Appeared in Summer/Autumn/Winter 2002, Vol. XXVII, No. 2, 3, 4

Download the PDF here

Capitalism no more means the affirmation of an individual, or a family’s right to possess land, machinery, housing, clothing, reserves of food and the rest, than fatty degeneration of the heart means the normal function of the heart as the circulator of the blood in a healthy human body.  -Hilaire Belloc

I. INTRODUCTION

When one considers how often and with how much passion the question of capitalism has been debated for the past one hundred and fifty years or so, it is surprising how seldom a true definition of it has been attempted. Most discussions of the subject seem to assume that everyone already knows what it is, or they characterize it simply in historical or even geographical terms. But what is capitalism? Is it possible or desirable to define it, and if so, can we learn anything from such a definition? In the first part of this article, I wish to approach the question of a definition of capitalism and to argue that a definition is not only possible, but that the correct definition can shed much light on the actual modus operandi of capitalistic economic systems and on what has often been called the “spirit of capitalism.” In the second part, I will discuss distributism and contrast it with capitalism.

That many have found it difficult to define capitalism is no secret. As Robert Heilbroner wrote, “What is capitalism? That is the profound and perplexing problem to which this book is addressed.” And he goes on,

But the question of what capitalism “is” presents challenges of another kind. Now the difficulty is not so much to cope with masses of material as to decide on a few quintessential elements. This is a much more recalcitrant question. The variables that affect the capitalist process overwhelm us in their complexity, but it is at least imaginable that they might be coherently ordered. No such conceptual clarity is available when it comes to determining the irreducible elements of the system. No formal procedures, even at the most abstract level, tell us how to specify the essence of a thing.3

Amintore Fanfani, in his Catholicism, Protestantism and Capitalism,4 gives a survey of opinions on what capitalism is, and finally concludes that instead of trying to define capitalism itself, it is rather in capitalism’s spirit that we must look for its essence. That is to say, in observing certain characteristics of the capitalist man, as distinguished from the pre-capitalist, we can identify what capitalism really is.5

Thus it undoubtably seems to many that it is useless to attempt a definition of capitalism and that the best we can do is to make some kind of rough description. But before we look at what I will argue to be an accurate definition of capitalism, let us consider some of the previous attempts at description or definition.

On an everyday level, people often uncritically assert that capitalism means private ownership of property, or perhaps “private property in the means of production.” But clearly neither of these is the case, since private property has existed in most ages, even in times usually not considered capitalistic, and “private property in the means of production” is nearly as common as the former. Let us turn to some of the deliberate attempts that have been made to define, or at least describe, capitalism. In “Capitalism,” his well-known article for the Encyclopaedia Britannica, Joseph Schumpeter wrote as follows:

A society is called capitalist if it entrusts its economic process to the guidance of the private businessman. This may be said to imply, first, private ownership of non-personal means of production, such as land, mines, industrial plant and equipment; and second, production for private account, i.e., production by private initiative for private profit. But, third, the institution of bank credit is so essential to the functioning of the capitalist system that, though not strictly implied in the definition, it should be added to the two other criteria. Common
parlance applies the adjective “capitalist” to almost all the phenomena of modem society, particularly when envisaged with reference to the socialist alternative.6

Schumpeter further states that, “Most of the features that define the capitalist order may be found in the ancient world, and particularly in its Graeco-Roman
sector.”7 Robert Heilbroner in The New Palgrave, a standard dictionary of economics, speaks thus of capitalism:

Capitalism is often called market society by economists, and the free enterprise system by business and government spokesmen. But these terms, which emphasize certain economic or political characteristics, do not suffice to describe either the complexity or the crucial identificatory elements of the system. Capitalism is better viewed as a historical “formation,” distinguishable from formations that have preceded it, or that today parallel it, both by a core of central institutions and by the motion these institutions impart to the whole. Although capitalism assumes a wide variety of appearances from period to period and place to place … these core institutions and distinctive movements are discoverable in all of them, and allow us to speak of capitalism as a historical entity, comparable to ancient imperial kingdoms or to the feudal system.8

Another standard source, the International Encyclopedia of the Social Sciences, gives a historico-geographical description rather than a definition of capitalism: “Capitalism is the economic and political system that in its industrial or ‘full’ form first developed in England in the late eighteenth-century.” But like most attempts to describe capitalism by placing it in an historical or social context, this one raises further questions. What was it about England in the late eighteenth-century that constituted capitalism? The disappearance of the guilds? The rise of large firms controlled by rich men? An increase of financial speculation? New technology? This article goes on to say that “Self-interest as ultimately the servant of society, the minimization of the role of the state and the institution of private property constituted the essence of capitalism in the nineteenth and early twentieth centuries.” Note, however, that the writer says, “in the nineteenth and early twentieth centuries.” Here again the description of capitalism is historically limited. And since we no longer live in the nineteenth or early twentieth centuries, if we want to look at capitalism as it exists in our own time, is this definition therefore no longer useful?

Next, we have the attempt at definition that focuses on the results of capitalism. For example, “Capitalism is an economic system characterized by the private, unequal ownership of the means of production or tools with which man produces his livelihood.”10 This may be a good definition of what capitalism becomes in practice, that is, what seems inevitably to happen under capitalist
arrangements, since private ownership does become unequal. But I do not regard this description as capturing the essence of capitalism. For to describe the effects of the capitalist system in action is not the same as to state what exactly it is that makes it capitalist.

In contrast to these efforts at definition or description are those who argue that an attempt to capture capitalism in a definition is a mistake, for, in fact, it is not one thing. John Groenewegen argues that there is in fact more than one kind of capitalism, and distinguishes “four types of capitalist systems: the Anglo-American, two varieties of the continental European system, and finally the Japanese type of capitalism.”11 And each type differs in “the organization of transactions, the nature of the firm and markets, the role of government, and the value system, in which [it] is embedded.. .” Given these differences, is it useful, or even possible, to find a definition which applies to all of them? And how even do we know that these “four types of capitalist systems” ought all to be called capitalist? What general characteristics make them all capitalist?

We are left without a clear answer.

And so we see that all of these descriptions of capitalism bring out important points, but do any of them reach exactly what capitalism is? Some of them seem to include as capitalist too many societies, others to list characteristics of capitalist economies without naming those which are essential. But is it possible to do better?

II. Capitalism Defined

Is it possible to come up with a definition of capitalism which captures those characteristics which distinguish it from other economic systems, and which also helps us to understand the course that capitalism takes in practice? I think that it is, and that the following definition, a definition gleaned from the encyclical of Pope Pius XI, Quadragesimo Anno (1931) will fulfill both these conditions. Pius speaks (#100) of “that economic system in which were provided by different people the capital and labor jointly needed for production.”12 In other words, capitalism is the economic system in which, for the most part,13 some people provide the capital for financing an enterprise and others provide the labor; that is, they work for wages on enterprises owned by the owners of
capital.14

This definition of capitalism, I believe, not only describes what is essential to capitalism, but enables us to understand why so many evils have, and always will, arise from any capitalist system as  long as this essential point of capitalism is maintained: the separation of ownership from work.15 If we look at some of the discussions of capitalism quoted above in light of Pius’ definition, I think we will see how the definition sheds light on them. Heilbroner, for example, in his article in The New Palgrave, goes on to say:

Both Smith and Marx stressed the importance of the expansion of the commodity form of wealth. For example, Smith considered labour to be “productive” only if it created goods whose sale could replenish and enlarge the national fund of capital, not when its product was instrinsically [sic] useful or meritorious. In the same fashion, Marx described the accumulation of wealth under capitalism as a circuit in which money capital (M) was exchanged for commodities (C), to be sold for a larger money sum (M’), in a never-ending metamorphosis of M-C-M’.

It is precisely this separation of ownership from
work which produces the emphasis on commodity sale,
because this separation creates a body of men who are
no longer focused directly on production, but rather on
money-making itself.16 For if one accepts that the inherent
purpose of economic activity is the production of
those goods and services necessary or useful for a truly
human life, then it is production which is of the essence
of economic activity. But as soon as my direct occupation
is not production for use, but money-making simpliciter,
then my whole focus changes. I no longer care what
is made or how much of it, as long as it is profitable. We
can see this in the activity of the stock market.

