A quiz for reader(s)…

"_______________ is a politico-economic system based on private ownership of the means of production and in which the powers of the state are limited to the protection of the individual's rights against the initiation of physical force. … Under _______________, the state consists essentially just of a police force, law courts, and a national defense establishment, which deter and combat those who initiate the use of physical force."

The answer to the above blank is…

A. Capitalism

B. Laissez-faire capitalism

C. Socialism / Keynseanism

D. Distributism

Enterprise, so called…

"Hardly anybody…dares to defend the family. The world around us has accepted a social system which denies the family. It will sometimes help the child in spite of the family; the mother in spite of the family; the grandfather in spite of the family. It will not help the family. … We live in an age of journalese, in which everything done inside a house is called ‘drudgery’ while anything done inside an office is called ‘enterprise.’"

-- G.K. Chesterton, Dec 1931

Maximum initiative…

"All who believe that ownership in the means of livelihood is normal to man, and necessary to liberty, and all who dislike and distrust the concentration of control advocated by Socialists and practiced by Monopolists, should join the [Distributist] League … [The League] stands for the Liberty of the Individual and the Family against interference by busybodies, monopolies, or the State … [and for] … the better Distribution of Property (i.e. ownership of land, houses, workshops, gardens, means of production, etc.). … [As such, the League] fights for small Shops and Shopkeepers against multiple shops and trusts…[, for] Individual Craftmanship and Cooperation in industrial enterprises… [, and for the] Small Holder and the Yeoman Farmer against monopolists of large inadequately farmed estates … [In a word, the League stands for] the Maximum, instead of the minimum initiative on the part of the citizen."

-- G.K.'s Weekly, March 29, 1929

The division of mind…

"The division of labour has become the division of mind… and means in a new and sinister sense that the right hand does not know what the left hand doeth. In the age of universal education, nobody knows where anything comes from. The process of production has become so indirect, so multitudinous and so anonymous, that to trace anything to its origin is to enter upon a sort of detective story, or the exploration of a concealed crime."

-- G.K. Chesterton, Jun 1932

A dialogue between a "real capitalist" and a "distributist dreamer"…

"Distributism does not blend or 'balance' Capitalism and Socialism. Both of these systems result in the concentration of ownership. Socialism does not 'redistribute' wealth, it denies the private ownership of it altogether…. We have been trained to believe that any significant state involvement means Socialism. This is a lie. State managed redistribution of privately owned wealth from the rich to the needy is not Socialism because the the wealth remains privately owned. … Both Capitalism and Socialism require the big state. This is true despite the Libertarian desire to minimize state involvement."

-- David Cooney, 10 Jan. 2011

A: Cooney's point about "redistribution" seems arguably correct. But where does he get his assertion about Capitalism? (Or is he ignoring the laissez-faire brand? For it never needs a "Big" government.)

B: I think the idea here is: "Wal-Mart without federal highways––oh really, now?"

A: I'm not following. And federal highways are one of the very few functions a SMALL government is actually allowed to govern.

B: Let me quote from a private and slightly revised correspondence:

"[We musnt confuse] 'prices' with 'costs.' [For] this ignores the role of externalities and subsidies. Prices can be lowered by externalizing costs. For example, WalMart could not survive if the costs of transportation were not subsidized. If there were weight and distance tolls on roads, the long range distribution system would be shown to be inefficient for low cost goods and would be confined to high-quality, rare, and high cost goods. If pollution were paid for by the producers, instead of by the gov't or simply by decreased public health, it is absurd to speak of 'low-prices.' …

"The WalMart distribution model looks this (I am using WM as an example because their operations are well-known and documented): They open a distribution center in a new area, and then saturate that area with stores along the major highways. It is obvious that the region cannot support that number of stores, but sales are not, initially, the object. As the local commerce (and competition) drys up, Walmart closes most of the stores to leave an 'optimal number,' which leaves the area at the mercy of Walmart, and stores that are remote from many people. At that point, even the pretense of low prices is lost. And this analysis ignores the cases of stores whose entire profit margin consists of the sales tax rebate."

In any event, small govt may be able to govern highways… but how did they get built?

