17 October, 2019

Three Questions on Distributism

Practical Distributism would like to thank Joseph L. Grabowski for permission to republish the following article. It was originally published on his own blog, which can be found here.

Question 1
27 September, 2019

A questioner wrote to me with three questions following my recent podcast recording on Distributism, and as I took some time to answer them and thought them generally useful basic questions on the subject, I decided I'd post them with the answers I gave here.

Here follows the first question and its answer; questions 2 and 3 with their respective answers will be posted separately. Be not faint of heart, this is the longest answer by a good margin, but also the most fundamental question.

Distributism seems to promote the wide distribution of the "means of production". Is this specifically land or does it also mean other assets like machines, tools, etc.? How does Distributism propose this be done?
PictureFrom "Economics for Helen"
First, I think it necessary to clarify some terms and also some background. 

​Distributism grew as a thesis in response to the 1891 encyclical of Pope Leo XIII, Rerum Novarum.

In that encyclical, Pope Leo — in addition to calling for the right to "private ownership [to be] held sacred and inviolable" — also called for "the law... [to] favor ownership, and [for] its policy... to induce as many as possible of the people to become owners." 

Now, contextually, it is clear that Pope Leo meant ownership of productive property, not merely things like leisure goods or even just a home. Belloc and Chesterton used the more familiar and colloquial term, "the means of production."​ Belloc usefully categorized "the means of production" to include physical or natural resources (i.e., land, tools, etc.) as well as capital (i.e., wealth reserved for future production). Belloc ascertained that there was still another category of wealth, which he put under the heading "enjoyment," but the distribution of this is not really part of the Distributists' concerns; that is to say, provided a well-distributed means of production, inequalities in wealth apart from capital would be a natural part even of the Distributists' envisioned ideal state.  

​Still working along the lines of definitions, we should provide another, which is probably the most important: namely, the term Distributism itself.

Distributism takes its name from the scholastic philosophical category of "distributive justice."  Put very simply, in any society there are three main kinds (or "species") of justice, and this covers all the kinds of relations within society:   
  • There is justice dealing with what is owed between members of a society (say, between two parties to a contract, or even between spouses).  This is called commutative justice.     
  • There is the justice dealing with what is owed by a community member to the community at large (e.g., a taxpayer's burden or jury duty). This is called legal justice.     
  • There is, finally, justice dealing with what is owed by the community as a whole to each of its members, the responsibility for which ultimately falls upon the community's leaders. This is called distributive justice.
The Distributist thesis is that a community owes its members some basic level of economic opportunity and participation. And, following the logic of Pope Leo XIII, Distributists hold that the most effective way of doing this is through wider distribution of the means of production.

Before we leave this question, though, one last clarification on what is meant by distribution. Consider a graph plotting data over a certain field with an X and Y axis, say, with 5 points positive and negative on each axis, and thus four quadrants to the graph. Now suppose all of the data are located in the upper-right quadrant of the graph. The way scientists or statisticians would describe these data is to say that they are poorly distributed or narrowly distributed. If, on the other hand, you have data all over the place, in all four quadrants, and at all four corners of all four quadrants and in the centers — well, of such data, you'd say that they are well distributed or widely distributed. 
"Bad data."
​Why is this last point important? Because we tend to think of "distribution" in terms of an activity rather than as simply a state of affairs: in its verbal sense rather than as, say, a predicate nominative.

Distributists want widely distributed property in the sense of widely distributed data. We don't want some kind of constant, rigorous activity of distributing. Whenever the conversation goes from a statement of a noun or adjective, a statement of fact ("distribution" or "distributed") to a discussion of activity or verb ("distribute" or "distributing"), we need to recognize that we've moved on past point one of the Distributist thesis: that a wider distribution as a status quo is desireable. If we aren't even yet settled upon that point, any conversation of ways and means is already out of order.

So, our first task is to convince people of the goal of wider distribution, and then invite a robust conversation about the best, most prudent, and appropriate manner in which this might be achieved: and there can be disagreement about this, and what's appropriate in one time and place may not be appropriate in another. For example, what may be appropriate under a tribal monarchy is not likely to be prudent as a tactic employed in a democratic republic under an imperialist presidency. The outcome of despotism does not attain as a risk equally in all situations or circumstances, but this certainly must be a factor to be reckoned with in any case.
It would be worthwhile, nevertheless, to provide a practical example of a policy model; so, here goes:

Belloc's proposal of some form of progressive tax.

The idea here would be that a tax effectively dis-incentivizing personal profit and capital control after certain set limits, such that it would be in the owner's own best interests to, say, distribute shares to his workers so that they could become stakeholders; or reinvest in a separate venture that would create gainful employment for more people; or the like. It would essentially provide a nudge toward many of those whom are often called "job creators" to... well, create jobs... rather than, say, buy a third or fourth luxury automobile.

Now, there are many objections to this, of course.