Stock market activity is so far removed from real
economic activity that the stock traders’ interests are centered
only on the rise or fall in the stock prices of a company.
Whether the company is making something useful
or not is of no concern to them. And when the rest of
us focus on stock prices as an indicator of the health
of the economy, the absurdity of this fact is made clear.
When the stock market collapsed in 1929, for example,
no real wealth immediately left the country. But because
the market’s decline was perceived as an indicator that the
country was in serious economic difficulty, real wealth
did begin to disappear as factories closed and farm

products were even destroyed because buyers could not
be found for them. The absurdity of this should be clear:
the exchange of what are only surrogates for real wealthstock
shares, for example-need not have an effect on real
economic goods unless the system in place is focused
less on production and immediate sale to consumers and
more on manipulation of these surrogates for the purpose
of money-making.

After the September 11, 2001 terrorist attacks,
when the New York Stock Exchange was closed for a
few days, everyone waited with bated breath for the Exchange
to reopen to find out whether the country was
still prosperous or not! Yet regardless of how well or ill
the stock market performed, the same amount of real
economic goods were present in the nation.

Another of the authors, whom we briefly surveyed
above, defined capitalism in this way: “Capitalism
is an economic system characterized by the private, unequal
ownership of the means of production or tools
with which man produces his livelihood.”17 Here again
Pope Pius’ definition helps us, for by defining capitalism
as the separation of ownership from work, we describe
an economic system in which, because some no longer
focus on production, they are free to focus on limitless
wealth, thus ultimately causing the “unequal ownership
of the means of production” which Turgeon took to be
of the essence of capitalism, whereas it is simply one of
the results of capitalism, or the “spirit of capitalism.”

If a society sees economic activity as a human activity
directed toward an end fulfilling that society’s need
for goods and services then it will tend to erect safeguards,
legal, social and customary, to channel economic
activity toward those ends. But as soon as a society has
largely forgotten that economic activity has its own inherent
end, then the mere acquisition of wealth comes to
be implicitly taken as the purpose of economic activity.

Now, of course, a necessary and important byproduct
of production is the support of the producer.
Everyone who understands that economic activity exists
for the provision of necessary and helpful goods and
services will also recognize that the producer must make
his own living by the use or sale of what he makes. So
there is another inherent end in this process: the maintenance
of the producer. And there is also a limit inherent
in this: namely, how much one needs to support oneself
and one’s family.

Capitalism, however, has brought with it its own
spirit, a spirit which regards wealth not as a necessary
means for supplying our earthly needs, but as something
to be increased beyond measure. What do I mean by “beyond
measure”? I mean by it something fairly precise,
for in speaking of the correct measure of our earthly
needs, man himself is the measure. Thus, for example,
a man can eat only so much food in a day. If he wanted
three times as much food every day as he could properly
eat, he would be desiring to multiply his possession
of food beyond the proper measure. Every man needs
a dwelling. Perhaps some few could make an argument
that they need more than one. But surely at some pointany
legitimate need for more houses would be exceeded.
A man who claimed the need for (say) four houses, is
obviously asking for more than he needs. And so on with
the rest of our property. Material things exist to satisfy
reasonable human needs, not unlimited human wants.18
Fanfani, indeed, summarizes Catholic teaching on the acquisition
of wealth as follows.

Man has necessities, needs that must be satisfied,
and, if temporal goods can satisfy them, it is a
duty and legitimate to seek to acquire such goods,
bearing in mind two rules, first that they must
be acquired by lawful means, secondly that the
amount acquired must not exceed the need.19

Or as Fr. Bede Jarrett said of the pre-capitalist ethic in his
Social Theories of the Middle Ages,

Merely to engage in commerce for the purpose
of making more money was not a sufficient justification,
for money should be only a means to an
end. To make it an end in itself was to spoil man’s
life, because life thenceforward became robbed
of definite purpose.20

Thus, the results which capitalism brings, and
which many writers have to a large degree considered
the essential condition of capitalism, are
instead inevitable results of capitalism in practice.
For as soon as we divorce ownership from work,
given fallen human nature’s propensities, we will
create a society in which wealth is no longer seen
as having a purpose, economic activity exists primarily
to produce that wealth, and the real economic
needs of society are subordinated to the
freedom to engage in limitless and socially useless
wealth acquisition.21

In the section above, I indicated that Schumpeter’s discussion of capitalism included equivocations. Consider
his statement that “society is … capitalist if it entrusts
its economic process to the guidance of the private businessman”
and is characterized by “private ownership of
nonpersonal means of production … and … production
for private account, i.e., production by private initiative
for private profit.” Schumpeter fails to distinguish here
between the various ways in which private ownership can
be exercised, i.e., either with an eye for production and
a reasonable remuneration for the producers, or with an
eye for mere gain and a remuneration for the owners or
controllers that is potentially limitless. And the reason
he omits such a distinction, as he says, is because he is
chiefly contrasting private ownership “with reference to
the socialist alternative.” When socialism fills the back
of our minds as the only alternative to capitalism, we are
not apt to focus on the different ways in which private
property can be used and the different
kinds of legal frameworks which
would support such diverse uses of
private property.

Nor is it only those who
own the means of production who
exemplify the effects of capitalism,
for the separation of ownership
from work tends to create a permanent
class of non-owning workers, a
circumstance often deplored by the
popes,22 and one which exacerbates
class feeling and class warfare. This
situation, in turn, produces men
alienated from their work and dulled
in spirit. If the managers and directors
of corporations had to work in
coal mines and on assembly lines,
we would soon see drastic changes
in such work. For under capitalism, some men are, in a
sense, the tools of those who own the capital.

The Wall Street Journal of July 24, 2001 carried
an article on the growing practice of factories operating
twenty-four hours a day, seven days a week. The article
discusses a Mr. Herman Lea, a part-time Protestant
preacher, who had hoped to become a regular pastor, but
whose schedule and life have been entirely disrupted by
the factory’s new work schedule.23

Mr. Lea and his co-workers have discovered
the unspokenreality of manufacturing: Increasingly
it is structured around the machines, rather than
the people who run them. The reason is economics.
Every hour a costly plant sits idle is a drain
on a company’s bottom line, something no one
can afford in the face of today’s sharply slowing
economy.

Compounding the new schedule is Goodyear’s
move to 12-hour shifts, which is common
when companies go nonstop. Mr. Lea gets more
days off with the longer shifts, but the longer
workday is far more grueling for the 50-year-old.
Moreover, his days off vary each week, complicating
his life. He had a stroke in February, which he
blames partly on the stress of juggling his schedule.

Of another worker at the same plant, the Journal says,

But Mike Baker, a maintenance
worker at the plant
who used to be very active in
his church, often had trouble
making board meetings. So
he stopped serving. This year
he also stopped working as
an umpire for high-school
baseball games. “This is the
first year I haven’t umpired in
I don’t know how long,” he
says. “It’s hard to give it up.”

The making of economic activity
into a relentless pursuit of riches,
the “bottom line,” clearly has deleterious
effects on workers and reveals
what happens to capitalism in action:
not only the frequent financial
exploitation of workers, but the insistence
that they structure their entire lives, and the lives
of their families, around the economic process.
As Fanfani related, capitalism has long looked at
laborers as simply so many tools:

The absolute State encouraged early capitalism in
another manner by placing cheap labour at its service.
Charles VII granted Jacques Coeur the privilege
of pressing idlers and vagabonds to serve on
his ships. His successors authorized tapestry-weavers,
glass blowers and pottery workers to employ
children from the foundling hospitals. The King of
Prussia gave a certain Hirsch the Potsdam orphansto work at making velvet. And in Prussia and Austria
even the soldiers worked for industry. Soldiers
on leave were sent to the manufactories; those in
barracks carded and wove wool, and at Bratislava
five regiments quartered in the town spun cotton
for a local contractor.24

I am not suggesting, I should note, that the separation of
labor from capital, of ownership from work, is in itself
unjust. Pius XI says, in the very next paragraph, “the system
as such is not to be condemned.” If such a separation
were in itself wrong, then an elderly grandmother
would do wrong were she to hire the teenager next door
to mow her grass or paint her porch. For, in this case,
she supplies the capital and he the labor. As I said, every
society will always include some economic activity of this
type, i.e., where one party supplies the capital and the
other party the labor. This presents a difficulty chiefly
when it becomes the dominant form of economic activity
and sets the tone for the whole of the society.25

If what I have said is accepted as more or less
true, then we can see that if we define capitalism correctly,
we can understand better capitalism’s effects in
practice, or what is sometimes called the “spirit of capitalism.”
Here is Fanfani’s description of capitalism in action:

