A World of Artisans: Distributionism as an Economic Third Way

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

I will attempt to draw the various ideas together to show not just how to encourage Distributionism, but what I think a Distributivist society would look like and some of the effects I think it would have on other societies. To make this as clear as possible I will attempt to do this in a single post, so I apologize in advance for its length.

In the views of Distributivist thinkers (and in my own opinion) Fascism, Communism, Socialism, and laissez-faire Capitalism all result from the same mistake. And that mistake is to misapprehend the goal of economic activity. For laissez-faire Capitalists, the error is thinking that the goal is to maximize profits with the goal of accumulating the greatest possible capital; for Communists the goal is transformation of Mankind into a new sort of person with a different nature; for Fascists the goal is social order and stability; for Socialists the goal is perfect equality of outcome (which they mistake for justice). Belloc and Chesterton point out where these errors can lead, and history has shown them to be pretty accurate. In every case the essential needs of Man are in at least some ways neglected, leading to unhappiness, abuse, and, eventually, tyranny.

The real answer is surprising in its simplicity; the goal of economic activity is the same as the goal of society. The goal is happiness. In ‘The Outline of Sanity ‘Chesterton wrote,
“There is no obligation on us to be richer, or busier, or more efficient, or more productive, or more progressive, or in any way worldlier or wealthier, if it does not make us happier”

We seek happiness in society through friendship, family, the development of character, and the improvement of our fellow man. We seek happiness through economics by acquiring the essentials of stability, the leisure of self-improvement and beauty, and the improvement of our fellow man. As the principle of solidarity points out, society and economics cannot be divorced from one another. This means that we must engage in economics with our neighbors and cannot forget that we are as dependent upon them as they are upon us. The principle of subsidiarity points out that, just as the most important element of society is the smallest and closest (the family), so our economics should look to smaller, closer ventures to maximize happiness.

There can be no true happiness in the absence of security. The first goal of society is security (from outside invaders, from crime, from abuses of rights) and the first goal of economics should be security (from hunger, homelessness, and exploitation). But just as a society that does not need to fear crime is not necessarily fair or open, a society where all are fed is not necessarily just or free. Security is the foundation, not the end, and this must always be kept in mind.

Many Distributionists argue that concentration of capital into the hands of too few people leads to a decline in liberty that can lead to a state resembling slavery for those who lack capital. The proposed solution is to strive to distribute capital as much as possible (hence Distributionism) so that most, if not all, families are capable of self-sufficiency. This leaves a wide range of possibilities; farmers that have enough land to provide for themselves both directly and through the sale of ‘excess’ produce; skilled tradesmen with their own tools and enough skill that they can be either self-employed or find employment both readily available and their jobs portable (such as a carpenter or computer programmer); factory workers who are part-owners of their factory with sufficient equity that they are involved in issues of capital expenditures and share the reqards and risks of production; retail employee/owners who make cooperative purchases of stock, participate in sales, and either lease or co-own their facility.

As you can see, the ideas of self-sufficiency, solidarity, subsidiarity, an aversion to wage slavery, and social justice tend to point along a particular path, one that rejects Communism, Socialism, and Fascism and is opposed to corporate consolidation and monopolies. The result, where as many people as possible are professionals that own all the tools required for their work and deal as directly as possible with each other, could be called a world of artisans.

A world of artisans would nullify the tendencies of industrial and post-industrial nations to slip into authoritarianism, regardless of their ‘flavor’. The economic displacement of both industrialization and the transformation to post-industrialism creates feelings of fear and insecurity amongst many people who are incapable of self-sufficiency do to a lack of personal capital; they need wages to live and are incapable of generating them without access to someone else’s capital. Changes in the structure are coming that means that they are unsure of continuing access to capital. A simple example is a worker at an auto-plant. He cannot make cars himself; he owns none of the tools, materials, or facilities to make cars himself; his skills are specialized to the point that no other employment but car-making affords him the potential of a living wage. As plants are closed or moved, he is (naturally) afraid of losing his home, even of losing his life to hunger.

Capitalist economies will always lead to some level of insecurity; it is their nature. The feelings of fear created by those lacking capital will be utilized by those who desire change. They may be Machiavellian, they may be benign, but someone will harness the insecurities to effect change. If the desire is to do away with the insecurities of Capitalism altogether, the goal of change will be Communism. If the goal is to use the power of the central government to take capital from one group and give it to another to ameliorate insecurity, the goal is Socialism. If the goal is to make Capitalism more efficient in the desire to accelerate economic growth and reduce insecurity through expansion, the goal is laissez-faire Capitalism in its ‘purest’ form. If the goal is to stabilize society while maintaining Capitalism (and the largest Capitalists), the goal is Fascism.

