The
Distributism
Debate
The
Distributism
Debate
Dane J. Weber
Donald P. Goodman III
Eds.
G
P
Goretti Publications
Dozenal numeration is a system of thinking of numbers in twelves, rather
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3, 4, and 6—as opposed to only two for ten. This means that such
hatefulness as 0.333. . . for
1
/
3
and 0.1666. . . for
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6
are things of
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In dozenal, counting goes “one, two, three, four, five, six, seven, eight,
nine, ten, elv, dozen; dozen one, dozen two, dozen three, dozen four,
dozen five, dozen six, dozen seven, dozen eight, dozen nine, dozen ten,
dozen elv, two dozen, two dozen one. . . It’s written as such: 1, 2, 3, 4,
5, 6, 7, 8, 9,
X
,
E
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X
, 1
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Dozenal counting is at once much more efficient and much easier than
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Deo meo Iesu Christo
Domino magno et Pastori bono
cuius Cor Sacratissimum passum est
propter me et omnes homines
in remissionem peccatorum
pro instituente regnum sociale eius
et Matri Suæ, Mariæ semper Virgini,
et Cordi Immaculatæ eius
et caræ Catharinæ uxori meæ
et Donaldo Patricio Quarto filio meo
et Ludovicæ Magdalenæ filiæ meæ
hoc opus dedicatum
—Donaldus Patricius—
Contents
Introduction ix
Trashing “Chesterbelloc”
James Fitzpatrick . . . . . . . . . . . . . . . . . . . . . . 1
Capitalism & Catholic Economics
John Sharpe . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Justice of Distributism: A Reply to John Clark
Thomas Storck . . . . . . . . . . . . . . . . . . . . . . . 7
Capitalism and Catholic Economics
John Sharpe . . . . . . . . . . . . . . . . . . . . . . . . . 13
The Capitalist Response
John Clark . . . . . . . . . . . . . . . . . . . . . . . . . 29
Letter to the Editor
Br. Alexis Bugnolo . . . . . . . . . . . . . . . . . . . . . 3E
Three Catholic Cheers for Capitalism
Thomas E. Woods, Jr. . . . . . . . . . . . . . . . . . . . 43
What Does It Profit a Man. . . ?
Br. Alexis Bugnolo . . . . . . . . . . . . . . . . . . . . . 4E
Economics and Profit: A Final Word
Thomas E. Woods, Jr. . . . . . . . . . . . . . . . . . . . 57
Liberal Economics vs. Catholic Truth
John Sharpe . . . . . . . . . . . . . . . . . . . . . . . . . 5E
Conclusion 83
Appendices
Morality and Economic Law
Dr. Thomas Woods . . . . . . . . . . . . . . . . . . . . . 87
Preface to Amintore Fanfani’s Catholicism, Protes-
tantism, and Capitalism
Directors of IHS Press . . . . . . . . . . . . . . . . . . . X1
References 101
Introduction
D
istributism is not
well understood even within the Catholic
world; outside of that world, it is barely, if at all, known. However,
it is much more important to bring Catholics to an understand-
ing of this economic system, intended to be a fulfilment of Catholic
social teachings, than to ingratiate the theory with those outside of the
Catholic world. Therefore, this assembly of articles was created, in an
attempt to bring Catholics to a better understanding of distributism,
the only economic system which attempts to conform to the principles
of Catholic thought.
In 2002, in the revered traditionalist publication Latin Mass Maga-
zine, John Clark penned an attack on distributism as explicated by one
of its chief early proponents, Hilaire Belloc. Capitalists hailed it as a
long-needed vindication of their principles against distributist ignorance;
distributists decried it as ignorant and badly reasoned. Both began
to address the matter on the Internet, and an informal debate quickly
arose.
This is a collection of most of the articles entered into that debate.
Naturally, many more were written, in many different places; some this
editor knows about, some he has never seen. But these are the primary
combatants, and consequently the debate ought to be judged primarily
on their terms.
There is great wisdom and perspicacity in these pages, and great
insight can be gained into the positions of both sides. John Clark and
Thomas Woods provide as coherent a Catholic defense of capitalism as is
possible; Br. Bugnolo gives some insightful considerations of profit, and
John Sharpe offers a brilliant defense of distributism and refutation of
the Clark-Woods theses. Both together provide an excellent cross-section
of arguments designed for laymen, by which the concerned Catholic can
make an informed decision regarding the economic question.
In editing these texts, I have limited myself entirely to typographical
and spelling errors; I have altered no wording and made only minimal
changes in formatting (for example, the small caps in Br. Alexis’s
ix
x
letter). While this does leave the text with a somewhat inconsistent
feel, I believe that this allows the authors’ words to reach the reader
with more authenticity and with all their original force. With that,
the reader is left to his task, and the editor prays that the blessing of
Almighty God might come upon him and guide him in this work.
Donald P. Goodman III
Editor
Trashing
“Chesterbelloc”
James Fitzpatrick
I
don’t know who
coined the term “Chesterbelloc” to describe the
economic theories of G. K. Chesterton and Hilaire Belloc, the famed
Catholic writers of the first half of the 20th century, but it is an
apt figure of speech. Chesterton’s and Belloc’s views on the economy
were closely aligned. The term commonly used to label their vision is
“distributism.
It is a vision that many have argued reflects the economic insights
found in the papal social encyclicals, and, for that reason, has been
highly praised over the years by Catholic intellectuals—those who take
the Church’s social teachings seriously, at any rate. But there is a curi-
ous disconnect in this phenomenon: Many of these Catholic intellectuals
are also proponents of free-market economic theory, “movement” con-
servatives. They proceed as if distributism reinforces their laissez-fair
capitalist views.
One can see why they would think that. Chesterton and Belloc were
opposed to socialism. They wanted to make privately owned businesses
as widespread as possible, seeking, in Belloc’s words, “a society in which
property is well distributed and so large a proportion of the families in
the State severally OWN and therefore control the means of production
as to determine the general tone of society.
But it is not that simple. In the Spring 2002 issue of The Latin Mass,
John Clark, the President and CEO of a financial group in Virginia,
shows us why. He goes so far as to argue that “distributism is actually
inconsistent with the traditional teaching of the Church. Clark focuses
on an element of distributism that is frequently overlooked. He illustrates
that Belloc’s method of keeping property ownership widespread was to
employ a severely progressive tax system to make it impossible for a
business to expand beyond a certain level. Clark summarizes Belloc’s
views: “If individuals approached financial levels beyond those viewed
1
2 Trashing “Chesterbelloc”
by the state as reasonable, they would be taxed so they were no longer
wealthy. In the eyes of Belloc, property would eventually be ‘more
fairly’ distributed. Clark quotes Belloc: “To control two such (stores)
may involve but a small tax, to control three a larger one in proportion;
and so on, with the curve rising steeply until the ownership of, say, a
dozen in the territory over which the Government has power becomes
economically impossible. (Restoration of Property, p. 69.)
We must face the facts: Distributism cannot be made to work
without a vast increase in state power. In Belloc’s scheme, the central
government will determine how much is “enough” for an individual or a
business to own, and then tax any accumulation of wealth beyond that
level at a punitive rate. That is how business ownership will be kept
widespread. State power is the lash, the redistributor of wealth.
This is where Clark feels that Belloc moves into opposition to the
Church’s teaching on private property rights: “Distributism places such
definitive limits on private property that private ownership actually
ceases to exist. Under distributism, it is not my decision to whom I can
sell or rent my land; it is a decision of the state. Under distributism, if a
merchant with three stores wished to purchase or rent my land, the state
would intercede and prevent this transaction, and every transaction like
it. The laws of distributism do not allow me to make private decisions
about my property, and when this right ceases to exist, I no longer
possess private property.
Thus, says Clark, the “traditional teaching of the Church is trampled
upon by distributism, and in the final analysis private property ceases
to exist, as ownership and use essentially become that of the state.
“Distributism violates the fundamental right of private property as
traditionally taught by the Church from the time of St. Augustine to
the present day. Further, says Clark, “The distributist state removes
the profit motive by placing limits on the amount of wealth that one can
earn,” thereby killing the profit motive that leads to economic growth
and the generation of jobs.
Clark buttresses his case by quoting extensively from medieval
theologians such as St. Albert the Great, Thomas Aquinas, Duns Scotus,
Francisco Suarez and St. Bernardino of Siena on the nature of private
property rights.
Is Clark right? To a certain extent, yes. I don’t think it can be
James Fitzpatrick 3
denied that Belloc’s call for an increase in state power to bring about
his “fairer” distribution of property would lead to a central government
with a level of authority likely to be abused. It is a great mistake to
make our decisions about the proper level of state power by assuming
that the government to which we grant power will be to our liking. To
make the point, imagine Bill Clinton and his cabinet sitting around a
table making decisions about how much wealth the rest of us should be
entitled to hold.
This is the fatal flaw in distributism. It is why I hold that it is
better to view Chesterbellocian economic theory as poetry rather than
prose. Their vision of small communities of neighbors, producing the
goods and services they require for a modestly prosperous existence,
has great appeal. It is the practical application of their scheme that
presents problems, specifically the mammoth nanny-state required to
prevent the Henry Fords and Bill Gates of the world from exercising
their entrepreneurial drive. It is worth empowering the Clintonistas to
hold our entrepreneurs in check?
I forgot where I heard the line, but it stuck with me: “Chesterton and
Belloc extol a world of small businessmen running owner-operated shops.
The only problem is that in the real world, every small businessman is
looking to expand. It is an important point to keep in mine. In many
ways, the distributist state would be as contrary to human nature as a
Marxsian socialist state.
That said, I suggest that Clark goes overboard in his criticism of
Belloc. It is no coincidence that the Catholic theologians Clark quotes
are from the Middle Ages, and that the papal encyclicals, from those
of Leo XIII to those of John Paul II, are more favorably disposed to
state intervention in the economy, even if not to the degree called for
by Belloc. It is why the encyclicals speak out against a rigid “economic
individualism” that would deny the state any role in regulating private
business in pursuit of social justice.
I make no claim to being able to augur how St. Thomas Aquinas and
St. Augustine would write about private property rights if they were
alive today. But it must be said: The private businesses they wrote
about were nothing like the transnational corporations of the modern
world. Their world of small craftsmen in medieval villages, employing a
few apprentices and journeymen, has little in common with our world of
4 Trashing “Chesterbelloc”
corporations with the power to inflict great damage on the commonweal
through their greed and dishonesty.