Firstly may be the objection that this is simply a "mean" attitude toward rich people. With this objection, I must say I have very little sympathy. A justly ordered society should encourage its members to be virtuous--and though clever readings abound of the New Testament and the Tradition about what was really meant by camels and eyes of needles and all that, none of these have convinced me that a society that tries to temper the desire for filthy lucre is less just or virtuous than one that irrationally and exuberantly celebrates it.

A second objection may be that... well, after all, luxury cars create jobs, too! I'll grant this. But if the luxury car factory really were to shut down owing to the hypothetical owner not buying his third or fourth man-toy and instead building a second factory for his enterprise, at least the former workers now displaced from the car factory would have a new place to look for work. Or, perhaps, in a Distributist economy the concern would be moot: maybe the luxury car factory would be a worker-owner cooperative, agile and responsive to the changing market, able to more smoothly and practically either either diversify its concerns, or at least by equitable distribution of the burden a more lean market ride out a lull in demand.

A final, and more substantial (in my mind) objection might be that the progressive tax removes economic incentives and doesn't square with human nature as we know it.

To this, I'd counter first that one of the most knowable and fundamental things about human nature is the prevalence and persistence of greed in fallen man; and the tax proposal certainly does seem to reckon with this truth about human nature. And it is well to note here that any sloganeering about "not legislating morality" is simply rubbish: all we can legislate is morality.

Further, though, I think a lot of counter-examples could be mustered from the realm of human nature to show that rule-based systems don't automatically result in people taking their ball home in a huff. The tax could be seen as analogous to a ten-run rule or "mercy" rule in Little League Baseball; and, accordingly within the metaphor, the argument would be like saying that if you put such a rule in place and capped the maximum score, suddenly the team that could score ten points and win in three innings won't do so: they will simply give up trying and not play to win anymore, merely because they can't win by thirty points or forty. Well, of course, the fact is that the better team will still play to win in any case. What is more, one could imagine a condition where a team is so dominant that simply winning in blow-outs becomes less interesting to them; and so, perhaps because they simply love the game so much and want to play for longer, or maybe because they love the other team so much, comprised of their schoolmates and friends, therefore they will start throwing hit-able strikes, stealing fewer bases, pulling their starters and playing the bench-warmers; in sum, extending the game so that even though they do win in the final result, they play a full six innings and the other team gets to score a few runs as well.

This metaphor isn't that far-fetched. Many company- and small business-owners have manifested how just this kind of altruistic relationship vis a vie their workers (as opposed to a relationship that sees workers as somehow competitors for some limited pool of wealth) is actually not only economically viable but even beneficial—even in our current economic paradigm; a fortiori, how how beneficial it might be under the kind of reformed society that which Distributism would hope to bring about!

Question 2
28 September 2019
Distributism believes businesses and individuals will flourish if the means of production is well spread; therefore, it believes that control of assets by the few is to be avoided. Socialism professes the opposite, believing there should be no private property, while Capitalism can lead to Oligarchy or Corporatism if left unchecked. On the other hand, Capitalism, when at its best, promotes people to innovate and out compete others either by making a new or better product or making a product better. How does Distributism promote innovation and prevent Oligarchy? At what point does a business become to big? Am I correct in guessing that American anti-trust laws are a form of Distributism?

I addressed some of this in the preceding, but this is a good question in its particulars.

To answer the ultimate question, I'd say that, yes, anti-trust laws and regulations preventing effective monopolies certainly are implicitly in line with Distributism.

On the topic of innovation and competition, though...

First, it's worthwhile admitting that some Distributists might seem to try simply to evade this question by pointing out that competition may exists in varied environments, from those of greater to those of lesser strain; and we would simply like a minimum of strain, less of a dog-eat-dog environment where those who fall behind in innovation simply die in the market.

But I'd personally go further than this, and challenge the premise somewhat. Not all innovation is desirable, ultimately. Slowing down innovation, especially in light of sundry valid concerns of environmentalism, is arguably, on balance, a good and desirable thing. Furthermore, frugality and reducing waste are both virtuous behaviors, and in the Distributist worldview an ideal market system is conducive to virtuous behavior and facilitates and incentivizes growth in virtue among the citizenry; whereas, arguably, under the current dominant paradigms of economic life, vicious behaviors of rapacious consumption and exploitation instead seem to be what are rewarded.

Finally, to speak more from within the science of economics itself rather than in terms of ethics, a lot of progress in innovation nowadays comes precisely via the function of obsolescence, be it planned and perceived.

The dawn of 5G wireless is a great example. The innovation itself seems a good thing; certainly many industries, including beneficent ones like healthcare and hospitals, will really benefit greatly from this innovation. But... the market cost of this innovation is rather complex. It comes at the expense, partly, of people throwing away perfectly good smartphones in order to buy new ones that will perform on the new network. Piles of waste, new cell towers marring the landscape, shenanigans like Apple slowing down consumers' phones to urge them to buy the new gadget in order to fund the innovation process... all these are real costs involved in the progress of innovation, but aren't necessarily costs captured by a market analysis, or reflected on any ledger detailing the price function. Sometimes, indeed, the value of a given stock seems to go up precisely in direct proportion to the growth of the size of piles in landfills, or the size of the stack of rubbish on consumers' curbs on trash day: and for Distributists, this is a concern, as I think it ought to be for us all.