A: Small government can = federal government, as long as it is existing within its Constitutional authority. And that's what I thought you might mean re: Wal-Mart, but Wal-Mart is no archetype of Capitalism, only of our current Socialist-laden Capitalism. A great capitalism could still exist even if Wal-Mart could not.

B: What would you say is the best actual, sustained case of laissez-faire capitalism in history (i.e. devoid of government crutches and monopolies)?

A: Several hundreds or thousands of (micro-)times in American history, most of which were in its earlier times. I'm not much of a historian, and so remember dates, etc., but I have read about them in books on history and economics. The PIGs to the Constitution and Capitalism are my better resources. (Which are, admittedly, not academic.)

But this question (which I've heard often) misses some of the point: for a single application of a single policy amidst an incredibly controlling, subsidy-laden socialist capitalism, if it frees the market in some small way, is enough of an example of laissez-faire capitalism. And I have found this to work at near 100%.

B: I'd call the "micro-times" of true capitalism just family's lives, i.e. time scales in which capitalism is effectively distributism. I am troubled by the apparent symmetry between the following claims: "Capitalism has never really been tried" and "Communism has never really been tried". It could just as easily be said that regulating monopolies under a socialist aegis frees the market for a greater number of producers, and therefore socialism is vindicated. The problem is that both capitalism and socialism seem to treat economic conditions and dynamics as a kind of trans-historical, absolute sphere of deterministic principles, as if "society" and/or "the market" were something over and above the particular people who interact. Speaking of freedom presupposes we know what freedom means, and I deny that freedom is simply the ability to do whatever. Freedom is the power to do the good, and nothing about capitalism in its theoretical purity seems to speak to "the good" (but only to "goods"). Therefore, it seems a truly-free market (i.e. a sustainable system of free people interacting towards the common good) can only be brought about by aiming market laws at the common good, which is the purpose of governance.

In any case, the point is precisely that 'real' laissez-faire capitalism (LFC) seems only to enjoy micro-spatiotemporally sustainable success, not longterm, widespread success (absent government crutches). Any theory can be made to work for a time. Look at Sweden as "proof" of socialism (never mind that it's liberalizing now that the socialist generation is growing oppressive). If LFC is practically unworkable in the real world of historical change, then it is just that: practically unworkable.

Here's a little syllogism (modus tollens): If the market M just is human behavior B, and if B is consistently and reliably rational Rr, then the market is Rr; but B is not Rr (~Rr), therefore M is ~Rr. If however M is irrational, then, either "the invisible hand" is just as 'good' a guide as "The Great Spirit of Natural Selection" or pure-market economics is ~Rr and LFC seems in dire straits.

It's an interesting conundrum: if LFC has never really, fully, truly been tried (á la Ron Paul), then it's not really been shown to be false. My query is why, if LFC is the natural order of human flourishing, it can't seem to get off the ground (i.e. it can't get really tried).

Nonetheless, let it be granted that distributism is all for smaller government, so small, in fact, that it would not amount to more than needed to protect the smallest and best government, namely, the family. That's a key point, in any event: there is a close connection between small government and small economy , on the one hand, and big economy and big government, on the other.

Or rather a second…

"Communism is that form of Capitalism in which all workers have an equal wage. Capitalism is that form of Communism in which the organising officials have a very large salary. … Both presuppose property not personal, but Worked from a centre and distributed as wages. There is a third ideal; or rather a second. It is that individuals should own and be free. … The right and essential thing [is] that as many people as possible should have the natural, original forms of sustenance as their own property.

The division of labour has become the division of mind; and means in a new and sinister sense that the right hand does not know what the left hand doeth. In the age of universal education, nobody knows where anything comes from. The process of production has become so indirect, so multitudinous and so anonymous, that to trace anything to its origin is to enter upon a sort of detective story, or the exploration of a concealed crime."

-- G.K. Chesterton, Apr-Sep-Jun 1932

Actually operating…

"Capitalism, as practiced in the real world, goes far beyond the private ownership of productive capital. Capitalism as it actually exists includes different forms of corporate ownership, … investment and financing schemes, interest, the acceptance of greed as an objective good, usury, using capital for profit … [and] to prevent competitors from making profit, monopoly, free trade, involvement of the highest levels of government, and a utilitarian view of the worker. … [T]he economic system actually operating under the name Capitalism is very different than the basic definition of the word [i.e. private ownership of production]…. Since both Distributism and Capitalism operate on the basis of private ownership of productive capital, we need to look beyond this one common root and realize that neither of these economic systems is wholly defined by it."

