In Defense of Distributism

Small Business is Beautiful

Something very strange is happening in the world of traditional Catholicism, and I think I know where it’s coming from, but rather than point fingers, I’m just going to explain myself and my position for what it is. Let me finish, then call me what you like. Some very prominent traditional Catholics, who I deeply respect and admire, have come out against distributism, attacking it as if it were socialist or something worse! I’ve watched their YouTube videos, and to be quite honest, I found those particular episodes way beneath them. They can do so much better, and I hope in the future they will. Their arguments against distributism were based entirely on strawmen — a total misrepresentation of what distributism is. I don’t believe they are the source of these misrepresentations though. Like I said, I think I know who the source is, but I’m not going to point fingers here.

I am a distributist. But let me explain myself fully first, then you can judge me however you like.

My understanding of distributism is what I call “distributed capitalism.” By that I mean, capitalism for the common man. Here’s the deal. I believe the only problem with capitalism is there are not enough capitalists. I think we need more, but when we talk about getting more capitalists (meaning business owners), we’re not really talking about capitalism anymore. Rather, we’re talking about distributed-capitalism, or just distributism.

I believe the only problem with capitalism is there are not enough capitalists.

The problem with capitalism, as we know it, is that not enough people have access to the capitalist system, or maybe I should just call it the free market. This is because the free market is dominated by big business, which cuts deals with big government, to keep their businesses big and to ensure government stays big as well. Big business actually works together with big government, to make strict regulations that govern a particular sector of the market. Those regulations make it harder for small businesses to get a foothold in the market, keeping most of them out of the market entirely. The few that manage to get through the strict government regulations are then crushed by unfair business practices, wherein big companies drop the price on particular items (absorbing the loss by raising prices on other items not related, which they also control, because they’re big), so as to make it impossible for the little business to compete. Once the little business closes down, the big business goes back to its original pricing. It’s nothing new. This sort of thing has been going on for ages, but in the last two centuries, it’s gotten out of control.

The word capitalism itself is misnomer. It didn’t exist prior to 1854. It’s a made-up word, actually created by Marxists and used disparagingly toward big businessmen. Prior to 1854, what we call “capitalism” today was just called “the free market,” and what we call “socialism” today didn’t exist. My point here is that the words “capitalism” and “capitalist” are not real historical words in the English language. They’re pejorative terms, made up by Marxists, to point out something that happened to the free market in the 1800s.

Marxists are good at one thing and terrible at another. They’re good at analyzing problems. They’re terrible at solving them. In fact, if we compared a Marxist to quackery medicine, we could say the doctor correctly diagnoses the problem, but is prescribing a cure that’s worse than the disease. In the 1800s, Marxists correctly analyzed that the number of small businesses was decreasing, and slowly being replaced by large corporations. Shop owners and tradesmen were having to close their doors and become employees to big business. They were still working, thank God, but they no longer owned their means of production. Instead, they had become wage-slaves, dependent on a larger corporate entity to pay them. This was a correct assessment of the problem in the West during the 1800s, and it remains a problem to this day.

That’s about as far as Marxists go when it comes to getting it right. They correctly assessed that the number of people owning businesses was shrinking. Consequently, those fewer businesses were getting larger, while everyone else was becoming wage-slaves to these big-business owners. These big-business owners they called “capitalists,” and this was not a nice word, because they controlled the majority of “capital” or money and assets (productive property). It was meant to be an insult. Everyone else they referred to as “labor.”

Later, Western governments adopted the pejorative word “capitalist” as an identity moniker, to contrast themselves with the communist Soviet Union. It’s sort of the same way Americans adopted the word “Yankee” as an identity moniker, even though the British originally coined the term as a mocking insult.

After Marxists correctly diagnosed the problem, rather than fixing it, they began a campaign of class envy and class warfare, which they continue to this very day, inciting the labor class to hate the capitalist (rich) class, and enticing them with a big-government solution. Marxists, however, lack imagination. Either that, or they’re stupid, or else the whole thing is just a big confidence trick or “con.” (Personally, I think it’s a con.) Marxists, correctly insist that too few people control business, therefore as a solution, they insist that we should turn business over to even fewer people! In other words, we should turn business over to the government, which is just one big owner, instead of a few big owners (capitalism). The solution to too few owners, is even fewer owners. That’s the Marxist formula.