Modern man, who is capitalistic, regards wealth as
the best means for an ever more complete satisfaction
of every conceivable need; he also regards it
as the best means for improving
his own position. He considers
goods as instruments to be used
ad libitum by their possessor. He
does not recognize any claim on
them on the part of third parties
not their possessors, still less does
he think it unlawful for their possessor
to use them so as to obtain
an unlimited increase or their reproduction
at ever diminishing
cost?26

To regard it as lawful or even
perhaps laudable to increase wealth
without measure, flows naturally
from the separation of ownership
and work. For work as the production
of goods and services is naturally oriented
toward the fulfillment of human
needs, whereas the accumulation of wealth has no
natural orientation except toward the satisfaction of potentially
unlimited desire. Gain has no natural limit. But
to allow moneymaking to assume such a place in human
life and society is to divorce man from any inherent limits
and ultimately to allow his culture to become permeated
with a commercialism that subordinates everything
to irresponsible economic activity. A capitalist economic
system will invariably result in the commercialization of
the whole of society. Why? Because society will be focused
not on the production of goods and services for
use, something which is inseparable from man’s life on
earth, but increasingly on the mere acquisition of wealth.
Money-making becomes the keynote of society. As has
been truly noted, “society itself becomes an `adjunct’ of
the market.”27

Nor are the supporters of this new type of society
especially shy about what was done when traditional
Western culture was transformed by the new economics
of eighteenth-century Deism, as embodied for example
in Adam Smith’s The Wealth of Nations. As Ralph Lerner
wrote, Smith and other like-minded thinkers “saw fit … to
promote a new ordering of political, economic, and social
life,” based ultimately on ideas going back “to Locke
and Spinoza, to Hobbes and Descartes, to Bacon and
Machiavelli.”28 What was this new order they were recommending,
and what was the old order they were rejecting?

The old order was preoccupied with intangible goods to an extent we now hardly ever see. The king had his glory, the nobles their honor, the Christians their salvation, the citizens of pagan antiquity their ambition to outdo others in serving the public good. However much men vied for a fine field, a good herd, a large purse, it was not by these alone that they would make their mark.29

Instead, “Eighteenth-century men had to be brought to see how fanciful those noncommercial notions were.”30 And what was this old order to be replaced by?

They thought human behavior
was adequately accounted for by
dwelling upon the wants by which men are driven wants that are largely,
though not exclusively, physical; wants that are part
and parcel of the self-regarding passions; wants that
cannot in most cases be satisfied…. This Hobbesian
truth was axiomatic for the commercial republicans.
Their reason told them that a surer guide to
sane behavior could be found in the operations of
a nonrational mechanism, the aggregate of small,
anonymous calculations of things immediately
known and felt by all. It was more reasonable to rely
on the impersonal concourse of buyers and sellers
than on the older standard of reasoned governance
for proper hints and directions precisely because
the market could better reckon with the ordinary
passions of ordinary men. Indeed, where the ancient
polity, Christianity, and the feudal aristocracy,
each in its own fashion, sought to conceal, deny, or
thwart most of the common passions for private
gratification and physical comfort, the commercial
republic built on those passions.31

And of this new order Lerner goes on to say,
“The contrast with and opposition to the Christian and
Greek worlds could hardly have been greater.”32

We can see by this that capitalism and the commercial
order that it brought about have changed more
than the economic system-and of course, this is no surprise.
Like a leaven working its way through dough, the
separation of ownership from work has allowed society
to turn its almost exclusive attention toward economic
gain. The fulfilling of human needs via economic activity
is now important only insofar as it produces gain, for gain
itself has become the sole good. And that this change has
had profound effects on all of human life and culture we
have already seen. But a society in which the principle of
limitless gain was not victorious would look very different
from our own:

Seen from the vantage point of our habits engendered
by our thoroughly industrialized society, it is
hard even to imagine life in countries not yet industrialized,
at least to the same degree. Spain is a good
example of the latter. Holidays, saints’ days, local
fiestas lasting for several days, family celebrations,
and so on, have at least as great an impact on the
course of life as work and efficiency-mindedness.
Next to work rhythm there is also a leisure rhythm,
not in the sense of “rest from work” but as a form
of the outlook on existence.33

In his book, In Tune With the World, Josef Pieper
often speaks of the “totalitarian laboring society,”34 a society
such as that of the Nazis or communists which was
dedicated solely to its own ends with no openness to God
or the transcendent. But could not the same be said of
capitalist society? Do not rest or holidays among us find
their only justification as recuperation from work and
preparation for further effort? Ours is a society equally
shackled to work in that it knows no other purpose for
human existence. Contemplation is no more characteristic
of it than it was of Stalin’s labor camps.

The very justification for private property in our
society and in a traditional society differs. Consider the
famous statement of Leo XIII on private property:

Men always work harder and more readily when
they work on that which is their own; nay, they
learn to love the very soil which yields in response
to the labor of their hands, not only food to eat,
but an abundance of the good things for themselves
and those that are dear to them.35

We would try in vain to discover how an owner of stock, for example, could ever “learn to love the very” shares which yield, not “an abundance of good things,” but a dividend check or a capital gain, in response to the labor of someone else’s hands. In such a situation, instead of an economy devoted to meeting real human needs, we have an economy devoted to making money in any way possible, with ownership, control and labor separated to the detriment of all three.
When ownership and work are joined, then not only will many evils be reduced or eliminated, but many good things will more easily ourish. Property will be seen again for what it is, a means of support for men and their families, not something whose chief use is to fa- cilitate nancial speculation, a speculation which, more- over, results in the disruption of economic stability, and thus of the stability of neighborhood, parish and family. Property is not simply convertible with money. No one who looks at his land as simply so much potential cold cash could ever “learn to love the very soil which yields in response to the labor of their hands … an abundance of the good things for themselves and those that are dear them.” These are fundamentally different ways of
viewing property, and in fact of viewing life as a whole.
The remedy for this problem, then, is simply the rejoining
of what has been separated, the reconnecting-as much as
is possible of ownership, control and work. Accomplishing
this requires an establishment of worker ownership,
or better yet, of that distributist order which Chesterton,
Belloc and many others labored to bring about. And it is
that order which we will next discuss.

III. The Distributist Alternative

In the previous section, I discussed what capitalism
is, and showed that capitalism’s essential note, the
separation of ownership and work, is also the reason
for capitalism’s characteristic ills: a harshly competitive
economic life, the exploitation of workers, and the commercialization
of society. Next, we must examine and
contrast the alternative to capitalism which I am recommending,
namely, distributism.

Of course, not only is the name distributism unfamiliar
to most people in the United States, but even the
notion that there is any alternative to capitalism except
socialism or communism is likewise unfamiliar. There are
many reasons for this supposition that capitalism has no
rival except for some form of socialism. The major extrinsic
reason is that, in public discussion of economics,
it has been assumed for decades that either capitalism
or socialism/communism were our only alternatives. But
there is another set of reasons, intrinsic to our notion of
economics. For both capitalism and socialism/communism
inhabit, one might say, the same economic world.
They have, for example, roughly the same goals: productive
efficiency and equity. As regards efficiency, they
differ greatly about means; as regards equity, they differ
also about means and to some extent about ends. But the
upholders of each system, in a sense, understand each
other. They are after the same things though in different
ways.36

Socialism, at least in its Marxist variety, was a
child of capitalism. It is a commonplace that Marx was
rooted firmly in what John Kenneth Galbraith calls the
“central tradition” of economic thought, chiefly through
the influence of David Ricardo.37 As Joseph Schumpeter
says of Marx:

Marx had a master then? Yes. Real understanding
of his economics begins with recognizing that, as a
theorist, he was a pupil of Ricardo. He was
his pupil not only in the sense that his own argument
evidently starts from Ricardo’s propositions
but also in the much more significant sense that he
had learned the art of theorizing from Ricardo. He
always used Ricardo’s tools, and every theoretical
problem presented itself to him in the form of
difficulties which occurred to him in his profound
study of Ricardo and of suggestions for further
work which he gleaned from it.38

And Ricardo, of course, is one of the central figures
in the classical/neoclassical tradition of economics
which descends from Adam Smith and remains the intellectual
mainstay of the capitalist system to this day.39

