Chapter XVII: The Practice of Distributism

The next-to-last chapter. Comments welcome

Somewhere, the Sage hath said, Philosophy is easy; plumbing is hard. The Sage is correct; we should be suspicious of systems that exist only in the mind, but are never seen on the ground. It is only on the ground that they can be tested, and on those grounds alone we should take our stand. It is easy—too easy—to come up with abstract systems which are perfection itself; it is much harder to make them work. The problem with abstract theorizing is that creating theories is a selection process; one must decide what to leave in a what to take out. But one can never know that the right elements have been included without seeing how the system works in practice. Hence, practice alone is the only standard of judgment about social systems.

In Chapter II we noted the failure to Capitalism to live up to its own standards, to deliver what it promises. We noted that it always and everywhere ends up with a statist economy, ever more dependent on government interventions. But such a critique would ring hollow if Distributism did not have its own practice which the capitalist could examine in the same way we have examined capitalism. Fortunately, there are many long-standing examples of distributist economies and practices, and their problems and successes can be examined in as much detail as you like; we can see whether the theory describes an actual practice, and whether the practice works as advertised. Here I will mention only of the more prominent examples, and I invite the reader to examine them in greater detail for himself.

The Mondragón Cooperative Corporation (MCC). Recently, the workers in the Fagor Appliance Factory in Mondragón, Spain, received an 8% cut in pay.1⁠ This is not unusual in such hard economic times. What is unusual is that the workers voted themselves this pay cut. They could do this because the workers are also the owners of the firm. Fagor is part of the Mondragón Cooperative Corporation, a collection of cooperatives in Spain founded over 50 years ago.

The story of this remarkable company begins with a rather remarkable man, Fr. José Maria Arizmendiarrieta, who was assigned in 1941 to the village of Mondragón in the Basque region of Spain. The Basque region had been devastated by the Spanish Civil War (1936-1938); they had supported the losing side and had been singled out by Franco for reprisals. Large numbers of Basque were executed or imprisoned, and poverty and unemployment remained endemic until the 1950’s. In Fr. José’s words, “We lost the Civil War, and we became an occupied region.”2 However, the independent spirit of the Basques proved to be fertile ground for the ideas of Fr. José. He took on the project of alleviating the poverty of the region. For him, the solution lay in the pages of Rerum Novarum, Quadragesimo Anno, and the thinkers who had pondered the principles these encyclicals contained. Property, and its proper use, was central to his thought, as it was to Pope Leo and to Belloc and Chesterton. “Property,” Fr. José wrote, “is valued in so far as it serves as an efficient resource for building responsibility and efficiency in any vision of community life in a decentralized form.”3

Fr. José’s first step was the education of the people into the Distributist ideal. He became the counselor for the Church’s lay social and cultural arm, known as “Catholic Action,” and formed the Hezibide Elkartea, The League for Education and Culture, which established a training school for apprentices. He helped a group of these students become engineers, and later encouraged them to form a company of their own on cooperative lines. The engineers agreed to do so, but had no specific plan or product in mind. In order to establish a factory, it was necessary to obtain a license from the government, which was not always cooperative toward the Basques. But when a nearby stove factory went bankrupt, they raised $360,000 from the community to buy it (1955).4 This first of the co-operatives was named Ulgor, which was an acronym from the names of the five students of Fr. José’s who were the founders. It was first organized as a conventional business because there was no legal form for cooperatives, nor would there be until 1959.

From such humble beginnings, the cooperative movement has grown to an organization that employs over 100,000 people in Spain, has extensive international holdings, has, as of 2007, €33 billion in assets (approximately US$43 billion), and revenues of €17 billion. 80% of their Spanish workers are also owners, and the Cooperative is working to extend the cooperative ideal to their foreign subsidiaries.5⁠ 53% of the profits are placed in employee-owner accounts. The cooperatives engage in manufacturing of consumer and capital goods, construction, engineering, finance, and retailing. But aside from being a vast business and industrial enterprise, the corporation is also a social enterprise. It operates social insurance programs, training institutes, research centers, its own school system, and a university, and it does it all without government support.

Mondragón has a unique form of industrial organization. Each worker is a member of two organizations, the General Assembly and the Social Council. The first is the supreme governing body of the corporation, while the second functions in a manner analogous to a labor union. The General Assembly represents the workers as owners, while the Social Council represents the owners as workers. Voting in the General Assembly is on the basis of “one worker, one vote,” and since the corporation operates entirely form internal funds, there are no outside shareholders to outvote the workers in their own cooperatives. Moreover, it is impossible for the managers to form a separate class which lords it over both shareholders and workers and appropriates to itself the rewards that belong to both; the salaries of the highest-paid employee is limited to 8 times that of the lowest paid.

