by Thomas Storck
[Dear friends, below is a copy of Thomas Storck's presentation from the recent "Catholicism and Economics" conference.]
Distributism is an economic system which encourages the widespread ownership of private productive property. This productive property is to be well-distributed so as to discourage extremes of wealth and poverty. The ideal of distributism is for each owner to work his own property, whether that is farm land, a workshop, a retail store or some kind of service, even if that ideal cannot always be realized.
Distributism is grounded in Catholic social teaching, for example in Pope Leo XIII's call that "The law, therefore, should favor ownership, and its policy should be to induce as many people as possible to become owners" (Rerum Novarum, no. 35), and this teaching is repeated by later popes, including Pius XI in Quadragesimo Anno (nos. 59-62, 65) and John XXIII in Mater et Magistra (nos. 85-89, 111-115). Distributists seek to minimize the employer/employee relationship by making as many people as possible owners of their own productive enterprises. Although the wage relationship, as Pius XI explained in Quadragesimo Anno (no. 101), is not unjust in itself, provided we are speaking of a living wage, distributists believe that when the employer/employee dichotomy becomes the usual way that an economy and a society are organized, this is dangerous and unwise.
To answer this question we must look for a minute at the purpose of economic activity. Why did God create man in such a way that we have both the capacity and the need for external goods? What is the purpose of our production of goods and services? A Christian, and indeed any thoughtful person, will realize that we need external goods not as ends in themselves, but to sustain a life that is truly human, a life in which more important matters, such as our families and friends, artistic and intellectual activity, and our relationship with Almighty God can flourish. Material goods are of course not evil, but in general, they are subordinate to more important values and they must be judged on whether and how well they serve these values. We wear shoes, for example, to protect our feet. That is their primary purpose. I might well need several pairs of shoes, but it is hard to see how anyone would need dozens of pairs of shoes. Similarly with dozens of cars or dozens of houses. In fact, our acquisition of material goods is or should be limited by their relationship to fulfilling human needs. As St. Thomas Aquinas wrote, "...the appetite of natural riches is not infinite, because according to a set measure they satisfy nature; but the appetite of artificial riches is infinite, because it serves inordinate concupiscence..." (Summa Theologiae, I-II, q. 2, a. 1 ad 3). Very few people would collect a hundred pairs of shoes, but people do tend to collect much more artificial wealth than they have any possible need for and in so doing they serve "inordinate concupiscence."
Now if what I have said about material goods is true, then the production of goods and services ought to be oriented toward human use and human need. Any society which understands that material things are subordinate to human life in its fullness and are meant to serve human needs, will not produce simply for the sake of piling up goods. Still less will it engage in financial transactions which have little or no relation to production or to the fulfilling of genuine human needs.
But when the employer/employee distinction becomes widespread and characteristic of an economy, and especially when it has assumed the form of the business corporation, there will exist a class of people one step removed from the production of real goods. That is, for the most part, owners and managers of capital who employ others to work are no longer directly focused on the production of goods to serve human needs, but gradually become preoccupied with what St. Thomas calls "artificial riches," either by concentrating their efforts on simply sales or, even worse, on manipulating financial instruments for their gain. So in time the managers of corporations tend to become more interested in mergers, buyouts and providing themselves generous salaries and pensions rather than in the actual product their company produces, because they have become to some degree separated from that product. If they are likely to make more money more quickly with a merger or acquisition than with the steady production and sale of useful goods or services, they will often opt for the former. And the mergers and acquisitions frequently result in less actual economic activity, less production of real goods and services, since the new company often must fire some of its workers in order to service the new debt it has taken on.
The stockholders, meanwhile, although legally the owners of a company, usually have little interest in what the company actually manufactures, so long as their dividend checks keep coming or the stock price is rising. Owners of mutual funds do not even own part of a company, but a form of artificial riches twice removed from real goods, traded on a market in which ownership of the actual company can change hands by the hour or the minute.
Here is Hilaire Belloc's description of the process.
"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." (An Essay on the Nature of Contemporary England, 1937) p. 67.
Distributism therefore seeks to maintain a healthy relationship between ownership and production by maintaining and encouraging small businesses, small workshops, small farms in which the owner would always be personally involved in the actual production of the product or service. He would see himself primarily as a craftsman or a farmer or as some kind of service provider, rather than as someone who could indifferently make and sell books or shoes or computers depending on where the greatest profit could be made at the moment.
What about industrial entities that because of the technology involved necessarily must be large-scale? How could you break down Ford Motor Co. into ten thousand micro-companies? This objection or question is hardly new to distributists and Belloc addressed it himself in one of the original distributist books, The Restoration of Property. The distributist solution is simple: in any entity that necessarily is large because of the technology involved, the workers themselves should be the owners of the firm. With regard to worker ownership, more than one model is also possible. John Paul II notes some of them, mentioning "proposals for joint ownership of the means of work, sharing by the workers in the management and/or profits of business, so-called shareholding by labor" (Laborem Exercens, no. 14).