Consequently, both socialist and capitalist economics
are products of the European Enlightenment tradition
and thus can be seen as modernizing and anti-traditional
forces. As Michael Novak writes: “There are two
major traditions of revolutionary political economy in the
world, one liberal [i.e. capitalist] and the other Marxist.”
And both of them, he goes on to say, “compete against a
backdrop of traditional, often peasant, societies.”40 Many
people do not understand that capitalism has been the
chief modernizing and secularizing force in Western culture.
But distributism, on the other hand, is concerned
to uphold, not precisely a peasant society, but rather a
way of looking at economic activity that our ancestors
had, of subordinating economic activity to human life as
a whole: to our spiritual life, our intellectual life, our family
life. It does not regard the mere production of goods,
still less the mere acquisition of wealth, as ends in themselves.
Such a traditional view regards society neither as
an “adjunct of the market”41 nor as the embodiment of
the Marxist workers’ paradise. As a result, from the standpoint
of traditional societies,42 both socialism and capitalism
can be seen as reductionist attempts to subject all human
life and society to an essentially economic principle
of organization.43

For traditional societies did not necessarily look
upon something from a purely economic standpoint just
because the thing in question was part of the process
of the generation of material wealth. Consider the concept
of property, for example. The economic tradition
stemming from Adam Smith has not asked many questions
about what property is: land, real property, movable
goods, as well as such intangible surrogates for real economic
goods as currency, shares of stock, futures contracts,
stock options, etc., are all considered property andequally so. No one of them is primary. None is the
paradigm for property. Therefore, since one can legally
own each of them, and they can be exchanged for each
other according to their monetary value, they are basically
equivalents. Land, for example, is nothing special,
and an ancestral home or farm has no more worth than
stock options of equal monetary value. Property is nothing
except forms of money value, embodied in different
things.

What follows from this? Since property is interchangeable,
it comes to be seen as existing for the sake of
exchange, and exchange is facilitated by having no attachment,
emotional or familial or social, to any particular
piece of property. Attachments such as these are considered
uneconomic and thus causes of economic inefficiency.44

If I am unwilling to sell my farm, at an excellent
price, because my grandfather is buried on it or because
I do not wish to subject the neighboring faiiiiers
to a suburban housing development, I am clearly acting
against the rationale of capitalist economic thinking. But
if property is simply a collection of things of different
types which we may use to enrich ourselves, why does it
matter who owns it, provided that it performs its function?
Thus, capitalists do not blush when property becomes
concentrated largely in the hands of the rich,45
and communists do not blush when property becomes
concentrated largely in the hands of the government.
Property in both systems has no meaning beyond its cash
value, so the only questions to be asked about ownership
are questions of so-called efficiency i.e., how to get the
most wealth out of it-or of equity-i.e., how to prevent
poverty or redistribute wealth. Capitalists and communists,
of course, differ about which system best produces
efficiency and equity, but they do not disagree that these
are the only relevant questions to ask.46

But if we look at property in a different way, then
we might see that there are other alternatives to either
capitalism or socialism. If we look at property as existing
not to facilitate exchange and wealth-creation alone, but
as part of a society where other things-such as worship
of God, love of family, cultivation of the intellect and
the fine arts-are paramount, and where the provision of
the material goods and services that man undoubtedly
needs is seen as something that is for the sake of those
more important goods, we might come to see that property
must be looked at as more than economic.
might also then begin to make distinctions, other than
those based on monetary values, about different sorts of
property. Land, for example, can be given a monetary value,
and thus we are accustomed to considering it as simply
one more form of property, equivalent to any other.
But there are many reasons for thinking that land is not
simply another form of property, or rather, that land is a
special form of property. On the purely economic level,
the amount of land is, in the first place, fixed, or almost
entirely so. It can be increased only rarely and with great
difficulty. Secondly, if land is rendered useless or harmful,
while theoretically it can be cleaned up, this process is
extremely difficult and expensive; in the case of nuclear
waste, such a process might take centuries. Thirdly, and
as following from the first point, land is the precondition
not only of economic activity, but for almost any
other kind of human activity.47 Thus Leo XIII’s famous
statement that “the earth, though divided among private
owners, ceases not thereby to minister to the needs of all;
for there is no one who does not live on what the land
brings forth.”48

Looking only to economic arguments, that is,
to arguments drawn from man’s need and ability to use
external goods, land is not the same as, say, stock certificates.
And this is confirmed for us if we look beyond
economic considerations. Nor, in doing so, are we moving
from the realm of the objective to the realm of the
subjective, from the realm of facts or reason to that of
“values” or emotions. Only if we regard man as purely an
economic being, as one who realizes his true self in producing
and consuming alone,can we think that it is solely
economic motives to which a hard headed person ought
to attend, and that everything else is simply the subjective
province of poets or dreamy clerics.49

What, in fact, is man’s life for? A Christian can
hardly say that it is for the amassing of goods. On the
contrary, our Lord said, “A man’s life does not consist in
the abundance of his possessions” (Luke 12:15). Rather,
it is our spiritual life, our intellectual life, our family and
community life, in which one’s true life consists. But if
this is so, then the external supports that mankind undoubtedly
needs ought to facilitate these aspects of life.
For example, family life is easier if a family can stay in
one place, if its extended family can grow up naturally
around it, if it can be part of the same parish and community.
But if land is seen as simply one among other
economic goods, to be sold at will for the sake of the
greatest gain, then the likelihood of such stable communities
and neighborhoods is reduced.

This special treatment of land can be seen in the
institution of the Jubilee year in the Old Testament.50
During the Jubilee year, which was to be observed every
fifty years, landed property would be restored to its original
owners. Even if a man did not have sufficient money
to buy back his property “in the jubilee it shall be released,
and he shall return to his property” (Lev. 25:28).

Moreover, what is true of land is true to a lesser
degree of other kinds of property, namely of all property
which directly serves a true human life. Just as we are all
dependent on the land, we are all dependent on the products
of the land and on many products of human art such
as clothes, dwellings, etc. It cannot be a matter of indifference
to a human community whether such products,
and the means for producing them, are confined to the
ownership of a few and sold to the others at high prices,
or whether they are widely available. Property must serve
man; that is what it is for. And since this is true, it follows
that the arrangements that mankind makes for managing
property are properly the concern of the community.51
As for other kinds of property, the kinds that might be
considered more derivative such as shares of stock, they
are legitimate only insofar as they truly serve the needs
of the kind of society I am about to sketch. Although
capitalism sees them as equal in validity to a farm or a
workshop, we must ask whether they are really so. Man’s
economic relations and activity must be part of his life,
not something separate, still less something which itself
remakes how man lives. But in fact, in modern times,
the economic system has tended to be the paramount
factor in human life, demanding that everything else be
reshaped to serve capitalist economic activity.

Only in modern “market society,” Polanyi argued,
is there a distinct “economic” motive, distinct
economic institutions and relations, separated out
from non-economic relations; and because human
beings and nature in the form of labor and landare
treated, however fictitiously, as commodities in
a self-regulating system of markets driven by the
price mechanism, society itself becomes an “adjunct”
of the market. A market economy can exist
only in a market society, that is, a society where,
instead of an economy embedded in social relations,
social relations are embedded in the economy.52

This last phrase is important: “instead of an economy
embedded in social relations, social relations are embedded
in the economy.” No one denies the necessity for
man to work, to produce, to consume, even to exchange
and trade. But as I pointed out in part one, under capitalism
it is economic activity, particularly the activities of
exchange and trade, which have come to dominate society,
to reshape society in their image. But society needs
to control economic activity so that it is a servant, not a master.

Now the notion of controlling economic activity
makes most people think of socialism or state control
of the economy. But this is not what I am talking about.
Rather, I am describing an economy in which, as much
as possible, economic activity performs its natural role
of providing man with the goods and services he needs
without coming to dominate life. And it is my proposition
here that this is best accomplished by what is called distributism.

Distributism is an economic system in which private
property is no longer regarded as something to be
manipulated, sold, resold, exchanged and transformed,
for the sake of gain alone, but rather something which is
for the production of necessary goods and services and
which, with the aid of legal and social systems, serves human
life and society. Thus a farm is for producing food,
and a farmer is a food producer, not someone who is
hoping for a good price when he is able to subdivide
his land and sell it to housing developers. Moreover, the
farmer is part of a rural way of life which has important
benefits for society, and by raising his family on his farm
the farmer is contributing to the health of the nation.
Nor are factories or workshops to be looked at primarily
as means for making money, but as existing for the sake of production. Producers must earn enough by their work to support themselves and their families. But their productive activity must serve a social end. It must have in view the common good. Thus there is a difference between a man making a living by producing (say) shoe and making a living by selling his shoe factory to a large corporation which will promptly close the factory and ship production overseas. Or between someone who makes his living selling books and someone who makes his living speculating on the rise and fall of the stock market. It is my contention that distributism is the best means of creating the kind of economy I have suggested, because well-distributed private property, safeguarded to prevent it being again concentrated in the hands of a few, will tend of itself to create conditions in which economic activity is viewed as for the sake of production rather than for the sake of gain alone, which will tend to create “an economy embedded in social relations,” and in which the intangible goods which the human community requires, such as stability and prosperity, are also fostered.