Mondragón has a 50 year history of growth that no capitalist organization can match. They have survived and grown in good times and bad. Their success proves that the capitalist model of production, which involves a separation between capital and labor, is not the only model and certainly not the most successful model. The great irony is that Mondragón exemplifies the libertarian ideal in a way that no libertarian system ever does. While the Austrian libertarians can never point to a working model of their system, the Distributists can point to a system that embodies all the objectives of a libertarian economy, but only by abandoning the radical individualism of the Austrians in favor of the principles of solidarity and subsidiarity.

The Cooperative Economy of Emilia-Romagna. Another large-scale example of Distributism in action occurs in the Emilia-Romagna, the area around Bologna, which is one of 20 administrative districts in Italy. This region has a 100 year history of cooperativism, but the coops were suppressed in the 1930's by the Fascists. After the war, with the region in ruins, the cooperative spirit was revived and has grown every since, until now there are about 8,000 coops. The are of every conceivable size and variety. The majority are small and medium size enterprises, and they work in every area of the economy: manufacturing, agriculture, finance, retailing, and social services.

The “Emilian Model” is quite different from that used in Mondragón. While the MCC uses a hierarchical model that resembles a multi-divisional corporation (presuming the divisions of a corporation were free to leave at any time) the Emilian model is one of networking among a large variety of independent firms. These networks are quite flexible, and may change from job to job, combining a high degree of integration for specific orders with a high degree of independence. The cooperation among the firms is institutionalized many in two organizations, ERVET (The Emilia-Romagna Development Agency) and the CNA (The National Confederation of Artisans).

ERVET provides a series of “real” service centers (as opposed to the “government” service centers) to businesses which provide business plan analysis, marketing, technology transfer, and other services. The centers are organized around various industries; CITER, for example, serves the fashion and textile industries, QUASCO serves construction, CEMOTOR serves earth-moving equipment, etc. CNA serves the small artigiani, the artisanal firms with fewer than 18 employees, and where the owner works within the firm, and adds financing, payroll, and similar services to the mix.

We discussed in Chapter 16 how the cooperatives work as an industrial model. Here let us only add that that the Emilian Model is based on the concept of reciprocity. Reciprocity revolves around the notion of bi-directional transfers; it is not so much a defined exchange relationship with a set price as it does an expectation that what one gets will be proportional to what one gives. The element of trust is very important, which lowers the transaction costs of contracts, lawyers, unlike modern corporations, where such expenses are a high proportion of the cost of doing business. But more than that, since reciprocity is the principle that normally obtains in healthy families and communities, the economic system reinforces both the family and civil society, rather than works against them.

Space does not permit me to explore the richness of the Emilian Model. I will simply note here some of its economic results. The cooperatives supply 35% of the GDP of the region, and wages are 50% higher than in the rest of Italy. The region's productivity and standard of living are among the highest in Europe. The entrepreneurial spirit is high, with over 8% of the workforce either self-employed or owning their own business. There are 90,000 manufacturing enterprises in the region, certainly one of the densest concentrations per capita in the world. Some have called the Emilian Model “molecular capitalism”; but whatever you call it, it is certainly competitive, if not outright superior, to corporate capitalism.

Taiwan and the “Land to the Tiller” Program. In 1949, the Chinese Nationalists were defeated by the Communists and fled to the island of Formosa, now called Taiwan. The Taiwan that greeted the refugees was a feudal backwater. Mostly it was a nation of small sharecroppers paying rents of 50-70% of the crop. Most of the land was owned by members of 20 families. Further, since the returns on land were so high, there was little interest in investing in industry. In addition, Taiwan had to absorb 2 million refugees from the mainland and bear the costs of defense. It was expected that Taiwan would soon fall to the mainland communists, as the Kuomintang had never proved very effective in controlling China. It was necessary to act quickly to reform Taiwan; it was the very failure to enact reforms which had made the Kuomintang unpopular in China and led to the victory of the Communists. They could not make the same mistake twice.

Effective control of the orient was in the hands of General Douglas MacArthur, who happened to be a distributist. He worked out a plan of reform for Korea, Japan, and Taiwan. Here we deal just with the reforms in Taiwan. The basis of the plan is that the farmers who actually worked the land would come into possession. The landowners were forced to sell the land to their tenants at a price equal to 2.5 times the average crop. The money to buy the land was given to the farmers, who repaid it over 10 years. Under this “land to the tiller” program, 432,000 families came into possession of their own land.

The results were dramatic. Farm production increased as farmers used more fertilizer, went to multiple cropping with as many as four crops/year and diversified production to higher value but more labor intensive crops. Production increased at an annual rate of 5.6% from 1953 thru 1970. The farmers suddenly had something they never had before: relatively large amounts of disposable income. Now they needed some place to spend it. Providing products to buy would require an expansion of industry on the island, if the country was not to be dependent on imports.

