Distributism: a Critique

Distributism is often characterized as a “third-way” economic alternative to the opposing ideologies of Capitalism and Socialism and has gained ground among Catholics since G.K. Chesterton and other Catholic thinkers first conceived and coined the term “Distributism” as the economic system truly compatible with church doctrine and the Catholic worldview – of course implying that all other economic schools of thought are not compatible. However, while I do like much of what Distributists have to say, their “model” seriously lacks the logical rigor necessary to label it scientific. Therefore, it is less of a branch or school of the science of economics and more of a life philosophy. Furthermore, all of those aspects of Distributism that do carry some academic rigor to it, at least those that I have seen, are clearly borrowed from other, legitimate, schools of economics like the Austrian school or the Chicago school.

Below is a short video explaining and defending Distributism. While the video was produced by a student I chose to show this video because it highlights many of the errors that seem intrinsic to the Distributist community at large, it reflects many of the positive aspects of Distributism and it is nicely condensed into a convenient 10 minute segment.

Error #1: non-local businesses, by nature of their base of operations existing outside of the community, “take money out of the community” and “concentrate” wealth among a few. While it is true that a relatively few can become very wealthy through running an inter-community operation like Walmart, for example, the idea that they do so simply by shifting wealth out of those communities and into their bank accounts is fallacious. In fact, it is based in what is perhaps the most common of economic fallacies: that economics is a zero-sum game. If the upper management of Walmart gets rich they can only do so by taking that wealth from others – and this is bad because it takes it out of the community, making the community worse off and “threatening your livelihood.” What’s implied here is that, in any transaction, one party must lose while the other gains. In this instance, it is local communities and, by implication, “you and me,” who lose and big businesses that gain. However, in a free market society, businesses do not gain simply by taking from others – that’s called stealing (and, occasionally, some businesses do steal) – no, they make a profit by generating more wealth. Money may leave a community when people buy products from Walmart but goods enter the community, goods that are worth more to the inhabitants than the money they spent on them – otherwise, they would not have bought them in the first place. We need to remember that money derives its value as a token that can be exchanged for the goods and services that constitute real wealth. Walmart may get the money, but only by giving up some of the wealth that it produced. The economic reality looks something like this: Walmart produces goods, people buy those goods, both parties get something that they want. Economics is a positive-sum game. Additionally, much of the profits “sucked out” of the community by companies like Walmart are then re-invested back into the company so that they can provide more and better goods and services to their customers in the future. As money circulates and more wealth is created the standard of living for everyone rises.

How dare you provide us with a wide variety of inexpensive goods at a single convenient location!

Furthermore, what defines whether a business is “big” or not? Or even if it is local or not? The problem laid out by the Distributists is defined in subjective terms and is, therefore, constrained in arbitrary ways. The business is only big from the perspective of the local community. If big businesses endanger livelihoods by sucking money out of a community then it can be argued that local businesses are also bad because they “suck money out” of individual homes. The only “good” kind of transactions possible are those that occur within the home. Essentially, the only way to eliminate these “bad” transactions that “threaten your livelihood” is to constrain all economic activity to within each home, making each household an economically exclusive and completely independent entity. However, one household, standing alone, cannot produce everything that it needs – at least not anywhere near current standards of living. Economic transactions with others might not be so bad after all.

Error #2: Distributism is not Capitalism. Or, as I’ve heard some Distributists describe it: Distributism is “technically” a form of Capitalism but we must not call it that because that will “confuse” people. However, its been my experience that to oversimplify  matters in such a way in order to avoid confusion only ends up, by denying reality, only confusing people and convoluting matters even more. Technicalities are often incredibly important: as my old philosophy professor used to tell me, “Don’t just look at the ‘big picture.’ Details are everything!” The definition given for Capitalism in the video is: “An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state.” This definition states two things: first, that Capitalism is based on the private ownership of property and, second, that economic activity in a Capitalist economy are determined by the incentives of profit and loss (although, that last part, loss, is often underemphasized by non-economists including, apparently, Merriam-Webster). The first part, property rights,  is the fundamental principle that Capitalism is based on and it is the exact same base of Distributism. It is the second part with which Distributists try to separate themselves and therefore claim that they are not in fact Capitalists. However, every Distributist I’ve encountered has at least implied that Distributism does still run on a profit and loss system. Additionally, this second aspect really does not so much refer to a system as it does to a human reality: no one works for an employer or starts their own business in order to incur losses. Individuals trade and manage industry in order to create more wealth, and they do it with the end of making a living in mind, that is, to profit. To deny this isn’t so much to deny Capitalism as it is to deny the human psyche. Socialism ignored people’s interests, desires and what incentivized them; millions died as a result. If Distributism ignores the importance of profit and loss it too will unintentionally lead to negative consequences.

