So we’re still experiencing the Global Financial Crisis and it does not seem to show any signs of dissipating. As a matter of fact, as I’ve written in the Distributist League of the Philippines blog, we’re expecting another global recession to land in our shores. To put it bluntly, we’re in deep trouble and we’re not getting out of hot water anytime soon if this were to continue.
Before we get to all the technical modern-day issues which plague the global economy, let’s first look at how we as Catholic-Christians are to view economics itself. Let’s rid ourselves of the misconceptions of how Christians ought to support the Marxist-like ideals (which seem to plague the Philippines) like those of Fr. Gustavo Gutiérrez or how we should support laissez-faire or libertarian capitalism like Ludwig von Mises or Ayn Rand—no, let’s look at what orthodox Catholics had in mind.
We first look at what the esteemed Pope Leo XIII wrote in his papal encyclical letter, Rerum Novarum. During the height of industrialization, all sorts of ideologies rose up concerning the aspects of labor and capital. A certain Karl Marx also had his own take on capital and labor, yet Leo XIII did not share Marx’s views.
True that Leo XIII spoke on the unjust treatment of workers but rejected the utter nonsense that there is a perpetual struggle between the rich and the poor.[1] The Holy Father did not like the idea of doing away with individual rights to property. He also believed that when man works—when he labors, he labors to obtain property of his own.[2] Doing away the concept of private property for the sake of the workers was a grave error for Pope Leo XIII.
About four decades later, Pope Pius XI released his own papal encyclical entitled Quadragesimo Anno, which not only reiterated Pope Leo XIII’s position on private property but implied that property has a sacred purpose.
Let us first state an example: Whenever we dine, we may have fun chatting with friends. We may enjoy the taste of the food we are consuming. We may enjoy the taste of wine paired with food. But the true purpose of dining is to satisfy our hunger. Not everyone eats for enjoyment; they need food as they need to survive. They eat food that they may not go hungry. Food is meant to address the problem of hunger.
The sacred purpose of property, as Pius XI implied, is that it ought to be subordinated for the common good.[3] Pius XI was not saying that property ought to be confiscated and be made public for everyone’s use. For all we care, we can enjoy the privilege of being owners of something; but our ownership has a social purpose. The question of how we can reconcile private property with social justice would be left unanswered if we are to stop here.
Enter G.K. Chesterton and Hilaire Belloc, the proponents of early distributism. In case many of you don’t know, distributism is the economic philosophy which advocates the widespread distribution of property and an ownership society based on the principles of subsidiarity & solidarity. Taking the writings of Pope Leo XIII and Pope Pius XI, Chesterton and Belloc founded a new economic school of thought which would have been a strong contender against capitalism and socialism during those times.[4]
The problem was that both of them never had any formal training in economics, although their arguments were very much compelling. The legacy that they left was not really that great. The dissolution of the Distributist League in Britain followed the death of G.K. Chesterton. Distributists that followed after Chester-Belloc argued on moral grounds, but not on economic terms. Distributism—except for great economic thinkers like E.F. Schumacher—was long forgotten and was dismissed as a mere specter which had been exorcised by modern economists; distributism had become a thing of the past, overshadowed by Keynesian economics.
To move on to the present day; are there any distributists left? Have they been wiped out following the mass purging by the Keynesian army after the Great Depression? Is there any hope for Catholic Social Teaching to win its place in the political economy?
Now, it seems as if the “free-market” system has failed once again. America, Greece, Spain and most of the EU countries are in deep debt. The reliance of people on having jobs has taken its toll, as unemployment rates are rising all over the world. This was what Hilaire Belloc predicted: The state, due to the natural instability of capitalism, has become servile.
The economic recession which has hit the global market seems to be a signal for neo-distributists to emerge. Debt apparently being the consequence of the Keynesian “free-market” concept and the liquidation of many firms caused by the over-reliance of the usurious credit system, distributism has to be a very plausible solution according to the new breed of distributists.
Let me stray from the topic a bit and focus once again on the issue of property. By the principle of building an ownership society, neo-distributists not only want workers to work to obtain property; [we] also want workers to be the owners of where they work.
Sounds absurd? Well isn’t that the system which cooperatives are adopting? Isn’t that the system which the Mondragón Cooperatives Corporation—started by Fr. José María Arizmendi based on Catholic Social Teaching—in the Basque country of Spain and the cooperative economy of the region of Emilia-Romagna in Italy is based on? Isn’t Mondragón the seventh largest company in Spain in terms of turnovers and the stronghold of the Basque economy? Aren’t the wages in Emilia-Romagna higher than the rest of Italy’s?[5] What?
See here, a cooperative/ownership economy is the dream of every distributist. Banks would be shunned in favor of credit unions and industries would be localized based on subsidiarity; but would also have a certain networking institution as that with the economy of Emilia-Romagna. Usurious practices would then be a thing of the past—we would be able to pay our debts without suffering from the high interest rates.