What, then, is distributism?53 Distributism is that economic system or arrangement in which the ownership of productive private property, as much as possible, is widespread in a nation or society. In other words, in a distributist society, most heads of families would own small farms or workshops, or in the case of entities which are necessarily large, such as railroads, they would either be jointly owned in some way by the workers themselves, or, less preferably, by the government.54

In the first place, it is necessary to discuss some of the objections to such an arrangement which readily occur to the reader. For example, it is often assumed that distributism necessarily entails a lower level of technology than we have today, or even a reversion to the technology of the Middle Ages. Neither of these assumptions is true. Although there may well be reasons to question the ever more rapid technological changes that are characteristic of our culture, and to wonder how much modern technology has really benefited man, distributism as such is incompatible with no particular kind or level of technology. It is true that the direction of technical research might well change towards inventing devices which are more useful to smaller enterprises, but this in itself does not mean a slowing down in inventions.

Secondly, when people hear the word distributism, it seems to some to suggest a situation in which the government takes away people’s property and gives it to others.55 Such people fear that the government will expropriate the property of the rich, or even the middle class, and distribute it to the poor. Those who have worked hard to accumulate something would find it taken away and given to those they consider lazy and envious. But this would not be the case. Rather, the chief method which Belloc suggests for establishing distributism would be the use of taxation, which would induce a sell-off of concentrated property. Excessive taxation is certainly wrong, but discussions and condemnations of unjust taxation by Catholic writers are concerned with a monarch’s or government’s appropriation of too much money from the citizens when this is not required by the exigencies of the common good. (See, e.g., St. Thomas Aquinas’s letter to the Duchess of Brabant, “De Regimine Judaeorum,” which, while chiefly concerned with questions about her Jewish subjects, contains a good short discussion of the subject of taxation in general.)

In the case of the taxation system which Belloc recommends to bring about well-distributed property, the intention and hope is that no one will ever have to pay a penny of it to the government. It is a use of taxation to achieve social goals, such as the tax credits given by the u.S. government to businesses to do certain things. It is not a scheme by the state to collect excessive funds, or indeed, any funds at all. Belloc himself was the determined opponent of excessive taxation. He writes, “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.” His point here is that well-distributed property means something different from property in a capitalist society. In the former it is connected with the family and is, in a way, part of the extension of a man’s personality; in the latter it is simply a store of money value. Thus, in a distributist society, taxation of property which truly supports a man and his family would be low.56

How would a distributist taxation policy work?
For example, if I own one or a few stores, I would have a
low or reasonable rate of taxation, but as soon as I begin
to assemble a chain of such businesses, then my rate of
taxation would rise so sharply that I could not continue
to own a large chain. In describing how such a system
might be applied within the territorial limits of England, Belloc wrote:

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.57

A similar scheme of taxation would attack “multiple
shops,” that is, stores selling many lines of goods,
such as department stores, and stores with “large retail turnover.”58

Of course, a suitable period of time (say, three to
five years) would be necessary during which large owners
should be able to complete an orderly sell-off of property
to small owners before the new tax system would
come into effect. Moreover, if this taxation were instituted
gradually, it would give these owners even more time
to prepare and also help to prevent a “firesale” of their
property. For instance, suppose in five years ownership
of ten chain stores would result in an increased but still
moderate tax. This would then increase every year so that
over a period of years the entire distributist legal framework
would be in place. Similarly, some form of guaranteed
loans would have to exist to allow those without
property or money to purchase the excess property that
was being sold.59 So, although every difficulty cannot be
anticipated, the main outline of how we might proceed is clear.

Since this tax structure would persist even after
a distributist economy had been established, this will answer
the objection that property will inevitably become
concentrated again,60 since all men are not equal in intelligence,
strength or energy, nor for that matter, in ruthlessness
or deceitfulness.61 Moreover, one key but often
overlooked point of distributism is the requirement that
small owners be formed into occupational groups or
“guilds,” after the manner of medieval producers and
after the teaching of the twentiethcentury popes who
championed this mode of organizing production, especially
Pius XI and Pius XII.

The safeguarding of the small unit, the seedlings
of re-afforestation, the delicate experiments in the
reconstruction of property, must take the form of
the Guild: not the unprotected guild arising spontaneously
(for that would soon be killed by the
predatory capitalism around it) but of the Guild
chartered and established by positive law.62

The role of the guilds, or as they might be called,
“occupational groups,” would be to provide a measure
of organization to the small owners, whether urban retailers,
small manufacturers, or small farmers. These
self-governing bodies could concern themselves with assuring
a supply of raw materials, with seeing that technological
knowledge were made available to the entire
membership, with prices and market share, with training
and apprenticeship programs, and with making sure that
no one firm or owner enlarged his business or farm so
as to begin anew the concentration of property.63 Occupational
groups might well own cooperative banks so
as to provide financing to their members. They could
also provide health insurance as well as benefits for their
widows and orphans. One can see from this that in a
distributist society the role of the state would actually be
reduced, as many matters now handled by the government
could be taken over by the occupational groups.
And in a Catholic society, they would have Masses said
for their deceased members and celebrate the feast of
the patron saint of their trade or occupation as the guilds
of the Middle Ages did. Overall, they would attempt to
foster a fraternal spirit, so that the members looked upon
each other as brothers serving the common good, rather
than as economic rivals.64

Another criticism of distributism that must be
faced was made by Todd Flanders in his paper already
referenced, “Where Distributivism Goes Wrong.”” Flanders
states “We also know that the widespread distribution
(i.e. transfer) of property that distributivists seek
could not be accomplished without massive state intervention
and the most tyrannical oversight of the transfers.65
Yet, some oversight would be necessary, but there is no reason to think that it need be “tyrannical.” Much of
the supervisory work could be done not by the government,
but by the occupational groups mentioned above.
Of course, for those who are convinced that the entire
distributist project is outrageous and unjust in itself, any
level of supervision would seem “tyrannical.” But the
recording of sales of property and property ownership
need not involve excessive or intrusive supervision by the
state.66

But if a distributist order were to be inaugurated,
another question presents itself: what is to become of
the huge amount of money which the present owners of
property would receive from the sale of their businesses
and land? Where would such a huge amount of money
be invested? Fortunately, it appears that the money would
match the need for money. That is, if would-be small
owners are to be set up in business, they would need to
be financed. Here the guilds or occupational groups, either
individually or jointly, could establish a fund to make
low-interest loans to the new owners. And the money for
these funds could be borrowed from the former owners
of property, who could possibly receive favorable tax
treatment of their interest payments if they made their
money available to these funds. And the repayment of
the loans by the small owners could be made from their
current profits; that is, a certain amount could be set
aside each year to pay back their start-up loans.67
Of course, no one would be forced to become an
owner under distributism. Some men will still prefer to
be employees, and doubtless some will remain employees,
willy-nilly. But the point is that society would tend
to look upon property and economic activity differently
from the way it presently does, and this would result in
a fundamental shift away from our commercialized society
with the difficulties attendant upon capitalism. Let us
look at just one of these difficulties, the conflict between
employment and inflation, and at how distributism would
be a remedy for this evil.

This instability, which is endemic to capitalism,
was well captured by this headline on the front page of
The Washington Post for November 11, 1997: “U.S. Jobless
Rate At 24-Year Low; Inflation Feared.” The story goes
on to say that this news caused the Dow Jones industrial
average to fall over 100 points and that “Federal Reserve
Chairman Alan Greenspan has cautioned that continued
shrinkage of [the number of unemployed] will lead to
higher inflation sooner or later.”68 What can one say
about an economic system which gets worse as it gets
better, or more precisely, as one measure gets better another
inevitably gets worse? If this were a characteristic
of socialism instead of capitalism, we can be sure that it
would have been widely denounced as a sign of the absurdity
of that system. It is worthwhile to look briefly at
the reason for this instability with full employment under
capitalism.

