The Errors of Capitalism and Socialism

Author: 

Tim , John Purdy  ,   Mr. Purdy   

Date: 
Tuesday, July 31, 2018 - 23:45
Article link: 

 

Tim adds:

The charge is sometimes made that Distributism is Socialism by a different name. Not so.

As Belloc explains, the three elements necessary for the creation of wealth are: land, labor and capital. In the Distributist model, wealth is distributed as widely as possible, both my moral norm and laws that support these norms.

To produce wealth morally, these three elements need to be in proportion to the need. To distort any one of these creates an imbalance and opens the door to abuse. In the case of both Capitalism and Socialism, land and labor are either in the hands of individuals or corporations or in the hands of the State. Both of these model exclude labor, and make labor dependent upon them.

As Belloc says: “It is obvious that who ever controls the means of production controls the supply of wealth. If, therefore the means for the production of that wealth which a family needs are in the control of others than the family, the family will be dependent upon those others; it will not be economically free.” The Restoration of Property

...

John Purdy writes:

I’ve heard of Distributism, although I am no expert on its intricacies but I am willing to give it a fair hearing. I would like, if I may, to pose some simple hypotheticals to Tim (or Laura) to gain an understanding of how Distributism would address them.

First, two farmers, A and B behave differently. A is industrious and frugal and after some years accumulates a body of savings. B is indolent and spendthrift. After some years he is bankrupt and feels compelled to sell his land to A and work for him. How does Distributism address this real-life possibility?

Second, Belloc does not mention energy or resources as part of his land, labor and capital formula. Yet energy, even if it’s a campfire, has been central to human development for ever. Suppose farmer A discovers a valuable source of energy on his land. How is that to be developed? Who owns it?

I offer this in a spirit of honest debate and would be very interested in your response.

...

 

Tim writes:

Belloc does address this first question. Keep in mind that not everyone is cut out to work for themselves. Distributism is about distributing wealth as widely as possible. Thus, a small farmer may need outside help. This additional labor can be a partner in the farm, but not the manager. According to Plato, these managers should be paid no more that a ratio of 6:1 to the average wage of the workers. Thus, everyone is entitled to a living wage. Modern cooperatives are a good example of this today.

Next, the question of the discovery of an energy source on private property: the above farm example could be applied to this situation as well, only on a larger scale. More capital and labor is needed to develop this resource. The land owner could retain full rights, or develop a partnership of investors and labor to share in the proceeds.

At the heart of any economic issue is the centralization vs. decentralization of control. A good example of this is the birth of the oil industry in the early 1900s. At that time, Americans made ethanol in their backyards to burn in their lamps, in their stoves, their furnaces to heat their homes. Some was made to drink. When the automobile came along, they made ethanol to fuel cars. Farms set up cooperatives to build larger distilleries to convert crops into ethanol. Henry Ford made all his vehicles to burn either ethanol, gasoline, or both. Depending what fuel was in the tank, the driver simply manually adjusted the engine from his seat, and off he went.

John D. Rockefeller, founder of Standard Oil, saw a burgeoning new market for his gasoline in the automobile. He was instrumental in getting the Eighteenth Amendment passed in 1918 by demonizing the evils of liquor, thus prohibiting the manufacture, sale and distribution of intoxicating spirits. This Amendment was meant to crush our decentralized ethanol energy industry. Once destroyed, the Twenty First Amendment (1933) repealed this previous Amendment (the only Amendment ever to be repealed) and Americans were now wholly dependent on gasoline.

We once had a Distributist energy independent country that was stolen from us.

...

Mr. Purdy writes:

First, I had no idea Rockefeller played such a role in the Volstead Act. It reminds me a bit of the argument that suppression of marijuana had more to do with the suppression of hemp, a cheap alternative to cotton and other textiles than it did with stopping people from getting high. Also, I had it in my head that the 18th came in in the late twenties. Live and learn.

Second, and more important, Tim’s response to my hypotheticals is satisfactory but let me extend them a bit further to see if we reach a crisis point.

Let us suppose there are many farmer Bs in farmer A’s vicinity. Over a period of years they agree to sell to farmer A and work for him. Let us further stipulate he does so through entirely ethical means (unlike Rockefeller) based entirely upon his industry, inventiveness and frugality. Farmer A is now on his way to becoming a wealthy landowner. Perhaps you can guess where I’m going with this – it has to do with capital accumulation.

This proposed 6:1 ratio between incomes becomes a bit harder to maintain as A is certainly more than 6 times as wealthy as his workers. We can hope he is a good Catholic but that is a bit utopian. This scenario suggests the need for state intervention. I am not a fanatical libertarian (although I was) but state intervention always makes me a bit nervous.

So, how do we address the “problem” of capital accumulation while respecting property rights and the observed difference in capabilities in the population?

...

Tim writes:

In response to Mr. Purdy:

Yes, industrial Hemp, an amazing crop, was declared illegal in 1937 under pressure by DuPont Chemical and Dow Chemical because it competed with several of their products. This law was rescinded in 1942 to allow U.S.-grown hemp to make rope for the war effort, and then reversed after the war ended. This despite the fact that both Jefferson and Washington grew hemp on their farms, and even the Declaration of Independence was printed on hemp paper. A great website to educate one on this topic is votehemp.com.

Now, back to your latest question.

As Avarice is one of the Seven Capital Sins, we must always be on the alert to its seductive ways.

In the scenario you describe, the first step is to solve the problem locally (that’s known as “Subsidiarity”). No need to call in the government, as they will only muck things up and then claim a great victory for the common man.

Rather, the farmers selling to the alpha farmer should do so as partners in the venture, owning an appropriate percentage of the operation. All business decisions are made jointly, the books are open, and all is equal and fair. The 6:1 ratio can also be retained. This should keep everyone honest.

Your interest in this subject is encouraging. To get you started on a proper path to understanding this fascinating subject, may I suggest you read Belloc’s The Servile State (1912), then The Restoration of Property (1936) and finally Economics for Helen (1924).

Then move onto Catholicism, Protestantism, and Capitalism (1935) by Dr. Amintore Fanfani followed by Beyond Capitalism & Socialism: A New Statement of an Old Ideal (2008) both by IHS Press. (This same press has several other titles related to the topic of Distributism that you may also find useful.)

A recent discovery on YouTube is an excellent series of short videos that are written, narrated and animated by the author, David Richins. Spend just seven minutes watching the first episode and you will be hooked. Well worth the time to see the entire series.

 

 

 

 

Own comment: 

I should definitely read up more on distributism. My understanding, however, is that it is not a Catholic economic model as such, but rather a model proposed by prominent Catholics as a way out of socialism and the pitfalls of capitalism.

My view, however, is that we would be much  better off seeing capitalism as a given, and working on people's morals to moralise our societies.

Distributism - or what little I know of it - seems to require a moral populace anyway, which presumably means an authentically Catholic populace, and since none of those seem to be on the horizon, the best course of action for now would seem to be for Catholics to band up and try and use capitalism to our advantage - whatever that may entail, and I offer no specific solutions or suggestions, not yet anyway.