Thursday, November 4, 2010

ZenTiger Distributismx

I'm all for small government, but in our system, a small government will always grow to be a big government, often as a response to the excesses of capitalism (OK, you got me, often as a response to being infested by socialists who fear the excesses of capitalism).

A free market is a worthy goal, but in today's world we don't actually have free markets, partly because of all of the government regulation and control, and partly because multinational corporations themselves abuse property rights and engage in monopolistic practices. Chesterton said: "Too much capitalism does not mean too many capitalists, but too few capitalists.

Equally, though, too much socialism results in too few capitalists. To my mind, Socialists don't really get the importance of property rights, and how they underpin human rights. Indeed, they get distracted inventing new human rights which require greater invasions of freedom to justify the need for the government to enforce them.

There is the so-called third way, but I hasten to say that this has widely different interpretations and therefore, some of its criticisms are unwarranted, and others spot on, given that there are variations of definition. I'm working through them to consider the merits and weaknesses of this approach. I'll share highlights of my reading and over time, start sharing my conclusions. Feel free to read along.

Distributivism, also known as Distributism, is an economic theory formulated by Hilaire Belloc and G. K. Chesterton largely in response to the principles of Social Justice laid down by Leo XIII in his encyclical Rerum Novarum. Its key tenet is that ownership of the means of production should be as widespread as possible rather than being concentrated in the hands of a few owners (Capitalism) or in the hands of state bureaucrats (Socialism). Belloc did not believe that he was developing a new economic theory, but rather expounding an old and widespread one against the novelties of both Capitalism and Socialism.

Belloc believed that Capitalism could never achieve economic equilibrium on its own. It is an unstable system for two reasons: divergence from its own moral theory and from insecurity of two kinds. The moral theory of Capitalism is based on freedom, but it tends to accumulate property in the hands of a few owners; as ownership becomes more and more limited, more and more power passes to a small capitalist class. The state increasingly becomes a tool to protect “wage contracts” which are increasingly leonine, that is, based on inequality. One side may refuse the contract (the employer), but the other side, the worker, generally has no choice but to accept it because the alternative is starvation. The state can no longer be a neutral arbiter between classes but becomes a defender of one class upon whom jobs and growth are increasingly dependent.

In addition to this moral problem,Capitalism also has two kinds of insecurity: insecurity for the workers and even insecurity for the capitalists. There is insecurity for the workers because the wage fetches less in old age, nothing in sickness, and jobs themselves are at the discretion of capitalists3 (e.g., “outsourcing”). But Capitalism also produces insecurity for the capitalist.

Competitive anarchy makes the system as unstable to owners as it is to workers and results in gluts and underselling. Capitalism responds by becoming less capitalistic; it uses the law to raise barriers to competition and to limit liability; the corporation itself is an adjustment to the inherent instability of Capitalism that allows investors to limit liability. The ardent socialist does not fear a pure Capitalism nearly as much as does the ardent capitalist.

Link: An Introduction to Distributism

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