I am aware that some will argue with my definitions, above. These are my own very broadly-brushed opinions, nit an in-depth analysis of political methods other than Distributionism.
Distributionism argues that Communism and Socialism are wrong (and lead to oppression) because they make the mistake of blaming Capitalism. They further argue that Fascisms and ‘invisible handers’ are similarly wrong for blaming people. You cannot reject economics, nor reject people – you must integrate them. This is done by making as many people as possible independent economic actors – in other words, capitalists.

But how do we get there?

As I mentioned in Part II, the shift to Distributionism cannot be coerced or via ‘negative’ means. You cannot seize land from those that have ‘too much’ and give it to those who have ‘too little’; who would decide? Who would enforce such decisions? Both obviously require – a massive, powerful central government, the very antithesis of Distributivist thought. Likewise, imposing higher taxes on people earning ‘too much’ and giving this money to those earning ‘too little’ result in the same formula – injustice enacted by remote, faceless entities. In addition to leading to resentment (from all sides as to what is ‘just’), alienation (of different groups from one another), dependency (of those who gain with no effort), and lawlessness (by those wishing to either avoid being taxed or who wish to profit unjustly) the power of the central government will continue to expand at the expense of local leadership, the family, and the individual.

The path must be positive. Some steps are relatively obvious and even partially in place. Small businesses should be encouraged with tax breaks and loans. Similarly, cooperatives, credit unions, and similar solidarity groups should also receive tax breaks. Microloans to such organizations could be subsidized by government agencies for a strictly limited time to encourage transition. The removal of farm subsidies and their replacement with tax incentives would go a long way toward creating Distributionist farms. Local, regional, state, etc. funding for training, especially in trades and professions, would encourage the creation of more artisans. Laws that encourage guilds should also be created.

And here we come to another key element in early Distributionist thought; the guild. Similar to unions, similar to professional associations, and similar to consortiums, guilds are still unique. The European guilds of the medieval period are, as noted in the link, the source of most modern concepts of intellectual property, business ethics, trade, and social security. The were formed by members of the same or closely-related trades or professions, generally as independent, self-employed artisans and professionals working together for their own greater good. They set standards of education for their members (and prospective members), codes of conduct, quality standards for products, even rules for contents, size of products, etc. Virtually all of them also organized funds and systems to care for the widows and orphans of members, for members no longer able to work due to disability, and the retired/elderly members of the guild.

Historically a number of guilds negotiated exclusive contracts with cities, preventing non-guild members from practicing their professions there. This eventually led to their concentration in such cities and, ultimately, their downfall as they became isolated and hidebound fraternal institutions. Their counterparts outside the cities often refused to join organizations they saw as urban and both were more able to change quickly and, interestingly, were easier prey for large capital concerns who wished to consolidate. Distributionist thought is to learn from history and employ the best of guilds while rejecting their tendencies to become focused on defending exclusive territories and protecting trade secrets. Under this model Guilds are to have an almost dual nature; internal and external. Internally they act like fraternal societies and professional boards/consortiums. They ensure training and performance standards, enforce ethics, provide insurance services for members, manage pensions and trusts, engage in cooperative enterprises with other guilds, etc. Externally, they are almost like a brand. Consumers that deal with members of, for example, the baker’s guild know that they can trust the contents of the baker’s goods, his level of training, the standards of cleanliness of the bakery, his business ethics, etc.

Guilds differ from unions in a very important element – all levels of the profession or trade are in the same organization. While unions tend to pit employee against employer, guilds force them to work together. Since guild members have the skills, tools, and other capital needed to make them ‘portable’ (they can work for themselves or another master of their profession with ease) there is less insecurity on the part of wage earners. Employers within the guild ‘worked their way up’ through the guild and are very clearly aligned with their workers in the joint venture of success for all members of the guild. Since many guilds historically had rules on the election of guild members to local leadership councils and guild assemblies, the voice of the employed has as much weight as the voice of employers in large decisions, as well. The preferred management of Guilds is at the level of individual self-employed worker, then small shops, then a neighborhood, etc. The involvement of workers ensures such things as a living wage, decent social benefits, and a voice in larger decisions. The non-exclusive nature of a guild means that guilds that become corrupt, exclusive, coercive, etc. will simply have their members melt away/ It is almost like the Wobblies, but with the managers and owners involved, too!

