Capitalism and Democracy (a revised response)

The Capitalist defense, to my mind, is that of a form of capitalism that is ultimately incompatible with democracy. For what if our current capitalism-of-the-few can only negatively impact the stability required to maintain, for the many, both economic opportunity and its concomitant self-determination and independence? In that case, wouldn’t capitalism be clearly adverse to the realization of a self-governing, harmonious citizenry that inherently checks, limits and defines the power of its political overseers to that of an ideal democracy – one that is in fact socialist-free?

The unfortunate reality is that dependency and the consequent expansion of government is the direct result of concentrated capitalism; a capitalism of the few requires more and more the hand of “Big-Brother”, namely, of Brother Keynes. That being the case, there’s no irony, to my mind, that distributists protest capitalism and uphold democracy. To be clear, we believe in capital ownership, we believe in democracy, we believe in a market that is truly free; and yes, we also decry socialism, thus we decry that form of capitalism which has not the vital spirit to support society and must inevitably conjure forth, as it has done in true Fabian fashion, the specter of socialism to work its black magic - and like all black magic, eventually it will exact a heavy toll.

For those seeking an alternative, then, we’re naturally forced to ask, can the private ownership in the means of production, that is, of capital instruments in an industrial society support true democracy? The answer, so I believe, is yes, but only when it aligns with the principles of justice and liberty (this alignment, for the record, is what I would call not pure capitalism but distributism, or distributist capitalism; it is, to adapt a line from Mortimer Adler, “capitalism perfected in the line of [the principles of justice and liberty], and without any admixture of socialism”).

It is, therefore, not a question of “imposing one’s vision of ‘the good life’”, but of tweaking the political context so that it fully subordinates economics to the common good, to a just society. Indeed, for if we take as our guide the classic liberal definition of freedom popularized by J.S. Mill, and which is well put by M. Stanton Evans, that “Liberty to act on one’s behalf must be fenced off by the equal liberty of others, so that freedom for one individual doesn’t become oppression for a second”, and if concentrated ownership in the means of production leads to the exclusion of opportunity for the many to earn a viable income through participation in ownership, and thus to a form of government which works as a default corrective through socialistic means that are ultimately destructive of liberty; and, moreover, if it’s the purpose of government to do, in Mill’s sense, the fencing off, then its relatively clear that for those who believe in freedom from oppression there is, politically, (as Adler put it in the Capitalist Manifesto) a “justifiable limitation on individual liberty to acquire wealth in the form of capital goods.”

I’ll quickly summarize. My point is a basic rephrasing of the distributist vs. capitalist question. For I’m asking, somewhat rhetorically, which type of capitalism best achieves the ideal of liberty (both distributists and capitalists, at least nominally, oppose State capitalism)? Is the distributist type of capitalism, which conceives individuals or households accumulating wealth to some extent by taking part in ownership, with its consequent provisions of independence for self-government and motives for limiting the scope of state power – very Jeffersonian – more agreeable to the ideal of liberty? Or does a capitalism concentrated into the hand of a few, which increasingly upsets economic equilibrium, works to erode the family unit, and perpetually requires the aid of a growingly intrusive government offer “the greatest breadth of opportunity to its citizens”?

You may argue that these are not fair questions, and I admit there’s certainly more to it all; but this, in general, is how I’ve come to view the debate. Given this perspective, I see no contradiction in being a distributist who accepts true progress and at the same time opposes an inherent flaw, which has accompanied it - that is, who opposes a mixed capitalism that many (among which I was one) defend but do not quite understand.

The Imbecile Within

[I]t is upon fashions, cars, and gadgets, upon news and the advertising for which news exists, that our present industrial and economic system depends for its proper functioning. For, as ex-President Hoover pointed out not long ago, this system cannot work unless the demand for non-necessaries is not merely kept up, but continually expanded; and of course it cannot be kept up and expanded except by incessant appeals to greed, competitiveness, and love of aimless stimulation. Men have always been a prey to distractions... but never before today has an attempt been made to organize and exploit distractions, to make of them, because of their economic importance, the core and vital center of human life, to idealize them as the highest manifestations of mental activity. Our is an age of systematized irrelevances, and the imbecile within us has become one of the Titans, upon whose shoulders rests the weight of the social and economic system.