It’s stupid right? I mean they literally prescribe a solution that is just a bigger version of the problem. Yet these Marxist con-artists have been successfully pulling this ruse over the people for well over a century now, and people keep falling for it! — one generation after another! It’s amazing really. It’s the ultimate con. And yet, people keep going for it, over and over again.

How do they do it? Well it’s a little bit of language trickery and it’s based on the ideals of the Enlightenment period. The Enlightenment ideals they use are that everyone is basically equal, and that society shouldn’t be divided into classes or hierarchy. They also heavily rely on the ideal of government being by the consent of the governed (Hobbes, Locke and Jefferson). These ideals have some problems, but they’re not all that toxic in themselves. Along with them, however, comes the notion that a representative government becomes the embodiment of “the people” at large. In other words, the Marxists focus on the notion (false notion) that the government IS the people, or an extension of the people. So government ownership translates into (according to Marxists) ownership by the people. It’s a clever little trick, building on Enlightenment ideals, that fool people into believing that by turning business ownership over to government, they’re really turning it over to all the people. It’s a crock really, a complete pile of bullshit, but that’s how they pull it off, and sadly, it works. They never would have gotten away with this in Medieval times, when kings were the top tier of government. Nobody would have gone for the notion that we should turn all property over to the king and then everything will be “equal.” I dare say the nobility would probably take issue with that. Even the common shopkeepers would probably object. No. In order for this lie to work, you need to eliminate a large number of middle-class shopkeepers and concentrate the majority of business into the hands of a few robber-barons (i.e. capitalism). Then, just get rid of the royalty, establish a republican form of representational government and convince everyone that the government IS the people. Then you can pull it off. That’s exactly what the Marxists did, or at least, that’s how they take advantage of the situation.

Marxism takes many forms, or “flavors” as I call it. The most popular flavor of Marxism is socialism, especially in the West, which is sort-of a “soft touch” form of Marxism. Today, it’s called “democratic socialism” which is even a softer touch. But it’s still Marxism, as I described above. Except, instead of the government taking over all business all at once, it just takes over one sector of the economy at a time. It’s kind of a gradual approach to making the problem worse. Communism was far more popular in the East. Communism is another flavor of Marxism, wherein the government takes over all business, and private property, all at once. It’s sort of a “let’s just get this over with” approach to Marxism. Communist regimes must be totalitarian in order to get the job done, which is moving all business and property away from too-few owners (corporate capitalism), into one great-big owner — the government. Communist regimes are well known for human rights violations of all types. They have to be tyrannical. Because in order to accomplish their goal of stripping all people of all property, they have to break their will to resist. Fascism is another form of Marxism, wherein the government and big-business work together to keep each other as big as possible, and the labor class as submissive as possible. Think of Fascism as a halfway-point between capitalism and communism. Think of it as a partnership between capitalists and communists, as if big-business entered into a 50/50 ownership deal with the government, where each owns half of all business in the country. Beyond that, we have modern ventures (or causes) which serve as a means to an end. Globalism and environmentalism have both proved to be means by which the end is Marxism in some form (socialism, communism or fascism).

So in a sense, what the Marxists did was take a problem (the free market turning into centralized or corporate capitalism) and figured out different ways for how to not to solve the problem, but rather make the problem worse, and in the process, award wealth and power to themselves. Capitalism is not the solution to Marxism. It is, rather the cause of it. Marxists need capitalism to happen first, so they can point out its problems, then fool people into making terrible choices that only make the problems worse. “Capitalism,” by definition (because it’s a Marxist word created by Marxists), is when the free market is overrun by big business that uses both the government and unfair business practices, to crush small business, turning former business-owners into wage-slaves for big corporations.

So now that we’ve defined the problem, and how it went from bad to worse, the next logical question is “how do we fix it?”

In order to fix it, we have to first define what our goals are. What’s the objective here? Capitalism (too few people controlling business) is the result of the Libertarian ideals of the Enlightenment period. During this time (1700s) there was a tendency to move away from religion in general, and toward secular control of governments. Once that happened, the moral restraint of religion was thrown off from government decisions. The free market, once governed by rules of fairness and equal opportunity, based on Christian morality, was turned loose to run itself. No longer would the market be governed by Christian principles of morality, but rather, the market would become it’s own judge. If businesses succeeded, it was because they were strong and smart. If they failed, it was because they were weak and incompetent. In other words, the market became a game of survival of the fittest, where only the strong survive and might makes right. So it was at that time, businesses with deeper pockets began the process of gobbling up smaller businesses with fewer resources, and so the market of small family-run businesses slowly began to transform into big-business capitalism. The independent shop owner, who barely made enough money to feed his family, went out of business, and took up a job in a factory where he didn’t make enough money to feed his family, and his wife and children went to work for the factory too. Yes, children work under capitalism. Child labor was a thing in the US, and it still is in other parts of the world. Check your history books. Now you can see how the Marxists so easily took advantage of this predicament. They promised to create a world where children could go back to school, instead of laboring in sweat shops, and wives could go part-time instead of slaving away in the factory with the husband and kids.