Moreover, even large companies like Ford began years ago to outsource aspects of their manufacturing, showing that production can be decentralized even in a capitalist economy.
This question of the size of industrial enterprises brings up a related point about technology. It is often said that distributists are luddites, opposed to anything more complicated than hammars and saws and that distributism would hinder technological development. But this is not the case. Different attitudes toward technology exist among distributists and the question of what level of technology is appropriate for mankind, although a real and urgent question for the health of human society, is a separate question from the proper distribution of property. Distributism is perfectly compatible with many different levels and kinds of technology.
One very important aspect of a distributist economy, again in accordance with papal teaching, especially of Popes Leo XIII, Pius XI and Pius XII, is that individual workshops, retail firms and farms would be organized into occupational groups, or to give them their older name, guilds. Occupational groups are autonomous societies consisting of all who produce the same product or provide the same service. Their purpose is the necessary regulation of the industry in question with the twin aim of its honest prosperity and the provision to the public of a quality product or service. They would concern themselves with matters such as product quality, technological research, safety standards, prices, training programs and compensation for trainees, supply of raw materials and the like, and would represent the industry or trade in dealings with the government.
On the local level, an occupational group might purchase for common use an expensive piece of machinery which no individual owner could afford. Note that much of the economic and industrial regulation which the modern state undertakes would, under distributism, be exercised by these lower bodies. Occupational groups would not be agencies of the government, neither would they be voluntary organizations. They are true intermediate groups and have both private and public aspects. Membership in them would be required for all who exercise a trade or profession. Their governance, like that of the medieval guilds, would be democratic. In cases where an occupational group had started to act like a cartel and to ignore the common good, the public authorities would be empowered to step in to prevent or end the abuse in question. The nearest analog in our society would perhaps be a bar association, whose membership in some states is mandatory for attorneys and which regulates some aspects of legal education, admission to the bar and professional discipline.
These occupational groups or guilds would in fact free the government from many tasks which it now undertakes, but which it is not especially well suited to perform. Whenever possible the regulation of the workplace and the economy should not be done by the central government, but by smaller and lower bodies, in accordance with the principle of subsidiarity articulated by Pius XI. These occupational groups will also aid in spreading the spirit of solidarity or social charity among those engaged in the same line of work, so that instead of regarding each other as competitors, they will tend to see each other as engaged in a joint task to provide the public with a needed good or service, at the same time of course, receiving a sufficient remuneration to provide decently for themselves and their families.
The establishment of a distributist economy would necessarily take place gradually. Right now there is much we can do on our own, including patronizing as much as possible local markets and small stores, use of local currencies, establishing cooperatives and the like. Chesterton and Belloc saw favorable tax treatment for small firms or for transactions in which property becomes more widely distributed as important means for the legal establishment of distributism. But right now it is to our own collective actions that we must chiefly look.
Distributists do not desire an equality of incomes or heavy-handed regulation by the state. Distributism is an effort to provide an institutional framework in which our use of external goods would not conflict with our pursuit of holiness. At the heart of distributism is the attempt to place man's activities in a right relationship with God, insofar as human institutions can do that. Distributists realize that grace perfects nature, as St. Thomas taught, and that only if human institutions have a basic orientation toward justice and right can we expect divine grace to abound in human society.
I must now say a word about the other two economic systems represented here today, capitalism and socialism. If we are to talk intelligently about either of them we must be clear what we mean, otherwise we may be talking at cross purposes. As for capitalism, despite its ubiquity in the modern world, there is surprising little consensus among economists and economic historians as to exactly what it is. I will use the definition of Pope Pius XI in the encyclical which I have more than once quoted today, Quadragesimo Anno. Pope Pius calls it "that economic system in which were provided by different people the capital and labor jointly needed for production" (no. 100). In other words, the widespread separation of ownership from work, the general presence of the employer/employee relationship, which I have been criticizing today: this is capitalism, since "different people [provide] the capital and labor jointly needed for production." I have already said why distributists think that capitalism is dangerous and unwise. All the ills of capitalism, what is sometimes called the "spirit of capitalism," such as its excessive concentration upon amassing riches, the loss of genuine quality in production, the periodic instability of capitalist economies with their regular cycles of boom and bust, their tendency toward labor conflicts, all these are simply the more or less necessary results of that original separation between capital and labor, between ownership and work.