When Thomas Aquinas wrote, “It is a good thing that each one shall
enlarge his possessions more, applying himself to them more carefully
as being his own”—he wasn’t talking about the practices of Enron,
WorldCom and the other corporations caught up in the accounting
crimes of the past few months. And I sense that he would not recoil
from granting the government a counterbalancing power to regulate
these massive concentrations of modern corporate power to make them
socially responsible.
The social encyclicals have it right. Belloc and Chesterton were
willing to assign the central state more authority than would be prudent
to effect their distributist goals, but their goals were lofty. The more
limited degree of state regulation of the economy called for in the social
encyclicals seeks those goals without running the risk of creating a
socialist state in the name of distributism.
Capitalism &
Catholic Economics
John Sharpe
Dear Editor,
Congratulations to Mr. Fitzpatrick for his honest assessment of John
Clark’s article on Distributism for the Latin Mass Magazine.
Mr. Fitzpatrick is correctly hesitant regarding all of Mr. Clark’s
corrections, however he fails to recognize that it is not only Distributism,
but also the teaching of the Church, that allows for the intervention of
the State in order to control properly economic life.
Mr. Fitzpatrick’s analysis suffers, specifically, from two problems.
First, he uses the term “socialism” in a very vague way, linking
it simply with “excessive state power,” when, in fact, socialism really
means the ownership by the state of the means of production. Criticizing
Distributism because it allegedly paves the way for socialism assumes
that the Distributists are content to let the state own the means of
producing wealth in society - and they plainly aren’t. Distributists have
in mind the better distribution of property among citizens of a nation,
not its government.
The second error in Mr. Fitzpatrick’s critique perhaps flows from
his first. While he may not like Distributism because in Belloc’s specific
vision of it, the power of the state would be used to defend widely
distributed ownership, Mr. Fitzpatrick cannot therefore accuse it of
socialism unless he espouses another flawed assumption. That flawed
assumption is that the state which exercises its power to give a Dis-
tributist tone to society is inherently arbitrary and lawless, and could
thus at any moment unbearably infringe on the liberties of its citizens.
Such an argument can be reduced to an erroneous syllogism, as follows:
Distributism harnesses the power of the state to ensure
widely distributed ownership of the means of production.
Tyrants interested in eliminating civil liberties harness the
5
6 Capitalism & Catholic Economics
power of the state for their own ends. Thus, Distributism is
tyranny.
At the risk of belaboring the obvious, I will merely point out that
(1) the State which uses its power to defend the small owner of property
is inherently orderly and lawful, since the very proposition implies that
the State’s power is being used toward some pre-defined end; the task
of Distributism, practically speaking, is to figure out how to imbue the
men of government with these correct, noble principles; and (2) the
unregulated free market, which is often “settled for” as the only possible
alternative to the kind of State power which Belloc’s scheme would
involve, is no better than the allegedly unacceptable consequences of
Belloc’s scheme, insofar as the corporations which control the economic
playing field are under no obligation or compulsion - in fact the system
works in quite the opposite way - to think of the common good above
their own self interest. Almost without question the small owner is made
into a mere employee, following the dictates of “economic” priorities
such efficiency, conglomeration, and cost-reduction.
Regards and God bless,
John Sharpe
Dear Mr. Sharpe:
Your analysis of the “Chesterbellocian” vision is perceptive and
persuasive. My point was not that distributism would necessarily lead
to socialism, but only that the amount of power that would be have to
be given to the state to determine how much wealth any one individual
would have the right to own in Belloc’s scheme would very likely be
abused.
Sincerely,
James K. Fitzpatrick
The Justice of
Distributism: A
Reply to John Clark
Thomas Storck
The basic assumption of bourgeois civilization was that the
best interests of the world, the state and the community
could be served by allowing each individual to work out
his economic destiny as he saw fit. This is known as the
principle of laissez faire. As far as possible individual life is
unregulated by the state, whose function is purely negative,
like that of a policeman. The less the state does, the better.
It was not long until the evil of this principle manifested
itself. If every individual is to be allowed to work out his
economic destiny as he see fit, it will not be long until wealth
is concentrated in the hands of the few and the vast major-
ity are reduced, as Hilaire Belloc showed, to a slave state
Fulton J. Sheen
1
I
n the spring
2002 issue of The Latin Mass, Mr. John Clark pub-
lished an article called “Distributism as Economic Theory. I believe
that his arguments and conclusions are not consonant with either
the teaching of the Church or the thought of Hilaire Belloc, and I offer
this article to clarify what the Church says on this matter, as well as to
do justice to the memory of a great Catholic, Hilaire Belloc.
Mr. Clark rightly begins by defining his key term, “Capitalism.
Clark’s definition of capitalism runs thus: “Capitalism is an economic
system in which private property is seen as a morally defensible right.
Corollaries to this right include the right to free competition in the
1
Communism and the Conscience of the West (Indianapolis: Bobbs-Merrill, c.
1948) pp. 1617.
7
8 The Justice of Distributism
marketplace and the right to trade both domestically and internation-
ally. Furthermore, the profit motive is seen by capitalism as morally
defensible, and therefore there should be no legal limit as to the amount
of money that one can legally earn” (p. 30).
Clark contrasts this with Belloc’s own definition of capitalism as “a
state of society in which a minority control the means of production,
leaving the mass of citizens dispossessed.
2
Although I think Clark’s
definition is erroneous, Belloc’s definition also suffers from the problem
that it describes the nearly inevitable effects of capitalism rather than
the distinguishing note of the system. For a better definition, then, I
will turn to the 1931 encyclical of Pope Pius XI, Quadragesimo Anno.
In section 100, the Pope refers to “that economic system in which were
provided by different people the capital and labor jointly needed for
production.
3
In other words, the distinguishing mark of capitalism is
that some men own the means of production and hire other men to work
for them. These latter are the “mass of citizens” that Belloc claims do
not share in the ownership of the means of production.
Let us examine the deductions which Clark makes from his definiton
of capitalism. “Capitalism is an economic system in which private
property is seen as a morally defensible right. As we saw above, this is
not the distinguishing mark of capitalism, but it nonetheless makes a
correct point: private property is a morally defensible right. But what
Clark claims follows from this is false: “Corollaries to this right include
the right to free competition in the marketplace and the right to trade
both domestically and internationally. Though we are accustomed to
regarding free use of private property as inherent in our right to it,
this is not the case. In the Catholic Middle Ages private property was
upheld, but not the right of free competition. As we will see, traditional
papal teaching on property by no means upholds the notion that one
can do whatever one likes with one’s property.
Clark next turns explicitly to the question of property rights. He says,
2
Quoted by Clark on page 30, but taken from Hilaire Belloc, The Restoration of
Property (New York: Sheed & Ward, 1946) p. 19.
3
The original Latin speaks of the economic system “qua generatim ad commune
rei oeconomicae exercitium ab aliis res, ab aliis opera praestaretur. Acta Apostolicae
Sedis, vol. 23, no. 6, June 1931, pp. 209210. All citations from Quadragesimo Anno
are taken from the Paulist translation as published in Seven Great Encyclicals and
elsewhere.
Thomas Storck 9
“Although distributism claims to be the champion of private property,
it is actually antithetical to it” (p. 31). Clark tries to substantiate this
claim by focusing on the legal method that Belloc suggested in The
Restoration of Property ought to be used to bring about the existence
of a distributist society. In brief, Belloc’s suggested method of achieving
more widely distributed property was to institute a system of highly
graduated taxation so that those who owned concentrations of property,
for example, a chain of stores, would sell off their excess property.
There must be a differential tax on chain-shops, that is,
on the system whereby one man or corporation controls a
great number of different shops of the same kind. To control
two such may involve but a small tax, to control three a
larger one in proportion; and so on, with the curve rising
steeply until the ownership of, say, a dozen in the territory
over which the government has power becomes economically
impossible.
4
Now, is there anything morally wrong with such a scheme? Let us
consider the various charges which Clark brings against it. First of all,
he quotes various Renaissance Catholic theologians on the evils of unjust
taxation and on what he calls “state redistribution” of property. Unjust
taxation is, of course, ipso facto unjust. But the question here is whether
Belloc’s plan is unjust or not. To quote writers who inveigh against
unjust taxation without first establishing whether Belloc’s proposed
taxation is unjust, is to be guilty of what in logic is called a petitio
principii, that is, begging the question.
Nor does his quote from Pedro de Navarra help “Taxes can be
tyrannical . . . if one is taxed more heavily than others. . . (p. 32.)
for this writer was doubtless talking about two persons in the same
circumstances being taxed at different rates.
5
More importantly, we
must note that the context of all the quotes from these Renaissance
theologians was their objections against the absolute monarchies of the
4
The Restoration of Property, p. 69.
5
Clark takes his quote from Alejandro Chafuen’s book, Christians for Freedom:
Late-Scholastic Economics (San Francisco: Ignatius, c. 1986). This source does not
shed any further light on the context of the quote, but it is surely absurd to suggest
that de Navarra believed that it was unjust for a rich man to be taxed more heavily
than a pauper.
X The Justice of Distributism
time instituting excessive taxation for the support of the king and his
court. But in fact, the very aim of Belloc’s taxation was that no one
would ever have to pay the tax at all! The entire aim of the taxation
scheme to institute distributism was that people would not accumulate
property in such amounts that they would have to pay the highly
progressive taxes that accompanied the ownership of large amounts of
certain kinds of property. The denunications of the theologians that
Clark instances are simply beside the point.
6
Moreover, Belloc himself was against high taxation: “High taxation
is incompatible with the general institution of property. The one kills
the other. Where property is well distributed resistance to big taxation
is so fierce and efficacious that big taxation breaks down.
7
This difference in attitude toward taxation flows from the different
ways property is regarded in a distributist and in a capitalist society.
In the former, property and all external goods are considered necessary
precisely because they are necessary for the welfare and support of the
family. It is the decent support of the family that is sought, not the
maximization of income. Thus property will be so intimately connected
with a man and his family, that he will have a fiercely protective attitude
toward it and resist high taxation.
8
But under capitalism, property is
viewed simply as something with a money value, which is to be sold if
a good price comes along. And although capitalists no doubt dislike
paying taxes also, if one is thinking solely of money values, it often
makes good business sense simply to write off high taxes as necessary
costs of doing business.
9
6
Moreover, Clark presumes that these Renaissance theologians have some specially
weighty authority in theology. But this is not the case. In comparison with papal
teaching or with the teaching of St. Thomas Aquinas, these Renaissance theologians
have no more authority than any other group of theologians. In no way can their
opinions be equated with what Clark calls “the traditional teaching of the Church”
(p. 30).
7
The Restoration of Property, p. 119.
8
Pope John Paul II, in Centesimus Annus, speaks of the purpose of private
property as “one’s personal development and the development of one’s family” (no.