Distributists view this profit and loss system as a system based on greed in which others are disregarded, where the poor get poorer and the rich get richer. It is soulless competition. Instead, they emphasize “cooperation.” However, Capitalism is based just as much on cooperation as competition. Income in a capitalist economy is earned not through “selfishness” but by helping others. Economists James Gwartney, Richard L. Stroup, and Dwight R. Lee explain,

People who earn large incomes do so because they provide others with lots of things that they value. If these individuals did not provide valuable goods or services, consumers would not pay them so generously. There is a moral here: if you want to earn a large income, you had better figure out how to help others a great deal.

Nobel laureate Milton Friedman put it another way: “Fundamentally, there are only two ways of co-ordinating the economic activities of millions. One is central direction involving the use of coercion … The other is voluntary co-operation of individuals.” The “voluntary co-operation of individuals” Friedman is referring to is Capitalism, which, really, simply means an economy without coercion in which private property rights are protected.

Distributism recognizes money as a means, not an ends, but then so does every other school of economics, including the Capitalists.

Error #3: Overemphasis on localism. Distributism places such an emphasis on localism that the very idea of big business is spurned (see error #1) and individual households are encouraged to be self-reliant. However, while buying local, making local contributions with your money, time and talents and increasing your families economic independence are all good things treating localism and globalization as mutually exclusive is a mistake. A healthy economy requires both a vibrant local community (because, thats where you live after all) and free trade with the outside world. This is for a number of different reasons.

First, globalization offers the advantage of spreading and thereby reducing risk. The recent heat wave that swept through the United States this summer is a perfect example. In an entirely local economy, such a heat wave and the subsequent crop failure would have doomed countless communities to famine and significant malnutrition or even loss of life. However, because those communities don’t exist in a bubble but are part of a much greater economy spanning the entire continent they hardly felt the effects of the crop failure except in the temporary rise in food prices. This is because much of our food is now imported from other communities in the US or even other continents. Sure, small local farms are certainly more personal than large corporate-owned farms located halfway around the world but is “personality” worth the increased risk of often deadly conditions like famine that, until recently, have always plagued us?

We also have globalization to thank for not having to stock our pantries to the brim in anticipation of winter. Instead, we can simply purchase produce from parts of the world where the seasons differ from our own.

Second, globalization is important because of the economic reality of “economies of scale” which refers to the fact that the more mass produced a particular item is the less expensive it becomes to produce that item (to a certain point). Essentially, the bigger the business the more efficiently it can produce, that is, the more wealth it can create with less cost. The peak efficiency of an economy of scale far exceeds the market demands of any local community. Thus, in order to use scarce resources in the most effective way possible demands businesses that operate on an inter-community or even international level.

Third, the laws of absolute and comparative advantage demand that, in order to use scarce resources effectively and thereby reduce prices and increase standards of living and independence, trade between communities, regions and even nations halfway around the globe from each other must be open and free. In economics, the law of comparative advantage refers to the ability of a person or a country to produce a particular good or service at a lower marginal and opportunity cost over another. Even if one country is more efficient in the production of all goods (absolute advantage in all goods) than the other, both countries will still gain by trading with each other, as long as they have different relative efficiencies. Thus, Maine would be better off buying oranges from Florida rather than trying to grow them in the frigid north and Florida is better of buying maple syrup from Maine rather than trying to produce it in the hot climate of the southern United States.

Finally, we must ask how Distributism would even promote localism. Good intentions are nice but they are not enough. Localism can only be enforced by taking away people’s liberty, since they have made it clear that they prefer to cooperate and trade with outsiders when it benefits them. San Francisco demonstrates the logical conclusion of political localism when they indiscriminately ban all chain stores in some areas. It is vital that, in defending and promoting the private ownership of the means of production that Distributism does not inadvertently destroy it as San Francisco has.