Under capitalism, production is not primarily oriented
toward use and consumption, but toward profit.
That is, instead of profit being a by-product of production
and consumption, production and consumption
are by-products of profit. For if my product is legal and
makes a profit, few capitalists care a fig about whether
it is really useful to society, and especially whether that
product is being produced in an amount that society can
absorb.69 Thus, car manufacturers hope that people will
buy a new car every few years, and spend large amounts
of money trying to persuade us to buy a new car, whether
we really need one or not. If every car owner kept his car
until it wore out, this would doubtless be a major problem
for auto manufacturers.70 Thus, there is no inherent
limit to capitalist production since it is driven by profit
alone, not by society’s needs.

But how does distributism remedy this problem?
God has created man and the earth in such a way that
through one man’s work more than one person can normally
be maintained. One family can produce more than
enough food for itself, and even before the industrial
revolution, civilization was capable of producing enough
food and shelter so that some members of society even
had the leisure to devote themselves to philosophic and
literary labors. We can see, therefore, that if the majority
of adult men were producers of the goods which mankind
needs in order to live a truly human life, not only
would we have plenty of goods to go around, but some
could devote themselves to the cultivation of spiritual
and intellectual goods. For those working to produce
necessary material goods, if their efforts resulted in an
abundance of such goods, then, since they would be selfemployed,
they could easily cut back on their work so as
to have more time for leisure. Full employment would be
the norm under distributism, but it would not result in
harmful inflation.

Under capitalism at full employment, employees
can demand wage increases which are harder for firms to
refuse because of a shortage of workers. In addition, the economy needs to sell the goods it produces in order
to provide this full employment, since without buyers for
their products firms cannot hire employees. This in turn
requires advertising, which leads to an increased demand
and thus to higher prices.

The preponderance of the evidence indicates that
inflation can be affected by the pressure of demand in
labor and product markets. If unemployment is pushed
above the lowest sustainable unemployment rate, inflation
tends to moderate, while high output and employment
tend to lead to rising inflation.71

But in a distributist economy, these factors would
not apply. First, with the employer/employee relationship
much rarer, the entire wage question would be a much
less important component of the national economy. Secondly,
each producer would need to sell only enough to
maintain himself and his family, and not provide for a
self-fueling economic engine that feeds upon itself. If
one million independent micro-businesses were producing
and providing the products and services that people
needed, such would be an essentially stable relationship.
As population increases, so do providers of goods and
services. There is nothing in this relationship to cause inflation
or other economic dislocations.72 It is firmly rooted
in the nature of man as both producer and consumer,
producer of the real economic goods he needs to live his
life, but producer in sufficient quantity that his entire life
need not be occupied with work.

We have seen that capitalism, the separation of
ownership and work, necessarily leads to many different
kinds of economic exploitation and dislocations. Distributism
is offered as an alternative, an alternative founded
on man’s real need for external economic goods, but
recognizing that man is not simply a worker or consumer,
and that the economic apparatus must be firmly subordinated
to the totality of man’s existence. Capitalism is
able to maintain its hold on our minds chiefly because it
is supposed that its only rivals are socialism or communism.
But if in our consideration of economics we refuse
to allow the preconceived categories of modern secular
thought to bind our thinking, then perhaps we can look at
alternatives. If we do this, the alternative of distributism
stands before us as a very attractive possibility, a possibility
that can become a reality only first by capturing our
minds, our imaginations and finally our wills.