6).
9
I should point out here that no one in a distributist society would be forced
to become an owner of productive property. Doubtless some would remain in the
position of employee. But the employer/employee relationship would no longer be
the usual economic mode of society. The characteristic mark of a distributist society
would be widespread ownership of productive property, even if not everyone chose
Thomas Storck E
Next let us consider Clark’s charge of government “redistribution” of
property. ‘Redistribution of the means of production’ is an economic
fallacy” (p. 32) Clark avers. But distributism, as sketched by Belloc,
has absolutely nothing to do with government acquiring, distributing or
redistributing any property at all. Private owners, aware of the coming
institution of a distributist system of taxation, would be free to sell off
their property to any other private owner they chose. The government
would not be involved in such transactions at all. One may support or
oppose such a system, but to call it “redistribution” by the government
makes no sense at all.
In order to evaluate the justice or injustice of Belloc’s proposals, we
must next look at Clark’s statements about property rights and the
question of property ownership.
Clark quotes from Thomas Aquinas’s Commentary on the Politics of
Aristotle: “It is a good thing that each one shall enlarge his possessions
more, applying himself to them more carefully as being his own” (p. 33).
Thomas is here summarizing and expanding upon Aristotle’s refutation
of Plato’s argument for the community of goods, i.e., for ownership
of all property in common, such as Plato advocated in his Republic.
The full sentence as translated from the Latin says, “Another good is
that each one will multiply his possession more, applying himself to
it more carefully since it is his own.
X
Thomas, following Aristotle, is
simply pointing out that, generally, one will take more care of his own
property than of common property. However, one cannot deduce from
this any notion that the unlimited enlargement of a man’s possessions
is good either for himself or for society. Elsewhere Aquinas makes this
clear. In the same Commentary he writes, “Political economy, however,
which is concerned with the using of money for a definite purpose, does
not seek unlimited wealth, but wealth such as shall help towards its
purpose, and this purpose is the good estate of the home.
E
And in the
Summa Theologiae, he says, “. . . the appetite of natural riches is not
infinite, because according to a set measure they satisfy nature; but
to own such property.
X
“Aluid bonum est quod unusquisque magis multiplicabit possessionem suam
insistens ei sollicitius tamquam propriae. Commentary on the Politics, book 2,
lectio 4.
E
Quoted in Bede Jarrett, Social Theories of the Middle Ages (Westminster, Md.:
Newman Book Shop, 1942) p. 155.
10 The Justice of Distributism
the appetite of artificial riches is infinite, because it serves inordinate
concupiscence.. . .
10
Moreover, such quotations could be multiplied
from Catholic theologians. For example, although Clark claims that
St. Antoninus “viewed the profit motive as both moral and financially
essential” (p. 33), in fact that saint wrote: “If any merchant exercises
his art, not for some honest end, as the government of the family, the
profit of the country or other like one, but principally out of great greed,
he gains an infamous profit.
11
What does this have to do with Belloc’s distributism? Simply that,
if the purpose of riches is the support of a man and his family, then no
one has any right to more than is necessary for the decent support of
his family. If we ask ourselves why God has created man so that he
must engage in the activity of producing external goods, the answer
is obvious: economic activity is meant to serve the more important
aspects of life, our spiritual, family, social, intellectual and cultural lives;
it is not an end in itself. Therefore it is not necessarily a tyrannical
act if our political arrangements determine our use of property so that
we seek the amount of worldy riches necessary for a decent human life,
but not more. As St. Thomas pointed out further in his De Regno, the
aim of men living together in society is not riches but virtue.
12
And
he pointedly says, “If abundance of riches were the ultimate end, an
economist would be ruler of the people.
13
10
Summa Theologiae, I-II, q. 2, a. 1 ad 3.
11
Quoted in Joaquin Azpiazu, The Corporative State (St. Louis: Herder, 1951) p.
145.
12
“It seems moreover to be the purpose of the multitude joined together to live
according to virtue.. . . the good life moreover is according to virtue; the virtuous life
therefore is the purpose of the human community.” In the original, “Videtur autem
finis esse multitudinis congregatae vivere secundum virtutem.. . . bona autem vita
est secundum virtutem; virtuosa igitur vita est congregationis humanae finis. De
Regno, I, 14. (This work is also known as De Regimine Principum.)
13
“Si autem ultimus finis esset divitiarum affuentia, oeconomus rex quidam mul-
titudinis esset.” Ibid. Consider also these words of John Paul II in his encyclical
Centesimus Annus, in which he describes the mainly U.S. attempt in the years
after World War II to defeat communism by trumpeting the material benefits of
our economy. “Another kind of response, practical in nature, is represented by the
affluent society or the consumer society. It seeks to defeat Marxism on the level
of pure materialism by showing how a free-market society can achieve a greater
satisfaction of material human needs than Communism, while equally excluding
spiritual values. In reality, while on the one hand it is true that this social model
Thomas Storck 11
But what of man’s natural right to private property? Would not
such a notion of the state conflict with it? Mr. Clark derives his notion
of private property from Tony Honore, professor of law at Oxford
University (p. 31), who is not a Catholic theologian. But Pope Pius XI,
in his encyclical Quadragesimo Anno thought otherwise. He rejects both
“individualism” and “collectivism” but clearly states that ownership has
a “twofold aspect. . . which is individual or social accordingly as it regards
individuals or concerns the common good. Therefore, “Provided that
the natural and divine law be observed, the public authority, in view
of the common good, may specify more accurately what is licit and
what is illicit for property owners in the use of their possessions.
14
We
do not have a right to do whatever we may please with our property.
Thus distributism does not violate “the fundamental right of private
property as traditionally taught by the Church” as Clark charges (p.
31). Rather it attempts to establish man’s right to private property on
a firm foundation, private property as the necessary means of support
for the individual and his family.
Clark quotes St. Thomas’ De Regno on the matter of distribution of
income to the effect that “an architect who plans a building is. . . paid a
higher wage than is the builder who does the manual labor under his
direction” (p. 32).
15
No one disputes this. Belloc is not arguing for
equality of property or equality of incomes. But the Catholic tradition
by no means sanctions just any distribution of income. Pius XI, for
example, in the encyclical already quoted, makes this remark about
Catholics at the close of the nineteenth century and their opinions
on the need for social reform: “Such also was the opinion of many
Catholics, priests and laymen, who with admirable charity had long
devoted themselves to relieving the undeserved misery of the laboring
classes, and who could not persuade themselves that so vast and unfair a
distinction in the distribution of temporal goods was really in harmony
with the designs of an all-wise Creator.
16
shows the failure of Marxism to contribute to a humane and better society, on the
other hand, insofar as it denies an autonomous existence and value to morality, law,
culture and religion, it agrees with Marxism, in the sense that it totally reduces man
to the sphere of economics and the satisfaction of material needs” (no. 19).
14
Quadragesimo Anno, sections 45, 46 and 49.
15
This is in De Regno, I, 9.
16
Quadragesimo Anno, section 5. Emphasis mine.
12 The Justice of Distributism
No distributist desires equality of income or property. However,
consider these figures on “the ratio of the pay a CEO makes versus that
earned by a factory worker. In the late 1960s, it was 25 to 1 and as
recently as 1980 it was 42 to 1. By 1999 it had risen to a whopping
419 to 1.
17
One may perhaps be allowed the opinion that a 25 to 1
ratio was quite sufficient to safeguard the incentives that entrepreneurs
apparently require.
The philosophy of property that capitalism contains and promotes is
not the philosopohy of property that traditional Catholicism promotes.
Property as the support for a man and his family, yes; but not the
unlimited acquisition of property, so that a society is kept in turmoil by
economic dislocations, plant closings, and so that individuals themselves
are corrupted by what Holy Scripture calls the “root of all evils” (I
Timothy 6:10). Traditional Catholics, when they consider economic
questions ought to consult the encyclicals and other writings of the
Popes, especially Leo XIII, Pius XI and Pius XII, and the works of St.
Thomas. There they will find a rich teaching on the proper place of
material wealth, and it will not be a teaching consonant with capitalism,
whose founders and theorists were eighteenth century Deists openly in
revolt against the traditional Christian conception of society.
18
17
Elisabeth Lasch-Quinn, “Markets and Morals,” The Washington Times, Sunday
July 21, 2002, p. B8.
18
For a good account of this, by someone who favors the new capitalist order, see
Ralph Lerner, “Commerce and Character: the Anglo-American as New-Model Man”
in Michael Novak, ed., Liberation South, Liberation North (Washington: American
Enterprise Institute, c. 1981) pp. 2449.
Capitalism and
Catholic Economics
John Sharpe
John Clark vs. Some Surprising Opponents
When men have become wage slaves they think in terms of income. When
they are economically free they think in terms of property.
We propose to re-establish the peasant, the craftsman and the small (and
secure) retail tradesman.
Hilaire Belloc
I
n the pages of the
Latin Mass recently, Mr. Clark launched an
attack on Distributism, maintaining rather that capitalism is the
economic system that conforms to the teaching of the Catholic
Church. In what follows, we will attempt to demonstrate that Mr.
Clark’s criticism of Distributism is either misplaced or unfounded, and
that his praise of capitalism is by no means consistent with the Church’s
attitude, or that of Her greatest thinkers on economic questions.
Mr. Clark bases his critique of Distributism on what we may classify
as two categories of observations; the first are attacks on Belloc’s theory
which are based on an incorrect or inaccurate representation of that
theory, and the second are attacks on the Distributist vision which are
themselves based on erroneous principles.
* * *
Misrepresentations of Belloc’s intent: a new theory.
The first of Mr. Clark’s arguments that can be classified as misrepresen-
tations of Belloc’s theory is the assertion that Distributism is a “new
theory” to which the world was introduced by Belloc with the 1936
publication of Restoration of Property. Actually, Belloc used the term
13
14 Capitalism and Catholic Economics
Distributism in his 1924 Economics for Helen; and therein he places
Distributism in historical context by admitting that “Distributism” is
the rather awkward term coined to explain what had been, throughout
the history of the civilized West, a common phenomenon: the existence
of widely distributed productive property, in the form of land or a trade
or craft and the tools that go with it, privately owned and worked by
individual families for the provisions of their basic needs and necessities.
In the Restoration he explains that the transformation of society into
its present form, one in which the ownership of productive property is
concentrated in relatively few hands, began with
the religious revolution of the sixteenth century [that]
had destroyed the ancient walls which had protected the
freedom of the human city.