While I believe that Distributism has many good things to say, that too much of our wealth is owned by too few, its criticism of the central banking system, its endorsement of credit unions and co-operatives, the necessity of living within ones means (both at the individual and national level) and its emphasis on the importance of the home and family as the core unit of society and therefore the economy, my worry is that, through a lack of rigorous standards, by failing to avoid the pitfalls of various economic fallacies and through ambiguity, the careless use of language and a failure to define terms, Distributists will condemn themselves to embracing ideologies that, in practice, will only lead to the same negative (albeit, unintended) consequences resultant from the very systems of socialism and crony capitalism that they seek to counter, aiding, instead of obstructing, in the corrosion of liberty and prosperity and in the establishment of a totalitarian state.

If the ultimate goal of Distributism appeals to you (to make as many people property owners as possible) then I would recommend two main sources: first, read Church teaching on social justice (Pope Leo XIII’s Rerum Novarum is a good place to start) and, secondly, read economists like Friedrick von Hayek, Frederick Bastiat, Milton Friedman and Thomas Sowell – all of whom support the decentralization of power and ownership. Only after reading these more rigorous and defined thinkers would I then expose myself to the more nascent Distributism.

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7 thoughts on “Distributism: a Critique

  1. Looking through your “distributism” archive (where you were previously praising it), does this mean you’ve had some sort of intellectual journey away from it? Or is it one of those “i didn’t leave distributism, it left me” stories?

    If you don’t want to say, just delete this comment (I don’t blame you), just seemed like a jump between some of your past posts and this one. A fascinating story there it seemed, one some might be interested in hearing.

    • I like the basic premise of Distributism that focuses on defending property rights and promoting the ownership of productive property but I don’t like the conclusions many modern distributists today come to. I had to give up reading the Distributist Review because I got so fed up with all of the same fallacies repeating themselves in every article: economics is a zero-sum game, we need to redistribute the wealth, big companies are inherently evil, its the government’s job to provide universal healthcare etc. What I’ve read of Chesterton on Distributism, however, I enjoy; its his contemporary reactionaries that I can’t stand.

      I’ve come to the conclusion that I like Distributism as a personal philosophy: focus on the family, own productive property, strive for independence, develop your own skills and knowledge, live simply, support your local economy and so on. However, it cannot drive public policy in the way that contemporary distributists would like. We cannot place prohibitory taxes on companies simply because they hire more than x employees or because they have x number of chains, we can’t place prohibitory tariffs on goods in an attempt to “protect” the local economy and to try to force businesses stay in the US instead of outsourcing overseas, we can’t give unions special privileges or have a government that “encourages” guilds. These things are unnecessarily coercive and therefore wrong.

      The only economic model I support is a free market, which is to say merely the absence of this kind of unnecessary force. However, most of today’s distributist movement seems to be nothing more than a reaction against Capitalism. They see the symptoms of our corrupt corporatist system but then mistakenly blame it on free market principles because they fail to distinguish between a centrally planned crony capitalist society and a free market society, to them its all “Capitalism” and therefore is poison in the well. I’ve had distributists tell me that they oppose Capitalism because its a “product of Protestantism” and tell me that they support a feudal system because that’s “Catholic”. They never see past the labels,

      So, to conclude, I like Chestertonian Distributism in the context of a free market but when distributists start talking about “shaping society” through implementing their distributist ideals via the government I reject that as I would any other attempt to use the state as a tool to control people whether it be socialism, fascism, or communism – its all the same.

      • See? I knew you had a fascinating thought on the topic. Though I think the DR may be calling you out here. 😉 (found via shea)

        However, it cannot drive public policy in the way that contemporary distributists would like. We cannot place prohibitory taxes on companies simply because they hire more than x employees or because they have x number of chains, we can’t place prohibitory tariffs on goods in an attempt to “protect” the local economy and to try to force businesses stay in the US instead of outsourcing overseas, we can’t give unions special privileges or have a government that “encourages” guilds. These things are unnecessarily coercive and therefore wrong.

        Excellent point. I wonder why more distributists don’t try to compete for supremacy (then again, some are). Example: I don’t keep my money in a bank, I keep it in a credit union. Why? Because they offer better services and treat the customer better than the last bank I had. (and believe me, I spread by word of mouth how angry I was at one and pleased at the other) Only years later do I find out that credit unions are “distributist”. But then to me, it doesn’t matter. Nothing transforms society better than success (see: Ford, Gates) so by all means, let the distributists compete in the market and win.