The goal then is to get back to what we once had, a little over 200 years ago, where most people had their own shops, trades and farms, relying on themselves instead of somebody else to feed them. The goal is to give the common man, the average nuclear family on Main Street, a share in the market again. I’m not talking about some artificial government-share garbage. I’m talking about a real business, owned by them, either fully or in part. I’m not talking about some ridiculous utopia, where everyone has everything they need. That’s not possible. Jesus said: “The poor you will always have with you” (Matthew 26:11), and I’m not about to call Christ a liar. No, I’m not an idealist or a dreamer. This mortal life is hard, and it doesn’t matter what form of economy you create. It will always be hard. What I’m talking about is an economy where people are independent again, and take care of themselves as much as possible. I’m talking about an economy where families don’t have to be dependent on some big company (they have no ownership of) to pay their grocery and utility bills. I’m talking about a society where the moral epicenter is the middle-class family, which goes to Church on Sundays, and listens to sermons preached by ministers of the Gospel, rather than big businesses, government elites and media conglomerates that tell us what to think. I’m talking about a return to a Christian economic system that’s focused on people rather than maximized profit going to the few.

So how do we get from here to there? I believe the answer is distributism, because it’s based on the teachings of the Church.

Now to be crystal clear, the Catholic Church does not teach a specific economic theory. That is outside of its purview. The Church doesn’t give economic theories, but rather sits in judgement of them all. There are no merits to Marxism. There are some merits to capitalism, but in my opinion, the greatest merits can be found in distributism.

This is because the two principles that distributism is based on, are the principles of subsidiarity and solidarity. Subsidiarity insists that its immoral for bigger government (or bigger business) to do the things that could be done just as well by smaller government (or smaller business). Solidarity insists on terms of “friendship” or “social charity,” which is demanded of human and Christian brotherhood. In other words, we’re all in this together; rich, middle class and poor alike. This means we don’t engage in class envy or class disdain, and we sure as hell don’t engage in class warfare. We try to help each other as best we can.

Distributism operates with a singular goal in mind. That goal is to get business ownership back into the hands of the people doing the work. This is not a 100% thing. Obviously, there are some cases where that doesn’t apply. A small family-run business is obviously not going to share ownership with a hired-hand needed to make ends meet. Likewise, not every large corporation is going to be willing to share ownership with its employees. The system of economics I advocate is called “distributism” not “re-distributism.” Theft is a violation of the seventh commandment of God, and if you claim to be a distributist, then Christian religion is important to you. You can’t advocate theft and call yourself a distributist, let alone a Christian. A common strawman argument leveled against distributists is that we want to take property away from some people and give it to others. I suppose there might be some very confused people out there, calling themselves distributists, who advocates such nonsense, but I assure you that’s not what the theory is about.

Here in the United States, for example, we already have a pretty good market system, and any changes that might need to be made would only be minimal. They should revolve around incentives not theft. For example, small business (particularly those family owned) should be given preferential treatment under the law, so as to give them the most opportunity at successfully providing for themselves. Government regulations should be focused more on keeping large businesses in check, to make sure they’re not abusing their employees or harming the public interest via pollution, unfair business practices, etc. Tax incentives are already used to help small businesses get started. Those might be expanded to give them a bigger boost. Small-business guilds could be recognized by the state, for the purpose of purchasing group medical insurance at reduced rates, and so forth. You get the idea.