Most of the payments to the landowners was not in the form of cash, but in bonds. These bonds were negotiable industrial bonds which they could then invest in any light industry the former landowners chose.6 Indeed, there was nothing else they could do with the bonds; it was a case of “invest or die.” The strategy was twofold: get capital, in the form of land, into the hands of farmers; get capital, in the form of industrial investment, in the hands of entrepreneurs. Note that the strategy provided both goods to buy and purchasers to buy them; it was a binary strategy, giving equal weight to production and consumption. A tremendous number of capitalists were created overnight; the former landowners, who previously had no interest in manufacturing, were converted into instant urban capitalists and had to find places to invest the proceeds from the lands sales; the landless peasants became proprietors. By this method, the government provided support to Taiwan’s fledgling industrial base. But the fact that the actual companies to invest in were picked by the former landowners meant better investment decisions than if the government had tried to pick the winners itself. Industrial production expanded, giving the newly empowered peasants some place to spend the money buying locally produced goods.

We can see the Taiwanese experiment for the conjuring trick it was: the government sold land it didn’t own, bought with money it didn’t have and financed industries that didn’t exist; the government managed to both expand the consumer market and to provide the industrial production necessary to serve that market and serve it from local resources. There was no inflation because the money supply expanded at the same rate as production by a sort of automatic method. Redistribution allowed for expansion of the consumer base which allowed for expansion of the industrial base. It is not often in business and economics that one gets to see solutions which are elegant and beautiful, but certainly the land to the tiller program qualifies.

The results have been impressive, both in economic and social terms. Starting with crude products made in small workshops, Taiwan followed the industrial value-added food chain right shipbuilding, electronics, and every sort of industry. Taiwan has managed 50 years of high growth rates, increased equality, and low tax rates (comparatively). Unemployment was low to non-existent through most of Taiwan’s post war history. Before 2000, it rarely exceeded 3% and usually was less than 2%. Since 2000, the rate has risen as high as the low 5’s before dropping back to the 4% range as Taiwan struggles to adjust to outsourcing to mainland China. By human measures, Taiwan’s growth was also a great success. For example, the literacy rate increased from 45% in 1946 to 93% in 1989; life expectancy went from 59 years in 1952 to 74 years in 1989 while the per capita caloric intake went from 2,078 calories to 3,070 in the same period. Living space per person went 4.6 square meters to 23.8.7⁠ Further, Taiwan and the other “Asian Tigers” were able to achieve these successes despite having population densities among the highest in the world, a fact which contradicts the prevailing dogma that population density is an impediment to growth.

Employee Stock Ownership Plans (ESOP). ESOPs are a leveraged buy-out of a company in behalf of the employees. To simplify a complex process, a fund is set up to borrow the money with which to buy the company. As the loan is repaid from the profits of the firm, ownership is transferred to the employees, so that over time they become owners of their own firm. There are thousands of ESOPs in theory, however there are a much smaller number in practice because the law allows ESOPs to function as a tax dodge, so many are set up with no intention of transferrring real ownership. ENRON, for example, was an ESOP in name, but certainly not in fact; the owners had no intention of relinquishing their control.

However, where there is a sincere intention to transfer real ownership to the workers, ESOPs tend to outperform their “shareholder” corporate cousins. The sign of this sincere intention is not so much the formality of the ESOP, but the culture of “open management” that is established within the firm. An outstanding example of this is the Springfield Re-manufacturing Company (SRC), which was originally a division of International Harvester, but was purchased by a group of its employees, headed by Jack Stack. These men had an idea of business that was completely different from the remote shareholder model of the modern corporation.

Of course, Stack and his colleagues would offer ownership to their employees, but this was just a means to an end:

Part of the problem has been the tendency of companies to use stock merely as a form of compensation—a carrot to get people to work harder. In a company with a strong culture of ownership, stock is more than compensation. First and foremost, it's a vehicle for change....Equity is used to involve people in the process of making a difference in the world. Why? Because business is not an end in itself. It's a means to an end.8

What Stack set out to create was a community of entrepreneurs, rather than just a collection of people with jobs; indeed, SRC wanted to do away with “jobs” and the employee mentality altogether. But the primary problem is that people have been trained to see themselves in terms of jobs rather than entrepreneurs; they see themselves as merely performing a function for somebody else, usually somebody very remote. To accomplish this goal, to create this community, SRC used two means: education and equity-sharing.

To educate the members of the firm (it would be wrong to say “employees”), Stack invented a system of informal but continuous education he called The Great Game of Business. If the workers are going to take responsibility for the firm, they must know the rules of business, and the Great Game was the means of teaching them these rules, from the simplest to the most complex. As Stack evaluates the results of this “game,” he notes that “we’ve had dozens of employees rise from the shop floor…to top management positions, and they’re far better qualified than a lot of MBAs I see.”9⁠ The game required that the firm practice open-book management. If all members of the firm are to be responsible for the firm, then they all must have equal access to the books. Further, you cannot truly educate employees unless they can see how their actions affect the firm, and this is impossible without looking at the books. But the greatest benefit, as Jack Stack notes is that, “When you open your books—really open them—you also open your mind, and neither your mind nor your books will be closed again.”10

Continuous education and open-book management frees the firm from the constraints of the division of labor, which confines each worker to just one task, and from the quasi-militaristic “top-down” management, which confines responsibility to just one group. The results of this culture at SRC have been nothing short of phenomenal. In 20 years, they went from sales of $16 million to $185 million, with similar results for profit and shareholder equity. But it is in the area of shareholder equity that the firm really stands out, because all of the shares are owned by the workers. The company has 727 worker-owners, of whom only five were original members of the firm. The other 722 shareholders own 64% of the firm. This point is crucial, because “owning their work” must involve real ownership, and not just some psychic substitute. Equity-sharing defines the community, a community built on the premise that all the members of the community must share in the wealth that the community creates.