The first great blow was the destruction of the Guilds,
coupled with the seizure of collegiate property in all countries
transformed by the Reformation, but most thoroughly and
universally in England. This was followed up in England
by a series of positive enactments of which that one called
the Statute of Frauds was perhaps the chief instrument in
destroying the English land-owning peasantry. The great
efflorescence of Capitalism came after all that bad work had
been done, and was only made possible by that bad work.
Prior to the publication of the Restoration, in his 1925 pamphlet
entitled “The Catholic Church and the Principle of Private Property,”
he makes reference to the need to remedy industrial capitalism with
the widespread distribution of property. Meanwhile, G.K. Chesterton
had by then been making references to the need for a more widespread
distribution of property for over 15 years. And in making such references,
Belloc and Chesterton were simply following in the footsteps of the
great Catholics of the Catholic Social Movement
1
and of Pope Leo XIII
who, in Rerum Novarum (1891), hoped that there would come a time
when working people could “look forward to obtaining a share in the
land“ (47).
1
Cf. Fr. Edward Cahill, S.J., Framework of a Christian State, Chapter 25,
Article 2; see also Charles Devas, Political Economy (1891), Chapter 7.
John Sharpe 15
The above should be alone sufficient to refute Mr. Clark’s statement
that Distributism is “inconsistent with the traditional teaching of the
Church. But let’s continue our look at the specific arguments.
Misrepresentations of Belloc’s intent: capitalism
defined.
Mr. Clark objects to the way in which Belloc defines capitalism, as “a
state of society in which a minority control the means of production,
leaving the mass of the citizens dispossessed. When Belloc says that
the mass of citizens are dispossesed, he is simply referring to the fact
that most citizens sustain themselves based not upon their own labor
applied to what they themselves own, but rather upon what they can
earn in terms of wages, by hiring themselves out to work on another’s
capital. This definition, which Mr. Clark calls “simplistic,” happens
also to be that of Pius XI: “that economic system, wherein, generally,
some provide capital while others provide labor for a joint economic
activity.
2
Misrepresentations of Belloc’s intent: radical equal-
ity.
Mr. Clark then suggests that the Distributist scheme would make it
impossible for “any one individual to have much more than any other.
This is simply false. Were Distributism a revolutionary “leveling” and a
socialistic denial of inequality, it would be justly deserving of blame. But
the persuasiveness of Mr. Clark’s critique is based upon the fact that
most of us are at the mercy of his representation of Belloc’s position,
not having handy a copy of the actual text of Restoration of Property.
A look at that text, however, dispels the myth that Distributism is an
egalitarian, revolutionary and quasi-socialist scheme.
Firstly, Belloc says clearly, in a passage which Mr. Clark must have
overlooked, that a variety of levels of ownership obviously form part of
the complexity of normal and healthy human society:
It cannot be too much repeated and insisted upon that the
ideal of property does not comport equality in property
2
Quadragesimo Anno, 100.
16 Capitalism and Catholic Economics
that mechanical ideal is contradictory of the personal quality
attaching to property. It is not a bad but a good thing that
rents, the dwelling house, the income from investment, and
the rest, should be upon various scales, for such variety cor-
responds to the complex reality of human society (emphasis
mine).
3
Secondly, Belloc desires not to equalize wealth, but to protect the
small farmer, the family landowner, the small craftsman, and the small
retail trader. He thus advocates a scheme of “Differential Taxation (1)
against chain stores; (2) against multiple shops; (3) against large retail
turnover,” in order to do just that. In no wise does Belloc propose
(nor would his scheme produce) a system which which would make it
impossible for “any one individual to have much more than any other.
In assuming that this is the case, Mr. Clark confuses the issue
between wealth used for production (capital, financial or that in land,
tools, machinery, etc.) and wealth which is immediately consumed in
meeting the needs of human life. If a man, by his initiative, ingenuity,
or pure luck, is able to have a business that is more successful than the
next, nothing will prevent him from enjoying the added benefits of his
effort or good fortune, insofar as those benefits are reflected in increased
profits, higher personal income, and more loyal patrons which will
ultimately procure for him more land, a nicer home, better food, more
ample furnishings, etc. But the employment of that increased wealth
in expanding, Home-Depot style, to the point where that wealth is
being used to shut down the independent enterprises, making them
dependent upon him or eliminating them completely such a course
would be discouraged by Belloc’s scheme of taxation. Belloc’s program
is not a radical redistribution of wealth “rivaled only by Karl Marx
and Leon Trotsky,” despite the useful emotional reaction which such an
assertion provokes. It is not a limit on natural inequalities, but a limit
on unnatural concentration.
3
Mr. Clark must have overlooked a number of passages in this regard, for Belloc
makes the point several times: “. . . the Proprietary (or Distributist) State neither
can, nor should be, complete; for it cannot of its nature be mechanical. There will be
many comparatively poor, and some comparatively rich. There will presumably be
some proportion of dispossessed. But Property, and its accompaniment, Economic
Freedom, will be the mark of society as a whole.
John Sharpe 17
Misrepresentations of Belloc’s intent: taxation.
Under this heading we should briefly mention Mr. Clark’s assertion,
based on various condemnations of taxation culled from the writings of
the Spanish Scholastics, that the greatest economic minds of the Church
would have opposed Belloc’s scheme to safeguard the small business
man and small landholder. Consider three points in response:
(1) The tradition of the Church has always been to support a widely
distributed property,
4
and there is no reason to suspect that the Spanish
Scholastics would have opposed the taking of measures to safeguard or
restore that distribution. Those measures are in no way “confiscatory,”
as Mr. Clark claims, using a word which we may suspect he learned
from Belloc in the very section where he condemns excessive taxation!
(2) As we will see later on, the Church, in her magisterial teaching,
has always granted to the state the power to regulate private property,
and to take necessary steps to ensure that it is defended.
(3) The citations produced by Mr. Clark which allegedly prove that
Belloc’s scheme would have been repudiated by the Spanish Scholastics
actually do nothing of the sort: they merely imply that, all things
being equal, a sovereign cannot licitly tax one citizen more than others.
The context obviously assumes a case in which a king might try to
eliminate his political enemies by taxing them out of existence. Such a
circumstance has absolutely nothing to do with Belloc’s proposals, and
it merely constitutes a straw man, through which Mr. Belloc may be
conveniently (if ineffectively) refuted. For Belloc himself, in Restoration,
condemns excessive taxation; he says that the institution of widely
distributed property is itself a barrier against high taxation; and that
high taxation is itself a tool which may be used to destroy widely
distributed property:
High taxation is incompatible with the general institution
of property. The one kills the other. Where property is
well distributed resistance to big taxation is so fierce and
efficacious that big taxation breaks down.
4
Cf. Cahill, Chapter 17, Article 2: “. . . the ideal, at which great statesmen from
Solon of Athens to Leo XIII and Pius XI have aimed, is a State made up principally
of flourishing and self-contained communities of small proprietors, and especially of
small farmers or peasants. See also the Catholic Encyclopedia, s.v., “Agrarianism.
18 Capitalism and Catholic Economics
Misrepresentations of Belloc’s intent: Socialism.
Mr. Clark elsewhere accuses Belloc of advocating Socialism, by referring
to a statement which reads as follows: “State ownership is better, of
course, than ownership by a few very rich individuals. But Mr. Clark
commits two serious errors here: (1) he takes Belloc’s comment out of
context, and (2) he ignores the rest of Belloc’s writing (both the text of
Restoration and his other works) in order to make his point.
(1) It will be sufficient to point out that Belloc makes the above-
noted statement in reference to a specific, limited, narrow circumstance:
he is discussing whether or not it is possible to have distributed property
in the case of that “economic unit which has, from the nature of the
instrument used, to be worked on a large scale; the classical example is
the railway system. The context of Belloc’s statement the points
he makes before and after the single, isolated sentence in question
reveal Belloc’s true meaning: he is clearly suggesting that ownership by
the state of a very large enterprise (such as a national postal service,
a railroad, or such like) is to be considered only as a last resort ( a
last resort sanctioned by the Church
5
), and that ownership by private
shareholders or a Guild is obviously to be preferred:
In those cases where the instrument is necessarily very
expensive we may, as I have said, adopt one of two methods:
we may either promote the ownership of it into shares,
the proper division of which and the saving of which from
irresponsible control will be later discussed; or we may accept
the principle of communal ownership, whether by a Guild or
by the State, but under the general proviso that ownership
by the State is better avoided where possible, because the
private citizen has no control over the State as he has over
the Guild.
State ownership is better, of course, than ownership by
a few very rich individuals, or even the ownership by many
small shareholders who are at the mercy of a few rich ones,
as they are under our English company law, but there is
always the danger in State ownership that the men who
work for the State-owned instrument will turn, if they are
5
Quadragesimo Anno, 114.
John Sharpe 19
not turned already, into wage slaves, without other support
than the weekly provision made for them by their master
the State.
It could not be clearer that Belloc is a mile away from advocating
Socialism, as Mr. Clark scandalously suggests.
(2) Belloc’s condemnations of Socialism, both in Restoration and
elsewhere, should be well-known. They should be so well known as to
make Mr. Clark think twice before making such an accusation. It suffices
to point out that Belloc speaks of the “Socialist fruit” of capitalism
in Restoration with the same condemning language that he uses when
speaking of capitalism itself, and he makes his position perfectly clear
in any number of other works, not the least of which is his pamphlet
“The Catholic Church and the Principle of Private Property.
6
What he
thinks of Socialism was expressed therein with almost Chestertonian
cleverness; nonetheless his meaning remains perfectly clear:
The short-cut to the relief of humanity from Industrial Cap-
italism is Socialism, that is, the denial of Private Property,
especially in the means of production. So the short-cut out
of the horrors of a false religion (especially if it be a cruel
and base religion such as Puritainism) is materialism. So
the short-cut out of an unhappy marriage is divorce. So the
short-cut out of an unhappy life is suicide.
Misrepresentations of Belloc’s intent: means of
production.
Mr. Clark suggests that Belloc’s vision would dictate that society consist
of “millions of family businesses,“ and that his plan calls for a “redis-
tribution of the means of production“ which ignores the fact that not
everyone alike possesses the same initiative and entrepreneurial skill.
To so suggest is to miss the essential point.
As we have noted above, Belloc is not calling for some radical scheme
of leveling, some smashing of factory equipment and handing out of
corporate infrastructure to impoverished families in depressed economic
areas. Nor does he deny, as Mr. Clark implies, that managers and
6
Published by The Catholic Truth Society, London, 1925.
1X Capitalism and Catholic Economics
leaders of enterprises which require above-average skill, effort, and
energy are entitled to a larger income; such a notion remains merely
a question of wages in exchanged for labor, and has little to do with
an examination of how productive property may be better distributed.
