Distributism: the Better Alternative to Capitalism and Socialism?

An excellent interview with Mr Storck. The interviewer asks probing, pertinent questions, and Mr Storck answers them well, explaining distributism.

From Practical Distributism

By Thomas Storck

The following is the English version of an interview with Thomas Storck by Martin Bürger of Catholic News Agency, Germany, published with the title, Distributismus: Die bessere Alternative zu Kapitalismus und Sozialismus? Ein Gespräch mit Thomas Storck

Bürger: What exactly is distributism? How is it defined?

Storck: Probably the best definition of distributism is that offered by G. K. Chesterton’s younger brother, Cecil, in 1917.

“A Distributist is a man who desires that the means of production should, generally speaking, remain private property, but that their ownership should be so distributed that the determining mass of
families—ideally every family—should have an efficient share therein. That is Distributism, and nothing else is Distributism … Distributism is quite as possible in an industrial or commercial as in an agrarian community …”

Note that distributism does not require an agrarian society, but is equally applicable to “an industrial or commercial” society.

It is also important to note that private ownership of the means of production does not necessarily mean individual ownership. While small businesses, indeed micro-businesses, are a key part of a distributist economy, we recognize that not all enterprises can be carried on in this way. For necessarily larger enterprises, we support worker-owned cooperatives, such as the very successful Mondragon cooperatives in Spain. The Australian distributist, Race Mathews, in his book, Jobs of Our Own, calls this “evolved distributism.” In Europe, the United States and elsewhere, employee-owned companies are not uncommon, and have been successful in various fields, including manufacturing, shipping and retail.

Bürger: What characterizes a distributist society? You already indicated that it’s not necessarily agrarian …

Storck: Indeed, distributism by no means requires an agrarian society, nor a low level of technology. Aside from the formal note of distributism—well-distributed private property—a distributist society and economy would try to subordinate economic activity to the common good and to the fullness of human life. Thus a distributist society would tend to strive not for unlimited riches but a plentiful sufficiency, so that men could devote their efforts to the more important things, the things of God, of the family, of friendship, of the intellect and the arts.

Bürger: What is the distributist position on interest?

Storck: It’s not the distributist position but rather the Catholic position. The Church has never retracted its teaching that interest charged solely on account of a loan is usury and ipso facto unjust. The Church also recognizes, however, that often there are other reasons that interest may justly be charged, what are called extrinsic titles, and this kind of interest is not usury. I argued this point at length a few years ago in an article in the theological journal, Communio. A shorter version of the article is available here.

Bürger: Capitalism has been tried (and found very successful), socialism has been tried (and found unlivable).

Storck: I think we have to be careful when we speak about capitalism. Capitalism varies considerably worldwide. Capitalism in Germany, with its co-determination, is not the same as capitalism in the United States, which approaches more closely to an economy ruled by “a free competition of forces” which Pius XI condemned and called “a poisoned spring” (Quadragesimo Anno, no. 88). Indeed, in most European countries there have been strong countervailing forces, both political and cultural, which moderate the tendencies of capitalism toward materialism and exploitation. And capitalism in China or in Bangladesh operates differently still.

Bürger: How do you define capitalism?

Storck: Economists and economic historians are not in agreement as to what exactly capitalism is. Pope Pius XI characterized capitalism in Quadragesimo Anno, no. 100, as the separation of ownership and work, as “that economic system in which were provided by different people the capital and labor jointly needed for production,” and I consider this the best definition. You’ll note that by separating ownership from work, a class of people is created, the owners, who are one step removed from the actual productive process, and thus tend to regard not production for use, but the sale of any product, useful or not, as the purpose of economic activity. Secondly, by creating the labor market divide—owners versus their employees—workers are always a cost item for capitalist owners, and hence the tendency to drive down wages, which historically has marked capitalism. It was only with effective labor organizations, as well as government regulation, that the worst features of capitalism were done away with or minimized. Because of co-determination, capitalism in Germany does not have most of the bad features of capitalism, but this is because of legal and cultural norms that work against the main point of capitalism, its separation of ownership and work. The participation of workers in managing companies mitigates that separation, and the mandatory wage agreements likewise mitigate the tendency of capitalism to regard workers as simply a cost item to be procured as cheaply as possible.