Other Examples. There are many other functioning examples of Distributism in action: micro-banking, mutual banks and insurance companies, buyers and producers cooperatives of every sort. This sample should be enough how distributism works in practice. Distributists are often accused of being “back to the land” romantics. The truth is otherwise. It is the capitalist who is the true romantic, because he believes in an ideal of which there is no functioning example; capitalism is never able to operate anywhere near its own principles; the mortality rates are simply too high. The Distributist, on the other hand, is a hard-headed realist, believing in what he can see, putting his faith in systems that work in practice. In reality, this idealistic capitalism always ends up relying on government power and money to rescue it from its own idealistic excesses; the distributist relies on functioning systems to deal with . Distributism goes from success to success; capitalism goes from bailout to bailout.

1“All in this together,” Economist.com, March 26, 2009, http://www.economist.com/business/displaystory.cfm?story_id=13381546

2R. Matthews, Jobs of Our Own: Building a Stakeholder Society (Sydney, Australia and West Wickham, UK: Comerford and Miller, 1999), 184

3Ibid., 185

4Ibid., 195

5Mondragón Cooperative Corporation, “2007 Annual Report,” December 31, 2007, http://www.mcc.es/ing/magnitudes/memoria2007.pdf

6J. Jacobs, Cities and the Wealth of Nations: Principles of Economic Life (New York: Random House, 1985), 100

7S.W.Y. Kuo, “Economic Development of the Republic of China on Taiwan,” in Agriculture on the Road to Industrialization (Baltimore: John Hopkins University Press, 1995), 334

8J. Stack, A Stake in the Outcome: Building a Culture of Ownership for the Long-Term Success of Your Business (New York: Doubleday, 2003), 5

9Ibid., 9

10Ibid., 9 Boldface in original.

24 comments:

Tom Laney Sunday, June 7, 2009 at 8:42:00 AM CDT  

Personally I have trouble with plumbing too.

But this is another exciting chapter for us working stiffs and I have passed it along to my auto friends.

Man! People are doing a lot of complaining about the government and UAW but still seem afraid to trust their common sense about economics and the need to return to Solidarity action.

This helps!

Gildas Sunday, June 7, 2009 at 8:56:00 AM CDT  

The key point here is that Distributism is being presented in a way that should dispel once and for all the shibboleth that it is a "back to the land romantic" movement; the examples of well-functioning enterprises demonstrate that quite clearly.

I am greatly looking forward to reading the entire book and will feature it on my blog, which deals with issues related to Distributism among other things: www.fromthecatacombs.info

Donald Goodman Monday, June 8, 2009 at 9:40:00 AM CDT  

+AMDG

Let's not forget, though, that distributism applies to *all* productive industries, including agriculture.

Fields, forests, factories, mines. These are the keystones of an economy, and these are what distributism seeks to have more widely distributed. It's certainly true that distributism isn't a "back to the land" movement in the sense that we don't like industry; but it's also certainly true that distributism *is* a "back to the land" movement in the sense that we want agriculture much more widely distributed, which means a much larger percentage of our citizens would be engaged in agriculture in a distributist society than at present. Equally true, however, would be that a much larger percentage of our citizenry would be engaged in industrial labor in factories, and in every other type of productive labor.

We have built a society of financiers and civil servants. Distributism wants a society of owners who produce. Getting back to the land is part---but only part---of that.

Praise be to Christ the King!

John Médaille Monday, June 8, 2009 at 1:07:00 PM CDT  

Tom, Auto workers ought to see the film "The Take", reviewed at http://distributism.blogspot.com/2007/10/fire-boss.html

Donald, I emphasize the industrial applications to show that Distributism is not solely an agrarian movement, although it is certainly that as well. The phrase I like to use is that agrarianism is not about everybody going back to the farm (which I certainly have no desire to do) but about restoring the proper relationship between town and country.

Donald Goodman Monday, June 8, 2009 at 2:21:00 PM CDT  

+AMDG

John, I like that phrase, too; it puts a pretty fine point on it. And we do need more mention of the industrial applications of distributism. When I was in college, that was the most common objection I heard: that an industrial economy couldn't possibly survive on distributist principles. This sort of thing proves them wrong.

Tom Laney Monday, June 8, 2009 at 4:50:00 PM CDT  

John- "The Take" has made the rounds but it's a good idea to recycle it especially now.

God knows, the auto workers can use the inspiration!