More seriously, the Guild system is a microcosm of Distributionism; the line between employer and employee is virtually eliminated since the employee has the means to become self-employed or an employer himself; the organization is founded on the principles of solidarity, subsidiarity, and justice. The goal of guilds is not to erase Capitalism (which was the goal of many early trade unionists), but to embrace it, to take the best of Capitalism and share it through the free actions of voluntary members. At the same time, guilds share the risks and dangers of Capitalism and ameliorate them through acting with and for each other. Their goal is to create a community where the members avoid the excesses of materialism through close association with their peers, a focus on the needs of their community, and a desire to contribute to the society that makes their success possible. These voluntary organizations succeeded not by rejecting Capitalism, but by sharing the Capitalism, the risks and insecurities as much as, or even more than, the rewards. This is an emulation of civilization itself; the protection of society by sharing risks and hardship is the cornerstone of the advance from barbarism. The voluntary sharing of the benefits of security is the cornerstone of a just civilization.

I can almost hear you now,
“Hold it!” you say, “Deep, you aren’t describing Distributionism as a ‘Third Way’, are you?”

No, I’m not. Mainly because I don’t think that it is a third way. Communism has always been a pipe-dream of people whose arguments begin and end with ‘once we change Man’s essential nature…”; Socialism is an argument that concludes “…and thus we will give Man more freedom by carefully controlling him.”; Fascism is an argument that “We know what is best for you!”; Laissez-faire Capitalism is an argument that “Selfish, unjust actions lead to altruistic, just results… eventually.” Distributionism rejects Communism, Socialism, and Fascism as unjust and immoral in their very conceptualization. It also rejects laissez-faire Capitalism as a wrong-headed attempt to separate ends from means. So, in the end, it is not a Third Way, it is simply the acknowledgement that Capitalism is the best known economic system, and that very minor, voluntary controls can prevent Capitalism from becoming a tool for injustice.

Since Distributivist writers and thinkers spend a lot of time explaining what is wrong with the world, and what Distributionism is against, it has been argued that Distributionism is no more than a reaction, a denial, a ‘no’. In short, it is impractical, even evil. The arguments against Distributionism range from ‘it prohibits international trade’ to ‘it cannot compete with huge multinationals’ to ‘it has no political platform for politicians to use in advocating it’. I find the concept that Distributivist are against international trade when virtually all of them point to the Mondragon Cooperative Corporation as an example not only of international trade, but successful competition with huge multinationals. Or that small firms cannot compete with large ones when small ‘mom and pop’ shops have successfully limited WalMart in China and carved out serious market share in America in recent years. I must also confess that I was surprised when Fr. Neuhaus, whom I normally find to have a very informed opinion, dismisses Distributionism as not having anything to which to attach policies or platforms in the political arena. America has; a Small Business Administration that promotes small business; farm co-ops, credit unions, consumer co-ops, and business co-ops like ACE hardware on almost every corner; a history where the Grange movement held strong, if brief, political influence over national politics; a growing concern over the impact of large enterprises like Wal-Mart and Microsoft of the well-being of the average person; and a rather large (and growing) government job training program. With all respect to Fr. Neuhaus, but I suspect his obliviousness to possible political planks supporting Distributionism may have more to do with his own ignorance of Distributionism, politics and American business than any weakness of Distributionist thought.

Indeed, it would be a rather simple matter to craft political positions that would have a broad appeal and promote Distributionism in a non-coercive manner. As I mentioned earlier, tax breaks for small businesses would be well-received by many. Pointing out that the vast majority of new jobs in America are generated by small businesses would go a long way to making it more popular. Tax incentives for co-ops would face similar approval across a broad segment of society, and it would be a simple matter to increase support for credit unions and similar activities. Reduction of levies and tariffs for small business and co-ops would also help. An increase in awareness of the value of trades would be of great benefit, too.

That seems pretty simple, really; the engine of job growth in America (and the world) is small business; tradesmen are critical for small business; co-ops of all sorts are efficient, competitive organizations that provide solid business benefits to their participants. I am not sure what Fr. Neuhaus and his fellow detractors are missing, but these seem easy sells as political positions. Conservatives can focus on tax relief for business owners and job creation, Liberals can focus on job creation and tax relief for students, blue collar workers, and mom & pop shops. Both can appeal to farmers and rural voters by supporting co-ops.