It is obvious (certainly to Belloc) that higher wages are justly paid
for more complicated, more demanding, or more risky work. As a
Distributist, however, Belloc is addressing himself to the problem of
the common lot of men, which is to work for someone else for a wage,
rather than for themselves for their sustenance. He is addressing the
problem which Pius XII called “economic dependence and slavery. He
is calling, primarily and principally, for the defense, the support, and
the restoration of the craftsman, the small farmer, the small retailer.
He is calling for what numerous Americans casually yet frequently hope
for as consumers: a local coffee shop, as opposed to a Starbuck’s; a
family general store, rather than a 7-11; a local video shop, rather than
“Blockbuster”; a personal hardware store, rather than Home Depot. And
he is calling for what they should wish for as producers: the ability to
depend upon themselves, their own capital, and their local community
for their livelihood, and not solely upon their employers or the state.
In Belloc’s defense, he does in fact reserve several pages for the
treatment of how to handle large enterprises, which, by their very
nature, would require both large amounts of capital and the direction
of capable men. But his vision of how those capable men manage their
respective industries is at issue, not what kind of wage they should
receive for their trouble. His vision is a Catholic vision, not a social-
Darwinist vision. Those large operations, he maintains, following the
teaching of Leo XIII, Pius XI, and Pius XII, must be run in a manner
consistent with the common good, and must serve the community by
producing necessary commodities, in exchange for a fair profit, while at
the same time respecting the proper economic order, which the Church
has declared to be a wide distribution of productive property which
helps to constitute families in a requisite degree of economic freedom
and security. All things being equal, from a Catholic standpoint there
is no degree of “business savvy,” “entrepreneurial vision,” or “economic
initiative” that gives a man who runs a huge corporation the right to
eliminate another small business, bearing in mind that such a business
may be the means whereby one or several men, as business owners,
John Sharpe 1E
support their families without being forced necessarily to work for
someone else in exchange for a wage.
In suggesting that not everyone is capable of turning raw materials
into actual products, Mr. Clark must obviously imagine that Belloc’s
scheme applies exclusively to the question of who owns and manages
factories, industry, and large-scale corporate life (which it does not),
rather than how those operations are managed and how characteristic
they are of society (in comparison with the prevalence of smaller, local,
more personal economic activities). Furthermore Mr. Clark must be at
a loss to explain how it is that Western Europeans, before the great age
of industry and business conglomeration, managed to feed and clothe
themselves, unable as the mass of them were to “turn raw materials
into actual products.
* * *
There remain to address three arguments advanced by Mr. Clark against
Distributism. We may classify them as follows: it is anti-competitive, it
restricts the use of private property, and it is in some fashion injurious
to the profit motive in economic life. These are all, in general, and
with room for exception and qualification according to circumstances,
admittedly correct notions with regard to Distributism. The problem
with Mr. Clark’s position is that these aspects make Distributism
conform more, rather than less, to the teaching of the Church regarding
economic life. Perhaps that problem stems from unfamiliarity with
truly Catholic economic ideals a problem which we hope somewhat
to remedy with what follows.
Catholic Economic Doctrine: free competition and
the use of private property.
Mr. Clark suggests that capitalism, as an economic system, implies
also a regime of free competition between economic enterprises. It may
be surmised that the principal way in which Distributism militates
against that notion of “free enterprise“ is indicated later on in his article
where he examines the notion of private property and its use. Taking
these two ideas together, then, we may thus summarize his criticism of
Distributism in this regard: “the institution of private property includes
20 Capitalism and Catholic Economics
the notion that private property may be used without restriction by the
owner of the property; Distributism destroys that notion by limiting the
way in which owners may use their property, and it thereby eliminates
(to some degree) the capitalist scheme of free competition.
7
Mr. Clark asserts that the Distributist ideal of private property is
“actually antithetical” to it, because it limits how private property may
be used. He then cites for us the definition of a modern professor of
law, who maintains that private property includes “the right to use or
not use the private property.
(1) Such a statement is so vague as to be almost useless. Should we
assume that the professor means that property implies an unrestricted
right to its use? Such an assertion would be surprising; one would not
find it upheld in even the most liberal of societies. I am not allowed to
commit murder with a knife that I own, simply because I own it, and am
therefore entitled also to its use. Human laws and human institutions
are limited by any number of considerations, both moral and legal, and
sometimes both (as in this example). If it is correct, therefore, that
even the professor would admit that the use of property may be limited
in some cases, then the logic of Mr. Clark’s position can be dismissed
as flawed. It remains solely to consider whether or not the Distributists
place such a degree of restriction on the use of private property that,
according to Mr. Clark, “private ownership ceases to exist.
(2) It is unfortunate that not everyone has a copy of Belloc’s fine
book, because it is impossible in the short space of this article to
accurately detail what kind of scheme he proposes. We have noted in a
few places that he proposes to defend the small landowner, the family
farmer, the small craftsman, the small retailer, from being eaten up
by the larger. What he is proposing is the checking of competition to
the extent necessary to reverse the current trend: the tendency under
a regime of free competition a tendency which cannot honestly be
denied towards the growth of bigger and bigger economic enterprises,
at the expense of the smaller ones. Such a proposal by no means implies
a stifling restriction on the use of property. Such a restriction does
7
Had Mr. Clark possessed either the space, or the inclination, he no doubt could
have detailed for us the other standard objections against an economic system that
limits competition. Those objections can be dealt with in another forum, at a later
date. Let it suffice for the present to concern ourselves with the objection he actually
described.
John Sharpe 21
not even imply a limit on the amount of money that one can make,
despite Mr. Clark’s assertion to the contrary, through the enterprises
and means of production that one already possesses. What it does imply
is a restriction of the ability of a businessman to employ amassed wealth
in an effort to eliminate his competitors, through outright purchase,
or through “free market” competition. He is discouraged, under a
Distributist program, from transforming without their truly free
consent his neighbors into his employees.
(3) In conjunction with this objection Mr. Clark makes the rather
heated assertion that traditional Catholic teaching is “trampled upon“
by Distributism. Is it really?
Belloc said “that unchecked competition must ultimately produce
the rule of ownership by a few. So did Pius XI:
This concentration of power and might, the characteristic
mark, as it were, of contemporary economic life, is the fruit
that the unlimited freedom of struggle among competitors
has of its own nature produced (emphasis mine).
8
Belloc thought that free competition was not sufficient to regulate
economic life in a way that allowed the masses to be secure in their
property. He thus refers, in Restoration, to the historical fact that
mankind
has instinctively safeguarded itself against [the danger of
ownership by a few] by the setting up of institutions for
the protection of small property, and that these institutions
have never broken down of themselves, but always and only
under the conscious action of a deliberately hostile attack.
The Popes also admitted that competition was not sufficient in
regulating economic life; Pius XI said that “the right ordering of eco-
nomic life cannot be left to a free competition of forces. For from this
source, as from a poisoned spring, have originated and spread all the
errors of individualist economic teaching.
9
And Pius XII observed that
“the demands of competition, which is a normal consequence of human
liberty and ingenuity, cannot be the final norm for economics.
X
8
Quadragesimo Anno, 107.
9
Quadragesimo Anno, 88.
X
Address to International Foundry Congress, September 28, 1954.
22 Capitalism and Catholic Economics
Belloc proposed to use the legitimate power of the State to regulate
economic life according to the common good. Pius XI, following Leo
XIII, also maintained that the role of the State in economic life was to
foster the common good.
With regard to civil authority, Leo XIII, boldly breaking through
the confines imposed by Liberalism, fearlessly taught that government
must not be thought a mere guardian of law and of good order, but
rather must put forth every effort so that “through the entire scheme
of laws and institutions. . . both public and individual well-being may
develop spontaneously out of the very structure and administration of
the State.
E
As we noted above, it is not only Belloc who sees the widespread
ownership of property as an aspect of the common good, which the
authority of the state not only may but must foster. Leo XIII hoped
for a time when working people could “look forward to obtaining a
share in the land;”
10
the Catholic Encyclopedia, under the heading
“agrarianism,” refers to not only the “uniform teaching and tradition of
the Catholic Church on the lawfulness of private ownership of income-
yielding property, whether it be named ‘land’ or ‘capital,’” but also to
the fact that Leo XIII “urged the diffusion of property as the mean
between Socialism and Individualism, and that where possible each
citizen should dwell secure in a homestead which, however humble, was
his own. And even more recently, Pius XII has taught that
The dignity of the human person. . . requires normally as a
natural foundation of life the right to the use of the goods
of the earth. To this right corresponds the fundamental
obligation to grant private ownership of property, if possible,
to all. . . ; and “legislation. . . must prevent the worker, who
is or will be a father of a family, from being condemned to
an economic dependence and slavery which is irreconcilable
with his rights as a person. Whether this slavery arises from
the exploitation of private capital or from the power of the
state, the result is the same.
11
E
Quadragesimo Anno, 25.
10
Rerum Novarum, 47.
11
Christmas Message, 1942.
John Sharpe 23
Finally, the Church, in a doctrine which Pius XI called “age-old,”
has always distinguished between the ownership and the use of private
property; the former must be held as inviolable, and the latter as subject
to the common good.
It follows from what We have termed the individual and at the same
time social character of ownership, that men must consider in this matter
not only their own advantage but also the common good. To define
these duties in detail when necessity requires and the natural law has
not done so is the function of those in charge of the State. Therefore,
public authority, under the guiding light always of the natural and
divine law, can determine more accurately upon consideration of the
true requirements of the common good, what is permitted and what is
not permitted to owners in the use of their property.
12
Therefore to regulate private property, in a scheme such as that
proposed by the Distributists, is not to destroy the institution of private
property, but to ensure both that it is implemented in society in a way
consistent with the common good, and that the widest possible number
can enjoy its fruits. To so regulate that institution is not to destroy it,
but to preserve it:
Yet when the State brings private ownership into harmony
with the needs of the common good, it does not commit
a hostile act against private owners but rather does them
a friendly service; for it thereby effectively prevents the
private possession of goods, which the Author of nature in
His most wise providence ordained for the support of human
life, from causing intolerable evils and thus rushing to its
own destruction; it does not destroy private possessions, but
safeguards them; and it does not weaken private property
rights, but strengthens them.
13
Catholic Economic Doctrine: profit.
The last of Mr. Clark’s objections which bears refutation is the accu-
sation leveled at the Distributists that they would remove the “profit
motive” from economic life, thus bringing it to a halt. He maintains
12
Quadragesimo Anno, 49.
13
Quadragesimo Anno, 49.
