Thursday, September 21, 2006

A Primer on Distributionism II: More Details on What It Is

This is the third in a series of articles about Distributionism. You can read the earlier pieces here and here.

In the previous piece A Primer on Distributionism I listed a number of concepts that are either generally accepted by Distributist writers as essential to the concept or ideas that are in dispute that I support as part of Distributionism. I’d like to go into each of those points in greater detail.

1. All men have a right to private property, just compensation for their goods and labor, and to enter into business agreements of their own free will:

In Rerum Novarum Pope Leo XIII anticipated the idea of ‘The Tragedy of the Commons’ which is, simply – things owned by everyone (like communal farms, fisheries, etc.) are depleted because no one is responsible for them and, more critically, no one sees them as critical to their own future or the future of their family. Private property is, overall, better cared for and developed than communal property. It is also generally more productive, creating a larger surplus. These are the basic reasons to approve of and promote private property.
Another reason to promote private property is justice; a man is entitled to appropriate compensation for his work. Whether a laborer or a highly-specialized technician, wages should be appropriate and just. This means a living wage is to be paid except in unusual circumstances (a part-time job, for example, may be exempt from the requirement of a living wage). For the compensation to be just, the wage earner must be free to spend his wages as he wishes (within the bounds of moral law, of course) and if he is frugal, hard-working, etc. and accumulates capital, it is his to keep.
Similarly, a man who produces goods or commodities must be paid a just amount for those items. This actually may not generate a living wage, but as long as the payment is just, that is acceptable. The concern here is the use of price controls and tariffs to push the margins of producers so low they can no longer afford to produce and sell their goods.
One of the elements I find most important is the fact that business agreements, including employment, must be made of free will. While this is often pointed out as meaning that a starving man cannot be forced to sign a lousy deal, it has broader implications. A mandatory-union shop, for example, might be seen as an imposition of coercion. While Catholic social teaching is very clear that people have a right to join organizations such as trade unions, it also states that people must also be free to avoid them, as well.

2. Private ownership of property and work are good for the individual and society as a whole:

This is simply the argument that being productive is good for the person doing it. More critically, it points out that the goal of being productive is not just for one’s own benefit, but for the benefit of of the family, community and, thereby, society as a whole.

3. Responsibility and decision-making should be ‘pushed down’ as low as possible; private organizations are better at getting things done than governments; the more local, the better:

This is the most direct implication (and application!) of the concept of subsidiarity. While I have made arguments (see the early articles linked at the top) that this is a practical issue because of efficiency, it is more critically an issue of justice. People have a right to determine their own destinies and should be given every opportunity to do so as long as the ‘greater good’ is not at risk. This is an extension of the concept that people need to do things of their own free will – the more removed the decision making is from the person affected, the more of an imposition on there free will is involved. Same with private groups being preferable to governmental groups and local being preferable to distant – it grants greater autonomy to the individual as well as providing the best and most direct benefit to the individual’s immediate community.
This can be taken too far! There is a need for, as an example, a national military. And I don’t think too many people would disagree with me when I state a military force should be under the control of a legitimate government, not private owners. While people should look for local solutions, this does not mean that there is a prohibition on distant opportunities. If you are a businessman and the only source for widgets is on the other side of the world, go ahead and buy them. You might want to mention to local entrepreneurs, however, your need for widgets! The statement is that local and smaller are better, not that large and distant are evil.

4. All families should be as self-sufficient as possible:

There are a number of reasons for this. First of all, of course, is the fact that self-sufficient families do not go hungry. They may not have 3 cars and a boat, but they are also spared the fear of insecurity. It also means that the members of the family have fewer constraints on their free will; if they do not have to worry about the necessities of life they are less likely to be exploited by others. Self-sufficiency is likely to lead to more free time that can be spent on education, art, music, and the other things that make life richer. The idea that every family becoming self-sufficient would lead to a truly just, equal, and happy society with an absence of poverty, is the heart of early Distributivist thought and is still the cornerstone of Distributionism’s plans and goals. G. K. Chesterton summed it up in a single quote, “The problem with Capitalism is not too much Capitalism, but too few Capitalists
The preferred method of being self-sufficient is to own your own business. For early Distributivists this goal meant that they were agrarians and felt each family should have enough land to grown their own food and generate enough income to meet their other needs. Later Distributists argued that the head of each family should have the tools and training to be an independent tradesman (such as a carpenter), and current Distributists acknowledge that certain professions, such as computer programmer, have the potential to meet this goal through specialized skills and knowledge alone.