--Aldous Huxley

Ambiguity and the Pope's latest encyclical...

I’ve always been fond of an Aldous Huxley quote: “ambiguity in language leads to confusion of thought”. Abusing language intentionally is the primary tool of the propagandist, who seeks not beauty and clarity of thought but emotional manipulation. The propagandist who goes about his manipulation fully knowing that the actions he seeks to inspire conflict with the actors own beliefs is a propagandist in the extreme. But not all propagandists are fully operating within a view they know to be morally incompatible with those they seek to influence. Most bodies of knowledge, in fact, are full of blind spots, which are, by default, overlooked in faith. In some cases, especially moral, the grounds for this type of faith is suggested more, if not entirely, by what the adherent rejects, by what he sees as an unacceptable consequence which keeps him back, safe within his faith-patched system of thought. It is here, in this second case of the propagandist, that we can at least have some sympathy and assume that any error we perceive in his thought is due to blind spots overlooked in good faith; it’s important therefore to see the end he has in view, and proceed then to an examination of means. Granting this good faith, I propose to examine, in the next post, what I think are the errors of an article written by Gabriel E. Vidal about the Pope’s latest encyclical. Before I go there, however, I should note one more thing.

Ambiguity in language is sometimes due to the inability of language to capture the dynamism of reality. It is, therefore, not always the person who propagates a view who is proceeding on faith, but the recipients who must accept on faith what the teacher says based on what they know of the faithfulness of that teacher. Jesus, for instance, knew full well that people could not see how they could eat his flesh and drink his blood, and, though the doctrine of transubstantiation was to develop later on as the bounds to which reason could go in understanding it, the apostles simply had faith. When it came time and those words were realized, when Christ broke blessed bread and passed around blessed wine, those same apostles, though not understanding fully, at least understood there was another sense in which this saying could be accepted. St. Augustine said likewise about the opening of Genesis, how there are deeper senses to the language in which the truth of creation was expressed. In both cases: In the case of Christ’s sayings, and in the case of the opening of Genesis -- as well as the Psalms and certainly other parts of Scripture -- it takes time to unpack meanings that are latent and which could never be discovered without first having faith. Everything about Benedict XVI equally suggests to me that, even where he is speaking as pioneer and not as clearly in light of past encyclicals, he deserves the benefit of the doubt, and that just perhaps he’s speaking in terms beyond his time, with plenty of senses to unpack for those who would first believe so that they may see.

Conservatism and “Distributive Justice”

If Conservatism means holding to the philosophy of the Declaration of Independence, and of generally rooting oneself in the wisdom of the Founding Fathers as well as those great statesmen like Abraham Lincoln who walked in their stead, then call me a conservative. But please, if you do so don’t confuse me with those who call themselves conservative using “free market capitalism” as their defining attribute, and don’t get caught up in knee-jerk “ditto’s” with those same neo-conservatives who’ d automatically insist I’m therefore some type of socialist. Like any balanced view, my conservatism requires nuance; it also requires, if it is indeed balanced, listeners who are themselves level headed. Thus, it is to the levelheaded – whether or not that includes the ditto headed - that I call to mind an alternative conservatism, what I believe is a truly conservative conservatism.

As an introduction to this form of conservatism, I’d like to start with a basic truth: “Governments are instituted among Men… to secure… certain unalienable Rights… among these are Life, Liberty and the pursuit of Happiness.” The genius of our founders, however, did not stop at this and other phrases of the Declaration of Independence. In later producing the Constitution, they recognized that government itself needed built in checks and balances to prevent it from also violating our unalienable Rights. What the founders established, therefore, was a form of government, which checked and balanced itself, though was still strong enough to secure the external conditions necessary for individual liberty. Liberty, however, is not license.

Understanding the unalienable right to liberty, the second right of the Declaration, is crucial, I believe, to understanding the limiting function of government. Clearly, liberty to pursue happiness cannot mean a pursuit by means, which would interfere with another’s pursuit of happiness, so that a vision of the common good - one, as Jefferson might say, that includes the rights of each individual - presents itself as the defining context for excluding the wrong sorts of means. In other words, each individual has the right to pursue the good life (happiness) for himself, thus anything, which infringes upon the conditions necessary for each individual’s opportunity to do so must be protected against by law; this is what securing liberty, the proper function of government, means.