–– David Cooney, "Is Distributism a Form of Capitalism?"

Capitalism has no conscience besides what we put into it…

John Medaille of the Univ. of Dallas Discusses Economics. His book, “Toward a Truly Free Market” is Available at www.amazon.com.
December 20th, 2011

John Medaille of the Univ. of Dallas answered questions such as the following:
1) The economy is not doing well. What caused the problem?
2) When the gov’t needs money, why not just create it and forget selling bonds and paying interest? This way there would be no national debt.
3) How important are Christian principles to the proper functioning of a free market system?
4) Is it harmful to the economy if too much annual income goes to too few?
5) Should Soc Sec be privatized? Should we keep the minimum wage and The Federal Reserve?

The heart of the social order…

"The rural family needs to regain its rightful place at the heart of the social order. The moral principles and values which govern it belong to the heritage of humanity, and must take priority over legislation. They are concerned with individual conduct, relations between husband and wife and between generations, and the sense of family solidarity. Investment in the agricultural sector has to allow the family to assume its proper place and function, avoiding the damaging consequences of hedonism and materialism that can place marriage and family life at risk."

-- Benedict XVI, 16 Oct 2006

MESSAGE OF HIS HOLINESS BENEDICT XVI
TO THE DIRECTOR GENERAL
OF THE FOOD AND AGRICULTURE ORGANIZATION (FAO)
FOR THE CELEBRATION OF WORLD FOOD DAY

Neither balance nor blend…

"Distributism does not blend or 'balance' Capitalism and Socialism. Both of these systems result in the concentration of ownership. Socialism does not 'redistribute' wealth, it denies the private ownership of it altogether…. We have been trained to believe that any significant state involvement means Socialism. This is a lie. State managed redistribution of privately owned wealth from the rich to the needy is not Socialism because the the wealth remains privately owned. … Both Capitalism and Socialism require the big state. This is true despite the Libertarian desire to minimize state involvement."

-- David Cooney, 10 Jan. 2011

First and second concern…

"I know that my first care is that of my immortal soul and that, since my soul is for all present practical purposes inseparable from my body, my second care is that of my body.... Hence my decision to purchase a smallholding, work it for myself, and live like a king in my own country."

–– G.C. Heseltine, G.K.'s Weekly.

By reference to moral values…

"Capitalism is not a philosophy. It is simply a method of allocating resources based on voluntary exchange instead of coercion. While some say that such a method promotes greed, history indicates that greed is no less present in any other system of allocating resources. Distributism is completely compatible with capitalism to the extent it is a voluntary expression of the desire to make such market exchanges by reference to appropriate moral values and not just profit. Distributism is most difficult to apply in the context of enterprises that need large amounts of capital to compete successfully. Such businesses tend to organize as public companies whose ownership is distinct from management. Such companies have a very difficult time voluntarily expressing values that are inimical to profit maximization. It is not impossible, since corporations can be organized expressing other goals which would be disclosed to investors, but thus far such efforts have not proven all that successful. Instead, non-pecuniary values are imposed via government regulation, which plainly can be blunt and political instruments. It is also important to realize that non-investor corporate constituencies, especially consumers, do alter behavior by imposing their values thereby affecting corporate profits. Imperfect information and imperfect consumers limit the efficacy of such forces, but truly there is nothing about a free market system that renders it inherently incompatible with Catholic values."

-- a guy named Mike Petrik, on a blog

Why are people always burying distributism?

"The very fact that people are always burying distributism is evidence of the fact that it is not dead as a solution. …

"[Chesterton argued] that were Dickens living today, he would not be harking back to the past, but dealing with things just as he found them. … [The] particularly Dickensian [consists in a man's] enjoying his surroundings as they were, and beginning from there.

"It is the same with Distributism. It needs to be constantly rewritten, re-assessed, restated, with the wisdom and clear-sightedness of a Chesterton who … who can help us today to make a synthesis of Cult, Culture and Cultivation.

