Foreword

Nostalgia is a useful and dangerous thing. At its best, it connects us to the past, providing a sense of community over time and guarding against what C. S. Lewis called “chronological snobbery.” Less helpfully, it can lead to mythologizing the past and blind us to the advantages of the present.

The ongoing appeal to Catholics of the economic arrangements called distributism and corporatism manifests in some cases the harmful form of nostalgia. In response, Thomas Woods pares away the inaccuracies of economic history that have accumulated over the last hundred years. Never does he call into question the good will of those who advocate older or more ideal forms of economic organization. Instead, he argues that the kinds of economic reform explicitly or implicitly promoted by the various defenders of distributism are imprudent. They would not further the ends that all devotees of Catholic social teaching share: wide ownership of property, service of the common good with particular attention to the poor, and a right ordering of the use of material goods.

Woods’ critique thus encompasses theology, history, and economics as he clarifies the Church’s teaching on social affairs, punctures common assumptions about precapitalist economies, and bracingly defends contemporary market arrangements against Catholic detractors. The details are debatable: Faithful Catholics may disagree with his assessment of the benefits versus the liabilities of capitalism, his portrayal of the guilds, or his judgment concerning the Industrial Revolution.

We should clearly understand, however, that Christian revelation does not demand one or another position on these issues. Instead, we are engaged in a common quest for the truth, a search that on most matters will not be definitely concluded until Christ’s kingdom is fully realized. Political theory, economic science, and history can all contribute to that search. None of these can be pitted against revelation. Instead they must be approached sympathetically yet critically so as to enhance our understanding of how best to achieve a society conducive to the gospel message of charity and justice.

In this cause, Thomas Woods makes a persuasive case for the wisdom of looking to a model other than distributism as we consider the best route to Christian participation in the world.

Kevin Schmiesing
Acton Institute

Introduction

When the Berlin Wall fell and the Soviet empire began to collapse, decent people everywhere rejoiced. The captive nations were breaking free, an outcome hardly anyone expected to live to see. Statutes of their tormentors came crashing down, and the communist emblem was torn out of national flags.

There were intellectual consequences as well. Among the clearest was this: Central economic planning was dealt a mortal blow and was widely discredited around the world. The free market, which had been far less intellectually fashionable those seven decades, had triumphed.

In recent years, there has been a minor revival of interest in a so-called third way between socialism and capitalism. Beyond Capitalism and Socialism, a new collection of essays by Catholics, is a good example of the phenomenon.1 The gist of such efforts runs something like this: Although socialism was indeed discredited following the collapse of the centrally planned economies of Eastern Europe, we must not assume that the free market is the only remaining alternative. The market has problems of its own.

Over the years, detractors have identified a variety of problems with capitalism, confusingly shifting the focus of their critique. First, critics claimed that the market produced too little wealth for the masses and enriched only a select few. Then they argued that the market produced too much wealth and made the masses materialistic and fat. Another complaint about the market was its alleged tendency to concentrate wealth and property in the hands of the few, leaving the great bulk of humanity propertyless and vulnerable.

Distributism, a school of economic thought made popular by early twentieth-century British Catholic authors Hilaire Belloc and G. K. Chesterton, made much of this latter point. Distributism was a variant of corporatism, a system of political economy born in the wake of the French Revolution that sought the resurrection of various corporate bodies, such as the guilds, that the revolution had suppressed. Corporatists sought to manage economic competition, which they viewed as destructive and destabilizing, by grouping occupations into self-regulating trade associations and granting the central state a supervisory and coordinating role over business and labor.

According to distributists such as Chesterton and Belloc, the unhampered market led to radical economic inequality and the dispossession of the vast majority of the people who lacked productive property and had to rely for their sustenance on the good will of employers. They were “wage slaves.” Furthermore, so-called cutthroat competition destroyed small competitors and led to monopoly.

According to distributists, this injustice might be redressed by a return to the less individualistic medieval economy. Then, productive property was widely distributed, guilds kept competition in check, and the poor and vulnerable were better cared for. International trade was more limited, and production for local use predominated.

The arguments offered in defense of this system, while perhaps superficially plausible, turn out to be based on logical and economic fallacies, as well as on a serious misreading of European history. Distributists blame widespread indebtedness on the free market instead of on central banks (which are creations of government) that make credit artificially cheap and thus all the more tempting. The medieval economy that distributism holds up as a model bears little resemblance to the medieval economy as professional historians and economists have come to understand it. There was far more long-distance trade and far less local self-sufficiency in medieval Europe than the distributist version of history allows. Land ownership was not widely dispersed under the feudal system, and neither was ownership of the means of production. Even urban workers outside traditional feudal bonds often did not own the means of production. Peasants labored exhausting hours and barely made ends meet even with all members of their families working. The guild system, far from being a liberating force, was actually the source of true monopoly and exploitation.2

Distributists hold up their understanding of the economy of the European Middle Ages as a model toward which we are to return, even though, as we have just seen, such a model never existed in the first place. Although not all distributists are Catholic, many are, and many contend that distributism is required by Catholic social teaching and is a superior form of economic organization.

Neither claim is true.

Distributists also repeat a longstanding leftist critique of the market: the so-called “capitalist paradox.” This alleged paradox involves a conflict between two trends encouraged by the market: ever-geater production on the one hand, and ever-lower wages on the other. Thus, while more and more shoes are produced, workers can afford fewer and fewer of them.3 As we shall see, no such paradox exists.

One supporter of distributism recently pointed to small-scale agrarian life as the ideal that could once again become the norm. “Ownership of the land by the families who themselves worked the land,” he claims, “would … mean financial stability, no fear of unemployment, a family enterprise that could engage, in some measure, all members, an ability to put aside food and supplies to create a hedge against destitution, a way of providing for familial subsistence and a local market.”4 Now if people want to recommend a semiautarkic agrarian lifestyle over one more engaged with the international division of labor, they should be free to do so. It is, however, incorrect to insist that no good arguments can be raised against such a lifestyle, or that Catholicism demands such an approach to economic life. It does not, and it is wrong to trouble the consciences of good Catholics by claiming it does.

Few sustained critiques of distributism have ever been written. This monograph critically reviews some of the system’s economic and moral aspects. It then urges us to consider the economic and moral merits of the free market—a system that is often known only in caricature but that deserves a more sympathetic treatment than it often receives among Catholics and other Christians who are serious about the implications of their faith for economic life.