According to neo-conservatives, however, economic matters can never infringe upon the conditions necessary for individual liberty; they are, instead, always part of the conditions themselves. I’ll give three reasons why I believe this view not only false, but also hypocritical.
1) Any criticism of our capitalist system brings the cha rge that such a system brought unparalleled prosperity, but what brought – and generally brings – national prosperity was Alexander Hamilton’s system, later dubbed the American System, which imposed high tariffs to protect and encourage manufacturing. Hamilton’s prudential economic measures were anathema to free trade proponents, as were those of Lincoln, Theodore Roosevelt, and other great men.
2) Every sane neo-conservative will make an exception and admit that breaking up monopolies is a federal obligation. Unconditioned capitalism tends naturally to monopolistic practice, and thus to destroy the conditions requisite for liberty. If economics is not subordinate to the common good, that is, to the conditions for liberty, then we have no basis for breaking up monopolies.
3) Prosperity depends on stability, and economic stability, unfortunately, has had to come at the hand of Keynesianism, of stimulating demand through governmental means. Moreover, these periods of stability are cyclical, and each upset requires more government involvement, thus, as we currently witness, more dependency. Neo-conservatives, in defending our prosperity, unwittingly defend the very socialistic means they claim to detest (for no self-respecting neo-conservative will propose that government, whose constitutional duty is to “promote the general welfare”, should just let the economy crash).

What, then, is the alternative? Pope Benedict XVI, in his recent encyclical titled Caritas In Veritate, referenced “distributive justice”; the reference is older even than the Catholic Church, originating in that great common sense conservative, Aristotle. The beauty of it is, it falls perfectly in line with the principles of our great Democracy, and is really the only thing that can save it. Attempting to abolish capital ownership leads only to the communist debacle, it merely transfers power to elitist bure aucrats. But working through legislation to preserve the conditions requisite for liberty by promoting, as far as possible, widespread ownership in the means of production through, for instance, employee ownership initiatives; that is the way to ensure a more equitable distribution of wealth. That is the way to ensure self- reliance and independence. That is the way to ensure limited government. That is the way to promote both ancient and revolutionary-period conservatism. In a word, that is the way to implement a conservatism, which the great intellect G.K. Chesterton appropriately dubbed - Distributism.

"Mixed Capitalism"

Rush Builds a Revolution

The Capitalist Manifesto

In my opinion this is largely a Distributist Manifesto: The Capitalist Manifesto

What's Wrong with Thomas E. Woods, Jr. (at least, what's wrong with his logic)?

I recently wrote two articles on Distributism (three, if you count the Letter to the Editor published in the May edition of magazine US Catholic), which were published as letters to the editor in my local paper. Both articles were merely general outlines which, given the format, were intended to get people interested so that they could seek out further information for themselves. Out of curiosity, I googled Distributism, like I hoped those interested in the articles would do, and found, on the very first page of search results, the heading “What’s Wrong With Distributism?”, written by one Thomas E. Woods, Jr. Now, Mr. Woods has done some excellent work -- I’m particularly appreciative of his book, How the Catholic Church Built Western Civilization. I was somewhat surprised, and more than somewhat disappointed, therefore, when I saw this article (which is actually pretty old, dating back to 2002), and, though with a bit of trepidation, I feel it an obligation to offer a response.

First off, Mr. Woods says that Distributism is favored as an alternative to the free-market; thus right off the bat, I think he shows a failure to understand the distributist point of view. The very starting point of Distributism, the very thing it concerns itself with, is economic equilibrium, without which a free-market serves no purpose. If the majority of people earn an income from wages, which are increasingly losing power to clear the market thus constantly resulting in the need for bigger government - both to bail out capitalists whose products cannot be consumed and to provide subsistence to labor which cannot consume those products - then what’s the point of a free-market? It’s virtually self evident that there are political conditions, like those safeguarded by the Bill of Rights, that everyone agrees are necessary for a free market to serve a purpose. Distributism simply points out the fact that there are economic conditions as well, that, as Mr. Woods sums up the vision of distributism, “that social system is best in which productive property is widely dispersed rather than concentrated.” In short, the distributist solution is the very condition for an effective free-market.