"In spite of the nuclear age we are living in, we can plant our gardens even if they are only window boxes, we can awaken ourselves to God’s good earth and in little ways start going out on pilgrimage, to the suburbs, to the country, and when we get the grace, we may so put off the old man, and put on Christ, that we will begin to do without all that the City of man offers us, and build up the farming commune, the Village, the 'city' of God, wherein justice dwelleth."

–– Catholic Worker Movement - DorothyDay - www.catholicworker.org

Economic empowerment…

Look, Ma, it ain't just Chesterbelloc and the Catholics going on about distributism, them humanists are going on about it, too.

"[W]hile I argue [pace Marx] it is false to claim that surplus value is unjustly appropriated by … employers, landlords and middlemen who are contributing to the value of a good or service, it is undoubtedly true that those who work for them, rent from them or sell to them would be financially better off if they could keep the financial benefit of this transaction - the surplus value - for themselves.

"This in a nutshell is what distributism is all about.

"Distributism is not trying to make the poor rich by making the rich poor, but empowering the poor and the not-so-rich to accumulate more of the demand-based value of their labour, more of the demand-based value of their produce, more of the demand-based value of their accommodation. …

"The key work to understanding early 20th century distributism is Belloc's seminal work, _The Servile State_. A savage denunciation of laissez-faire capitalism, which Belloc argued was re-establishing feudal servility on economic lines, _The Servile State_ is no less savage towards state socialism, which (ironically presaging the later words of free market economist Friedrich Hayek) Belloc called no less a road to serfdom. …

"The laurel for outstanding success in implementing distributist aims must rest with the Spanish, where following the Spanish Civil war, Don Jose Maria Arizmendiarrieta founded the Mondragon Co-operative in the Basque region. From a handful of unemployed oil lamp makers, Mondragon has grown to become the ninth largest corporation in Spain. … The lot of the poor is improved not through welfare but through economic empowerment. Capital is seen not as the enemy but as an instrument for social progress. …

"[I]f capitalism is simply about maximizing profits and standing back even if that leads to monopoly ownership, then Mondragon isn't capitalism. And if socialism is about collective ownership rather than private profit, Mondragon isn't socialism either, because Mondragon is all about making individuals and their families wealthier."

-- Distributism as an equalitarian economic policy - www.hsnsw.asn.au

Natural capital…

"The twin pillars of the capitalist system – private ownership and free markets – are undergoing a significant shift as a result of the financial meltdown. The days of companies "privatizing the profits" and governments "socializing the losses" are gone forever. … Capitalism is dooming itself because it is polluting and depleting its resource base – natural capital – in its frenetic pursuit of profits and growth. The tragedy of modern capitalism lies in its denial that there is a biophysical limit to exponential consumption and growth. … [We must revise] statistical accounting systems, such as Gross Domestic Product, so that they reflect externalities like pollution and public health. … Capitalism cannot be reformed until we reform our own consumption behaviour: until we learn to live with less, until we reduce our bloated ecological footprints and until we lower our material expectations."

-- Hugh Robertson, "Capitalism and Sustainability" - www.future-generations-party.org

Too much capitalism means too few capitalists…

"The modern rulers, who are simply the rich men, are really quite consistent in their attitude to the poor man. … That which wishes, in the words of the comic song, to break up the happy home, is primarily anxious not to break up the much more unhappy factory. Capitalism … is at war with the family, for the same reason which has led to its being at war with the Trade Union. This indeed is the only sense in which it is true that capitalism is connected with individualism. Capitalism believes in collectivism for itself and individualism for its enemies. It desires its victims to be individuals, or (in other words) to be atoms. For the word atom, in its clearest meaning (which is none too clear) might be translated as 'individual.' If there be any bond, if there be any brotherhood, if there be any class loyalty or domestic discipline, by which the poor can help the poor, these emancipators will certainly strive to loosen that bond or lift that discipline in the most liberal fashion. If there be such a brotherhood, these individualists will redistribute it in the form of individuals; or in other words smash it to atoms."

-- G.K. Chesterton, The Superstition of Divorce, II.2

A more, rather than less, radical critique…

Does Catholic Social Teaching approve of capitalism?

