“More and more, I find Catholics dividing themselves into capitalist and distributist camps,” writes Bernardo Aparicio García, president of the Catholic journal Dappled Things. To help readers establish “a firm foundation” for thinking about economic questions, García opened up the pages of his journal to Robert T. Miller, for capitalism, and John C. Médaille, for distributism. The result is a lengthy exchange “On Truth and Trade: Economics and the Catholic Vision of the Good Life.”

Miller is a professor of law at the Villanova University School of Law and writes for First Things. Médaille is an adjunct instructor of Theology at the University of Dallas, and a businessman in Irving, Texas. He writes for the Distributist Review. Here are some snippets from the debate:

Miller:

… I will defend a more modest proposition, namely, that, for people like us in a society like ours, capitalism is the most reasonable choice among the various economic systems we might adopt. To defend this more modest proposition, I start with some deep assumptions about human life.

Among these, the deepest is that human beings, being physical beings, have material needs and so must organize the world’s material resources to meet them. Another deep assumption is that even modestly complex manipulations of material resources—let alone sophisticated projects like building transcontinental railroads, designing computers and their software, or refining petroleum products—require the cooperation of very large numbers of human beings. This point is vastly under-appreciated. In 1958 Leonard Read famously estimated that the number of human beings involved in producing an ordinary wooden pencil from raw materials to final product exceeds one million; nowadays, in a more complex economy, that’s probably a gross underestimate. Yet another assumption is that information about the various possible uses of resources is difficult to obtain and analyze and, moreover, changes very rapidly.

From a moral point of view, what we want from an economic system is that it generate and distribute resources in a way that maximizes the long-run probability that all members of society have enough goods and services to lead decent lives. One way to do this would be to appoint a central body authorized to allocate resources and charged with responsibility to ensure that everyone receives a fair share. This is socialism, and it has proved a very poor solution to the economic problem. There are two main reasons for this. The first concerns information: the central authority cannot acquire enough reliable information, much less process it fast enough, to allocate resources efficiently. This results in tremendous waste. Thus, in the former Soviet Union, warehouses full of unneeded machine parts sat and rusted while consumers found no toilet paper on the store shelves.

Médaille:

Clearly, the standard model of economics has failed us. Not only has it failed to bring a stable economic order, but it has destabilized the family and the community as well, and grown the government past any reasonable bounds. Clearly, a different model is needed. Note that I said “different” rather than “new.” It is not a question of inventing new systems, but of examining existing systems to see what works and what doesn’t. Economics—or rather political economy—is preeminently a practical science. We need to find out what works, and adapt it to our own circumstances. Inventing models is easy; getting them to work is hard. And if a system has no existing implementations, we are permitted to assume that it can’t be implemented. So, can we find a system on the ground and working that will address our questions of political economy?

I believe we can, and that system is distributism. This system seeks to restore distributive justice to its proper place in the economic order; its main tenet is that without a proper distribution of the rewards of production, markets cannot be cleared, family life will be disturbed, and the markets will become more dependent on government and consumer finance to clear.

Now the major difference between distributism and conventional economics has to do with property and a just wage; that is, with the things the Catholic Church teaches as essential to economic order. Standard economics justifies the wage on the basis of “free contract,” that is, if there is no government coercion which forces someone to accept a given wage, then the wage must be considered “just.” Further, through free bargaining, both sides, capital and labor, will get what they actually produce and productivity will be properly rewarded.

Also see Beyond Distributism by Thomas E. Woods Jr., available in the Acton Bookshoppe.


  • Roger McKinney

    Médaille: “Clearly, the standard model of economics has failed us.”

    No argument there! But the failure is the result of implementing distributivism,
    not with free markets.
    Médaille: “Standard economics justifies the wage on the basis of “free
    contract…”
    Church scholars in the 16th century decided the same thing. BTW, there
    is no free market in labor in the US. Myriads of regulations work to fix wages along
    the lines of distributivist nonsense.

    • http://tonylayne.blogspot.com/ Anthony S. Layne

      Roger, Dr. Médaille is not plugging distributivism, but distributism. From the rest of your remarks, it’s clear you have the two confused.

      • Roger McKinney

        I like redistributionarianivistalism better.

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  • Rick DeLano

    Miller makes a good point about Soviet warehouses.
    I reply that the capitalists were clever enough to make sure their grotesque misallocations vanished into thin air, leaving no evidence of their having existed at all.

    The key element missing from this analysis so far imo is the ecclesially charged word, that word which every Catholic could define with precision two and a half centuries ago, and no two Catholics can agree upon what it even signifies today:

    Usury.

    It is the abandonment of the proscription against usury which opens the door to capitalism.

    Like Enlightenment science, it had an excellent run.

    Past tense most definitely intended.

    charged

  • C3

    The implementation is in the distribution of future holdings, not current.  You’ll create a war like the world has never seen if you attempt to take what is currently possessed by its possessors.  Tax policy along with governmental regulations that reward business models of the distributist paradigm is the only way to foster an atmosphere of acceptance.  By governmental regulations I’m speaking of “front of the line” or “VIP” treatment for businesses which comply with a set of standards outlining the just and equitable distribution of compensation based on contribution.  This VIP treatment would — along with tax breaks — involve accelerated patents, FDA, USDA approval, things of that nature. Also with the increased distribution of compensation businesses could more easily put the costs of holding employees onto the employees.  Health benefits not being pooled through the employer could be pooled through a consumer group to actualize the group rate.  The current benefit system as a means of compensation is no longer a tenable position.  The free spirited nature of companies to take away these benefits on a whim and attempting to justify these loss in benefits as a result of “being accountable to their shareholders” is almost criminal.  What other “contract” would allow one side the overwhelming advantage that the employer has against his employee?