Second, it’s not just that “smaller businesses have been swallowed up by larger firms,” it’s that government policies and subsidies have contributed to this process. It’s simply unfair to say distributists want to interfere in the free-market when the market has already been interfered with, making it in certain respects a controlled market, which controls, then, the distributists are aiming to counteract. Mr. Woods goes on to say, that it’s not always preferable for a man to own his own business or work his own farm - as if that is the extent of the distributist solution, and not the prime example of what Mr. Woods charges distributists of using -- a “crude generalization.” Due to the degree of Mr. Woods’ knee-jerk reaction, he’s apparently kicked from his vision the fact that Distributism isn’t confined to agrarianism, or to mom and pop stores and farmers markets (all good as far as they go), but can accommodate a layered and complex economy. As the authors of the Capitalist Manifesto, Louis Kelso and Mortimer Adler, put it:

What Jefferson said in terms of a laborist agrarian economy,
what Aristotle had said before him in terms of a similar economy,
holds true of a capitalist industrial economy. We need only transpose
the terms. In place of the slave-owning aristocrat who was the
ideal citizen in Aristotle’s day, or in place of the land-owning
farmer who was the ideal citizen in Jefferson’s day, we need only
substitute the capital-owning common man as the ideal citizen in our
own day. In all three cases, such men have the kind of independence
that is needed for self-government; and since they have their
economic and political freedom by right, not by might, they will try
to limit the powers of government to those necessary for the protection of their rights.

Next, Mr. Woods writes about the rise of Capitalism in 18th century Britain, that “Capitalism, and not distributism, literally saved… people from utter destitution and made possible the enormous growth in population, in life expectancy, in health, and in living standards…” Now we’re getting to the crux of the matter, for it’s the type of capitalism that began in the 18th century but did not evolve its own principles and therefore mutated into 19th century abuses, into concentrated capitalism, and into mixed socialized capitalism, to which Distributism is opposed. We need to be clear about a vital point here: all political systems are capitalistic, for even under Communism, capital, which is the means of production, is owned by the state, and is therefore State Capitalism. Distributism, it follows, is also capitalistic, but it is the antithesis of State Capitalism, as ideally the means of production, capital, is owned by the common man, not, in effect, by bureaucrats. In its infant stage, Capitalism certainly had its virtues, but so did earlier economies predicated on slavery -- in fact, slavery, historically speaking and put in purely economic terms, made for a quite stable economy. However, just as technology has evolved to make the means of production more and more efficient, and thus gives to owners of those means an increasing and disproportionate claim on returns (which eventually comes back to haunt them, though they can sustain the negative effects quite comfortably compared to labor), so must capitalism evolve into a distributist ownership society in order to maintain an economically workable balance. As G.K. Chesterton famously said, the problem with [concentrated] Capitalism is that it produces too few capitalists.

Mr. Woods then talks about distributists decrying the profit-motive, but he seems to use the term in an unbounded way. “Ambiguity in language leads to confusion of thought”; we might add to Aldous Huxley’s observation that it also lends itself nicely to cheap shots, low blows, and easy knockdowns, as this bit about the profit-motive demonstrates. Would Mr. Woods, for instance, abolish all laws, which ban the sale and use of all otherwise illegal narcotics, or which ban prostitution - how about child labor laws? According to an unqualified use and pursuit of the “profit-motive”, he must! Or perhaps Mr. Woods is just being selective, and for some reason won’t extend the use of his imaginative faculty to quite prudent, rational concerns that, as a consequence of his capitalism, he might have to ignore; concerns like so called free-trade, which dismantles our manufacturing base and sends people into lower paying service jobs, and like the exploitation of workers both here and abroad, which are things distributists really do decry. Mr. Woods, as he professes, likes to state certain points in a way that “suddenly appear… not only profoundly moral but actually obligatory,” and in general I think that’s a good goal, but perhaps he should first find someone other than a straw man -- maybe he has some irrational fear of agrarian scarecrows? – against whom he should try to score a TKO. Mr. Woods, for instance, might state the point in a manner more consistent with a fair use of profit-motive, one that allows for no self-contradiction, something along the lines of, say, Kelso and Adler --

It is the free play of the forces of demand upon the sources of supply that objectively and impartially determines the exchange value of whatever things are regarded as items of exchangeable wealth.

