Alas, the Poor Distributist

We recently came across this provocative statement: “There is a tiny group of folks called ‘distributists’ who believe that big is bad and wealth should be redistributed by the State, by force if necessary, away from those who’ve earned it and to those who won’t/can’t.”

As defined by G.K. Chesterton and Hilaire Belloc, distributism is a system of widely distributed private property in capital, with a preference for small, family owned farms and artisan workshops. If an enterprise must be large, the workers should own it on shares.

Obviously, there’s a problem if a system in which as many people own is taken as one in which the State owns. Distributists are doing a poor job of either presenting or defending their position if it can be distorted that much.

That seems to be the case. While there are exceptions, today’s distributists tout various forms of socialism as distributism. They venerate Fabian socialism and its offshoots, such as guild socialism and social credit. Ironically, Belloc wrote his classic The Servile State in 1912 to protest the Fabian proposal that everyone should be forced to work at a wage system job and get no income from capital.

While there are exceptions, today’s distributist tout various forms of socialism as distributism.

Distributist also admire Arthur Penty, R.H. Tawney, E.F. Schumacher, and Henry George, all of whom either influenced or derived their thought from Fabian socialism. R.H. Tawney, for example, was involved in “esoteric philosophy” (“New Age”), what Chesterton called “Esoteric Buddhism,” describing adherents as having “shiny pebbly eyes and patient smiles.” Tawney was a member of the Fabian Society, serving on its Executive Committee from 1920 to 1933, and was termed the Society’s greatest socialist writer by co-founder Edward Pease.

And what is “Fabian socialism”? Total State control of every aspect of everyone’s life, characterized by simple living, pacifism, and vegetarianism. The Fabian Society, however, is willing to tolerate people who may reject certain specifics, but who agree that the collective or the State has rights that human beings do not.

Combining aspects of “mystical” New Age socialism with Marxist “scientific” socialism, Fabian socialism differs from Marxist socialism by using State coercion — the tax system, legal system, and the courts — instead of violence to impose its will on others. The Fabian emblem is a wolf in sheep’s clothing.
How did distributists become so enamored of socialism? Neither Chesterton nor Belloc understood money, credit, banking, and finance. They believed all new capital formation can only be financed out of existing accumulations of savings. That means only the rich (capitalism) or the State (socialism) can own, for the rich own the savings, and the State has the power to take what some have and redistribute it among others.
This put Chesterton and Belloc into a dilemma. If they respected private property, the only way most people could become owners was for the rich to give away their wealth voluntarily. If they did not respect private property, then the State could redistribute wealth . . . and “restore” property by destroying it.

 

Chesterton and Belloc believed all new capital formation can only be financed out of existing accumulations of savings having not understanding of money, credit, banking, and finance.

Bound by their principles, Chesterton and Belloc could only hope for either a “change of heart” on the part of the rich, or a collapse of the system. They didn’t realize that the “secret” of the rich is to purchase new capital on credit that pays for itself out of its own future profits — “future savings.” What keeps most people from owning capital is not an insufficiency of existing savings, but an insufficiency of existing collateral!
That is why in 1958 lawyer-economist Louis O. Kelso proposed that the risk premium on all loans be changed to an insurance premium, and broad-based capital ownership be financed with future savings instead of past savings, and collateralized with capital credit insurance instead of existing wealth owned by the borrower. This is the basic idea behind “Capital Homesteading,” which might be called an updated — and financially feasible — distributism that doesn’t try to circumvent private property or the laws of economics, but works with them to achieve the desired goal.

 

Michael D. Greaney is Director of Research at the Centre for Economic and Social Justice