CP,  Tuesday, June 9, 2009 at 12:48:00 PM CDT  

I've been reading the connected Distributism blogs for several weeks now. I believe in the ideals and practice of Distributism and see it as a viable and just third way .

What concerns me with the comments to this post, and to other posts, is the intense focus on agrarian and industrial economies. There seems to be an implication that this is the only form of productive labor. I understand the core belief in the need for workers to become owners and producers, but I do not believe that productive wealth is solely material.

Man is, by his nature, a creative being. He strives to develop new ways to solve problems through technologies. This has been happening since the first stone tools were fashioned to the creation of the microprocessor. His technological developments have brought us to a point where farming and industrial work require less labor. This has been a major contributing factor to how workers have shifted from these sectors into becoming "financiers and civil servants."

The answer to practicing distributism is not to send the "financiers and civil servants" back to the farms and factories to create more material goods less efficiently than is done today. Instead, we should be focusing on redirecting the "financiers and civil servants" into positions that further build upon man's innate creativity– into jobs that seek to solve the issues of today through new technologies.

This does not mean that we should leave the farming and heavy industry to giant multinationals. We should seek subsidiarity in these cases. Nevertheless, there is a good chance that this drive for subsidiarity might even decrease the number of people needed to work in these industries by eliminating the obese corporate infrastructure of non-producers.

The goal of distributism should be to focus the vast numbers of non-producing workers to move into creating items that will better the state of mankind. Some of this may be creating new technologies that would make agriculture and heavy industry more efficient. However, much of this may be work in light industries and creative fields that produce new medicines, information technologies, and other items to increase the health and knowledge of the general population.

It is important that distributists not get trapped presenting 19th century arguments for 21st century realities. One might argue that much of the world does not share the 21st century technologies that the United States has in abundance. But, as has typically happened, the predominant economic model will come from the most powerful. To focus on the practice of distributism, we should seek to look for examples of how to best utilize the skills that today's workforce possesses.

Donald Goodman Tuesday, June 9, 2009 at 3:20:00 PM CDT  

+AMDG

"One might argue that much of the world does not share the 21st century technologies that the United States has in abundance."

One would be wrong, of course, since most of that technology isn't made anywhere near the United States. But it's true that it's more dispersed through our population than it is in many foreign lands, if that's what you mean.

"It is important that distributists not get trapped presenting 19th century arguments for 21st century realities."

It's odd that you characterize this as a problem with distributism because it's focusing too much on production. The reason it's odd is because distributism is all about production; it's like saying that medicine focuses too much on keeping people healthy.

The fact that farming and industry "require less labor" is a complex issue. One reason, for example, that farming is less labor-intensive than it once was is because it now consists largely in growing genetically-engineered crops and inundating the land non-sustainably with petroleum-based fertilizers and pesticides; sustainable agriculture, which cares for the soil and can last for millenia, is still pretty labor-intensive by comparison, though a knowledgeable farmer will produce comparable yields. The point, of course, is that a mere "improvement" in technology doesn't mean that the effort spent in the "improvement" wouldn't have been better dedicated to some useful productive task. Sometimes these technological "improvements" have turned out to be detriments, at least partly.

This isn't to say that creation of new discoveries and technologies isn't useful. Agricultural research, for example, has produced enormous advances in sustainable agriculture, even separate and apart from chemical farming, and this is a good thing. But to say that our less labor-intensive industry is an unparalleled benefit to mankind, and that we ought to dedicate ourselves further to similar efforts to spare us all from more work, I think is going too far.

"To focus on the practice of distributism, we should seek to look for examples of how to best utilize the skills that today's workforce possesses."

Once again, part of the point of distributism is that our workforce is largely trained for the wrong things. We have a vast body of workers dedicated entirely to, as you put it, "the obese corporate infrastructure of non-producers." Not to mention the financiers and their dependent employees, and any number of other non-productive fields. Most of us will have to learn some new skills if we're to change that.

If the ordinary worker is going to be an owner of productive property, he's going to have to learn some productive skills.

If the ordinary workers *isn't* going to be an owner of productive property, then it's not distributism anymore.

"The goal of distributism should be to focus the vast numbers of non-producing workers to move into creating items that will better the state of mankind."

But that's precisely what distributists believe that having a large body of productive, owning workers will do.

I'm the first to say that computers are great and useful; I enjoy them a lot, and have used them to manage many things that would have been significantly harder without them. But no matter how cool computers and technology are, they won't feed you, and they won't clothe you. For that, you need farmers, shepherds, a textile industry. This is production we will always need, and it's the proper focus of an economic system.

Praise be to Christ the King!

CP,  Tuesday, June 9, 2009 at 4:41:00 PM CDT  

"It's odd that you characterize this as a problem with distributism because it's focusing too much on production."

I am not characterizing a focus on agriculture and heavy industry as a problem with distributism, but a concern with those commenting on distributism here. Thus my comment: "What concerns me with the comments to this post, and to other posts, is the intense focus on agrarian and industrial economies."

My point is that production is not solely agricultural nor heavy industrial. I feel that there is too heavy of a focus in the comments here on these two forms of materialistic production as it applies to distributism.