Obviously, the modern world cannot run on small business alone. We need big business to make: automobiles, airplanes, rockets, computer chips, smartphones, etc. The assembly-line method of production will be with us for the long-term foreseeable future, and that’s not necessarily a bad thing. It’s given us a magnificent civilization unparalleled in world history. So yeah, let’s not mess that up. But how do we get back to the ideal of widespread ownership when we need big business too? That answer comes to us in the form of worker-owned cooperatives and “employee stock option plan” (or ESOP). Both of these models are examples of ways that large corporations can share ownership of their business with the people who work therein (employees). Before you bristle at the notion, you might want to consider that a large number of corporations in the United States are already worker-owned cooperatives or ESOP. It’s a common business model that Americans seem to like (especially the ESOP), and is a growing trend. As I said, the American market is already pretty good. We don’t need to make radical changes. We only need to make greater incentives toward those things that encourage more worker ownership.

Worker-owned cooperatives are based on the model that each worker owns an equal (or tiered) share in the company, based on seniority and merit. ESOP corporations are companies that offer their employees stock in the company in lieu of higher pay. Thus, loyalty to the company is rewarded with ownership in the company. Both models offer employees a share, or a stake, in the free market, and they offer partial ownership of their jobs, their equipment and the place they work in. This in turn encourages pride in their work, their job and their company. It also gives them a voice in how the company is run. In ESOP companies, the employees are shareholders, and they can elect representatives to the board of trustees. In worker-owned cooperatives, it’s very similar, and they too can elect representatives for corporate meetings. The employees therefore get a say in business decisions, and how the company is run.

The United States already offers some tax incentives for large companies to switch to the cooperative or ESOP models. No company need make the change, if the owners don’t want to, and no company is ever forced or coerced, but there are financial benefits. I argue those incentives should be increased. They need to be made into an offer most companies wouldn’t want to refuse. That’s probably the best way the United States could move toward a more distributist economy, and no, this doesn’t involve theft in any way. Notice I never advocated that we take property away from one group and give it to another. I’m a distributist not a re-distributist.

Beyond that, cities and towns could move more toward a distributist model with stricter zoning laws for businesses. For example, they could limit the square footage a business is allowed to have in a given area. They could limit the size of company allowed to establish in a shopping district. The fees for licenses on trucks and equipment could be based on weight, so as to give smaller businesses a leg up. All of this should keep in mind the grandfathering of established businesses, so that no government-sponsored theft occurs.

When it comes to overpriced services, like medicine and pharmaceuticals, government could grant licensing powers (with royalties), as opposed to traditional patents, so companies that take risks developing these things can make bigger profits by farming out mass production to competing businesses, and taking in a slice of their profit instead. High-skill trades, like medical professionals for example, can be trained using a guild system, instead of traditional college, wherein licenses are issued by the guild instead of the state, and the guild is held for surety in the case of malpractice, thus encouraging they produce and license only the highest quality of medical professionals. This could potentially end the need for endless student loans for college, and create medical professionals that work their way up through the system, using on-the-job-training along with coursework. Hospitals themselves could become worker-owned cooperatives, or ESOPs, so as to give medical professionals a stake in the system and a share in the market. The possibilities are many.

In all of this, have you heard me once advocate a violation of the seventh commandment? Have you heard me once advocate theft? Have you heard me once advocate forcibly taking property from one group and giving it to another, or to the state? If so, please point it out to me, because I don’t see it. No, I think what I’m advocating here is just an expansion of what many companies in the United States are already doing, and perhaps a few innovative ways that address the excessive cost of some goods and service — like medicine for example.

Would any of this involve bigger government? No. We might need a stronger enforcement of America’s antitrust laws, but this should probably be farmed out to the states to enforce on their own, rather than a centralized approach. If anything, I’m talking about devolving (decentralizing) government, by farming out some limited licensing powers to guilds, so the government doesn’t need to do that itself. In all of this, the government would not grow. At worst, it would be the same size but decentralized. At best, it would be decentralized and reduced in size significantly. I think the latter is more plausible.

The objective (goal) of distributism is to get away from big business and big government, moving more toward smaller (decentralized) government and more distributed business, where individuals and families have more ownership of their jobs and more of a stake in the free market system. That’s my defense of distributism. Take it for what it’s worth. You’re now free to judge.

13 thoughts on “In Defense of Distributism

  1. Good article. One of the very best I’ve read on Distributism. I am something of a skeptic about it, for some of the reasons mentioned in the article.

    For example, it’s hard to see how a collection of small businesses could do anything on the sort of vast scale that is needed to supply the needs of a large nation, such as road building, large scale manufacturing, large scale construction and the like. All of these enterprises require significant amounts of capital. Further, there is nothing stopping any collection of like minded individuals from pooling their resources and forming cooperatives right now. Very few actually do it. The likely reason? They don’t wish to take the risk that comes with being a business owner. Rewards may have to wait, sometimes for a very long time. There is no guarantee of a steady paycheck. There are no set hours, guaranteed vacations, weekends off etc. Most workers find it easier to allow someone else to manage a business while they show up, work the agreed upon hours for the agreed upon wage, and be done with it.