5. Coops and Guilds are preferred over corporations and unions. This also means credit unions are to be preferred over banks:

Just as with the preference for local over remote and private over governmental, Distributionism has a preference for coops and guilds to corporations and unions. Where corporations are legal individuals that have owners and employees, coops are employee-owned, meaning there is no differentiation between capitalist and laborer. Consumer coops allow many individuals to act as a community and gain all the advantages of scale by buying in bulk as a community. While unions are the sole domain of employees, pitting the employed against the employer, guilds are ‘vertical’ organizations that include managers, employers, and employees together, erasing the differences between the various people. While a bank is a private or corporate venture aimed at maximizing profits for owners, credit unions are, essentially, coops aimed at maximizing utility of the owner/users. In each case the goal is to provide maximum benefits overall to all participants (who are usually co-owners or have a vested interest in the venture), not maximize profits for a limited group of owners (who are often completely divorced from the actions of the venture other than the collection of profits).
Another point in favor of coops and credit unions is that the employee-owners/customer-owners are local, not remote, the vast majority of the time. Coops are employees working with and for each other; farm coops are local or regional farmers pooling resources and sharing production; consumer coops are local to regional people working together to get better prices, better quality, difficult to obtain goods, or some combination. In all cases people are drawn together, not separated, by work and commerce.

6. Deal as directly as possible with the producer/end user:

Closely related to all of the above, avoiding middlemen is a goal of Distributionism. In many cases middlemen add no value to goods or services, they simply add costs. There are even cases where middlemen use their access to resources to artificially control markets. In addition to these ‘negative’ reasons, there are good positive reasons; direct sales allows for the development of a personal relationship between buyer and seller/supplier and consumer/etc. Even if the widget factory is in Ghana and your sprocket shop is in Seattle, there is a chance that a direct sales relationship can build community through commerce.

7. Government welfare programs are to be eliminated or at least reduced with elimination the goal:

Government welfare is in some ways the antithesis of Distributionism. Welfare programs are funded by taxes [which take away from the just earnings of workers and add to the costs of all communities], are administered by bureaucrats [remote, unconnected government agencies with no real interest in either those taxed or those receiving benefits], have no real hope of meeting the actual needs of recipients [those same distant bureaucrats must come up with a generic, one size fits all plan, attempt to implement it on a grand scale, and are further constrained at all times by political issues], and actively degrade communities [non-recipients assume recipients are OK; the recipients are alienated from others by being marked as ‘different’ with no human compassion associated, etc].
Distributionism would repeal all such programs as could be repealed without harm immediately and push the rest as far down the ladder (state, county, local government, etc.) as possible and begin phasing the remainder out. Charity should be a matter for communities, not bureaucracies.

