. McNabb, I’ve also included some of the work of Amintore Fanfani, Fr. Heinrich Pesch, A.J. Penty, B.A. Santamaria, Hilary Pepler, Cardinal Manning, and my favorite, K.L. Kenrick.

“The first time I ever heard the word ‘ Distributism’ was on Dale Ahlquist’s (president of the Ameri­can Chesterton Society) show on EWTN about six years ago. My cu­riosity led me to an article by Thomas Storck, called ‘ What is Distributism?’ Storck’s work left a lasting impression on me, as did some of the great work of the now defunct Caelum et Terra.

“However, I found information on Distributism to be scarce and often piecemeal. Luckily, after reading the republishing of the Distributists’ work by IHS Press — another sign of the Bellocian revival underway today — I decided to consolidate as many essays and articles as I could find on the topic. Some of these ma­terials required constant trips to the library, while others I searched for in schools across the country. I want­ed to prove to the readers of the site that Distributist thought wasn’t lim­ited to the classics, but extended to other publications such as America, Blackfriars, Commonweal, Orate Fratres, etc.

“I also wanted my readers to real­ize that Distributism wasn’t a small movement in Great Britain. From the various Catholic Land associations, the 24 branches of the Distributist League, the Guild of St. Joseph and St. Dominic, and the massive con­tributions from various columnists for Chesterton’s G.K.’s Weekly, Dis­tributism permeated across the Brit­ish Isle, and in Ireland where simi­lar features of a Distributist rural economy were already in place.

“The feedback has been very pos­itive, and over the years Distribut­ism has risen rapidly amongst Cath­olics and other Christians. Online and print journals are often chatting about it on a worldwide level. As a result, I’ve added a foreign-language section dedicated to contemporary articles about Distributism I’ve found from Spain, Argentina, France, Poland, and the Czech Republic, among many others.

“But The Mandate and the re­prints on it are one-half the topic. John Medaille, author of ‘The Voca­tion of Business: Social Justice in the Workplace,’ and I collaborate at The Distributist Review (www.distributism.blogspot.com), a contem­porary online web site discussing contemporary politics and socioeco­nomic issues from a Distributist per­spective. We believe we offer sound analysis about the current crisis in the Bellocian tradition.”

www.thewandererpress.com

The Wanderer

9 comments:

Septeus7,  Tuesday, March 10, 2009 at 2:48:00 PM CDT  

I'm sorry but I didn't follow this post at all. You seem to be recycling the Malthusian myth of the crisis of "over production" rather than the better model of the American School or the German Historical School's that the problem is centralization of capital that occurred with industrialization.

The problem ,as I can see it, is that centralized capital after mass production consistently undervalues the labor thus fails to provide enough payment needed to purchase the goods. It's not a crisis of over production but "underpayment." The reason capital tends to underpay the workers is because the farther away the owner of capital is from the worker less they understand Say's Law i.e. workers are your consumers. I agree with rest of your analysis but the general "over production" is an illusion created by underpayment of workers.

The only true forms of over production come in the form of cultural pollution i.e. "opium" for the minds of the working class to make them powerless against the Capital Ownership class which is actively stealing the value of their labor and then selling them debt to ensure necessary consumption. As the debt increase the form of production shifts from "things of permanence" to "opium" and "bread and circuses." So we have a over production things of fleeting value and the under production of real value. That's the real crisis of "overproduction" resulting from underpayment of labor which is the result of the centralization of capital.

John Médaille Tuesday, March 10, 2009 at 3:26:00 PM CDT  

Sept, Excellent observation: not overproduction, but underpayment. Obviously, if the markets cannot be cleared, it is because people do not have the purchasing power with which to clear them.

Septeus7,  Tuesday, March 10, 2009 at 5:38:00 PM CDT  

I'm actually thinking that it might be both depending on the businesses involved. I do know of situations where people are overpaid without considering the number of customers.

Regardless of "over production" or "underpayment" it is a function centralized capital not be able to judge demand because it doesn't understand the direct stake because ownership is removed from the physical process of economy. Capital is just shareholding instead of stakeholding so there's no "harmony of interest."