    The idea of Employee Stock Ownership enterprises is a good one, as is the idea of incentives to encourage them as well as cooperatives for those so inclined. And clearly, large businesses need to be regulated and kept within an anti-trust, anti-competitive framework so as to ensure that smaller enterprises have the best opportunity to succeed.

    Anyway hope to see more on this important topic.

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  2. You speak of stock options for employees. Anyone can purchase stock of a publicly-traded company, whether they are an employee or not.. Isn’t that an example pf distributism?
    Also, an owner of a patent, whether an individual or a business, can now grant a license to another to make, use, and/or sell that which the patent covers. Doesn’t that comply with what you propose under distributism?

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  3. Shane, I applaud the Distributist sentiment to decentralize but it cannot lead where you want it to. Just as you call silly the Marxist ideas because they just want to give the power to the government which is worse than concentrating capital in the hands of fewer capitalists. I agree. But for anyone who is not politically naive, I don’t see how Distributism does anything different. You and I agree that when big business gets in bed with big government we all lose. But your answer is just to shift what the government does – regulating, favoring, etc, etc. And yet somehow you seem to think they will justly, dispassionately make those decisions. Maybe you have looked into this and if so I’d be interested to hear your perspective, but it not, please look up the social science research on things like capture theory and especially public choice theory. People in government are no different from anyone else. They respond to incentives and they will always do what helps their perceived interests – just like all of us. So by leaving the government regulatory and taxing structure in place, you just perpetuate the issue you seem to be wanting to alleviate. To be plain, lobbyists and regulators and legislators will still be interchangeable and will still favor whoever can schmooze the most – not likely small decentralized business.

    Second, say the government was pure of heart – impossible, I know – but accept that. What are you going to do to the “small business” owner who wants to sell the business to the larger firm? Will you prohibit that?
    I really don’t want to get into licensing because I will just become awfully snarky. Suffice to ask, are you really interested in limiting access to things like healthcare? – which licensing clearly does. And where does it stop – who decides what requires a license? (Can you not see the incentive for corruption there?)

    My point is that Distributism requires force and will lead to corruption just as we have now.
    I’m sorry but the only answer is decentralizing the entire system – removing as much government as we can. We need to lean toward the direction of least government always, always, always. I’d almost make this rule – Whenever we need to make a social decision, if you lean toward less of structured government, you win.
    Couple more points -You slip in an equivocation about libertarianism. Libertarianism is not the same as libertinism. There are many small “L” and even big “L’ libertarians who are faithful Christians. We do not support libertinism in morals whatsover. But we do not think the benefits are worth the cost of creating a state capable of regulating our morals deficiencies. The State is better thought of as a conspiratorial, criminal gang and never, ever your friend. If your answer is the government needs to do it, then your social and moral imagination has failed.
    Lastly, I’m not sure what youtube videos you are watching where traditional Catholics knock Distributism. I’d be interested in hearing that too.

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  4. I sympathize with the implied and stated objectives of these 49% correct proposals in this overly verbose article but observe that a starting point of the 7th and 9th commandment would offer an excellent beginning for implementation. Tim H is quite correct that Distributism is often used as inspiration for what may be termed Socialist-Lite that often deteriorates into the real thing. The main roadblock to many of the worthy stated objectives is an ever grasping and oppressive government even in democratic countries. This is the underlying reason that Great Britain voted, albeit narrowly, to leave the EU.

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    1. Yes. Taiwan is basically a distributist economy, and the United States has implemented distributism on a limited scale in the form of credit unions, worker-owned cooperatives, and ESOPs.

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      1. I sold chemicals to the Taiwan textile and papermills during the 1970s. Yes there were a number of small textile operations but I always thought that came from the Chinese attitude of survival.

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        1. Quite correct. My (Chinese) wife’s family owned a traditional pharmacy. Theirs, like many others was a cultural approach to an economic matter, earning a living.

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  5. As a matter of historical reality, fascism is, practically, the political face of distributism. This should not trouble conservative Catholics, given their track record in Italy, France, Spain, Portugal, and various South American countries.

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