9. Usury is to be avoided:

Usury” means “interest on loaned money, or excessive interest”. Traditionally, charging interest on money loaned to another was seen as taking advantage of another person, if not downright theft. It was almost universally condemned in the West until the Reformation and still has detractors. St. Thomas Aquinas argues that charging interest for a loan is the same as charging a person for a thing (after all, you must pay back the principle) and charging for the use of a thing, too; like selling a man a cake and then charging him additionally for each bite he takes.
The Catholic position on usury is, bluntly, very complex. A number of theologians have approached the idea of interest on loans from a variety of viewpoints for, essentially, 2,000 years. Although there is disagreement on particulars (how much interest is ‘excessive’?) the basic ideas of just lending are fairly well defined. I will start with what is allowed.
A lender may charge reasonable fees for a loan or for exchanging money. A lender may charge a reasonable penalty for a late payment. Interest that is profit-based (i.e., the ‘loan’ is to purchase a share in a venture) is acceptable, especially if there is an ‘upper cap’ to the earned interest. Investment into public funds (like savings bonds, or t-bills) is acceptable. Loans where the lender shares in risk allow the lender to charge reasonable interest.
What is not allowed is to charge unreasonable interest in any form of loan. You may not charge interest on fee amounts or penalties. The more secure the loan, the less you may charge. If there is collateral held ‘in pledge’ you may not charge interest. You may not charge interest if the borrower is driven to a lender by necessity.
The preferred manner of lending money that earns interest has always been for a productive venture where the lender shares the risk, such as buying a share in a new business. In this model interest is a share of profits, not a fee for the use of money. The modern stock market is seen by some as a violation of this, however, because investors often buy and sell stocks so rapidly that there is, effectively, very little shared risk. Under the principles of solidarity and subsidiarity, the ‘best’ loan for interest would be a joint venture of local or regional investors (or global investors with shared values and a personal relationship) for a productive venture (a farm or factory, real estate development, mine, etc.) where the investors receive a fixed portion of net profits as interest and all share in the risk so that if the venture struggles they earn no interest and if it fails they do not regain their capital. Also, if there is a primary investor/owner, he should have the option of ‘buying out’ shareholders by repaying them their full initial investment.. Similarly, interest-earning investments into public bonds, t-bills, and similar instruments is generally acceptable under the concept that the investment is funding the community as a whole. Certain cases (such as a municipal bond to fund the construction of a casino, or for a privately owned ballpark) are more problematic and require individual scrutiny.
The strongest debate on interest/usury is on loans for consumption. The primary examples of these sorts of loans are form family homes and cars. While homes increase in value, a person’s home does so so slowly (in general) and the need for a home is so great that the increase in value is certainly not the primary reason for investing – that reason is to live there. A car decreases in value over time and is certainly not a productive purchase on its own (with a few exceptions). In almost all cases the lender has provisions to seize the home or car if payments are not made, making their risk very low; in the case of home loans, their risk can often be zero. Many theologians and ethicists that examine such loans argue that interest rates should be extremely low (on the order of 1-2% at most) and, especially for home loans, others argue that no interest is acceptable at all, only fees.
The most despised form of loan with interest is for necessities or passions. These are the use of credit cards to buy groceries, or a loan to a gambler. Their impaired will often leads such borrowers to ‘ruinous circumstances’, situations that usurious loans only make worse.

10. The key to developing Distributionism is positive reinforcement:

Based as it is upon justice and the exercise of free will, Distributionism cannot be imposed. Some advocates of Distributionism argue that land should be seized and reapportioned equally; others want strong taxes on corporations and the wealthy with the tac receipts given to the poor. Both are against the core concepts of private property and free exercise of the will, respectively. Further, such actions would only break down or remove any feelings of solidarity between those who have their property and wages taken from them and those that receive them from no inherent virtue. Lastly, such actions would, by necessity, have to be performed by a national government, violating the spirit of subsidiarity. No, if you believe, as I do, that Distributionism is a more-just system, it must be encouraged by just means. My next piece will discuss my ideas on how to do this in greater detail.

And what may be the most important point of this primer-

There is no utopia:

No earthly system is perfect, nor will there ever be one. Distributionism is not a ‘magic bullet’ that will cause the world to spontaneously break into universal peace, the immediate cessation of crime, or the permanent elimination of want and fear. It is an attempt to dampen the harmful excesses of laissez-faire Capitalism without resorting to plans that require the violation of human rights (Socialism) or the conjectured alteration of basic human nature (Communism), all while avoiding the tendency powerful central governments have of deciding that they know what is best for their citizens (Fascism).
The tendencies of societies to shift to predatory Capitalism, confiscatory Socialism, authoritarian Fascism, or dictatorial Communism should be obvious. Forging a Distributionist society will take time, effort, and some pain. Mistakes will be made, adjustments will be needed, and results will vary.
The thing to remember is that the core ideas of Distributionism are the ones that matter; justice, solidarity, subsidiarity, and personal responsibility are the key elements. The details of how to reach a society that embodies those principles will certainly change over time.

Next time I will discuss my ideas on how to build a Distributionist society and what it would look like.

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