Distributism: A Third Way
Since the beginning of the nineteenth century and the collapse of the old order of guilds and protectionism, as well as the rise of industrialism, two economic theories have dominated Western, economic thought. These two ideologies are capitalism and socialism.
Capitalism began with the publication of Adam Smith’s The Wealth of Nations in 1776 , which argued against the protectionist policies that then dominated Europe. Adam Smith was a British economist who argued that free trade would prove to be mutually beneficial to both trading nations as well as provide more prosperity than mercantilism. This was quite against the old economic theory that taught free trade would harm a nation as it would be overwhelmed with imports which would threaten domestic producers. Mercantilism sought to control trade through taxes aimed against imports. Capitalism supports free trade, private property and minimal state interference in the economy.
It can be said that free trade and capitalism have long ago vindicated Adam Smith. Capitalist countries are among the richest and most innovative in human history. However, this prosperity comes with a price. As wealth became more concentrated in the hands of the managers and entrepreneurs, a sharp divide was created between labor and management, rich and poor. Factory owners took home a profit while their workers ended up starving in slums. George Godwin, a British editor, described one such London slum in 1859 as ““…filled with fetid refuse, of which it had been the receptacle for years. In some… it seemed scarcely possible that human beings could live: the floors were in holes, the stairs broken down, and the plastering had fallen… In one, the roof had fallen in: it was driven in by a tipsy woman one night, who sought to escape over the tiles from her husband.”
It is only natural that such conditions would create resentment and a new economic theory was born. This was socialism. Socialism supports public ownership of property. This can mean state ownership of the means of production or the means of production can be owned by the workers. The latter system has never been tried. Early socialist thinkers included Robert Owen and Vladimir Lenin. In every socialist country to date, everything has been owned and controlled by a central government. Dissension is ruthlessly suppressed and there are little to no civil liberties. Socialist countries include Nazi Germany and the Soviet Union. Both nations were abject failures. Some argue that Scandinavian countries are socialist, but they have private ownership so they are not socialist by definition.
Capitalism has serious flaws, but socialism is worse. Is there an alternative? A third economic system was formulated by British writer GK Chesterson and French writer Hillaire Belloc. Distributism supports private ownership, but takes this one step further than Capitalism. The main problem with Capitalism, according to Distributism, is that not enough people are owners. Property is in fact owned by a small elite who are supported by the labor of the workers. The common man or woman is deprived of the fruits of his or her labor while profits go to whoever they work for.
To the Distributist, this is fundamentally unjust. Distributism revolves around the ideal that everyone should own their own property, that “each man should have something which he can shape in his own image as he is shaped in the image of heaven” to quote Chesterton. In this system, exploitative corporations would be replaced by co-operatives in which the workers would all take part in ownership and share the profits of their labor, policies would be enacted which would support small, family-run businesses and the monopolies that dominate our current economic landscape would be permanently dismantled.