24 Capitalism and Catholic Economics
that Belloc’s philosophy is founded on the notion that “men must be
legally restrained from owning more property than their families need for
support,” and that such a notion has been “rejected by great traditional
thinkers of the Church.
The first problem with such a position is that no where does Belloc
condense his scheme to such a neat and tidy proposition. We have
sufficiently seen, up to this point, that Belloc is seeking to protect the
small economic enterprise from ruin at the hands of the larger ones. His
purpose is not to restrict the amount of wealth that one can possess,
but rather the amount of productive property one can employ when
that employment directly affects the ability of the smaller operation
to survive. It is crucial to bear in mind the distinction, which we have
examined above, between the simple possession of property and its use
in the public sphere a distinction which Mr. Clark seems determined
to forget.
A second distinction that we ignore at our peril is the one between
wealth for consumption, such as food, clothing, luxuries, and “capital”
(generally speaking) destined for personal use (such as land, automobiles,
etc., which are not rented but used), and the wealth of capital (strictly
speaking), which is employed in order to produce more wealth and
generate income. It is the latter that is used by the great corporations
to “get ahead” and defeat the small businessman, and it is the latter that
must be regulated if a widespread distribution of ownership of income-
generating property is to survive. No one is suggesting that it is sinful to
be rich (though it may be noted in passing that, compared to warnings
and condemnations, praise of the rich is rather scanty in both Scripture
and the writings of theologians); what the Distributists condemn is a
use (intentional or otherwise) of riches which deprives smaller property-
owners of their ability to generate income without having to work for a
wage. Regardless of whether it is permissible or praiseworthy to be rich,
we would be at a complete loss to explain, without understanding this
real nature of Belloc’s objection, why Leo XIII and Pius XI (to name
just two) denounced so vehemently the “immense power and despotic
economic dictatorship [that] is consolidated in the hands of a few.
14
A final note on this last of Mr. Clark’s objections to Distributism is
that the “profit motive,” as it is imagined by modern economists, is a
14
Quadragesimo Anno, 105.
John Sharpe 25
concept which is hardly acceptable to Catholic theologians.
We do well to glance quickly at the teaching of St. Thomas on the
role of material goods in man’s life. First, they are ordained to a specific
end, which is the upkeep of himself and his family: “Temporal goods
are subjected to man that he may use them according to his needs, not
that he may place his end in them.
15
Furthermore, the fulfillment of
man’s needs does not serve its own purpose but rather facilitates the
practice of virtue, which itself is ordained to the attainment of Heaven:
“That a man may lead a good life, two things are required. The chief
requisite is virtuous action. . . The other requisite, which is secondary
and quasi-instrumental in character, is a sufficiency of material goods,
the use of which is necessary for virtuous action.
16
Based upon these principles, St. Thomas explains the licit motives
for commercial activity as follows:
The other kind of exchange is either that of money for
money, or of any commodity for money, not on account of
the necessities of life, but for profit. . .
[this] gain which is the end of trading, though not im-
plying, by its nature, anything virtuous or necessary, does
not, in itself, connote anything sinful or contrary to virtue:
wherefore nothing prevents gain from being directed to
some necessary or even virtuous end, and thus trading be-
comes lawful. Thus, for instance, a man may intend the
moderate gain which he seeks to acquire by trading for the
upkeep of his household, or for the assistance of the needy:
or again, a man may take to trade for some public advantage,
for instance, lest his country lack the necessaries of life, and
seek gain, not as an end, but as payment for his labor.
17
The “profit motive” is licit, then, only insofar as the motive for the
profit is the becoming upkeep of a household, the support and care of
the poor, or as a just wage in exchange for a productive service rendered,
which is good in itself.
15
Summa Theologica, II, ii, Q. 55, Art 6, ad 1.
16
On Kingship, I, xv.
17
II, ii, Q. 77, Art. 4.
26 Capitalism and Catholic Economics
Can it be honestly maintained that such a concept is the motive
that economists have in mind when they speak of “maximizing profits”?
That this is what Mr. Clark has in mind with his vague defense of the
“profit motive”?
No doubt the determination of what is necessary and what is exces-
sive in the upkeep of a household is largely a matter of conscience. No
doubt that many Catholics are satisfied with a reasonable wage, which
they then employ in the upkeep of their households. But the legitimate
increase in income and property which results from the practice of
an honest trade is not what Distributism seeks to limit. Rather it is
the massive concentration of capital and financial wealth, that results
from unrestricted economic competition,
18
which Distributism seeks
to control. It is the personal craft, the independent retailer, and the
homestead which Distributism seeks to defend, by placing Home Depot,
WalMart, and agri-business under reasonable economic control. If such
controls militate against the “profit motiveu” of modern economic man,
then perhaps economic man must reevaluate his motives in light of the
teaching of the Church.
***
Distributism is broadly thought of, by its advocates, as an implemen-
tation of the Social Doctrine of the Church. It is so because it is a
program that is consistent with the natural law and, because, in the
final analysis, it will help man along the path to heaven rather than
throw him off it.
The essence of the Social Doctrine is that society is a means to an
end. The temporal common good the moral and material goods
of this life which it is society’s duty to protect and foster, serves
ultimately another end: the Eternal Salvation of men.
19
As a result,
every law, every custom, every ordinance of the earthly community
is salutary insofar as it makes man’s journey to heaven easier, and is
disordered whenever it makes that journey more difficult.
18
Both of which the Church has condemned, as we have seen.
19
“. . . civil society, established for the common welfare, should not only safeguard
the well-being of the community, but have also at heart the interests of its individual
members, in such mode as not in any way to hinder, but in every manner to render
as easy as may be, the possession of that highest and unchangeable good for which
all should seek” (Leo XIII, Immortale Dei (1885), 6).
John Sharpe 27
In light of that most important of all truths of Catholic Social
Doctrine, it should be easy to see that Distributism is consistent with
the Catholic economic vision insofar as it subordinates economic life
to the ultimate purpose of man’s life. It does not curtail the right of a
man to own and use his private property; its entire program is designed
to safeguard and defend that right, and to ensure that most if not all
I society are able to benefit from it. But defending private property
assumes that there is something to defend it against: which is the notion
that private property is an end in itself, to be amassed and multiplied
and owned without limit.
“The art of amassing wealth,” said St. Thomas, “which is solely
concerned with money, is infinite.
1X
Where that art is pursued for its
own sake, where it is governed by a “profit motive” which possesses no
built-in limit but is rather an end unto itself, it leads simply and directly
to yet further desire for wealth: “Hence he that desires riches, may
desire to be rich, not up to a certain limit, but to be simply as rich as
possible.
1E
The incarnation of that mentality is the modern economic
system which not only encourages (by its philosophy) the unlimited
acquisition of wealth, but sanctions (by its practice) an expanding field
of ownership by a few at the expense of widespread and distributed
ownership by many. It is this scheme of things that Distributism opposes,
and for which it offers a remedy. That by the Restoration of Property
to the non-owning masses it might also effect a restoration of economic
life in its proper place, subordinate to the real needs of man and to the
just decrees of God.
John Sharpe
9/6/2002
1X
Commentary on the Politics of Aristotle, v.
1E
II, i, Q. 30, Art. 4.
The Capitalist
Response
John Clark
I
would like to thank
Mr. Sharpe for his rebuttal to my recent
article in The Latin Mass Magazine. I would also like to take this
opportunity to say that I appreciate all of the many reviews that
my article has received. It is refreshing to know that so many Catholics
have such an interest in economics.
Seeing an attack on capitalism appear on the Internet is like hearing
a sermon on the evils of flying from the cockpit at 40,000 feet. Using
capitalist tools to spread anti-capitalist thought is a strange irony.
Though time will not reasonably allow an extensive point by point
rebuttal of Mr. Sharpe’s recent piece, I feel compelled to simply make
several observations in general.
I. The Greatest Minds of the Church
Mr. Sharpe begins his article with a very bold statement:
“his (Clark’s) praise of capitalism is by no means consistent
with the Church’s attitude, or that of Her greatest thinkers
on economic questions.
Sharpe’s entire essay revolves around one essential thesis: neither
the Church herself, nor her greatest thinkers on economic questions
have been supportive of capitalism. If his thesis itself breaks down, his
subsequent conclusions must be seriously questioned, since distributism
is, in essence, a form of anti-capitalism.
I will address this claim first.
I argue that the Catholic Church has been supportive of capitalism
from its origin, both in theory and in practice.
Practice.
As a matter of historical fact, capitalism almost literally
began in the backyard of the Vatican. As Raymond De Roover explains
29
2X The Capitalist Response
in The Rise and Decline of the Medici Bank: 1397-1494: “Modern
capitalism based on private ownership has its roots in Italy during the
Middle Ages and the Renaissance.
Even the premiere economic historian Joseph Schumpeter admits
that:
“by the end of the fifteenth century most of the phenomena
that we are in the habit of with that vague word Capitalism
had put in their appearance, including big business, stock
and commodity speculation and ‘high finance’. . .
Simply put, the Bellocian thesis that capitalism has Protestant
origins must be summarily rejected. It is significant that modern
capitalism found its origin in Catholic countries at the height of the
glory of Christendom, when faith still mattered. It is also significant
that the Medici Bank, which existed as both the figurative and literal
center of the capitalist world, had one customer that did business with
it more than any other: the offices of the Catholic Church. Though
there are other examples, this is probably the best one to show that
the Catholic Church actually endorsed the structures of capitalism in
practice for hundreds of years (and, not insignificantly, has continued to
support capitalistic enterprises without ceasing ever since). With this
in mind, it would be difficult to argue that the Church did not support
something that it was financially involved with for at least six hundred
years.
Theory.
Mr. Sharpe claims that my view of capitalism is inconsis-
tent with the greatest minds of the Church. After Mr. Sharpe claimed to
grasp the thought of the Church on economic questions better than my-
self, his reader might logically expect to see Sharpe quote some of them.
After all, there are quite a number of extremely influential Catholic
economists from whom he could have chosen. If the reader would please
forgive the length of the following, I would suggest that the greatest
Catholic thinkers on economic questions would include the following:
St. Bonaventure
(the thirteenth century doctor of the Church
who laid out an extensive moral application of property rights).
St. Albert the Great
(who developed a moral defense of the law-
fulness of business as well as establishing the “need theory of value”).
Pope Alexander III
(who provided an ethical foundation for the
John Clark 2E
formula of a “just price”).
Alexander of Hales
(thirteenth century Franciscan chairman in
theology at the University of Paris who, according to Odd Langholm,
produced the “first clear definition and denunciation of monopoly in
medieval theological literature”).
Henry of Ghent
(the thirteenth century master of arts at Paris
who provided the moral defense of personal financial investments for
future needs).