Notes

1 This article incorporates some material originally published in my “Some Economic and Cultural Considerations of Capitalism,” Caelum et Terra, vol. 5, no. 1, winter 1995.
2 Hilaire Belloc, The Crisis of Civilization (Rockford, IL: TAN Books, 1992 printing), 139.
3 Robert Heilbroner, The Nature and Logic of Capitalism (New York: WW Norton, 1985), 14.
4 Amintore Fanfani, Catholicism, Protestantism and Capitalism (New York: Sliced & Ward, 1939).
5 Ibid., 9-10.
6 Joseph Schumpeter, “Capitalism,” Encyclopaedia Britannica, 1962 ed., vol. 4, 801.
7 As against Schumpeter’s statement, we may proffer the words of Fanfani, “Capitalism … is wholly original, and was perhaps unknown to any age but that which followed the thirteenth or fourteenth centuries” (Catholicism, Protestantism and Capitalism, 9). Furthermore, as we will see, Schumpeter’s statement contains an equivocation about the
role of private initiative in the economy.
8 Robert Heilbroner, The New Palgrave: a Dictionary of Economics Vol. I (London: Macmillan, 1987) vol. 1, 347. Earlier Heilbroner had written, “For it is not socialism alone that presents us with a confusing heterogeneity of systems,
but capitalism as well; and yet we feel perfectly assured in applying the common term ‘capitalist’ to worlds as far
apart as those depicted by Sinclair Lewis and Thomas Mann, or Faulkner and Proust. And there is a very good reason
for our generalizing approach to the societies of capitalism. This is the presence within all of them of a common set
of institutions and ideas the institution of the basically uncontrolled market system and the ideas of the legitimacy of the private ownership of the means of production. In a word, we find a business system at the core of all capitalist societies, no matter how diverse their other characteristics.” Between Capitalism and Socialism (New York: Random
House, 1970), 80.
9 Calvin B. Hoover, “Capitalism,” International Encyclopedia of the Social Sciences, vol. 2 (Macmillan & Free Press, 19 68), 295-296.
10 Lynn Turgeon, The Contrasting Economies: a Study of Modern Economic Systems (Boston: Allyn and Bacon, 2nd ed., 1969), 23.
11 John Groenewegen, “Institutions of Capitalisms: American, European, and Japanese Systems Compared,”
Journal of Economic Issues, no. 2, (June 1997): 335.
12 Pius XI, Quadragesimo Anno, #100. 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, 23, no. 6 (June 1931): 209-210.
13 It is not suggested that in a capitalistic economy there are no economic activities in which the same person
supplies both labor and capital, simply that such separation is the characteristic note.
14 A few economists have given a more or less similar definition. E.g: “Here, then, is the essential dividing line:
under capitalism the worker does not work on his own; he works for his employer, the capitalist. The worker is propertyless
and has to offer his labour for sale in the market. The capitalist, by virtue of his owning capital, is in a position
to buy labour.” For example, see A. K. Dasgupta, Phases of Capitalism and Economic Theory (Delhi: Oxford University
Press, 1983), 125. In a sense, this definition is implicit in Marx, e.g., The Communist Manifesto, “In proportion as the
bourgeoisie, i.e., capital, is developed, in the same proportion is the proletariat, the modem working class, developed-a
class of labourers, who live only so long as they find work, and who find work only so long as their labour increases
capital.” Cited in Great Books of the Western World, Vol. 50, 422.
15 Thus under the German co-determination (Mitbestimmung) system, since labor is associated in the management
of capital, we no longer have capitalism in its pure or perfect form.
16 Of course, those who manage a firm are occupied with production. Thus, firms actively managed by the proprietor
are an imperfect form of capitalism, since they preserve some features of a non-capitalist order. The capitalist
here is still focused on production. It is in the corporation that capitalism assumes its perfect form.
17 Turgeon, 23.
18 See St. Thomas Aquinas, Summa Theologiae, I-II, q. 2, a. 1 ad 3, “… the appetite of natural riches is not infinite,
because according to a set measure they satisfy nature; but the appetite of artificial riches is infinite, because it
serves inordinate concupiscence …”
19 Fanfani, 128.
20 Bede Jarrett, Social Theories of the Middle Ages (Westminster, MD: Newman Press, 1942), 155.
21 “But wealth obtained indirectly as profit out of other men’s work, or by exchange, becomes a thing abstracted
from the process of production. As the interest of a man in things diminishes, his interest in abstract wealth
money increases. The man who makes a table or grows a crop makes the success of the crop or the table a test of
excellence. The intermediary who buys and sells the crop or the table is not concerned with the goodness of table or
crop, but with the profit he makes between their purchase and resale. In a productive society the superiority of the
thing produced is the measure of success: in a Commercial society the amount of wealth accumulated by the dealer
is the measure of success.” Hilaire Belloc, An Essay on the Nature of Contemporary England (New York: Sheed & Ward, 1937), 67.
22 See Rerum Novarum, #4 and #35; Quadragesimo Anno, #59 – #63; Mater et Magistra, #112 – #115; Laborem Exercens, #14.
23 Timothy Aeppel, “Juggling Act: More Plants Go 24/7, and Workers Are Left at Sixes and Sevens,” The Wall
Street Journal, Tuesday, July 24, 2001, Al.
24 Fanfani, 106-107.
25 The Popes have often deplored the separation of ownership and work; cf. Leo XIII’s statement, “The law
… should favor ownership, and its policy should be to induce as many people as possible to become owners.” Rerum Novarum, #35.
26 Fanfani, 22. Max Weber, in The Protestant Ethic and the Spirit of Capitalism (New York: Charles Scribner’s,
1958; orig. published in 1904-05), summarized the capitalistic spirit in these words, “Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated
to man as the means for the satisfaction of his material needs. This reversal of what we should call the natural relationship,
so irrational from a naive point of view, is evidently as definitely a leading principle of capitalism as it is
foreign to all peoples not under capitalistic influence,” 53. Weber, as does Fanfani, distinguishes between capitalism as
a system (what he calls “the capitalistic form of an enterprise”) and the spirit of capitalism. See 64-69.
27 Ellen Meiksins Wood, “From Opportunity to Imperative: the History of the Market,” Monthly Review, 46,
no. 3 (July/August 1994): 20.
28 Ralph Lerner, “Commerce and Character: the Anglo-American as New-Model Man” in Michael Novak, ed.,
Liberation South, Liberation North (Washington: American Enterprise Institute, 1981), 25.
29 Ibid., 26.
30 Ibid.
31 Ibid., 30. Lerner’s entire essay, written by one who favors the commercial order, should be read in order to
see exactly how far the new capitalist world is opposed to traditional Western and Christian life.
32 Ibid., 33.
33 Thomas Molnar, Authority and Its Enemies (New Rochelle, NY: Arlington House, 1976), 76. Contrast the picture
Molnar paints here of a society engaging in communal festivity with a society in which the factories run twentyfour
hours a day, seven days a week, with no room for any communal festivity or even for the common observance
of Sunday.
34 Josef Pieper, In Tune With the World (South Bend, IN: St. Augustine’s Press, 1999). See, for example, 9.
35 Rerum Novarum, #35.
36 This is the truth, for example, behind the passage in Pope John Paul II’s encyclical Centesimus Annus, in
which he contrasts the attempt in the decades after World War II to defeat communism by trumpeting the material
goods of our economy and way of life. The Holy Father writes (#19), “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
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.” (Emphasis mine.)
Apropos here are these words of Fulton Sheen: “The Church agrees with some of the protests of communism.
In fact, there is a far better critique of the existing economic order based on the primacy of profit in two Encyclicals
of Leo XIII and Pius XI than there is in all the writings of Marx. But the reforms of communism are wrong,
because they are inspired by the very errors they combat. Communism begins with the liberal and capitalistic error
that man is economic, and, instead of correcting it, merely intensifies it until man becomes a robot in a vast economic
machine. There is a closer relation between communism and monopolistic capitalism than most minds suspect. They
are agreed on the materialistic basis of civilization; they disagree only on who shall control that basis, capitalists or
bureaucrats. Marx himself admitted he got many of his economic ideas from liberal economists such as Ricardo and
the author of an anonymous work on interest. Capitalistic economy is godless; communism makes economics God.
It is Divinity itself. Capitalism denies that economics is subject to a higher moral order.” Communism and the Conscience
of the West (Indianapolis: Bobbs-Merrill, 1948), 80-81.
37 John Kenneth Galbraith, The Affluent Society (New York: Mentor, 1958), 59. Ricardo lived from 1772 until 1823.
His chief work, The Principles of Political Economy and Taxation, was published in 1817.
38 Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: Harper,- 3rd edition, 1950), 22.
39 Sometimes what is known as Austrian economics is contrasted with the mainstream neoclassical school.
And there are differences. The Austrians are (rightly) much more skeptical about econometrics, for example, and seem
to regard the factor of time more realistically than does the neoclassical school. Also, they are not mesmerized by
(as Ludwig von Mises put it) the “mathematical description of various states of equilibrium,” which he described as
“mere play.” I am here considering them as allied with the mainstream, however, for these reasons: Their general use
of a deductive methodology Carl Menger, the founder of Austrian economics, “defended the role of a priori, deductive
theory against the antitheoretical stance of the burgeoning German Historical School” yet this deductive approach to the multifarious human activities that constitute the economy is one of the hallmarks of the tradition
descending from Adam Smith, and one of its most objectionable features. Secondly, their policy prescriptions are, if
anything, more radically free market than those of the neoclassical school. As Geoffrey Hodgson wrote, after noting
some of the differences in the Austrian approach, “. . . in other respects the neoclassicals and Austrians share common
ground. This is particularly the case in regard to their inheritance of classic liberal ideology.” David L. Prychitko,
ed., Why Economists Disagree: An Introduction to the Alternative Schools of Thought (Albany: State University of New York,
1998), 5, 17, 164.
In this same vein, F. A. Hayek, wrote that “Carl Menger … was among the first in modem times consciously
to revive the methodical individualism of Adam Smith and his school.” “Individualism, True and False” in Chiaki
Nishiyama and Kurt R. Leube, eds., The Essence of Hayek (Stanford: Hoover Institution, 1984), 154.
40 Michael Novak, ed., Liberation South, Liberation North, 97.
41 Ellen Meiksins Wood, 20.
42 When I say “traditional societies,” I am not thinking primarily of primitive or uncivilized societies. Rather,
I am using the term as it was used in Walt Rostow’s The Stages of Economic Growth (Cambridge University Press, 2nd
ed., 1971). In Rostow’s usage, “traditional societies” include not only primitive cultures, but the high civilizations of
ancient Greece and Rome, China, India, medieval Europe, indeed all human cultures up to the triumph of the scientific
revolution in eighteenthcentury England. Rostow defines it thus: “A traditional society is one whose structure is
developed within limited production functions, based on pre-Newtonian science and technology, and on pre-Newtonian
attitudes toward the physical world. Newton is here used as a symbol for that watershed in history when men
came widely to believe that the external world was subject to a few knowable laws, and was systematically capable of
productive manipulation,” 4. See also C. S. Lewis’ essay, “De Descriptione Temporum,” in his Selected Literary Essays
