16 October, 2009

Distributism and the “Global Economy”

One of the charges I have heard against distributism is that it is “isolationist,” and that it fails to account for the “realities” of the “global economy.” The truth is that these terms are thrown out in order to dissuade people from even considering our views. They invoke a twisted view the population at large has been taught to have regarding these terms and unjustly associate those views with distributism.


Whenever people express the idea that local businesses should be given preferential treatment over foreign businesses, they are called isolationists. This idea is not exclusive to those who promote distributism. It has also been voiced for decades by the so-called populist movement, who are also smeared with the isolationist label.

The implication is that we oppose any kind of trade; thus cutting ourselves off from the rest of the world. This is nonsense. The desire to protect our neighbors from losing their jobs to foreign interests is not the same as saying we don't want anything to do with foreign interests. Nor is the desire to remove our dependence on distant sources for basic needs the same as saying that we would not consider buying from those distant sources. There are other implications from doing so, which I will address in a later post, but suffice it to say that under distributism, the marketing and distribution of non-local goods would be different; not eliminated.

Global trade is a good thing; even in a distributist system. A locally owned retail shop for imported goods is not in any way incompatible with distributism. However, this statement does make some assumptions. Distributism assumes that society is applying moral principles, particularly that of justice, to its economic activity. This would exclude goods that are, for example, from places that use child or forced labor. It would also exclude, or at least provide a price balance for, goods that are either subsidized (artificially reducing the cost) or produced using monopolistic practices (reducing the cost through anti-competitive measures).


The misunderstanding that most people seem to have about the “global economy” is that they equate it with global trade. In fact, these are two completely distinct things. Global trade has to do with the buying and selling of goods across national boundaries. Global economy has to do with the manipulation of national economies and currencies by banking interests that do not take any national identity into account in their decisions.

Consider the current economic crisis. What impact did the failure of around 2% of home loans in the United States of America have on global trade? Not much. International trading goes on today pretty much the same as it did before the housing collapse. The failure of these loans did, however, have a major impact on the global economy. It created a global economic crisis that has caused the collapse of major banks around the world.

The loans themselves did not create this crisis. The way banks handled and repackaged these loans into financial vehicles used to back major investments in each other caused the collapse. Yes, I've heard all about how policies imposed by the U.S. Government literally forced these banks into making these loans. However, these loans themselves did not cause the collapse of international banking. It wasn't the “greedy” mortgage companies. After all, the usurious nature of these loans made them practically risk free IF the banks making them had just held onto them. (I plan to make another post later explaining this statement.) It was how these loans were passed around, bought and sold, by the international banks that made this relatively small number of foreclosures in one country an international financial disaster that sent economies all over the world into turmoil for more than a year.


So, what have distributists to say about global trade, or about trade at any level? The considerations of justice must be applied in all aspects of our lives; including economic matters. This is not to say that we feel those who promote capitalism reject the notion of justice in economics. If we believed that, there would be no point in trying to present our views to them. The problem is that, as a society, we have become accustomed to not think about it. We, as a society, must change. We must take these considerations into account. We must also recognize that monopolistic capitalism tends not to do so.

In the view of monopolistic corporations, anything that prevents them from improving their “economic efficiency” is bad. Putting thousands of people out of work in one place is okay if thousands of other people more are provided work in another place for a lower cost. The only real consideration seems to be what will result in the greatest return for the shareholders. All too often, however, the reason the cost is so much lower is because the workers are even closer to a true slave state than we are.

Let's face it, the majority of our society here in the U.S.A. has grown too comfortable with ignoring the greater implications of these happenings. It isn't that we can't know about it, it's almost as if we have not been trained to think about such things. As long as we get their gadget at the lowest possible price, all is good. Is it really?

Think about it. How is it possible that the price of some gadget produced in a factory in China can cost less to purchase here in the U.S.A. than the same gadget produced locally? Look at what's involved in getting the locally produced gadget. Once it is produced, it must be delivered, usually by truck, to a retailer. I know that I'm simplifying things, but basically that's really it. In contrast, the gadget from China must be (1) trucked to the port, (2) loaded into a container and the container loaded onto a ship, (3) shipped across the ocean, (4) the container must be unloaded from the ship and the product from the container, and then it can be trucked to a retailer. How is it possible that the added fuel and labor cost of steps 1 through 4 outlined here could still result in a retail cost that is lower than the same gadget produced locally? The heads of monopolistic corporations may be greedy, but that alone can't entirely account for this.

The fact that China's factories are not only subsidized, but use forced labor, including child labor, can account for it. There is no secret about this. Our government produces reports about it. Some of the so-called conservative commentators have pointed it out. Yet, our government still lists China as a most favored trading partner. Many of our biggest companies import a large percentage of their parts and products from China. Many of them shut down factories here in the U.S., putting people here out of work, only to open new factories, producing the same thing, in places like China and have those products imported back here. Our major media outlets, paid for by corporate advertising, don't report it. Imagine that, they increase their profits by putting our citizens out of work, opening up a factory where they pretty much get slave labor, and then import the products that used to be made here back to us; and this isn't considered news! Why do these companies do this? Because we still buy the products. In fact, we will buy them even if there is a locally produced alternative because they will cost a bit less.

Here is a humorous representation of this.

This is the face of monopolistic capitalism. This is the inevitable result of what is called the “free” market. Our predecessors saw it in the factories of the U.S. and Europe at the turn of the 20th century. We have been ignoring its return at the turn of the 21st.

Is there no moral implication for doing business with governments that use forced labor (i.e., slavery) as a means of undercutting our costs? Is there no moral implication for companies that choose to get greater profits by collaborating with governments and other corporations that treat employees badly? Is there no moral implication for us if we support companies that treat employees badly instead of supporting companies that treat employees well, just to save a few bucks? Are we not, in fact, helping to maintain that bad treatment?

I'm not saying that we have no moral responsibility for helping the unfortunate people who live under those conditions. I'm just saying that this responsibility does not necessarily include supporting the corrupt governments and businesses that exploit them. (How does enriching the oppressor help the oppressed?) We also have a moral responsibility to support those organizations that incorporate the principles of justice into their operations. The more they have incorporated these principles, the more they deserve our support.

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