St. Bernardino of Siena
(fifteenth century scholastic whose trea-
tise De Contractibus et Usuris is considered by economists as perhaps
the first general survey of the field of economics).
Richard of Middleton
(thirteenth century regent master of arts
at the University of Paris whose theories on international trade are
considered by economists as breakthroughs).
Blessed John Duns Scotus
(fourteenth century Franciscan
whose commentaries on usury provided a pivotal understanding about
the nature of money itself).
Roland of Cremona
(thirteenth century regent master of arts
at Balogna, who wrote a 1400 page confessional manual addressing
questions of wealth and property).
St. Antoninus
(archbishop of Florence until 1459, whom Schum-
peter describes as “the first man to whom it is possible to ascribe a
comprehensive vision of the economic process in all its major aspects”).
Pedro Fernandez Navarrete
(seventeenth century scholastic ca-
nonist who outlined the financial and moral perils of high taxation,
whose theories pre-dated “The Laffer Curve” by almost four hundred
years).
Cardinal Cajetan
(sixteenth century general of the Dominican
Order whose theories on the morality of exchange and pricing in De
Cambiis provided a major ethical support for free market economic
principles).
St. Alphonsus Liguori
(eighteenth century doctor of the Church
whose theories on the nature of capital would shape economic ethical
theory henceforth).
Martin de Azpilcueta Navarrus
(sixteenth century Dominican
canon lawyer at Salamanca who developed the purchasing power parity
theory of exchange rates).
30 The Capitalist Response
Covarrubias y Leiva
(sixteenth century bishop of Segovia who
promoted the utility theory of value).
Francisco Suarez
(sixteenth century chair of theology at the Jesuit
College in Rome, who promoted the natural rights view of private
property).
Leonard Lessius
(seventeenth century student of Suarez who de-
fended the capitalist principle of the entrepreneur being paid much more
highly than other workers).
Laurentius de Ridolfis
(fifteenth century canon lawyer who pro-
duced the first detailed discussion of foreign exchange).
These are many, but certainly not all, of the names that constitute
the Church’s greatest thinkers on economic questions. In fact, there
was so much economic thought penned by these men that even secular
economists are now forced to admit that many economic laws and
theories previously attributed to others should rightly be attributed to
these Catholics. I want to emphasize that point because it is so often
missed. It is historically accurate to say that not only did the Catholic
Church produce some of the greatest economic theories of all time, but
economics as a science is forever indebted to these Catholic thinkers.
Though I am familiar with the writings of the above, I was only
afforded three thousand words for my Latin Mass Magazine article,
and within that word limit, I was able to cite fifteen references to
pre-medieval and medieval Catholic economists. Mr. Sharpe, on the
other hand, with over 6,000 words at his disposal, quotes exactly one
Catholic prior to Rerum Novarum.
Therefore, though Mr. Sharpe draws the conclusion that my thesis was
inconsistent with the greatest Catholic minds in the field of economics,
he cites virtually none of them in the effort to prove his case, or to
disprove mine.
The conclusion that the reader draws from reading Mr. Sharpe’s
piece is that Catholics only started writing about economics about a
hundred years ago. That is an unfortunate (and presumably unintended)
attack on the greatness of the Church thinkers. Instead, Sharpe relies
almost exclusively on Hilaire Belloc, Chesterton, and some of the papal
encyclicals.
Incidentally, Chesterton and Belloc could only be referred to as
economists in a non-scientific sense. To my knowledge, neither of them
John Clark 31
had any formal training in economics; neither has any economic law at-
tributed to them; and both of them are admitted former socialists. That
is not to say that they did not have anything to offer philosophically—it
is simply to underscore this fact: to present Chesterton and Belloc as
the “greatest minds of the Church in economic matters” to the exclusion
of medieval theologians who have countless economic laws attributed to
them is unscholarly and extremely misleading.
One further point on this matter. Mr. Sharpe feels free to tell his
reader what the Spanish scholastics thought, without ever citing them,
as in the following quote:
The citations produced by Mr. Clark which allegedly prove that
Belloc’s scheme would have been repudiated by the Spanish Scholastics
actually do nothing of the sort: they merely imply that, all things being
equal, a sovereign cannot licitly tax one citizen more than others. The
context obviously assumes a case in which a king might try to eliminate
his political enemies by taxing them out of existence.
As a matter of fact, that is absolutely not what they were referring to
in any way. They were formulating a moral philosophy of taxation, and
merely attempting to save the Spanish monarchy from losing its most
gifted citizens to emigration. Navarrete’s thought might be summed in
one sentence from his writings: “He who imposes high taxes receives
from very few. Though he says that the Spanish scholastics “obviously”
meant something other than what I described, it would have been nice
if Mr. Sharpe had provided a specific quote, rather than simply guessing
what they meant without ever having read the text.
II. Papal Statements
Catholic anti-capitalists, as von Mises has termed them, consistently
point out that capitalism has been summarily condemned by the modern
social encyclicals. While Pope Leo XIII was admittedly concerned about
the economic environment of his time which followed industrialization, he
certainly was no anti-capitalist. On the contrary, he simply condemned
the abuses of capitalism, not capitalism itself. That is a rather large
distinction. Condemning the abuses of a thing is not the same as
condemning the thing. One year prior to Rerum Novarem, Pope Leo
XIII, in Sapientiae Christianae, condemned the abuses of the education
of children; he did not say that the education of children is an abuse.
32 The Capitalist Response
Pope John Paul II is really the first modern Pontiff to delve into
capitalism proper, and analyze it on its own merits.
In Laborem Exercens, Pope John Paul II writes:
. . . it should be recognized that the error of early capitalism
can be repeated wherever man is in a way treated on the
same level as the whole complex of the material means of
production, as an instrument and not in accordance with
the true dignity of his work that is to say, where he is
not treated as subject and maker, and for this very reason
as the true purpose of the whole process of production.
This paragraph is full of meaning and presents the Church long-
standing attitude toward capitalism. When the Holy Father says “early
capitalism,” he is not talking about capitalism per se, he is referring
to a specific historical period following the industrial revolution, in
which abuses did certainly take place. More importantly, and somehow
this message gets lost when many people read the social encyclicals,
the main point of the social encyclicals was not to outline a specific
economic system, but simply to state that employers should treat their
employees as beings created by God. No economic system has ever
been endorsed in an encyclical, although some have been condemned
(socialism and communism), just as no political system has ever been
endorsed. The Church has recognized that the duty to teach, sanctify,
and rule within the realm of economics pertains to helping create a
foundation of Catholic morality in that society, whatever its economic
policy.
As close as a pope has ever come to fully endorsing a specific economic
system occurred in Centissimus Annus. Speaking of capitalism, Pope
John Paul II writes:
Certainly the mechanisms of the market offer secure ad-
vantages: they help to utilize resources better; they promote
the exchange of products; above all they give central place
to the person’s desires and preferences, which, in a contract,
meet the desires and preferences of another person. Nev-
ertheless, these mechanisms carry the risk of an “idolatry”
of the market, an idolatry which ignores the existence of
John Clark 33
goods which by their nature are not and cannot be mere
commodities. . .
Returning now to the initial question: can it perhaps
be said that, after the failure of Communism, capitalism
is the victorious social system, and that capitalism should
be the goal of the countries now making efforts to rebuild
their economy and society? Is this the model which ought to
be proposed to the countries of the Third World which are
searching for the path to true economic and civil progress?
The answer is obviously complex. If by “capitalism” is
meant an economic system which recognizes the fundamental
and positive role of business, the market, private property
and the resulting responsibility for the means of production,
as well as free human creativity in the economic sector, then
the answer is certainly in the affirmative. . .
The Holy Father is simply echoing what had been said time and
time again by the other pontiffs: capitalism is an efficient economic
system financially empowering its participants and serving the common
good, however, it is not without peril if one begins to look at money as
his god. In a later passage, the Holy Father does warn that capitalism,
or more accurately, libertarianism, will be eschatologically unsuccessful
in a society that is not shaped by morality. Of course, the same could
be said of any economic system.
There is a substantial body of evidence available that the Catholic
Church and her thinkers have supported capitalism both philosophically
and practically for hundreds of years.
One further note on the papal capitalist versus distributist debate.
I must admit that I find it tiring to hear the shopworn mantra from
so many Catholics that distributism is the “more Catholic” economic
system. Time and time again we hear that distributism has been
endorsed by the recent pontiffs, yet the word “distributism” has never
appeared in a single papal encyclical! If the modern popes were such
proponents of distributism, as some would suggest, wouldn’t they have
at least used the word?
34 The Capitalist Response
III. Belloc a Socialist?
I have been attacked in number of journals for saying that Belloc was
a socialist. Of course, I never said that Belloc was a socialist. Here is
exactly what I said: “Belloc called for the most radical redistribution of
wealth in history, philosophically rivaled only by Karl Marx and Leon
Trotsky. It apparently wasn’t a real popular thing to say.
However, a comparison is not only possible between Marx and Belloc,
it is almost impossible not to make one. Consider the following quotes:
No sooner is the exploitation of the laborer by the manu-
facturer, so far at an end, that he receives his wages in
cash. . . But does wage labor create any property for the
laborer? Not a bit. It creates capital, i.e., that kind of prop-
erty which exploits wage labor, and which cannot increase
except upon conditions of begetting a new supply of wage
labor for fresh exploitation. —Karl Marx, The Communist
Manifesto
For the first time in history, the whole idea of wages was attacked
by an influential writer. Remember that the Church emphasizes that
wages be “just” and “living. Marx, however, contended that the mere
concept of wages constituted an injustice. He wouldn’t be the last to
make this claim: Belloc would follow.
Furthermore, although Marx was pretty hard on capitalism, Belloc
was an even greater foe.
It is a necessary inference that there will be under capitalism
a conscious, direct, and planned exploitation of majority
(the free citizens who do not own) by the minority who are
owners...If you left men completely free under a capitalist
system, there would be so heavy a mortality from starvation
as would dry up the sources of labor in a very short time.
—Hilaire Belloc, The Servile State, Section 5
Though Karl Marx detested capitalism, Belloc does him one better.
Belloc’s position is that if they were left to their own devices, capitalists
would just assume let men starve to death—quickly. Let me be clear:
I am not saying that Hilaire Belloc was a socialist or a Marxist. I am
John Clark 35
simply saying that Belloc’s terminology was eerily similar to that of
Marx. One cannot simply reject Marxist critiques and simultaneously
accept Belloc’s analysis as completely accurate.
