Distributism, and another myth about capitalism

I made a comment on a blog at The Guardian Newspaper of London and wrote in part:

“Few people like real capitalism as mentioned in the link. Marxism is dead, embarrassing really; but fascism (or whatever name you like) lives on.”

I was referring to my post “Few people like real capitalism” of a few days ago. I got a reply back referring to only the part quoted above. The reply was interesting to me and I promised the fellow I would address his comment when I got the time and at this blog where I don’t have to worry about moderation and can put in links or images to my heart’s content. And so this essay is my reply to the fellow.

He wrote:

From my (distributist) point of view, the problem with Capitalism is Capitalists who don’t work for a living, and I think you are wrong here. I am also definitely not a Marxist, since Distributism is just about the polar opposite of Communism. To Communism, the solution is to get rid of the capitalists. To Distributism, the solution is to make everyone a Capitalist and a Laborer at once. (my emphasis)

Apparently he thinks that Steve Jobs did not “work” for his living and should not have been allowed to be in charge of Apple, Inc.This is standard collectivist envy showing itself. Either that or the man does not understand that the division of labor is what has produced the miracle of increasing productivity in the modern world. Sure, everyone could make their own pencils but one pencil factory will outproduce the entire population with just a few men and machines. (capital invested in the means of production)

For those who are not familiar with the Distributism economic view here is the beginning of the entry at Wikipedia:

Distributism (also known as distributionism[1] or distributivism[2]) is an economic philosophy that developed in England in the early 20th century based upon the principles of Catholic social teaching, especially the teachings of Pope Leo XIII in his encyclical Rerum Novarum and Pope Pius XI in Quadragesimo Anno.[3]

According to distributists, property ownership is a fundamental right[4] and the means of production should be spread as widely as possible among the general populace, rather than being centralized under the control of the state (state socialism) or by an elite of wealthy property owners (laissez-faire capitalism).

There is at least one serious error committed by the distributists and that is the idea that the division of labor comes without any investment in the means of production. They don’t seem to understand that someone must invest in capital equipment to make production goods efficiently. But let us hear what the man had to say. He wrote:

Let’s define the three systems here:

Capitalism: Investors and financiers (Capitalists) inject money into businesses, buying the means of production and hiring labor. Wages and prices are set by power differentials between the parties. A small portion of the population controls most of the economy.

And here he is just plain wrong and imagining things that we know to be false. In a crony-capitalist world (the kind we have now) we might agree that he has some minor point but the fact is that laissez-faire allows everyone to trade their property and service voluntarily in whatever manner suits them. If the “distributists” don’t like the trades, I guess they would have armed goons put a stop to the trades and that would be at the detriment of us all. But more importantly the man or group with capital use that capital to create new and improved means of production that makes owner and employee alike more wealthy than before. There is no setting wages by some “power relationship”. What codswallop.

The real error is to imagine that there would be some class of “elites” who keep that elite position forever under laissez-faire. That is gross error and against historical evidence. It was governmental intervention that was used by elites to keep their position of top of the heap.

Communism: In order to address the problems of the Capitalists concentrating power, the State, claiming to be representative of the worker, seizes control over the means of production. Wages and prices are set by the state. Communist systems have all the problems of capitalist systems plus state repression. While in theory the workers collectively own the means of production through the state, individually they have no real power.

This is standard rhetoric and I have no observation at this time other than to say it is overly simplistic and does not get to the heart of the matter — the worker owns nothing; only the State owns everything including the citizen. We have the historical example of the USSR to show us the folly of the socialist approach.

But now on to the fellow’s pet idea:

Distributism: Most businesses are owned by people who put in work in them, whether they are family farms, the self-employed doctor or lawyer, the tradesman or artisan, shopowner, or the like. Where this is insufficient, the laborers are also the investors, ensuring that the workers own, as individuals, a piece of the means of production. Pro-distributist reforms include employee stock purchase plans, policies that favor the self-employed, and more. Distributist systems favor more freedom in the market than capitalist systems and they have worked in the past.

The problem is the division between capital and labor that defines capitalism. Distributism is the best way forward as it seeks to avoid or dismantle that distinction.

So, if ten fellows in my area all see that they need jobs and that there are houses that need roof repairs then they could all become roofers. Unfortunately even that simple trade requires tools, materials, transportation, credit to buy roofing shingles, and so on. The men have only their time to trade on the market and the “distributist” would deny that they are helped in any way by the man with some savings who decides to risk his accumulated capital and try to form a roofing business. I guess the “distributist” thinks that every man can just conjure up the means of production out of his imagination — or more crudely — pull it out of his ass.

The job of the entrepreneurial agent in the free market is to take risks and to guess what products, services, methods, and so on will best please the fickle buying public. He may go down in flames if he fails to guess correctly and no one cares; but let him guess correctly and now all sorts of envious people jump up to holler that he don’t deserve his profits!

The free market (or more accurately the semi-free market) has given us and unending array of “rags to riches” tales. Not every man or woman is the kind to take big risks and make it big (or fail miserably) but there will always be some who do. It is they who make us all more wealthy since getting rich in the capitalism society is about serving the masses in some way. It is about selling them something they want at a price they can easily pay.

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