The assumption, as it takes but a simple explication to state, is that the market is “the free play of the forces of demand upon the legal, and legally produced, sources of supply…” To be sure, economics, by default, take place within a context, which includes moral guidelines. What those moral guidelines are is, the further you get from those that are more self-evident, a matter of degree, of prudence, and must be determined socially. But, since economics takes place within a political context, then it clearly must serve a political end; that end, according to the natural law, is political democracy. Economics, therefore, must support political democracy both positively and negatively. In other words, it must add something to liberty, and at the same time, it must not interfere with the outer, political context for liberty. Mr. Woods, if I may put his view into my own words, charges that Distributism somehow violates the political context for liberty. However, other than some vague “economic regulation”, against which he predicates the second half of his response, we’re left legitimately asking if he could just as well be attempting to destroy everything but libertarian anarchy! Indeed, the logically keen prostitute, drug dealer, and 19th century styled child-exploiting capitalist perhaps should be lining up behind Mr. Woods, eager champions of his apparent anarchical profit-motive.

The discrepancy in Mr. Woods logic thus leaves me unable to erase this image from my mind: For I see a curious line of people filing in behind him, all clasping his next book – as if they’re imitating lady liberty - titled, How Certain Catholic Laity Destroyed What the Catholic Church Built, and holding high, in their opposite hands, a torch representing the “light” and “wisdom” of anti-Catholic Ludwig von Mises. Meanwhile, oblivious, I’ll grant, to the anarchical profit motives trailing behind him, Mr. Woods, it seems, is shouting from a mega-phone, “we have the blessing of ‘Pope John Paul II’s Centesimus Annus’ ; come, therefore, and rail in our cause against those ignorant Catholic distributists.” Then I feel, as perhaps all ignorant distributists might, that I want to yell back, that I want to shout, “hey, John Paul II the Great called for associating the worker with his workbench”; and, “we are the true capitalists, who support economic democracy, not just political democracy”; and, “what right do you have associating us with Big Government when it’s the failure of your capitalism which assures we will have it!” Indeed, I want to shout these things and more. But then I notice something. I notice in this image that Mr. Woods and his string of Misesian acolytes all have something covering their ears, something which makes us ignorant distributists think they cannot hear us no matter how loudly we might yell; and it seems there’s writing on those things covering their ears, which, not incidentally, reads: P-r-o-p-e-r-t-y O-f T-h-e A-u-s-t-r-i-a-n S-c-h-o-o-l.

What's the Catch?

Federal help? There are always string attached: Federal road-sign mandate to be costly

Distributism and the American School of Trade

Distributism, to put it in summary terms, is an economic point of view cautioning us that the type of capitalism we have favors an uneven accumulation of wealth and purchasing power to those few who own, in mass, the means of production; that this imbalance tends to need socialistic state intervention, which gives inordinate power to bureaucrats; and that the only way to approach economic equilibrium (a truly free market) and attain the decentralization of political power is to favor an ownership society where the means of production are widely distributed. The Distributist approach simply recognizes that if the majority of individuals receive an income from both labor and ownership, then wealth will be more evenly distributed, people will be consuming what they produce (clearing the market), and we will have, as a consequence, enduring economic stability.

A fair acquaintance with Distributism will show, I believe, that it is naturally akin to the thought of our Founding Fathers. Like the Declaration of Independence, it is rooted in a philosophy of natural law, justice, and the existence of God; like the founders view of a limited federal government, it favors bottom up control; and, similar to the trade theory of Washington, Hamilton, Lincoln, and Teddy Roosevelt (wiki the “American School”), Distributism favors high tariffs, when necessary, to protect our manufacturing base. That last point, I think, is especially relevant today.