"If by 'capitalism' is meant an economic system which recognizes the fundamental and positive role of business, the market, private property and the resulting responsibility for the means of production, as well as free human creativity in the economic sector, then the answer is certainly in the affirmative, even though it would perhaps be more appropriate to speak of a 'business economy', 'market economy' or simply 'free economy'. But if by 'capitalism' is meant a system in which freedom in the economic sector is not circumscribed within a strong juridical framework which places it at the service of human freedom in its totality, and which sees it as a particular aspect of that freedom, the core of which is ethical and religious, then the reply is certainly negative.' …

"The theology that makes CST 'a category of its own,' makes it a more, rather than less, radical critique of Capitalism, because it subordinates economics to other, higher, dimensions of society…. [Médaille] painstakingly builds the case for introducing ethics and justice into economics and business, starting with the most basic issues. … Médaille confronts [the problem of relativism] directly, and carefully reconstructs the process of moral reasoning, taking the reader all the way from the Bible and the Greeks to the Enlightenment, and the separation of reason from faith—the source of our modern (or post-modern) predicament, where relativism rules."

-- Angelo Matera, Book Review: The Vocation of Business: Social Justice in the Marketplace by John Medaille - www.cjd.org

That isn't just bullshit…

Me: "The point of distributism is that capitalism must regulate-itself-or-be-regulated in a way that protects and promotes the very conditions which make capitalism possible. Labor is taken as a given in neoclassical economics, but labor is nothing more than laborers, who are nothing more than the sons and daughters of families. Therefore, the market must first respect families –– the market must not use families, it must consist in families."

My coworker: "Hm. That's the first thing I've heard that… takes away from capitalism… that isn't just bullshit."

I now understand the reason for my doubts…

"Until very recently, … I had grave doubts that what has come to be called 'capitalism' could establish the kind of economic democracy which political democracy required as its counterpart. I now understand the reasons for my doubts. They were based on an understanding of 'capitalism' which was colored by the sound criticisms that had been leveled against its injustices and inequities, not only by Marx and Engels, and by socialists generally, but also by Popes Leo XIII and Pius XI, and by social philosophers or reformers as diverse as Alexis de Tocqueville, Horace Mann, Henry George, Theodore Roosevelt, Woodrow Wilson, Hilaire Belloc, Jacques Maritain, Amintore Fanfani, and Karl Polanyi."

-- Mortimer Adler, Preface to The Capitalist Manifesto (1958) by Louis Kelso, p. 5.

Expropriation in Taiwan…

"Elderly farmers... said the proposed amendments to the Act of Eminent Domain are still tilted toward corporations. Tsai Pei-hui, a professor of Social Transformation Studies at Shih Hsin University who joined the protest, said a dozen of the controversial land expropriation cases in special agricultural zones are related to major government construction projects. The draft amendment... allows the government to acquire private lands in agricultural zones, which means farmers' properties can be expropriated at will.... One of the main points of the amendment bill is that land expropriation must be in the 'public interest....'" However, the draft bill, which was scheduled for a second reading Tuesday, did not take into consideration the public's opinions on what constitutes 'public interest,' [Tsai] said."

Farmers say draft bill fails to address land expropriation woes - Taiwan News Online

www.taiwannews.com.tw

Avarice is directly a sin against neighbor…

"External goods [i.e. commodities] have the character of means useful for an end. Hence man's good in them must consist in a certain measure of them; that is, a man must seek to have external riches only in a certain measure, insofar as they are necessary for him in his state of life. In any excess of the measure there will be sin; it is evil if he should wish to get or keep them beyond a right measure. This would be avarice, which is defined as 'the immoderate love of having.' ...

Avarice can be immoderate in external goods in two ways. First, directly in the getting or keeping of these goods, by getting of keeping them more than he should. This is directly a sin against our neighbor, because external goods cannot be simultaneously possessed by many, and therefore, if one man has more than he ought, others have less than they ought.

Secondly, avarice can imply an immoderateness in the internal affection we have for riches, namely, by immoderately loving, desiring, or delighting in them.... Consequently, it is a sin against God."

-- St. Thomas Aquinas ST IIa IIae, q. 88, Art. 4, resp. 1.