        The only economic model I support is a free market, which is to say merely the absence of this kind of unnecessary force. However, most of today’s distributist movement seems to be nothing more than a reaction against Capitalism. They see the symptoms of our corrupt corporatist system but then mistakenly blame it on free market principles because they fail to distinguish between a centrally planned crony capitalist society and a free market society, to them its all “Capitalism” and therefore is poison in the well. I’ve had distributists tell me that they oppose Capitalism because its a “product of Protestantism” and tell me that they support a feudal system because that’s “Catholic”. They never see past the labels,

        And I’m never any happier about Protestants who want to discount or throw something away just because it’s Catholic. A good idea is a good idea, and if all Christians are to be prudent, then we should embrace wisdom no matter the source.

  2. I would love to see distributist ideals compete more openly in a free market. The main problem that I see, however, is that it is precisely the free market that many distributists are fighting against. So instead of seeking change within the market they want to change (or even get rid of) the market from the outside (via government). I on the other hand don’t oppose a free market I just want to see a more distributist-oriented one.

    As for the “subsidiarity without solidarity is a heresy” I wholeheartedly agree. That’s precisely why I am against government involvement to the greatest extent possible. Impersonal government bodies cannot offer solidarity only people can and I believe that they do that best in a free market. Government too often seems to accomplish little more than removing the human aspect from any equation and, often instead of fostering solidarity, seems to breed resentment instead.

    The DR’s mistake is that while its article poses as a critique of libertarianism its really a critique of libertarians. Instead of addressing libertarian principles that define the movement it attacks the sentiments of particular libertarians. The best example is right near the beginning of the article: “government is intrinsically bad and has no role in civil society.” Many libertarians believe this. However, its not a libertarian principle it is an anarchist one. The two are often confused even among libertarians because “small government” and “no government” seem pretty similar, especially when contrasted against our massive federal government of today. I would argue, however that anarchic sentiments like “no government” or “government is evil” actually have more in common with collectivism in that the ultimate end of both is the advantage of the stronger, the centralization of power among whoever is the strongest within society. Classical liberals like Mises or Bastiat, the fathers of modern libertarianism, viewed government as an intrinsic good with a well-defined, necessary role to play in society. Primarily, to provide a legal framework that protected the rights of everyone equally. That these men so openly despised many aspects of their own government yet openly endorsed a government capable of enforcing a strong rule of law should be testament to just how important and necessary they viewed government to be.

  3. I’m sorry if this is trollish, but I’m honestly rather frightened by your ideology. It might not be my place to say anything, but I believe in democracy, and that means I’m allowed to have a say, even if I’m not a Scientist of Economy. Nobody is, because it isn’t a science. At least, not a hard one, with inescapable laws like gravity. It’s just keeping track of where the money goes and how it’s created.
    We SHOULD be able to determine where the money goes and how it’s created, using our sense of right and wrong, at many levels of our democratic society.
    Libertarians, if they’re smart enough actually foresee the materialization of their ideology in REALITY, want to limit OUR right to do this. They want to limit our ability to determine how the money is spent to one level only, free trade of our own property, and the states only function would be to protect property rights. People can compete to own as much as they want and do whatever they want with it. They want to force us to OBEY the non-existent laws of the so-called economy the way we would a GOD or, worse, gravity.
    If you aren’t a free market capitalist you aren’t obedient to the scientific fact of its absolute goodness. Sounds like you think economics is a zero-sum game.
    So you don’t like Distributism because you believe in the free market? Same reason you don’t like socialism and (ridiculously, this is your main qualm with) fascism. So basically you’re too faithful to your right wing ideology to understand that in a democratic society the government is WE THE PEOPLE, not a dictatorship. We have the right and the opportunities to decide TOGETHER to regulate the use of the land, water, airwaves, etc…To set limits on our freedoms, and to have a tax policy that doesn’t screw over the people to benefit elite LORDS. WE are empowered to control our government for the benefit and protection of whatever segment of society we want, for whatever reasons we want. The only people that aren’t OK with this want ONE segment of society, the LAND LORDS to determine what we all are subjected to.I just can’t believe that most of white middle class America wants to protect the Wall Street overlords instead of their neighbors, and an oil fuled war machine instead of our only home, planet Earth. I can’t believe so many of you have fallen for this crap.
    You are either DUPES, or MORALY CORRUPT.
    A right wing friend of mine and her exceedingly right wing father (a K of C and 2nd order Franciscan) see the good sense in having a single payer health care system, by the way. They’re brilliant though, so not quite so easily blinded by ideology. They are also fairly wealthy, so it isn’t a case of us poor folks being envious of you regular folks, which is a mean bigoted lie I hear all too frequently by those who have place their Faith and Hope in the religion of their chosen savior… Free Markets.

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