Wednesday, October 12, 2011

Selling distributism as a fairer system

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The Occupy Wall Street movement is into its fourth week. While copycat protests have sprung up in over two dozen cities, according to Reuters correspondent Lauren Tara LaCapra, Wall Street denizens are nervous but not exactly on the edge of panic, far less surrender (surrender to what? he wondered).

For one thing, despite the heavy presence and influence of anarchist and anarcho-syndicalist radicals in the core of the movement (according to one observer — see the comments in this post), the participants themselves seem to have no particular goals in mind, showing up mostly to eat free cookies and express their displeasure with the masters of Corporate America. They’re having their Howard Beale moment, and enjoying the fact that they’re with others who are “as mad as hell and not gonna take this anymore”.

They don’t necessarily want an anarcho-syndicalist commune or a socialist workers’ state … they just want somebody to do something, to fix the rotten situation we’re in. The focus of their anger is on the top one percent, partially because of envy, but also because of the increasing income inequality that’s sapping the middle class and which compares unfavorably to such third-world economies as Cameroon and Uganda.[1] But that doesn’t automatically translate into a populist desire either to surrender everything to a “nanny state” or to chuck State powers altogether.

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There is an alternative to capitalism that doesn’t abandon us to the mercies of a “nanny state” or to the dubious utopia of the commune, a real-world alternative that isn’t about handouts or soaking the rich yet is inherently more equitable: Distributism.

The fundamental principle of distributism is spreading out capital — that is, ownership of the means of production — as much as possible. If this sounds communistic, it’s only in that much. Distributism recognizes the profit motive as legitimate; however, by decentralizing ownership, it allows more of the profit to get back down to the lowest levels of the economic base.[*] Moreover, it narrows the gap between the rich and the poor by basing itself on local worker cooperatives and family-owned businesses rather than national chains and multinational corporations. Above all, it doesn’t depend on the government to correct the imbalance inherent in lending, the engine of capitalism, since the ownership of lending institutions are cooperatives as well.

Unlike the anarcho-syndicalist commune, the distributist model already has the advantage of being road-tested. The most notable example of the cooperative system envisioned by distributism is the Mondragon Corporation of Spain (€14.76 billion revenue and 83,859 employees in 2010). Also notable for a distributist economy is the Emilia-Romagna administrative region of Italy, considered one of the richest, most developed regions in Europe, where almost half of the GDP derives from over 8,000 cooperatives and family-owned businesses.

So what’s the catch? Actually, there are three.

The first catch is actually getting the very rich very few to divest themselves of their stranglehold on capital ownership without adopting “Robin Hood” means — not impossible, but not cheap or easy. Partially because of this, the second catch is that it isn’t a quick solution; for people facing foreclosure and bankruptcy now, knowing a better, more just economy is just a couple of decades away isn’t a great comfort.

The third catch is that the bulk of distributism’s defenders and advocates are/were Catholic.

The basic building blocks of distributism were laid out in the 1920s by Catholic writers G. K. Chesterton and Hilaire Belloc, and most of its refinement and defense has been along the lines of Catholic social doctrine. You don’t need to be a Catholic to be a distributist or to see its advantages; however, if you’re a committed anti-Catholic, references to Rerum Novarum, Quadragesimo Anno and Centesimus Annus are likely to shut the doors of your mind.

The relation between morality and economics is necessary, indeed intrinsic: economic activity and moral behaviour are intimately joined one to the other. The necessary distinction between morality and the economy does not entail the separation of these two spheres but, on the contrary, an important reciprocity.[2]

Indeed, the whole argument between competing economic systems revolves around what constitutes a “fair exchange”. But there can be no argument over the relative merits of each system in meeting a standard of fairness if there’s no preceding moral imperative that says, “Exchanges of goods and services ought to be fair.” Such an imperative immediately allows that there is such a thing as an unfair trade, that some people do the shafting and others get the shaft.

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Selling distributism, then, means selling people on the moral principles of social justice which a system has to meet to be considered fair. Difficult to say, even more difficult to do. As angry as people are right now about overpaid CEOs, sports figures and entertainers, they like to live in a system where one day they too might be overpaid.

After all, isn’t that how we got the standard of living we have today?

Well, no. That was always a self-justifying semi-myth, one that conveniently ignores the restraints and influence exercised by unions and the government. At the end of the day, it still boils down to one person telling the other nine why he deserves 83% of the pie and they must fight for their share of the other 17% as best they can.[3] Social mobility is mostly a pipe-dream; poor Americans are less likely now than ever to move up to the upper middle class, let alone live with the tycoons. Poverty in America may be more comfortable for most poor people than poverty in Ethiopia or India, but it’s still a largely artificial condition caused by human greed and inefficient distribution.

Life is unfair. But it doesn’t have to be that unfair.

Further reading:
Business Insider: Fifteen Mind-Blowing Facts About Wealth and Inequality In America
Mother Jones: It's the Inequality, Stupid
Scribd: "Distributism and the Modern Economy" by Donald P. Goodman III (link fixed)

[*] The main engine of capitalism is lending, i.e. debt, with debt instruments circulating as money. YouTube has a very interesting educational film on money as debt, which you can find here.

[1] Central Intelligence Agency (2008). Household Income or Consumption by Percentage Share. Retrieved 10/11/2011 from The World Factbook (
[3] Domhoff, G. W. (July 2011). Wealth, Income and Power. Retrieved 10/11/2011 from Who Rules America? (