I write textbooks for at-risk students for a living. I feel that I produce something valuable for our society. Could my job be done in a different way? Could we be a cooperative rather than an investor-owned corporation? Could school districts or schools work with people with my skill set directly to develop small scale curricula tailored for only that district or school and not buy canned curricula made for every student and no student? Are there ways to bring subsidiarity and solidarity to bear on my industry?

My answer to these questions is: Yes. There are many ways for me and my coworkers to create a product which we own, has value, and benefits our society. We can apply distributist thought to our lives and our skills. Skills that I feel are important.

Distributism can also be extended to many industries, not only agriculture and heavy industry. There is purpose to industries that enrich mankind in non-material ways. There is production in items that bring us beyond subsistence.

"Man doth not live by bread only, but by every word that proceedeth out of the mouth of the Lord doth man live. "

Man requires more than subsistence. He has spiritual and creative needs. I see these needs as being even more powerful than that of hunger and homelessness. You may die quickly from malnourishment or exposure, but you may suffer far longer from spiritual desolation and vacantness. Our Lord Himself noted that our primary need is beyond the material during his temptation.

If industries focus on improving the welfare of man, or fulfilling needs beyond that of subsistence, why are they not as important as farming or textiles? Is it not better for a man to be able to expand his mind, or his understanding of his God, and live on basic foods and clothing than for him to be ignorant and agnostic yet supplied with abundant food and many t-shirts?

There is more to being productive than creating material goods like textiles and tomatoes.

This leads to another comment... See below.

CP,  Tuesday, June 9, 2009 at 4:41:00 PM CDT  

"But no matter how cool computers and technology are, they won't feed you, and they won't clothe you. For that, you need farmers, shepherds, a textile industry. This is production we will always need, and it's the proper focus of an economic system."

Farming does not need to be done by horse-drawn tools. Some of the changes in agricultural technology have been negative, but not all of them. Some drawbacks do not mean that we should abandon the search to find methods that are both sustainable and efficient utilizing the technology available to us.

Computers are powerful tools that allow for design and planning to create methods and means by which we could improve efficiency in all industries. They allow for communication and collaboration so that those with the skills necessary to improve our tools can work together to achieve these goals. Computers are not just "cool" toys. It is true that basic computers have proliferated our homes as entertainment devices, but this is not their sole use. Much work that helps feed more of us and clothe more of us more efficiently is done using technology.

Is there a doctrine of distributism which outlaws efficiency? Efficiency at all costs. Yes. Efficiency within a rigorous value system. No. Is an industry that helps lead to efficiency and improvement in another industry any less valuable if it also applies distributist principles?

I ask that those here discussing distributism consider these points. I believe that distributism can be applied to our world for the betterment of mankind. I disagree that distributism insists that the bulk of our population be working in the production of strictly material goods. I also disagree that the majority of real wealth is in foodstuffs and textiles.

It is quite right that there are too many "financiers and civil servants?" But I do not believe that are far too few farmers. There are far too few prodcuers, far too few owners, but production and ownership is not solely agrarian nor industrial.

I don't believe that most here mean to imply this, but I would appreciate more thought to applications of distributism to all varieties of industries that improve the welfare of man.

Donald Goodman Tuesday, June 9, 2009 at 8:13:00 PM CDT  

+AMDG

"I don't believe that most here mean to imply this, but I would appreciate more thought to applications of distributism to all varieties of industries that improve the welfare of man."

There's no question that distributism must infuse all industries, up to and including textbook writing.

There's also no question that we require spiritual goods more than material ones.

However, economics is the study of the distribution of scarce material goods. So while you're correct that our society has problems with the distribution of spiritual goods, that's not what distributism is really about, though naturally distributist ideas have a place in that discussion, as well.

As a distributist, I believe that most people will and should be involved in the production of useful material goods. The reason that most people are not in our society is not so much our greater efficiency, but the fact that foreigners do a great deal of our production for us. That production that we do at home is often less labor-intensive, of course, but particularly in the case of agriculture that less labor-intensiveness comes at a great cost.

Take the small city that is my home. It was once an industrial powerhouse, very heavily involved in the textile and furnitures industries. Bassett Furniture; Stanley Furniture; American Furniture; Hooker Furniture; Tultex textiles; all of these had their base of operation in Martinsville and Henry County, Virginia. Huge portions of our population worked in these productive industries, making material things of value. Now, of course, things are different. Hooker and American still sell furniture, but only furniture made in China. Bassett and Stanley do still make furniture, but on a much-reduced schedule, and locals fear that they will soon take the Chinese route, as well. Nearly all our textiles have gone. And this has all happened within the last fifteen years.

So much of our population is no longer involved in productive industries. But this isn't because fewer people are needed for production; it's because fewer *Americans* are needed for production. In a rightly ordered economy, with a properly autarchic economy, many, *many* more of our citizens would be required in the productive trades.