In addition, in Germany the hostility between management or ownership and labor, which has characterized capitalism elsewhere, including the United States, is minimized by cultural norms which promote a sense of partnership and cooperation between management and labor.

Where capitalism is not restrained by something like co-determination, I would hardly call it a success. It has certainly been successful in the production of great quantities of stuff, sometimes useful, sometimes not. It has also been a chief factor in the commercialization of society, which can be seen clearly in the US, where everything is valued in terms of its monetary worth, for instance, higher education is justified almost exclusively because of the higher salaries which graduates usually obtain. Capitalism has also done great damage to our physical environment, through its tendency to regard present profits as more important than the future welfare of mankind.

Bürger: And socialism?

Storck: Marxist socialism has certainly been a failure, but it’s important to note that socialism is a slippery term. It was Pius XI who pointed out that socialism was no longer the monolith that it had been in Leo XIII’s time. By 1931, when Quadragesimo Anno appeared, the economic proposals of moderate socialists, as Pius noted, “at times come very near those that Christian reformers of society justly insist upon” (no. 113). What makes it impossible for a Catholic to be a socialist is not necessarily socialist economic ideas, but the heritage of anti-Christian materialism which genuine socialist movements carry with them. One can see this in the fact that European socialist parties, when they come to power, sometimes are quite willing to make their peace with the existing capitalist economy, but seldom fail to enact measures attacking the family, the Church, etc.

Bürger: What about distributism? It certainly hasn’t been tried on the level of a nation state, has it? What about local communities, though?

Storck: As for distributism, the medieval urban economy, dominated by craft guilds, was distributist. The guilds attempted to orient economic activity so that the public received a quality product at a fair price and individual producers were adequately compensated. As nation-states and markets grew larger, the distributist order was bypassed or suppressed in the effort to increase national wealth and power, but there is no reason why the basic principles of distributism could not be applied today.

Bürger: Today, there are many publicly traded companies. Is it wrong to be able to buy shares of such companies? Isn’t the stock market a way to distribute ownership?

Storck: The stock market is not a desirable institution. One can hold shares of stock without committing a sin (“playing the market” may be another matter), but that does not mean that the institution is economically or socially beneficial. It is rather absurd that an institution that has only an indirect relationship with the real economy is often considered as a barometer of the health of the economy. It is always the real economy of production for use that is important, and the stock market contributes very little toward that. Rather it can distort the real economy by contributing all sorts of secondary and even trivial factors that destabilize the functioning of the economy. When the market crashed in 1929 this was not because any real economic good, neither farm land, nor factory, had disappeared or closed. Yet the stock market was eventually able to bring down the real economy.

Does the stock market distribute ownership? Not ownership as distributists understand it! If we keep in mind Pius XI’s definition of capitalism, the stock marker multiplies capitalist owners, but they have little or no relationship with the actual product of the company they own shares in. Sometimes they are hardly aware of what the company really does, so long as they receive dividend checks or the price of their stock keeps rising. In fact, stock ownership is the very type, if you will, of capitalist ownership, stockholders being people with absolutely no real connection with the firm or its products. And since shares change hands over and over during a day’s trading, this diminishes even more the actual connection between those who are legal owners of the company and the actual company itself and its products.

Distributism, on the other hand, tries to promote a real and close relationship between ownership and work or production. That’s why a very small business or a worker-owned business is the very type of distributist ownership.

Bürger: Distributism came up after Pope Leo XIII published his encyclical “Rerum novarum,” perhaps the first modern social encyclical. Is distributism the only possible reading of that document, and subsequent papal pronouncements on similar questions?