However, one person did call Belloc a socialist: Belloc’s best friend,
G. K. Chesterton. In G.K.’s Weekly, published on 28 November, 1935,
G.K. Chesterton wrote: “It is my experience that the sort of man who
does really become a Distributist is exactly the sort of man who has
been a Socialist. . . Mr. Belloc himself had been a Socialist.
Why didn’t anyone get mad at G. K. Chesterton for making such a
“scandalous” comment?
IV. Moral Society
Distributists often make the claim that capitalism does not encourage
virtue. Though I disagree with this analysis, mainly since things like
dishonesty and fraud are poor business practices, it is unclear why
distributists regard distributism as the sine qua non of a moral society.
India was essentially a distributist state for at least fifty years and they
worshiped cows.
Nevertheless, capitalism is often blamed for the moral ills of society’s
in which it operates. To this, I make but one observation. Imagine
an economic system to be an automobile. Capitalism is a Ferrari
with a full tank of gas and a world-class driver. The driver can use
the car to commit a drive-by shooting, or it can be used to take a
sick child to the hospital to save his life. Even Belloc, while at the
same time lambasting capitalism, did admit that it is a more efficient
economic system than distributism. But while capitalism is a Ferrari,
distributism is admittedly a broken car with a blind driver. Belloc
realized that distributism was inefficient—that’s what he liked about it.
Unfortunately, inefficient systems often fail to provide the essentials in
life, like food, shelter, and medicine.
Ultimately, the question should be asked of distributists: isn’t ineffi-
ciency immoral?
V. Government
Belloc does not essentially call for a Catholic state—he merely calls for
a distributist state. He does not say, “Since the state is given more
36 The Capitalist Response
power under distributism, we must be careful that only moral regimes
employ it. He just wants distributism. What he fails to grasp is that
the government under in a distributist state will become enormous.
In the distributist state, mainly due to the almost unlimited powers
of taxation, the government would become an all-powerful leviathan.
The government becomes so involved in the day-to-day operations of
communities that the people will soon realize the horror of living under
a central planning government.
While the distributist state ensures that no private business will
grow too large, paradoxically, one entity grows larger by the minute:
the government. The entity we call “government” might seem large in
the United States, but at least there are corporations so large in size
that they can compete for power and influence. That is a good thing.
In American, large corporations serve as a de facto check and balance
on the cultural influence of government. In the distributist state, there
is one power which vastly exceeds all others: the government. And if
one power threatens, the state can simply move in and tax it to death.
Government rarely reforms itself, or cuts back on its authority, and it
rarely refuses to use all means at its disposal.
Not only would the size of the government increase in the distributist
state, but under the distributist regime, the relative size of the govern-
ment versus private business would be gargantuan. The government in
a distributist state would constitute absolute power, and we know what
that does.
In the distributist state, would-be capitalists are taxed to the hilt.
This tax money doesn’t just disappear—it goes to the government,
giving it more power.
Of course, with so much power, the members of government would
attempt to do as much as they could to enrich themselves.
Furthermore, many men would seek to enter government, recognizing
governmental participation as the best way to enrich themselves, and
under this regime, they would be correct.
The inescapable fact about distributism is that the distributist state
would create an atmosphere in which business would be curbed at a
certain level, but government would never be curbed. It would simply
keep growing more and more powerful. Even in the Catholic state, the
amount of power the government would possess would be staggering.
John Clark 37
VI. Emigration
Though the inherent problems with distributism are many, there are
two main economic problems which are so severe as to render the whole
question of distributist a dead letter: emigration and trade. Though
I am by no means a fan of Ayn Rand or Atlas Shrugged, some of her
conclusions are inescapable. The first of which is simply this: if you tax
entrepreneurs to death, they will simply find some place else to do their
business. In the distributist state, the state would progressively tax the
ablest entrepreneurs to the point where they can no longer increase their
profits and wealth. Does Belloc actually think these talented people
would remain in a country in which they cannot get any richer?
American corporations are often lambasted by liberals for moving
their operations overseas. We are told that American companies move
operations for “cheaper labor”. Though this no doubt does happen in
some instances, it is also true that many companies move operations
because the taxes are lower. The quality of work in a foreign country
is a big unknown for a company and may make them hesitant to leave
America. However, when comparing tax rates, it’s an “apples-to-apples”
comparison. How much time does it take to decide whether you want
to pay ten cents in taxes of every dollar earned, or thirty cents? People
wonder why the Irish economy is booming. The reason is that they
lowered the tax rate to 10%, attracting many new businesses which
were sick of paying high taxes.
When a municipality issues a bond, they investigate whether the
community will be able to pay the bond coupons out of their taxes.
This is called a feasibility study. One of the main equations that goes
into this formulation is the question of how many people will leave the
community because of tax increases. On a major increase, the question
isn’t whether people will leave, but how many. This principle must also
be applied to the economy as a whole.
If your principle is that capitalists are greedy men, who care about
nothing except profits, why would they stay in a country that limits
the amount of money they can make? The ablest entrepreneurs will
move somewhere else, leaving those who have never run businesses with
the job of running businesses.
Perhaps Navarette said it best:
38 The Capitalist Response
The origin of poverty is high taxes. In continual fear of
tax collectors, (farmers) prefer to abandon their land, so
they can avoid their vexations. As King Teodorico said, the
only agreeable country is one where no man is afraid of tax
collectors.
VII. Trade
Perhaps the biggest problem with the distributist economy involves the
issue of trade. Belloc did not address the problem, but the problem
still exists. To clarify what I am suggesting, let’s first look at what the
scholastics have taught about international trade. The position of the
greatest scholastic minds of the Church on the subject of trade is this:
1) international trade was ordained by God; 2) it is vital to the survival
of the state; and 3) the effort to restrict trade may be a sin against
charity.
In De Regno, St. Thomas says that entirely self-sufficient communi-
ties are impossible. Thomas writes:
One cannot easily find any place so overflowing with the
necessaries as not to need some commodities from other parts.
When there is an overabundance of some commodities in one
place, these goods would serve no purpose if they could not
be carried elsewhere by professional traders. Consequently,
the perfect city will make a moderate use of merchants.
The perfect city is one that engages in trade. St. Bonaventure, the
great Franciscan Doctor of the Church, argued that international trade
must be moral because without trade, “many regions could not exist.
A late scholastic named Vitoria claimed that eternal law, natural
law, and positive human law favored international trade. He wrote that
to restrict the goods of an area from being supplied to another was not
only economically unsound, but actually claimed that it was “iniquitous
and against charity. Therefore, one can see that the Church has always
been supportive of trade.
But how does international trade occur in the distributist state? In
short, it doesn’t.
Belloc admits that the small business cannot produce at a price
that can compare to the large manufacturer. Therefore, as a small
John Clark 39
business owner, I must be protected against the large one. Therefore,
international companies become my biggest adversary, because they
can produce cheaper goods. If my small business produces and sells
men’s socks for three times the price of an import, I am finished if you
allow the import. Therefore, in the distributist state, you cannot import
goods, because if you were to do so, you would introduce a competitor
to the small business, destroying his business.
Not only can you not import goods, you cannot realistically expect
to export them either. Consumers are generally very disinterested in
spending three times the amount of money on similar products. The
distributist state just doesn’t have much to offer in the way of goods
to foreign lands. As economic history teaches, the quickest way to the
poverty of a nation is to completely restrict trade. The people who are
left in the distributist state will quickly discover what it means to be a
third-world nation.
In the final analysis, the distributist state cannot engage in inter-
national trade, despite the fact that God ordained international trade,
and despite the fact that poverty will ensue on a massive scale because
of its absence.
Conclusion
As I mentioned in my Latin Mass article, capitalism and each of its
component parts has been defended for centuries by the greatest minds
of the Church. While capitalism continues to be attacked by the
intelligentsia of the world, it has brought prosperity unknown prior to
its arrival in countries across the world. Not even Belloc doubted its
efficiency. Instead of attacking capitalism, perhaps Catholics should use
the monetary tools at their disposal to produce Catholic businesses in
an effort to glorify God.
May we all have the faith and courage to do so.
Letter to the
Editor
Br. Alexis Bugnolo
Dear Editor,
Mr. Clark’s contention that the economic system of capitalism is
the one most supported by Catholic teaching if one is to judge from
his rebuttal is specious at best. He confuses the teaching of catholic
theologians and saints with that of the Magisterium, which always takes
precedence. In this Mr. Sharpe has a clearer sense of fidelity to the
Church’s mind.
On the other hand, when discussing an economic system, the question
of which is more catholic can only be resolved by a comparison of
the ethics of the system to the morals taught by Jesus Christ, since
economics fundamentally pertains to human relationships in the moral
order. Thus Mr. Clark’s contention of the need for a “profit” motive
is absurd Such proponents confuse the material aspect of moral action
with the formal aspect.
Take for example the case of a man whose home is flooded repeatedly
by rainwater. There is a temporal need to dig a ditch, let us say; and
his duty as head of the household requires him to look to the common
good of his family and property. The temporal motive (to impede future
flooding) is only materially the goal. The actual formal goal of his
action is the common good of his family.
On the other hand the contention, advanced by Mr. Sharpe, that
it is better that the state own large scale properties (railroad, post
office) etc. than a private individual or group of individuals acting as
one (corporation) or a group of individuals acting in concert (guilds
or private persons) is also false. Who owns property is not a moral
question. What he or they do with it is. Thus there is no more catholic
a system when one or many own a given piece of property; just as there
is no more catholic a government whether one or many govern. These
are legitimate differences of the natural order–so long as the natural
3E
40 Letter to the Editor
rights of man are not thwarted.
I find the dichotomy between ownership of property for the sake of
making a living and use of one’s personal talents to acquire a wage for
the sake of making a living also facile. A man is equally the proprietor
of his material possessions as well as his own work. If he chooses to
work for a wage or to make a living by using his material wealth, the
one is not more moral than the other, since neither pertain to the moral
order. This is a question of the material aspects of moral action, not
the formal.
No economic system that holds as legitimate what is not legitimate
is capable of approval by any catholic. If you think acting for the sake
of profit is meritorious in Christ’s eyes, you are sadly deceived.
Let us consider what Sacred Scripture teaches:
Do not transgress against thy friend deferring money, nor
despise thy dear brother for the sake of gold (Ecclus. 7:20)
There is not a more wicked thing than to love money: for
such a one setteth even his own soul for sale: because while
he liveth he hath cast away his heart. (Ecclus 10:10)
He that loveth gold, shall not be justified: and he that
followeth after corruption, shall be filled with it. Many have
been brought to fall for gold, and the beauty thereof hath
been their ruin. Gold is a stumbling-block to them that
sacrifice to it: woe to them that eagerly follow after it, and