Yes, there is a great deal wrong with the way our textbooks are written and distributed; perhaps you can educate us on those problems, an education that I, for one, would welcome. There's a great deal wrong with many things in our society. But the most important and primary forms of production, without which other forms of production are completely unnecessary---food, clothing, housing, tools for further production, and so on---are more urgent concerns for an economic theory, which is specifically concerned with material goods.

Praise be to Christ the King!

John Médaille Tuesday, June 9, 2009 at 8:35:00 PM CDT  

CP, I agree we shouldn't ignore civil servants and financiers. In regard to the first, in the Emilian system, most of the social services for the region are delivered through coops. As for financing, the Caja Laboral, the Mondragon bank, was indeed the key institution in turning the original stove factory into the network of cooperatives we see today. In fact, their innovative banking practices opened up entrepreneurship to any cooperative member with a good idea. This allowed the movement to grow from within. And the bank was crucial in seeing the coops through the crises and the 80's, and they are doing the same today. see http://distributism.blogspot.com/2009/03/mondragon-and-current-crises.html

Mondragon also runs its own internal network of social services. So these necessary functions are not ignored in the practice of distributism.

So your observation is correct

CP,  Tuesday, June 9, 2009 at 10:51:00 PM CDT  

From reading the work here, I think that we agree on many core ideals. I seek only to expand the discussion.

"However, economics is the study of the distribution of scarce material goods. So while you're correct that our society has problems with the distribution of spiritual goods, that's not what distributism is really about, though naturally distributist ideas have a place in that discussion, as well."

I suppose that this limitation is the point where we diverge. Economics is the study of the transfer, production, and consumption of wealth which includes both goods and services, and not just material necessities.

Paragraph 2426 of the Catechism reads as follows:

"The development of economic activity and growth in production are meant to provide for the needs of human beings. Economic life is not meant solely to multiply goods produced and increase profit or power; it is ordered first of all to the service of persons, of the whole man, and of the entire community."

This could be interpreted in many ways, but I focus on the phrase "the whole man" which implies that there is more to economic activity than providing for basic necessities. More than "fields, forests, factories, mines" form the basis of an economy and economic activity.

Why is this significant to my view of distributism?

I understand that the United States has outsourced its productive labor in "fields, forests, factories, [and] mines." However, I do not believe that distributism dictates that the vast majority of our population should necessarily be employed in farming, mining, lumber, and heavy industry. Thus my point that there are other ways of producing and generating wealth that benefits "the whole man and the entire community."

This does not mean that there should not be a large shift of labor into these fields. The creative joy that production and ownership over the production of these goods brings would greatly improve the situation of many tied into jobs that inspire and disenfranchise. However, men should be left to pursue the creation of wealth that best aligns with their spirit. If they do not derive joy from their production and ownership, then distributism has accomplished nothing.

The end goal of distributism should not be to create the maximum number of producers of "useful material goods," but to create a better, more productive society. Having more producers of "useful material goods" is an economic factor in creating this society, but it is not the sole economic manner through which this society can ascend. There must be an equal amount of distributist principles applied to other facets of the economy. Facets which are just as crucial to the welfare of "the whole man and community" as the production of basic necessities.

The discussion of distributism should expand past the focus on individual industries and into the application of the ideals of ownership, solidarity, and subsidiarity in all industries that improve the welfare of mankind.

Donald Goodman Wednesday, June 10, 2009 at 8:03:00 AM CDT  

+AMDG

I think that you, and John here, are correct that we need banks and textbook writers, and that distributism has a whole lot to say about these fields of endeavor. However, I still disagree when you deny the primacy of material production.

"The discussion of distributism should expand past the focus on individual industries and into the application of the ideals of ownership, solidarity, and subsidiarity in all industries that improve the welfare of mankind."

Yes. I absolutely agree with this.

"CP, I agree we shouldn't ignore civil servants and financiers."

Yes. I absolutely agree with this, as well. I just think that we have too many of both.

However, my definition of economics was correct: "Economics is the social science that studies the production, distribution, and consumption of goods and services." While this naturally ought to be done for the good of the whole man---to deny this would be to fall into Austrianism---that doesn't mean that distributism concerns itself with the distribution of Catholic catechesis. Distributism, as an economic system, is specifically concerned with the distribution of material goods and services.

And while more than fields, forests, factories, and mines play a role in an economic system, those are unquestionably the bedrock of it. With an insufficient agricultural and industrial framework, a society simply can't survive. On the other hand, it *can* survive without financial services, though not nearly as well as it can with them.

As St. Thomas argued quite clearly in the de Regno, the most important thing for a state is producing sufficient food. Without that, your banks can be perfectly ordered according to Catholic social teaching, but they still won't do you any good.

That's all I'm trying to say. Not that non-agricultural and non-industrial fields don't matter; just that they're not primary, and that distributists do, admittedly, pay much more attention to these primary concerns.

John's chapters on the money system touched on some of these industries; perhaps something more detailed would be in ordered. What is the best way for banks to be run in a distributist system?