The necessary role of justice in political economy…

"Medaille suggests that economics—better labeled as political economy—lost its way under the influence of David Hume and Bernard de Mandeville. ... As his antidote, the author returns to the political economy of Aristotle and to the necessary place of justice in proper theory. ... Aristotle also argued that '[t]he family is the association established by nature for the supply of men’s everyday wants.' Medaille elaborates: 'It is the family, and not the individual, that is the starting point ... because only the family is [fundamentally] self-sufficient; an individual in isolation can neither reproduce nor provide for himself.' Accordingly, all economics is necessarily social, or communitarian. This return to Aristotle also points to measures of justice. ...

"The author also resurrects the key insights of early 20th Century Distributists[: namely,] 'Markets are not natural phenomenon, but are socially created'; '…exchange does not create wealth; that happens in the production process'[;] …if the worker is to reap the full value of his labor, then he must own an interest in the land he works; — “Property must be seen as an aid to productive work, and not as a substitute for it'; and —-“This accumulation of property into the hands of those who do not use it is the sole cause of the vast inequalities that bedevil civil society and economic order” [referencing here Adam Smith—one of the author’s heroes-- “Wherever there is great property there is great inequality…[and] the indigence of the many”]. In each case, Medaille provides provocative elaborations of these basic premises behind the Call for a Property State."

-- "Commentary on John Medaille’s Toward a Truly Free Market" | Front Porch Republic - www.frontporchrepublic.com

A fantasy world of moral and fiscal unreality...

Debt, Finance, and Catholics

Samuel Gregg

Debt and deficits seem to be on everyone’s minds these days. ... Unfortunately, modern Catholic social encyclicals have relatively little to say about financial questions. Even the 2004 Compendium of Catholic Social Doctrine confines itself to very broad statements about finance and foreign debt, and it never really addresses the moral dimension of private and public debt.This absence of sustained contemporary Catholic reflection on financial questions is puzzling. ... Indeed, for many centuries, Catholic bishops and theologians invested considerable energy in understanding the world of money because of the usury question. Catholic thinkers were consequently among the first to identify money’s primary functions, illustrate how money in the conditions of economic freedom could assume the form of capital, demonstrate the moral legitimacy of charging interest on money-as-capital, and assess the moral status of different debts in different contexts. 

... [E]arly-modern Catholic theologians assailed governments who tried to escape their debts by measures such as inflating the currency or borrowing more money to pay for interest payments on existing public debt, or who spent large portions of the taxes they raised on servicing debt or on activities that were either morally evil or simply did not fall within the core functions of constitutionally limited governments. 

... Today one looks in vain for Catholic thinkers studying our debt and deficit problems from standpoints equally well-informed by economics and sound Catholic moral reflection. ... Instead, one finds broad admonitions such as “put the interests of the poor first” in an age of budget-cutting. The desire to watch out for the poor’s well being in an environment of fiscal restraint is laudable. But that’s not a reason to remain silent about the often morally-questionable choices and policies that helped create our personal and public debt dilemmas in the first place.  

One Catholic who has proved willing to engage these issues is none other than Pope Benedict XVI. In his 2010 interview book Light of the World, Benedict pointed to a deeper moral disorder associated with the running-up of high levels of private and public debt. ...  

In other words, someone has to pay for all this debt. And clearly many Western Europeans and Americans seem quite happy for their children to pick up the bill. That’s a rather flagrant violation of intergenerational solidarity.  

... This willingness on the part of governments, communities, and individuals to live off debt means that people are “living in untruth.” ...  

In fact, it’s possible to go further and argue such attitudes reflect a mindset of practical atheism: living and acting as if God does not exist, as if the only life is this life, as if the future does not matter. Only people who have no hope — no hope in God, no hope in redemption, no hope for the future — will think and act this way. ... 

For if we choose to live our lives according to a perspective dominated by immediate gratification or pursue economic policies forever focused on the short term (which is, more or less, Keynesianism’s Achilles’ heel), then living off debt is entirely rational. But what does that say about our priorities and conception of human flourishing?  

Taking on debt is not in itself intrinsically evil. In many circumstances, it’s an entirely reasonable decision. Nevertheless, a situation of inexorably increasing debt and a failure to confront its moral and economic causes can slowly corrode our personal sense of responsibility for our freely undertaken obligations and severely tempt us to live in a fantasy world of moral and fiscal unreality. ...