Monday, December 26, 2011

Production coterminous with consumption...

‘The Distributive Alternative’

Posted By Russell Sparkes On November 6, 2010 7:09 AM

... Probably the greatest and most persistent attack on Distributism was the notion ... that it was an otherworldly invention by Chesterton and Belloc as part of their romantic attachment to the Middle Ages, and alleged desire to return there. This was often caricatured as policy of giving everybody ‘three acres and a cow’, which was in fact a policy slogan of Joseph Chamberlain in the 1880s.

There is little truth in this argument, for, as we shall see later, Chesterton and Belloc did not reject modern technology, but they did fundamentally disagree with the economic system on which modern society is based. As we shall see, they called it ‘plutocracy’, or rule by the rich.

Probably the original inspiration behind Distributism, was both Chesterton and Belloc’s keen interest in English political, social, and economic history. I believe that Chesterton was also struck by a vein of social commentary in literary men like Dickens ... [and] William Cobbett, that doughty fighter for the poor of England. Chesterton describes Dickens’ hated [sic] of the way the free-market economists of the Nineteenth Century, the so-called ‘Manchester School’, advocated starvation and misery for the poor as a necessary evil:

‘He didn’t like the mean side of the Manchester philosophy: the preaching of an impossible thrift and an intolerable temperance…. Thus, for instance, he hated that Little Bethel (a workhouse) to which Kit’s mother went: he hated it simply as Kit hated it. ... [i]
It was also inspired by the recent practical success of Land Reform in Ireland as they were impressed by the peaceful and successful redistribution of land in Ireland which was carried out following the 1903 Wyndham Act. They both knew its author, the Conservative Minister George Wyndham, who became a great friend of Belloc. Finally, both Belloc and Chesterton were Catholics, and they were certainly inspired by the formidable figure of Cardinal Manning, of whom more later.

Hence the ‘received wisdom’ on Distributism—that its main proponents were well-meaning idealists ignorant of the real world of politics and economics is quite wrong. Hilaire Belloc was a Member of Parliament from 1906-1910 before he resigned his seat in disgust. Chesterton was a well-known and widely respected journalist whose views helped shape popular opinion.... In 1927 Chesterton was invited to lecture at the London School of Economics.... 
 In 1936 Keynes revolutionalised economics by inventing macroeconomics in his The General Theory of Employment, Interest, and Money. Keynes’ great discovery was that the focus of previous economists on the individual firm meant that they had ignored the fact that the economy was an organic whole; what to an individual firm was a cut in costs (wages) was to the worker a cut in income. Chesterton made exactly the same point in 1926, before the Great Depression began in 1929 -- but then he was not blinkered by having absorbed the doctrines of economics:

‘Capitalism is contradictory as soon as it is complete; because it is dealing with the mass of men in two different ways at once. When most men are wage-earners, it is more and more difficult for most men to be customers. For the capitalist is always trying to cut down what his servant demands, and in doing so is cutting down what his customer can spend. As soon as his business is in any difficulties, as at present in the coal business, he tries to reduce what he has to spend on wages, and in doing so reduces what others have to spend on coal. He is wanting the same man to be rich and poor at the same time.’ [iii]
One last point about classical economics is how it has often mirrored the wishes of the rich and powerful, contradicting its earlier teaching to do so. ... As Chesterton wrote in 1927:

‘But what is interesting to note is the way in which the sophistry of political economy changes and adapts itself to the needs of the luxurious at any particular moment. Whatever the politician may want to do, there is always a political economist beside him to say that it must be done, and whenever the rich want to be luxurious, it is always opportunely discovered that luxury is a form of economy.’ [iv]
They pointed out that Adam Smith’s insistence on the need to specialize and trade, rather than to produce locally, led economics to neglect transport costs, the uncertainty involved in trade, and broader environmental considerations. As Vincent McNabb pointed out, in the language of economics, Smith’s error: 
‘I have often said that the most efficient social and economic unit is one wherein the area of production tends to be co-terminous with the area of consumption; i.e. that things will be produced where they are to be consumed.’ [v] 

[i] G.K. Chesterton, The Victorian Age in Literature, London, Home University Press, 1910. 
[iii] G.K. Chesterton, The Outline of Sanity, (first published 1926), reprinted Ignatius Press 1992, page 59 
[iv] G.K. Chesterton, ‘Very Political Economy’, from G.K.’s Weekly, 5 August 1927. 
[v] Fr Vincent McNabb, Old Principles and the New Order, Sheed and Ward 1942, page 12.

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