Presently, the standard line of bi-partisan “free traders” is that free trade lowers the cost of goods and raises the standard of living. It kind of half remembers the fact that wealth does not consist in money, which is purely a means, but in consumable goods. If, therefore, goods are cheaper and a nation is able to have more, then, it follows, that nation will be wealthier. But that rather puts the cart before the horse, as Alexander Hamilton, in opposition to British free trade policy, well knew: for it is originally in production that consumable goods are created, an income is earned, and the purchasing power to consume those goods is derived. Now couple that fact with the Distributist insight that labor inevitably looses power to clear the market due to a disproportionate amount of income favorably accruing to ownership, and the conclusion inescapably follows that free trade can only serve to accelerate the divide between labor and ownership, and thereby force wages down and decrease the standard of living at an even quicker pace.

The bottomward spiral that results from this whole process increasingly boils economic relations down to bare survival instinct. Whether it’s corporations moving manufacturing to poorer countries in order to compete, or banks, lacking investment in a productive economy, needing to stay alive by making speculative loans; such entities will do what they must to survive. But the same goes in politics. Perhaps -- recalling that a certain party will have to adapt, severely, in order to overcome the latest tidal wave of rejection -- we might speak directly to our politician’s survival instincts, reminding them that we are American constituents, and that a fair trade policy exists, which, contrary to our current one, was dubbed the “American System” – and for good reason.

Brave New Alternative: Modern Distributism

The United States of America, at the time of its founding, was to be a nation governed by the rule of law -- by the U.S. Constitution. The Constitution’s Preamble, naturally, articulated its goals, among which was to “secure the blessings of liberty to ourselves and our posterity”. Set in stone, therefore, were certain indispensable means to this end: a limited federal government with powers both clearly defined and which acted to check and balance. Somewhere along the way, however, something went wrong. When states and big businesses are vying for “their share” of billions of dollars in taxpayer money, when they are groveling at the feet of a federal government, which can set any condition it wants upon them, can it any longer be said that the federal government works within the parameters originally intended to “secure the blessings of liberty”?

Many people point the finger of blame at Fabian socialists (modern Democrats), rightly decrying redistribution of wealth. What many of these people forget, however, is that welfare is welfare by any name, thus corporate welfare, money to big farms, and all sorts of Republican earmarks “redistribute wealth” just as effectively as any liberal scheme. But even aside from this type of redistribution, big business globalists (modern Republicans) wind up enabling the very ideology they claim to detest. When only a fraction of the already tiny percentage of capitalists are “too big to fail,” then government has no real choice: it’s either “bail out” or let civilization as we know it sink. To many, our current predicament is an absolute surprise. But to some, it is really no surprise at all. For a while now, in fact, there have been “voices crying out in the wilderness”, and it may be time to listen to what they have to say.

The title for this article was inspired, as a case in point, by Aldous Huxley’s work, though not so much by his classic novel “Brave New World” as by an alternative he subsequently offered. From works like “Brave New World Revisited” and a forward he later added to “Brave New World,” one will find Huxley speaking of the need for economic decentralization and distributing property as widely as possible in order to remedy the oppressive partnership between big business and big government; in connection to these remedies he draws upon names like Hilaire Belloc, Mortimer Adler, and Henry George.

Though none of these men are any longer with us, their ideas are still very much alive. Belloc, for instance, along with well-known author G.K. Chesterton, popularized a theory known as Distributism, and a simple Google search will turn up pages worth of modern Distributist theories, practices, and demonstrated successes. Among the successors of Belloc and Chesterton, John Médaille, who writes for a blog called The Distributist Review, is playing a part in advancing Distributism both by his insightful writing and by drawing upon allied elements -- like (Henry) Georgism, strategies evolved from Mortimer Adler by CESJ, and, in addition to Huxley’s references, E. F. Schumacher’s work (among others).

All of these men, incidentally, would agree with President Obama that change was long overdue; still, neither elitist socialists nor monopolistic capitalists, that is, neither Democrats nor Republicans have given, nor will give us anything but an insatiably power hungry “Servile State”. The answer may be, as the song goes, “blowing in the wind,” but, then again, perhaps the “winds of change” and a brave new alternative, are only a few more Google clicks away.