It is often assumed that capitalism is simply the system of private ownership of property. We have seen that this is not the case. Capitalism has entirely forgotten the reason private property exists and in reality is no friend of property. Above I quoted St. Thomas to the effect that "the appetite of natural riches is not infinite, because according to a set measure they satisfy nature." That is, natural goods have a purpose, an end, and should be judged on how well they fulfill that end. Under distributism the purpose of private property is clear: the support of the producer and his family and the provision of a quality product to society. But capitalism has divorced property from its natural purpose. The mere amassing of property beyond any rational need cannot be the reason why God gave man the use of material goods. G. K. Chesterton once wittily wrote,
"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." (What's Wrong with the World, p. 42)
Moreover, under capitalism, property is considered valuable only because of its exchange value. There is no essential legal difference between your property in a farm or home handed down in your family for five generations and your ownership of a share in a hedge fund. Both are equally sacred to the law only because both are equally capable of monetary exchange, of being bought and sold. Pope Leo XIII wrote (Rerum Novarum, no. 35), that "Men always work harder and more readily when they work on that which is their own; nay, they learn to love the very soil which yields in response to the labor of their hands, not only food to eat, but an abundance of the good things for themselves and those that are dear to them." This is the Church's defense of private property, a defense based on the intimate connection of person and property. But under capitalism property is anything from which I can make a buck. We can learn to love our farms and even our workshops, but it is pretty hard to love bank accounts or stock certificates. And if we ever do learn to love them, then perhaps we should tremble at the thought of the coming judgement of God, when we recall that St. Paul said that the "love of money is the root of all evil" (I Timothy 6:10).
In a capitalist economy and society property generally has no particular relation to any person. The U.S Supreme Court decision of a year or so ago that allowed a local government to exercise eminent domain to confiscate neighborhoods for building luxury housing shows how capitalism values property. So long as the residents receive money value equivalent to their homes, it makes no difference that a neighborhood and a way of life are destroyed. A capitalist society is incapable of seeing property as having anything other than market value, because for capitalism value is equivalent to money value. But distributists know that each piece of property is unique just as each person is unique, and that only when property is widespread and well-distributed can this intimate relation with what is one's own develop. Although material things are subordinate to the ultimate purposes of human life, they still have their appropriate and unique place and value. Hilaire Belloc thought that in a distributist society people would be more attached to their property and more opposed to excessive taxation or confiscation in the name of the public good. People would more easily see the difference between genuine property and the kind of legal fiction that looks upon a share in a futures contract as a form of real wealth.
Since the separation of ownership and work is the keynote of capitalism, wage labor will always be the most characteristic kind of labor under capitalism. Now what is one consequence of this? For the capitalist, wages are always an expense, always an item in his balance sheet which he would like to reduce or even eliminate. Hence the constant pressure under capitalism to reduce wages, lay off employees, to find cheaper places to manufacture, to ship jobs overseas or to import foreign workers at lower wages. And on the other hand, the periodic struggles by labor unions to increase or maintain workers' incomes. Labor unions have not always been just or reasonable in their wage demands, but they quite rationally felt that since the capitalist was usually going to pay as little as he could get away with, they would try to get as much as they could. Usually neither party felt itself bound by a standard of justice, so each tried to get as much for itself as it could. I am not arguing that there is a natural opposition between labor and capital, but rather that under capitalism, willy-nilly they are put into a situation where their own interests usually seem opposed to the interests of the other party. Distributism, however, eliminates or minimizes this opposition by eliminating as much as possible the wage relationship. Distributism thus reduces or eliminates an additional cause of the tension and strife which characterize capitalist economies.
Despite the frequent homage paid to small business in the United States, under capitalism the tendency is always toward bigger firms. This is because of what St. Thomas said, that "the appetite of artificial riches is infinite." When you separate economic activity and production from its immediate relation, on the one hand, to the legitimate needs of the producer and his family, and on the other, to the genuine needs of consumers, there is no reason not to expand your business as much as possible and in the process lose touch with the actual product you make. And with advertising even the natural need of consumers for material goods is stimulated and increased not according to what is needed, but according to what they can be convinced to buy. In 2004, although there were almost four times as many proprietorships as corporations, it is corporations that dominate our economy and in that same year corporate receipts were almost 20 times that of proprietorships. Americans profess to prefer small businesses, and if this is so, then it is not capitalism that we should promote, but distributism.