Cooperatives go a long way to correct this problem. The era is top down organization is over the era of the network has arrived and until we stop looking at the fake value of shareholder paper and start building an economy around stakeholder value we are heading for a "New Dark Age" not unlike the 14th century with the Lombard banking collapse.

Hopefully, we Distributists and Decentralists of all types can network and mobilize before we are in total breakdown complete with plagues and a new "Black Death."

We are really in moral crisis concerning the question of human value that started a long time ago with the "Enlightenment" elites rebellion against the classicalism and Christian Orthodoxy that created Western Civilization and slowly infected the entire world. But I believe we have an opportunity now that our very elites are bankrupt and without ideas and perhaps even fearful of the uncertain world their corruption has created perhaps even members of the elites will begin to look back and consider of the universal truths regarding human beings that made the "West" the "West."

It's not like we haven't been here before and God's truth won't prevail. We just need to to learn to accept it.

A "lost decade" to teach us would be well worth it considering the peril we face if we refuse to learn and obey.

What I'm seeing as are only options at this point are a "lost decade" to revive moral leadership or a least 4 generations of a Dark Age.

Richard Aleman Wednesday, March 11, 2009 at 7:26:00 AM CDT  

Hi Septeus,

First, I want to thank you for your reply.

Let’s start with your comment that centralization of capital was the result of industrialization. We agree. But we disagree with the root problem. Belloc and Penty both believed that mass production itself was the cause leading to waste, planned obsolescence, etc., not only the lowering of wages. Mass production leads to overproduction because demand cannot possibly keep up with the supply. A shoe factory creating one particular shoe cannot sustain itself producing millions of pairs of shoes to a population of thousands. Sure it would turn a profit in the short term, but would cease to sell in the long, unless it lowered its prices dramatically (thus why Leo XIII said it was immoral to lower prices to the detriment of employees), eliminated local producers, lowered wages, fabricated cheap quality goods, monopolized, and created artificial want.
Mass production then is untenable without the elimination of widespread ownership, and once it achieves it, lowers wages because it can pursue a greater maximization of profit.

Mass production also leads to free trade, which only serves that same concentration of capital. What happened with the repeal of the Corn Laws in 19th century England? What is happening today to Mexico? Domestic production is crushed and the local farmer finds himself headed to the city to work in a factory.

This “opium” is the result of mass production first, concentrated capital second.
We agree with the effects, but we both disagree with the cause, much as I would say contraception leads to abortion, while others believe abortion is the root cause of the depreciation of life. Both sever humanity, but make no mistake, it all begins with contraception.

I don't disagree that capital is centralized post-mass production, but that is easy to observe, as a decentralized marketplace would always lead to widespread capital (and this requires the more important wide diffusion of property). Neither would I disagree if you were to say the intent was the concentration of capital all along. But I would disagree that overproduction, the effects of mass production, was not the principle agent.

John Médaille Wednesday, March 11, 2009 at 11:06:00 AM CDT  

In general, I would say that overproduction = underconsumption = underpayment. But there is a problem with mass production even if there was proper payment, because at some point a market becomes saturated. If you are producing faster than rising population and needs dictate, sooner or later you will reach a limit. The problem is really better diagnosed by Kevin Carson, who points out that a "supply-push" economy, where you turn out goods whether there is demand or not, and then rely on advertising to create demand, will always face this problem. Distributed industrial systems are "demand-push," creating products in response to demand and hence with less possibility of overproduction.

Septeus7,  Wednesday, March 11, 2009 at 7:46:00 PM CDT  

Looks like a bit of the Chicken vs. the Egg kind of debate on what cause what and I'm not that good of an economic historian to make any general determination.

In general, I don't saying the problem is over production because in the Third World often thanks Imperial looting there is extreme under production.

Take a look at Sudan where you have excellent soil but no water so you have famines where you should have a breadbasket.

I find it hard argue that we shouldn't be mass producing tractors and power plants so we can start saving human lives.