Storck: The response to Rerum Novarum among Catholics, as well as to the later social encyclicals, especially Quadragesimo Anno, tended in two directions. Distributism was more common in English-speaking countries, while in continental Europe and Latin America a somewhat different approach predominated, whose best exponent was Fr. Heinrich Pesch, SJ (d. 1926), author of the magisterial Lehrbuch der Nationalökonomie and other texts. Pesch, in addition to being a priest, was an economist trained at the University of Berlin, and called his system solidarism (Solidarismus). In my opinion, distributism and solidarism differ more in emphasis than in substance, with Pesch putting more stress on intermediate groups (akin to guilds) and labor unions as means for orienting the economy toward justice and the common good. But each system has important similarities with the other. Pesch is considered as the main source for Pius XI’s 1931 encyclical Quadragesimo Anno, and solidarist ideas lie behind co-determination and other European efforts to involve workers in management, as Pius XI had recommended in that encyclical (no. 65), and Leo XIII had suggested even earlier in Rerum Novarum (nos. 45ff.)

Bürger: Hilaire Belloc is often described as the founder of distributism. G. K. Chesterton is one of its main proponents. Neither were trained economists. Is that problematic?

Storck: Chesterton and Belloc were both born in the 19th century when there was still a strong tradition of interest in economic questions by well-educated intellectuals. Indeed, earlier, Adam Smith himself was not a trained economist, nor was David Ricardo. Economics, or the economic welfare of humanity, is important enough that any intelligent person should take an interest in it. In the 19th century there were numerous schools of economics which offered greatly varying approaches to the subject, for example the German Historical School, which eschewed the deductive and increasingly mathematical approach of the evolving neo-classical school. Thus both Belloc and Chesterton came out of the tradition of intelligent non-specialist interest in economic questions which was characteristic of their times.

Bürger: There have been many capitalist critics of distributism, for instance Thomas E. Woods, Jr. Do their critiques have some merit? How would you answer them?

Storck: I have argued with the critics of distributism for many years. In many cases their critique is based on a libertarian view of the economy and society, which would be as hostile to co-determination, or to any significant modification of capitalism, as it is to distributism.

In my opinion their thinking is characterized by a failure to see that the commercial society which capitalism, whenever it is not severely restrained, has created and fostered is at odds with the economic maxims of Holy Scripture and the social teaching of the Church. This is especially so in the United States, where the kind of capitalism usually defended is, as I said, closer to the free-market version explicitly condemned by the Church.

Bürger: Do you have any book or essay suggestions for our readers?

Storck: Hilaire Belloc’s, The Restoration of Property is the best short introduction to distributism by one of its original proponents. Current distributist writing can be found mostly on two websites, The Distributist Review, and Practical Distributism, both of which I write for. Also, the works of Race Mathews I mentioned earlier, and those of John Médaille.

Other writers such as E. F. Schumacher, and Wendell Berry, while perhaps not distributists in the strict sense, include numerous and important distributist themes in their writings.

Bürger: Finally, if you want to bring about a distributist society, what needs to be done? Which practical suggestions do you have?

Storck: In the encyclical to which I have referred so often, Quadragesimo Anno, Pius calls for both a reform of institutions and a reform of morals. With regard to the first, the law could favor small enterprises and the formation of micro-businesses and worker-owned businesses, by giving tax breaks, guaranteed loans, and other favorable treatment. The law could also discourage concentrations of property, for instance by impositions of special taxes or enforcement of anti-trust laws. But at the same time, there would need to come about a consciousness that the economy does not exist for the sake of enriching individuals, or even nations, but for providing mankind with the goods and services needed for a truly human life, while at the same time allowing us the leisure to give our attention to the more important things: the things of God, the family, friendships, the arts and the intellectual life.

In the United States, which is the place I know best, economic activity is commonly viewed as a means of getting rich, and the desire to get rich is considered as an obvious and reasonable aspiration, despite Saint Paul’s warning (1 Timothy 6:9) that “those who desire to be rich fall into temptation, into a snare, into many senseless and harmful desires that plunge people into ruin and destruction.” The United States is often seen as a very religious, a very Christian country, but its understanding of Christianity is based on the Protestant free-church tradition, which tends to privatize religion and to see it as having little or no connection with the economy or economic morality. In such a culture it is very difficult for distributist ideas to make much headway. Hence, when I speak of measures for creating a climate of opinion favorable to distributism, what I say may apply more to the United States than to Germany or other parts of Europe whose cultures were shaped by Catholicism with its robust concern for the common good of society.