Technology has actually made distributism considerably easier in certain industries; say, in publishing. Perhaps that's what you were getting at?

Praise be to Christ the King!

Donald Goodman Wednesday, June 10, 2009 at 9:01:00 AM CDT  

+AMDG

CP, I just posted an article concerning some of my reflections on the discussion we've been having here. Am I getting at what you're trying to say? I'm interested to see your comments there, in light of your comments here.

Thanks for the thought-provoking discussion, in any case.

Praise be to Christ the King!

Donnie Wednesday, June 17, 2009 at 1:07:00 PM CDT  

Hey Mr. Medaille,

Thanks for everything you are doing...especially providing me with some ammo to fire at the NEO-conservatives (or, are they liberals?). Anyway, what do you know about:

"The Myth of Mondragon: Cooperatives, Politics, and Working-Class Life in a Basque Town" (Anthropology of Work) (Paperback)

Thanks again.

Besorge Friday, June 19, 2009 at 2:24:00 AM CDT  

isn't this just reverting itself and pointing back to what a real "Free Market" should be?

Doesn't this break the Marxist Dialectics, and allow us to move into the final analysis that economics is more of an art than a science? Why are we still using Marxist Dialectics?

Don't get me wrong, this is beautiful stuff Mr. Medaille, I really appreciate your efforts in returning the Economy to Christ.
I see how people are treating distributism when they hear it, but I can't help think, the name is quite horrible, as most conservatives are sensitive to the name, lol. They automatically assume, you are talking about re-distribution through force, or by law.

What about making proper ontological foundations, and making a complete connection with Theology and Philosophy as metaphysics?

If we don't take care of the positivists and the informal logicians, we are going to be very much arguing from a giant pie in the sky, and it is going to make Distributism look like a fantasy.

In Chesterton, Belloc and etc., I find little grounds in making proper philosophical ontological connections, am I wrong, are their writings that make the bridge?

I mean the Church has done a horrible job in even promoting this idea, they make investments in large corporations and their investments and schools seem to show they are almost clueless as to this idea.

What I am trying to get at is, where is the foundation? Where is the proper language that we should be using? How is it that we are going to prove these systems all fallacies? We really need to stop using the term Capitalism.

John Médaille Friday, June 19, 2009 at 10:35:00 AM CDT  

Besorge, excellent comments, and timely too, at least for me. Next month, I will be giving an address at the University of Nottingham about the relationship between theology and economics. I touched on it briefly (in chap 2 or 3) and gave it a more complete treatment in my first book, The Vocation of Business, but the purpose of this book is to give distributists some purely economic arguments.

You have pointed out the great irony, namely that distributism is closer to the free market than are most free-market ideologies. Anything needs limits, and without knowing the limits of the market, the market destroys itself. That is why Mondragon and the Emilian models function more as free markets than does any supposedly laissez-faire model. If the libertarians want to find a real-life expression of their system, they will have to go to the distributists. The left-wing libertarians realize this (or some of them, at least) but the Austrians do not.

You are correct that the Church, and especially the American Church, does a poor job, even of understanding this, much less implementing it. It has a lot to do with the failure of catechetics in the wake of Vatican II, but I think things are changing. In that light, I am looking forward to the new encyclical this month.

Peregrinus_PF Saturday, June 20, 2009 at 8:55:00 PM CDT  

John:

When you are finally complete with this e-book, is it going to be consolidated and downloadable in one document (i.e. PDF file)?

John Médaille Saturday, June 20, 2009 at 9:14:00 PM CDT  

Peregrinus, it is kind of you to ask. The next chapter shall be the last, and it is due momentarily. But then, it has been due for six months now. But when at last it is written, I shall re-write the whole thing and publish it. I suspect I have published too much already on the blog for anybody to actually buy it. Nevertheless, I flater myself that it will be a useful guide for those distributists who want to enter the fray against socialists and libertarians and neocons and the like.

Maybe by the end of summer, it will be ready for publication, but that's what I said last Christmas.

Peregrinus_PF Saturday, June 20, 2009 at 9:38:00 PM CDT  

John. I am one of those who still prefers paper when it comes to reading things. I can take it anywhere and read it when I want.

BTW. There is a discussion of Mondragon starting over on the Distributism forum.

Besorge Wednesday, June 24, 2009 at 2:37:00 PM CDT  

Thank you for your reply. Are there any books beside yours, which I already bought and am reading, that you recommend into the theological connections of theology and economics?

I encourage a better language by the way, using the word capitalism should be avoided, and I really hate communicating between capitalism and communism as proper dichotomies into understanding economics. These dichotomies are false, and show economics as if it were limited to just a science.

John Médaille Wednesday, June 24, 2009 at 3:07:00 PM CDT  

There are a number of such works by John Ryan, Rupert Ederer, Heinreich Pesch, etc. More contemporary however is Helen Alford and John MacNaughton "Management as if Faith Mattered." What is unique about their book is that it is the only one that deals with practical management issues from the standpoint of the Social Teaching.

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