Quote: "We agree with the effects, but we both disagree with the cause, much as I would say contraception leads to abortion, while others believe abortion is the root cause of the depreciation of life. Both sever humanity, but make no mistake, it all begins with contraception."

This is kinda of topic but you brought it up and I've been thinking about this issue some.

I agree that contraception is closer to the root cause because says essential producing human life a an expense to be gotten rid of using technology. It is a Malthusian, Eugenic, and even oligarchical view of man.

But then comes question of how we fight contraception?

Well, I've protested abortion and help fund raise for the Pro-Life movement along with other conservative and Christians and what you we have to show for it?

Essentially nothing. Roe vs. Wade is still law and abortion is on the rise again and will probably reach record levels during this depression.

So where did we go wrong? This is my thinking and tell me where I go wrong because I'm probably going to way outside the box on this one because I'm going to address the economics of abortion.

I think we failed to understand what has been called the "law of attraction."

We have been trying to negate of frame of thought but every time we do that we concede the operation of the frame. For example, say we ban contraceptives? What have we done? Have we made anyone stop wanting to using contraceptives? No, we merely made it more expensive like narcotics. People will still seek contraceptives because they have false beliefs about human life.

As long as people believe that abortion or contraception are tools in cutting an unnecessary expenses out of their lives they will continue use those technologies and fight anyone who opposes are attacking their "right to control their own bodies" etc.. etc... Now they what are really saying is that they want the "right" to pursue what they think is their is economic self interest.

So how do we change this believe and teach people the truth that they are not merely reducing an economic cost but rather destroying the economic blessing of human life and the potential for real value in life altogether?

My solution is radical and many will say it is too dangerous and potentially worse the problem but I'm tired of tilting at windmills arguing about "rights."

What is abortion? What is contraception? Answer: They are technology that enable modern society to hide eugenics and infanticide.

So we can defeat evil technology with good technology. Technology teaches us and if we develop "artificial wombs" the very development of that technology to end of replacing the practice of abortion will destroy the culture of death because we are no longer mobilizing our economy to destroy our children but to save them.

It robs the Eugenist's of the arguments about "right to control her own body" and other such nonsense by physically showing that real control over one's body creates life and doesn't destroy it.

Although it may upset Libertarians, I think we should have a national project akin to the Moon Shot to this development technology because I want to bring entire nation into this process of creating to protect human life. But even if we can't do this with the government help I still think we should do it.

Well I'll let you guys rip this line of thinking apart but I have been thinking about some of the counter arguments and I don't think they work but I wouldn't want to influence your reactions to this idea at this time.

Clare Saturday, March 14, 2009 at 8:37:00 PM CDT  

Pope's recent off-the-cuff calling for dialog re: crisis:
"to block the domination of egoism, which presents itself under the pretenses of science" translated at Acton blog
http://www.acton.org/commentary/511_pope_benedict_economic_realism.php
He recognizes that macroeconomics will not be realized in microeconomics without a conversion of hearts:
"... education in justice is a priority, we can also say the priority." and "... good structures will not be realized if justice is opposed by the egoism of competent people."

Tom Laney Monday, March 16, 2009 at 9:31:00 AM CDT  

http://www.employeeownedauto.org/2601.html

Here's a solution (above) for auto production that is not Bellocian or perfect but could open the way for auto workers to develop a more Guild-like production system.

I'd appreciate comments on it.

Anonymous,  Monday, March 23, 2009 at 11:21:00 PM CDT  

[Well, I've protested abortion and help fund raise for the Pro-Life movement along with other conservative and Christians and what you we have to show for it?

Essentially nothing. Roe vs. Wade is still law and abortion is on the rise again and will probably reach record levels during this depression. ]
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I think the problem lies in the fact that the media is in the hands of those with an agenda . If people were educated , graphically and en masse , about what an abortion really is , abortions would be greatly diminished .

Also , there is a high demand for adoption , if women who were considering abortion were to be financially rewarded by the adoptees for carrying to term and contracting their baby to an adoption and at the same time these women were seen in the culture in a postive way , abortions would be practically non-existant .

What is needed is for there to be a media "regime change "

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