Seems like a win-win to me.


Next time: more on Distributionism, but on a more personal level.

The Efficiencies of Charity

I have been planning a series of posts for about 2 weeks now explaining a concept called Distributionism. As I was casting about for a good topic to illustrate the core ideas underlying Distributionism, I came across an article by Naomi Klein. While the article as a whole is a joke (the U.S. is going broke? That girl needs to look up the term ‘ratio’), her mockery of the idea of the private sector being more efficient than government (indeed, she assumes her readers will laugh hysterically at the idea) got me to thinking.

Who in their right mind thinks the government is more efficient at anything?

Let’s take a look at a ‘darling program’, one of those programs that every single senators and congressmen feels they absolutely have to vote for. A program so beloved that not voting for it can haunt your political career for decades. The one I will pick is…. Head Start.

Head Start was begun in 1965 as part of LBJ’s Great Society plan, particularly the War on Poverty. The goal was to get kids ready for school before they began, especially poor kids. It provides early education and a meal to kids and has done so for over 40 years. It began as an eight week Summer program, but now ranges from pre-natal care to health screening and pre-school education that can last all year.

I am not going to go into the debate over the effectiveness of Head Start, or the necessity of Head Start, or any of the other controversies surrounding this program. No, I am going to focus on something a little different. Is it the best use of our money? Let’s assume that pre-school education works, and that kids that get at least one decent meal per day during the week have fewer health and education issues, and that being socialized into pre-school is not detrimental to behavior. Fine, let’s assume these are all true. Is there a better way to do these things?

The majority of Head Start participants are 3-5 years of age and only participate during the school year, usually in the mornings. There is also a program called Early Head Start that covers prom pregnant women to the time that the young children are eligible for Head Start. Nailing down the precise per-child price of head start is tough (for example, the Wikipedia entry I linked above states that the cost is about $7,200 per child when the count of participants and budget in the same entry actually indicates that it is closer to $7,600 per child), but it can be found. The Administration for Children and Families states that Early Head Start costs more than $10,500 per child while Head Start proper is $7, 543 per child (don’t trust their total – do the math for yourself). Of their budget of about $6.6 billion dollars they claim that about #233 million goes to research, development, and administration, meaning that about 3% of their budget goes to overhead.

That seems pretty efficient, doesn’t it? I mean, that rivals Feed the Children, one of the largest charity organizations on Earth. Like Head Start, Feed the Children focuses on feeding hungry kids (obviously) but also provides basic education, health screenings and basic services, and even pre-natal care. These two very similar organizations provides similar benefits and Feed the Children is rightly praised for having merely a 3% overhead. It seems that government can be as efficient as the private sector (well, charity sector) after all, right?

Don’t make me laugh. First of all, the Office of Management and Budget admits that the Head Start Budget is structured in such a way that ‘all administrative overheads cannot be determined’. In other words, the Department of Health and Human Services and Administration for Children and Families do all of the actual administration out of their own budgets to effectively hide the real cost of running and managing Head Start. This means that the 3% overhead seen as budget line items is in addition to the salaries paid to all the of the civil servants that run Head Start as part of their daily routine at HHS and ACF. The listed overhead also does not include the costs of developing training guidelines for the Head Start teachers (that is part of the budget of the Department of Education), printing up the guidelines, programs, handouts, training requirements, etc. associated with the program(also the Dept. of Ed.). Also stashed in there is more overhead – internal administrators. While the ACF lists 213,000 paid Head Start staff members, there are only about 50,000 paid Head Start teachers, meaning that the other 160,000+ staffers are administrators, clerks, etc. The complaints about the (relatively) low pay of the teachers also indicates that these staffers are probably better paid. Heck, if they are only paid an average of $25,000 a year, that means the admin salary overhead is about $4 billion a year, or about 58% of the total budget!

Don’t forget the 10,000 plus local, county, and state administrators of local Head Start programs (all of whom receive their salary from either the local government or local school district) as well as the fact that Head Start happens in local schoolrooms, often adding to local administration costs. Another key aspect of the local Head Start programs are the many volunteers involved in the process. Indeed, unpaid local volunteers outnumber paid dedicated Head Start staffers by more than a factor of 6. This means the relatively low costs of Head Start are subsidized by over 1.2 million unpaid volunteers.