To look at the global financial meltdown from a distributist perspective, people would be able to enjoy the benefits of being a worker and an owner at the same time if we adopt the distributist system, or something like it. By loaning from credit unions owned by its workers/members instead of banks that impose high interest rates, repayment would not be very difficult. As such, we wouldn’t have the problem of stock prices going down and the government wouldn’t have to provide bailouts for firms on the brink of bankruptcy or liquidation. (In other words, the government would not have to borrow money and increase its debt.)
Ownership would not be concentrated on a few firms but among a lot of people, may they work for a cooperative/distributist firm or may they form one. A society of worker-owners would be able to provide genuine social justice and wages would be evenly distributed. There, the problem of unemployment would not only be addressed, but employment per se would be elevated into something much more profound—employment and ownership at the same time.
By decentralizing industries (subsidiarity), inefficiencies caused by the central authority would not affect local ones. If there are inefficiencies, a networking institution between certain firms would then be able to reach out by invoking the other firms. Unlike in Keynesian economics, these institutions would allow for cooperation between firms and industries instead of doling out monetary aid. This is solidarity.
I know, the distributist take on the global financial crisis which I have presented may be superficial and somewhat naïve. I’m not quite sure if I did justice to the economic philosophy here, as I am not a scholar who can discuss distributism and argue on purely economic terms; I merely consider myself a student and I am still learning. But I’m hoping that what I’ve presented may be a stepping stone for what Catholics ought to do with regards to the political economy.
The popes have presented their views in the papal encyclicals. These views did not only stop with Pius XI’s Quadragesimo Anno, but continued on with Bl. John XXIII’s Mater et Magistra, Paul VI’s Populorum Progressio, Bl. John Paul II’s Centesimus Annus and more recently, Benedict XVI’s Caritas in Veritate.
There are also those whom I’d like to call the masters of neo-distributism like John Médaille and Christopher Ferrara, who are very much strong advocates of the economic philosophy as started by Chester-Belloc. These people have written good books and articles and have debated objectors to distributism, including libertarian capitalists.
So let’s go back to the title of this article: What’s a Catholic got to do with the political economy?
The answer: A Catholic plays a vital role in reshaping society and to mold economics as something which ought not to be treated as a physical science, but as a humane science. The popes and Catholic thinkers have built the foundation on how justice and progress can be made to exist in society and the economy from Christendom’s perspective.
As Catholics, let us treat property with high regard, ownership as sacred and the economy as God’s gift to mankind. And let us take into consideration the teachings of the Church—especially by the popes in the mentioned encyclicals—as well the ideas of the proponents of distributism and Catholic Social Teaching.
Jared blogs regularly at Verum Nocet, The Distributist League of the Philippines and his personal blog, The Secular Catholic.
[1] Rerum Novarum, Pope Leo XIII Sec. 3-4
[2] Ibid. Sec. 5
[3] Quadragesimo Anno, Pope Pius XI, Sec. 47
[4] I recommend reading The Outline of Sanity by Chesterton and The Servile State by Belloc
[5] Toward a Truly Free Market, John C. Médaille Chp. 18, The Practice of Distributism
5 thoughts on “The Political Economy: What’s a Catholic Got to Do?”
I continue to be impressed with many of the serious essays posted here. The neglect of subsidiarity in the modern economy has become a truly shocking problem. I was reading just this morning . . . I just can’t recall where . . . an insightful essay about the pernicious effect of the ubiquity of two-income households (here it is, I found it.) I’m not enough of an economist to know how that fits into this, but it strikes me as a subsidiarity problem: the appropriate relationship between basic societies (families) and intermediate societies (business) has been disrupted.
One conceptual problem with the widespread use of cooperatives is its effect on venture capital. The ventue-capital driven corporation is hardly a model of subsidiarity, but its basic building blocks can be adapted for the purpose. All a guild or a cooperative need be is a corporation in which the employees together own a controlling share. It would be perfectly possible to create a legal arrangement in which a corporation was formed in the hands of several entrepreneurs, but the stock of which was gradually transferred to employees (and made non-alienable during the employment of each stockholder) as the initial investors realized a return on their initial investment. That’s a long way from solving all our problems, but it is at least a helpful thought experiment to demonstrate how a distributist-influenced system can use some of the growth-encouraging mechanisms of a more laissez-faire economy.
Wow, fascinating. I’m now really interested in researching the success stories you mention in Italy and Spain. I do have one question, in the middle of your essay, you seem to state that the “reliance of people on having jobs” is a problem. It is a problem for people to rely on a job for their income?