So, ultimately, I am prepared to admit that under an economy characterized by Distributism, some innovation might really slow down somewhat; but on the whole, this is not necessarily a negative outcome. I will flesh out this point somewhat in the following...

Question 3
28 September 2019
I have read that Distributism is anti-mass production. Is this true? If so, what model does Distributism put forward for developing complex machines, medicines, and other products reliably and affordably?
This, too, like the former, is a very good question, precisely because it seems simple but belies a great deal of complexity.

Once again, some Distributists, encountering this question, might simply point out that there are models of mass production organized along Distributist principles, perhaps most notably such as the Mondragon Cooperative in the Basque Region of Spain.

But once again, I tend to feel that such an answer is too facile: at least in my mind, lingering implications of the question remain even after pointing out that Distributism can work with large-scale production.

I think there are philosophical correlations here to what I wrote about in the previous answer. Just as wasteful obsolescence has real-world consequences that market mechanisms alone don't seem fully to account for, so too most markets involving mass production have what are called "externalized costs" that seem bound up with ethical/socio-political questions, and can't be resolved simply by economic analysis.

To speak concretely: mass production often involves, for example, outsourced labor; and this labor often is also more or less exploitative. The complex creation of a smartphone, say, might involve child labor in a war-torn or Socialist hellscape, with ten-year-olds being sent underground for the mining of niobium or tantalum ore. Yet my cell phone contract, with its $35/month device fee - or even a ~$1K direct device buyout - hardly captures the real costs even of just the refinement and shipping of these minerals, let alone the cost of mining them. I don't see these costs because in the manufacturer's ledger, they are externalized—out of sight, out of mind. The true cost is burdened by the exploited market of labor and resource provision involving truly deplorably conditions. Nobody on the selling or buying side of the exchange ever really picks up that bill, according to the current model. To the manufacturer and consumer alike the value is like "found money," while to the laborer in the mine it is a heavily-borne yoke little better than slavery.

Distributists—or, at least, my school of Distributism—reckons with this complexity by urging application of axiom by the great Distributist thinker, Fr. Vincent McNabb, O.P. As one of the cornerstones of his economic theory, McNabb maintained that, ideally, "the sphere of consumption should be coterminous with the sphere of production."

Now, this is a bit of a mouthful, but the central idea is unpacked easily enough. Simply put, McNabb maintained that the extension of markets should be kept as local as possible. But this isn't mere romanticism about localism or buying corn from the roadside stand; McNabb had deep philosophical and economic reasons for urging this principle. He maintained, and I think he was right, that in "tighter" market models, the full spectrum of cost, value, worth, and price are more reified - made more real, practical, and actual. In other words, in such markets costs are less easily externalized or hidden: it is more difficult to put them out of sight, out of mind, and out of our calculations.

To put McNabb's principle into a pragmatic illustration: suppose I built a chair and drove it to a market square in my own truck to sell at my own stand. In haggling for the price I'm willing to take for that chair, I'm going to take care that the price I charge really covers the cost of the wood for that chair, the cost of the gas for my truck, the cost of my rent of the kiosk in the market. Any margin of real profit for me will only really exist after these costs have been accounted for; and if for whatever reason I do decide to lower the price to offload my chair, that loss in profit is felt by me directly. don't, in such a "tight" market arrangement, have the opportunities that are so often exploited under modern more complex markets: to low-ball the third-party logger or the third-party trucker, or to use their services on credit; or to get into arrears in my rent for the market stand; to take the whole surplus for myself and to bilk others involved in the exchange out of what is justly their own fair share.

But this principle also extends into certain degrees of complexity. Even if I do use outsourcing for the provision of wood or the transportation of my chair, if at least the logger and the trucker are my neighbors, I'm much less likely to try to screw them out of their own profit than I might be if they were faceless merchants in a developing nation halfway across the globe...

So, finally, to answer your question after what may have seemed a long tangent: the model Distributists put forward is, quoting McNabb again, putting "first things first." Whatever arrangements we make in economic praxis, however large or complex the arrangement may become, justice is best secured by putting cost before utility. In market economics, complexity in itself does seem to have great utility, but it also has costs; but we've gotten too clever through credit, outsourcing, and other means of eliding or hiding those costs, leaving others holding the bag while we take the loot. Many of our current economic crises  arise precisely from pursuing utility regardless of cost, or evading costs by burdening others with them—others who already are more heavily burdened by life and circumstances than the capitalist or the consumer can even conceive to imagine. Yet they are our brothers and sisters, too, even if halfway around the world; and they have their due in distributive justice just as much as we.

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