Those local operations are very interesting. The ACF report lists the budget and enrollment levels, and in some cases the racial makeup of Head Start. The majority of poor in America are White, yet Head Start enrollment is less than 30% White. The majority of poor in America are rural, but the majority of Head Start participants are urban (see the above links). If Head Start were actually serving those in greatest need, it should look rural and White; instead, it is urban and Black.

Let’s look again at the core of Head Start; pre-school education and a decent meal. The effects (and duration of the effects) of Head Start education are hotly debated, let’s look at costs alone. The majority of Head Start participants are enrolled only during the school year, and only for part of the day. For the sake of being conservative, I will base all of the following numbers on a year round partial day schedule to cover the fact that some kids are in Head Start year round or all day, or both, but trying to keep it as middle-of-the-road as possible. The actual cost per child varies from over $10,000 to as little as a bit over $7,500, so we will use $7,500, as well. Since Head Start is overwhelmingly a weekday program, we will assume that kids attend about 250 days a year. This means that Head Start costs no less than $30 per day per child. While you may think this doesn’t sound too bad, let me remind you – this is to provide basic instruction in letters and numbers (similar to Sesame Street) and to provide a meal and a snack. Looked at that way, its pretty darn steep a price to pay. After all, 3% of the budget goes to overhead like research and program review, about58% goes to administration overhead, and the salaries of the actual teachers comes to an additional 7%, chewing up almost 70%, meaning that the books, construction paper, apples, and juice boxes are being purchased with less than $9.60 per child.

And that $9.50 a day or so is still no bargain! I don’t know about you, but I am a homeschooling Dad with 4 kids at home. Homeschooling my pre-schoolers costs us less than $400/year and Deeper Thought can feed the Airborne Philosophy Squad for less than $3.00 per kid per meal, snacks in between included. We do not have the government’s advantage of A) buying in huge bulk and B) not paying sales tax on our purchases. That means that our year-round daily cost for one meal tops out at about $4.00 per meal, less than half of the Head Start per meal cost. Another point to remember – the numbers above are a generous minimum! If I start using the highest numbers for Early Head Start, that meal, those snacks, and finger paints start edging up on $20 per day per child. This tells me that there is much more waste, overhead, and inefficiency lurking in Head Start, probably to the tune of an additional $5-$15 per child per day.

So while my family can certainly do better, can other institutions do better? Absolutely. Let’s talk about Feed the Children, a group I mentioned above. Feed the Children works to provide roughly the same services as Head Start, albeit all over the world. They openly publish independent audits of their organization that shows where and how the money they receive is spent. Their calculated over head comes to 11%, meaning that for every $30 they spend on a kid, that child receives about $26.70 in food, goods, or education. In fact, what Feed the Children states is that they will feed an American child for a grand total of about $0.25 a day, or roughly 1/40 the cost of Head Start. This level of efficiency allows Feed the Children to provide services world-wide, including disaster relief, and to serve many more kids with much less cash than Head Start.

And Feed the Children is considered to be fairly inefficient, as charities go. Their creation of their own distribution network means that other charities, like Save the Children, with a mission very similar to Feed the Children, but with a greater emphasis on education and health, has an overall efficiency of about 91%, roughly 3% less overhead than Feed the Children. Of course, all national and international charities pale in comparison with that bulwark of American charity – the local church. It is estimated that local churches and parishes, be they Baptist, Catholic, or Lutheran, have a nearly 98% efficiency. Indeed, many churches try to create an endowment that covers all salaries and taxes so that charity donations are 100% to charity. Additionally, such local charity functions as gathering donations of clothing or food are 100% efficient. As a matter of fact, Head Start can chalk up what little efficiency it does have to local action; after all, if they had to pay all those local volunteers even one-fourth what they pay their teachers, it would come to an additional $6 billion a year in their salaries alone.

As we can see, private organizations are more efficient than government organizations. More importantly, local organizations are more efficient than global or national organizations. In this case, if the $6+ billion of the Head Start program were instead used by a group like Feed the Children even if the efficiency of that organization was cut in half the number of children receiving education and food would grow by no less than 150%, all at no increase in costs. This is a key element in Catholic teachings on social justice and society; the concept that local is better.


Next time I will be discussing the ideas of Subsidiarity and Solidarity.

NOTE: Deeper Thought informed me that $3.00 per child per day is actually the ceiling of what she spends, including our forays into fast food.