Capitalism is often given the credit for the prosperity that characterizes the Western world. But is this true? Capitalism did not create the scientific or technological revolutions, in fact, in some areas, such as public health, improvements were carried out by governments, sometimes over the objections of supporters of free markets. And when we speak of prosperity we need to be careful as to what we are talking about. The mere piling up of goods is not true prosperity. But capitalism fails to make any distinction between useful and harmful goods. It is ready to sell anything, provided it is legal, and it does not always scruple at that. It seeks the cheapest way of doing things regardless of how that affects product quality, for as Belloc pointed out, its sole criterion of excellence is wealth. The present crisis of capitalism is not an aberration, but simply the inevitable result of the forces that capitalism both unleashes and depends upon. Human greed has always existed, but capitalism has institutionalized it and made it the mainspring and virtue of its operation. Because of the strength of the human desire for gain, and because of the power of organized capital, when capitalism controls an economy it tends to take over the entire society so that, as one writer put it, society itself becomes an adjunct of the economy. The result is what some call a commercial society. Everything is now for sale or is measured in money price. The average cost of a wedding is around $30,000; average house size has increased since 1970 while average family size has shrunk; the share of aggregate income of the richest Americans has grown while that of the poorest has decreased in the last 29 years. In 1980 the lowest 20% of the population received 4.2% of the nation's aggregate income, while the top 20% received 44.1%. In 2006, the last year that I have data for, the lowest 20%'s share had fallen to 3.4% while the top 20% has risen to 50.5%. And for the top 5%, their share had risen from 16.5% to 22.3%. Incidentally, the share of aggregate income fell for every segment except the highest. And most recently the capitalist system has been kept going only by massive infusions of wealth from government in a series of cynical bailouts by both the Bush and the Obama administrations. This is capitalism in action.
Now socialism is a more slippery thing to define even than capitalism. This is not so much because conceptually it is more difficult, but because socialists, over the course of almost two centuries, have been modifying their economic ideas, very often in the right direction. Already by 1931 Pope Pius XI noted that socialism had split into two groups, the Communists and the moderate socialists, and that the programs of the latter "often strikingly approach the just demands of Christian social reformers" (no. 113).
But nonetheless the Church made the definitive statement in that same encyclical that "No sincere Catholic can be a true socialist." And why is this? Not necessarily because the proposals put forward by moderate socialists are always unjust, but because the socialist movement, as it historically has existed, has had at bottom a materialist philosophy, one that was hostile to supernatural religion and looked upon mankind as a purely material creature with purely material needs. Incidentally in Centesimus Annus (nos. 13, 19), John Paul II shows that the philosophy that gave rise to capitalism is equally as materialistic and atheistic as that of socialism, and that the post-World War II capitalist quest for the affluent society sought 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 autononous 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)
I have spoken of many of the specific structures that would characterize a distributist economy. But in closing I should say something about the effect which such an economy might have on our society and our culture, on each of us in fact as Christian believers. Fr. Ian Boyd, editor of The Chesterton Review, once described distributism as a "different rhythm of life." By that he meant, I think, that in a distributist society the external things of life, and especially what St. Thomas called "artificial riches," would have a much more subordinate role than they do in American society today. Around three-quarters of our gross domestic product consists of consumer spending, consumer spending moreover that is constantly stimulated by advertising and that for some has become a form of recreation. Yet does this make us happier? Does it help keep marriages and families together? Does it increase our piety, our love of God and neighbor? Has it contributed to outstanding works of art and literature and music? Most of us know that the answer to these questions is No. Holy Scripture long ago warned us of the corroding effect of seeking after riches. Since this is the Year of St. Paul, let me quote his words on the subject again. "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).
Distributists do not desire poverty for the human race, but we do desire a society in which economic goods are seen for what they are. To put material goods in their proper place is, of course, ultimately a work of divine grace. No economic system, including distributism, is sufficient to reform human nature, but the sacraments of the Church will be more efficacious if their natural setting is not the arid and toxic atmosphere produced by a society which makes commercial gain its highest aim. Grace perfects nature, St. Thomas said, but grace will not usually substitute for a deformed nature. Distributism therefore hopes to aid in the construction of our earthly city so that it will be, as much as possible, like the city of God. This is not Utopianism, this is simply attempting to carry out the commandments. For if I know that I must try to make my own life something fit for eternal life, why would Christians imagine that the life of their society should be based on any other aim?
I do not want to ignore or minimize the real difficulties that would accompany any attempt to establish a distributist economy. Although we know pretty much what we are aiming for and have some idea of the method for attaining it, necessarily many things would arise which we would not foresee. Moreover we realize that if we were to make a transition to distributism, it would have to be gradual. But we need not fear either the process or the endpoint. Distributists do not desire to deprive anyone of the legitimate fruits of his labor or to force an equality of incomes on society or to increase the state's power to interfere in our lives. We want only to turn man's attention to those things that matter, to those things that promote real happiness in this world and in the world to come.
Adam and Eve were put in the Garden of Eden to "till and keep it." Many centuries later we are still subject to the same necessity, that of working upon the raw material which God gives us. But if human labor is, as Pope John Paul said, "a participation in God's activity" (LE, no. 25), we cannot allow it to become detached from its twin purposes of providing a living for the worker and his family and providing society with the useful goods it needs. This distributism seeks to do without neglecting man's ultimate vocation to a life in which production and consumption will no longer matter and we will look upon God himself face to face.