I guess the alternative would be having the kind of property with which one could sustain oneself and family by raising food, etc. But that’s hardly the way society has ever looked throughout history. There are always artisans, teachers, or scientists (in the very broad sense) whose contribution to a community prevents him from spending the time necessary to also grow food for his family. I’m just wondering…where do those non-agrarian figures fit into the distributist model? I’ve known a crop of distributists in my day, and (not to be nasty) but their solution to every problem is the self-sustaining family farm.
I just don’t find that to be a realistic answer. For one thing, society is far beyond the kind of insular structure in which families live near one another forever and always–we live hundreds of miles apart now. Communities are fragmented, and our ability to travel long distances would be severely hampered by the kind of decentralization that distributism requires. Infrastructure, for example, is a hairy problem for the distributist. Should states care for the roads? Or counties? And what if one of the counties in the middle of the state doesn’t pull its weight? Who gets to rule over the country and tell it to get with the program? Doesn’t that defy subsidiarity?
I know there are obvious and practical answers to all these problem, but they assume a kind of basic cooperation among human beings that (again, not to be nasty) the species simply isn’t known for. In the meantime, the problem I have with distributism is a lack of “rules” or practical principles for living out that kind of socio-economic system. I understand subsidiarity, of course, but in a way it feels like sending someone off with “Love one another” and not also giving them the Ten Commandments.
Jennifer,
Here’s my [timid] attempt at answering your query:
Reliance of people on jobs is not a problem per se. I was not too clear on that point, forgive me. The statement on the reliance on jobs is based on Belloc’s The Servile State.
In the book, Belloc spoke about the period in time where English enclosures were enforced. This was the time when peasants and farmers lost their common land and were forced to work inside factories or mines or whatever. When they could have done something productive for themselves with the land where they once worked on, they were forced to work in hazardous environments where there was little pay. This was English industrialization, which spread throughout the world.
Now, the “working-to-get-paid-at-your-usual-corporation” mindset is still very much intact in modern society. Due to the economic recession that hit the world, many corporations went bankrupt or liquidated or could not hire any more people, hence the unemployment problem. Then, we have the conclusion of people’s reliance on working for corporations being a problem. This is similar to Belloc’s Servile State–people become slaves to corporations, hence what I wrote above on the reliance on jobs.
What alternative do people have? If they can’t work for a corporation, then they could opt to working for a cooperative or something similar—which they own and operate for a mutual benefit. Workers themselves are in control of the firm despite being workers/members.
Cooperatives have better job security than [typical] corporations. It has been argued that they provide for equitable distribution of profit and social justice. The cooperative model—as I’ve mentioned—is what had been adopted by Mondragon and Emilia-Romagna.
So you see, distributism does not simply advocate permaculture or agrarianism. Cooperatives fit just nicely in the industrial and commercial environment.
On your point where you touched on the topic of infrastructure, Prof. Chuck Wilber stated that infrastructure in a certain area may be established cooperatively—neither privately nor state run. Following my answer on your first point, an option also is to have a worker-owned cooperative in charge of establishing infrastructure. We only have to look at Mondragon or Emilia-Romagna to see if the theoretical answers I’ve provided are viable. If we had firms like Mondragon, infrastructure and the like would not really be a problem.
We also have to take into consideration that the cooperative system is a highly democratic system. Mondragon has a “one man, one vote” policy as an example. If by popular consensus people would wish to fix roads in a certain community, then the road-fixing would eventually happen. If members wish to establish a certain infrastructure for whatever purpose by popular consensus then they’d make it happen. For that reason alone, people would be compelled to work in a firm with a cooperative/distributist model.
In Christ, Mary and Joseph
All makes sense, thanks. 🙂 The thing about distirbutism, and maybe its representatives in my experience weren’t good evangelists on the subject, is that is sounds like a really nice way of life, but not necessarily a good way to govern or construct a society. It just counts too much on people being, well, decent.
Maybe I’ve been blessed to come from an environment that falls outside the “standard,” but I know very few people who work for large corporations. My family members happen to be some of those people, working for the same corporation through four (!) generations, but very few people we know in our hometown are also employees of the corporation. On the contrary, most people are either agrarian producers, or the owners/employees of the hundreds of small businesses that have grown up in town over the years. The single large corporation “drives the economy,” in the sense that its presence is what brought all those little service industries into town, but it by no means forms the bulk of the county’s employed citizens.
I’m taking forever to make my point, but I think I’m trying to say that “cooperatives” are actually quite common, in some form or another. The step that’s missing in my head is how some kind of legislated structure would hold those businesses together, in the event that they all voted to maintain infrastructure, for example. Do they pay into a pool and then hire an outside worker to fix the roads? Does each business maintain only the roadway and easement directly in front of their property? I’m not trying to get answers, really, just thinking out loud. Thanks again for the links and answers.
Thanks for the comments and for thinking out loud, Jennifer. You just gave me some valuable insights which I will take into consideration. After all, I’m still a student at distributism. 🙂