(Cambridge University Press, 1980), 1-14. Lewis likewise places what he calls “the Great Divide” in human history at
about the same time as Rostow does.
43 This is akin to what John Paul II calls “the error of economism,” that is, “of considering human labor
solely according to its economic purpose,” Laborem Exercens, #13. Strikingly, the Holy Father links the rise of economism
with the separation of labor from capital. As I argued in the first section, capitalism does this not just to human
labor but to the whole of human society.
44 Galbraith says that the criterion of efficiency for increased production is the only one that mainstream
economics considers of any importance. The Affluent Society, 223-226.
45 Between 1970 and 1997 the “percent distribution of aggregate income” received by the lowest 20% of
the U.S. population fell from 5.4% to 4.2%, while the percentage received by the top 5% rose from 15.6% to 20.7%.
During the same period, the percent received by the highest 20% rose from 40.9% to 47.2%. Statistical Abstract of the
United States, 1999 (Washington: Government Printing Office) table 751.
46 Capitalism, at least as upheld by many of its exponents, makes a kind of equity claim just as much as socialism
does, in the sense that it sees itself as the best means for eliminating poverty and thus raising the general level of
wealth. See, for example, Michael Novak, This Hemisphere of Liberty: a Philosophy of the Americas (Washington: American
Enterprise Institute, 1990), 101-106.
Some carry this notion rather far. “The market economy has created unfathomable prosperity and, decade by
decade, century by century, miraculous feats of innovation, production, distribution, and social coordination. To the
free market, we owe all material prosperity, all leisure time, our health and longevity, our huge and growing population,
nearly everything we call life itself. Capitalism and capitalism alone has rescued the human race from degrading
poverty, rampant sickness, and early death.” Llewellyn H. Rockwell, Jr., “The Legitimacy of Capitalism.” Posted July
19, 2002 on the website of the Ludwig von Mises Institute, www.mises.org.
This concern, for efficiency and equity, is present in the earlier capitalist theorists also: for example, in Smith
and Ricardo. The full title of Smith’s work is An Inquiry into the Nature and Causes of the Wealth of Nations and he sees
his principle of the division of labor as being chiefly responsible for this increase of wealth; see bk. I, chaps. 1-3.
Similarly, Ricardo argues that only by applying his own free-market solution will the poor really be helped, and that
any “interference of the legislature” or “systematic or casual charity” will, so he avers, end up hurting the poor more
than helping them, and “he is the best friend of the poor” who can come up with the best scheme for abolishing the
current welfare laws. Principles ofPolitical Economy and Taxation (London: J.M. Dent, 1911), 61-62. See the entire chapter 5, “On Wages.”
47 Moreover, farming, and any other sort of work directly dependent on the land, such as the herding of
animals, does not fit the capitalist free-market paradigm which is taken from commercial activity. Farms, for example,
cannot be moved to cheaper locations as can factories, and they are heavily dependent on non-economic factors, such
as the weather. Successful farming is more than a job; it is a way of life, and often requires several generations to learn.
But if farmers are uprooted from the land, who is there to teach this knowledge when new farmers are needed?
48 Rerum Novarum, #7.
49 See Centesimus Annus, #19 and #24.
50 See Leviticus 25:8-17, 23-55.
51 That property rights are not absolute and are subject to reasonable regulation by the civil authority is clear
from papal teaching. See, for example, Quadragesimo Anno, #44-52 and Populorum Progressio, #23-24.
52 Ellen Meiksins Wood, 20.
53 Much of this description of distributism is taken from Hilaire Belloc’s The Restoration of Property (New York:
Sheed & Ward, 1936, republished 1946), the most complete discussion of a distributist order and how it might be
established. The last few chapters of Belloc’s The Crisis of Civilization (1937) as well as G. K. Chesterton’s The Outline
of Sanity (1926) are also helpful, as are parts of his What’s Wrong With the World (1910). These latter three are in print
today.
54 Hilaire Belloc, The Restoration of Property, 88. It is probably worth noting that Pius XI in Quadragesimo Anno
specifically sanctions state ownership of certain industries. See #114.
55 It may well be that some other name should be found for distributism, e.g., the system of micro-property.
56 See Hilaire Belloc, The Restoration of’Property, 119.
57 Ibid, 69.
58 Ibid. As to this last Belloc writes, “Your large retail distributor who has only one place of business and who
deals with only one kind of business can be, and is, in his way, destructive to the small man just as much as the large
distributor who owns chain shops or has a multiple department store,” 72. Belloc also sketches the means for the
establishment of a rural distributist order. See The Restoration of Property, 93-118.
59 Belloc himself touches on this point in The Restoration of Property, 72. But for a more developed theory which
could easily be adapted to the establishment of distributism, see John H. Miller, ed., Curing World Poverty, the New Role of
Property (St. Louis: Central Bureau/Social Justice Review, 1994), for some interesting ideas about financing enterprises
out of future profits, accompanied by loan guarantees. See especially 133-149.
60 This is one of the criticisms made by Todd Flanders in his paper, “Where Distributivism Goes Wrong”
(available on the Acton Institute website, www.acton.org).
61 Lest it be thought that this is too harsh a judgment on those who are successful in a competitive business
environment, one should remember the at least equally harsh judgment of Pius XI expressed in Quadragesimo Anno,
#107: “This accumulation of power, a characteristic note of the modem economic order, is a natural result of unrestrained
free competition which permits the survival of those only who are the strongest. This often means those who
fight most relentlessly, who pay least heed to the dictates of conscience.”
62 Hilaire Belloc, The Restoration of Property, 136. See 136-140.
63 Leo XIII recommended the re-establishment of the guilds for the purpose of bringing about peace between
capital and labor at least as early as 1885. Cf. Joaquin Azpiazu, The Corporative State (St. Louis: Herder, 1951), 86-87. In
his encyclical Rerum Novarum, he spoke about them especially in #36-43. He entrusts them (#34) with authority over
wages, “the hours of labor in different trades, the sanitary precautions to be observed in factories and workshops”
and other matters not specified. In Quadragesimo Anno, Pius XI speaks of them again (#81-87). The literature on them,
from the 1930s and 1940s especially, is voluminous. Nor have subsequent popes been silent on them. Pius XII spoke
of them often, and John XXIII in Mater et Magistra (1961) also refers to them (#37). See also #65-67, #84, #86-90,
#100. John Paul II also clearly alludes to occupational groups in Laborem Exercens, #14 and #20 and in Centesimus Annus,
#7, #13, #43, #48.
64  The notion that those who are in the same line of work ought to regard each other not as competitors but
as brothers engaged in serving the common good might seem strange. But as Richard Tawney pointed out, “The idea
that there is some mysterious difference between making munitions of war and firing them, between building schools
and teaching in them when built, between providing food and providing health, which makes it at once inevitable and laudable that the former should be carried on with a single eye to pecuniary gain, while the latter are conducted
by professional men who expect to be paid for service but who neither watch for windfalls nor raise their fees merely
because there are more sick to be cured, more children to be taught, or more enemies to be resisted, is an illusion only
less astonishing than that the leaders of industry should welcome the insult as an honor and wear their humiliation as a
kind of halo. The work of making boots or building a house is in itself no more degrading than that of curing the sick
or teaching the ignorant. It is as necessary and therefore as honorable.” The Acquisitive Society (New York: Harcourt,
Brace & World, 1920), 96. If today it sometimes seems that physicians or teachers are more interested in money than
they were when Tawney wrote, this is in part because of the pervasive commercialism of our society that tends to
make one measure all human activity by the amount of money it takes in.
65 Available on the Acton Institute website.
66 Could a distributist economy be instituted without the kind of taxation that Belloc proposes? In his Outline
of Sanity, Chesterton suggests “half a dozen things which would help the process of Distributism.” They range
from a “league of voluntary dedication,” apparently to buy only from small shops, to subsidies to small operations
to the “taxation of contracts so as to discourage the sale of small property to big proprietors.” The Collected Works of
G. K Chesterton, vol. V (San Francisco: Ignatius Press, 1987), 98. See his whole chapter, “A Misunderstanding About
Method,” 91-99. Certainly there is no reason why a combination of methods could not be used.
67 See John H. Miller, 133-149.
68 “At full employment the economy is patently unstable. Prices move relentlessly upward. But if production
is much below the full employment level, a drastic reduction in income is visited on those who are unable to find jobs.
This is taken as a serious indication of economic failure, and is.” Galbraith, The Affluent Society, 235.
69 “Of itself, an economic system does not possess criteria for correctly distinguishing new and higher forms
of satisfying human needs from artificial new needs which hinder the formation of a mature personality,” Centesimus
Annus, #36.
70 In 1995, of the 123.2 million cars in use, 46.2 million were under 5 years in age, and 26.9 million were 6-8
years old. Statistical Abstract of the United States, 1999 edition, table 1032.
71 Paul A. Samuelson and William D. Nordhaus, Macroeconomics (Boston: Irwin, McGraw-Hill, 1998), 332-333.
72 In fact, it is probably the truth that, the closer an economy is to pure barter, the more healthy and stable its
exchange relationships will be and the less susceptible to inflation or other negative factors. As Ricardo himself said,
“If any cause should raise the price of a few manufactured commodities, it would prevent or check their exportation;
but if the same cause operated generally on all, the effect would be merely nominal, and would neither interfere
with their relative value, nor in any degree diminish the stimulus to a trade of barter, which all commerce, both foreign and
domestic, really is.” The Principles of Political Economy and Taxation, 149. Emphasis mine. This is not to suggest that we seek
to establish a barter economy, which is an absurdity; rather it is to point out that to the extent that money and the
money supply come between buyer and seller there is more of a chance for dislocations caused by what ought to be
simply a means of facilitating exchange and serving as a store of value. When money takes on a life of its own, so to
speak, it necessarily complicates the economy and is apt to become a cause of inflation, among other negatives. This
is especially evident in financial speculation, where purely monetary transactions that have no economic value (that
is, produce no real economic goods) become a means of enriching the speculator, often to the detriment of the real
economy. Money here has become an enemy of the economic system. Consider these words of George Soros: “I am
sure that speculative activities have negative consequences but I never think about them and cannot afford to think
about them. If I stopped doing some things because of moral scruples, I would have to stop being a speculator. I feel
no remorse whatsoever about having won money when the pound was devalued; I did not speculate against the pound
to help England or hurt her; I did it to earn money.” Quoted in Helen Alford and Michael Naughton, Managing As If
Faith Mattered: Christian Social Principles in the Modern Organization (Notre Dame: Notre Dame University Press, 2001), 53.