    • Roger McKinney

      But who will decide what is just? Church scholars determined centuries ago that the only just transaction is a free one. Should we abandon that and let bureaucrats decide?

  • bob

    Roger McKinney states our economy is redistributivist. That’s correct. We redistribute from the middle class to the wealthy. While our federal tax code is SLIGHTLY progressive, state and local taxes are STRONGLY regressive. In addition, the economic structure of our country has turned this into a plutocracy where the richest 1% have had an increase of 500% in the last 30 years while the middle class has had zero (adusted for inflation).

    • http://www.jordanballor.com/ Jordan Ballor

      If by “slightly” progressive you mean “the most progressive income tax system among industrialized nations,” at least by one OECD measure, then you would be correct. 

      http://www.taxfoundation.org/blog/show/23856.html

    • Roger McKinney

      Yeah, social security, medicare, medicaid, welfare all redistribute wealth to the wealthy.

  • http://www.facebook.com/bpuharic Bob Puharic

    As I pointed out, the US federal tax system is SLIGHTLY progressive. However, as conservative Harvard economist Greg Mankiw admits, the US ‘welfare’ state is ALOT less effective at reducing poverty and protecting workers who lose benefits than other western countries are. AND, as I previously pointed out, STATE and LOCAL taxes are regressive, as are payroll taxes. Here’s the link to Mankiw’s site. http://gregmankiw.blogspot.com/2011/03/what-nation-has-most-progressive-tax.html. And the US, while in the top 10 in terms of economic freedom, is less free than such social democracies as Switzerland, Canada, Denmark,  Ireland, etc., which have strong social safety nets (such as national health insurance).
     
    We also have the problem that, in real terms, middle class male wage earners have had their wages decrease by 27% between 1969 and 2009. http://www.msnbc.msn.com/id/44288256/ns/business-us_business/
     
    I’m not sure how conservatives square the fact that Sweden has higher social mobility than the US does with the idea this is the country of the “American Dream’. Societies with high income inequality tend to be unstable. The “American Dream” is now a myth fueled by conservatives who seek to deny the economic fact that the weatlhiest have continued to concentration financial resources among them while systematically destroying the middle class. This is probably not intentional, but is the result of supply side fundamentalism that has held sway here for the last 30 years or so. That experiment has failed but conservative elites refuse to acknowledge it.

    • http://www.acton.org/ John Couretas

      Is Sweden a False Utopia?
      http://www.newgeography.com/content/001543-is-sweden-a-false-utopia

      The old Sweden, in contrast, has not done as well in economic terms. In 1960 taxation stood at 30 percent of GDP, roughly where the US is today. As taxes rose, economic growth decreased, with Sweden dropping from being the 4th richest country in 1970 to being the 12th richest in 2008. Swedish GDP per capita is now $36,600, far below the $45,500 of the US, and even further behind the $56,900 of Swedes in America.

      A Scandinavian economist once stated to Milton Friedman: “In Scandinavia we have no poverty.” Milton Friedman replied, “That’s interesting, because in America among Scandinavians, we have no poverty either.” [ ... ] Ironically, this points us towards the conclusion that what makes Sweden uniquely successful is not the welfare state, as is commonly assumed. Rather than being the cause of Sweden’s social strengths, the high-tax welfare state might have been enabled by the hard-won Swedish stock of social capital. It was well before the welfare state, when hard work paid off, that a culture with strong protestant working ethics developed. [ ... ] The high-tax state has also created an increasingly threatened middle class. In a recent study, the Swedish Taxpayers association noted that wealth formation among the middle classes is weak. There is little correlation between earnings and wealth amongst Swedes. Instead of building capital, Swedes go into debt: 27 percent of Swedish households in fact have more debts than wealth, compared to between 16 and 19 percent in the US. With middle class wealth formation being held back by high taxes, Sweden has ironically developed a more unequal wealth distribution than the US. The Gini coefficient for ownership is almost 0.9 in Sweden, compared to slightly above 0.8 in the US.

      The Myth of the Declining Middle Class
      http://stats.org/stories/2008/myth_decline_middle_june9_08.html

      Since the late 1970s there has been a substantial decline in the number of adults living in husband-wife couples. At the same time, there was a small rise in the share of single adults with children and a large rise in the number of single adults living alone (primarily adults in their twenties and those over the age of 70). Thus, while GDP per capita was up by 63 percent, personal income per household rose by just 48 percent. This reflects the fact that newer households were small and tended to have relatively low incomes; fewer people per household means that household income is not going to increase as much as per capita income.

      After adjusting for demographic changes and for rising employee benefits (counted in GDP accounts but not by the Census Bureau), median household incomes rose by 33 percent rather than 13 percent over these 26 years. If the median (the number where half of households earn more and half earn less) was the same as the mean (the average household), then the median household income would have increased 48 percent. Thus households above the median (the richer half) did rise faster than 48 percent — but it is also clear that not all the growth went to the top decile. A substantial part of the growth dividend was shared by the masses of the middle class.

      It is, perhaps, no surprise that for all its popularity with the pundits, the “vanishing middle class” meme doesn’t quite have a purchase on the public: According to a 2008 Pew Research Center survey on intergenerational mobility, two out of three Americans who describe themselves as middle class rate their standard of living as better than that of their parents.

  • Azhermit

    crony capitalism and suffering for the masses… corporate welfare for the corporatocracy and plutocracy… you little people get used to it… the haughty and corrupt political elites, corrupt business elites, corrupt military elites, the treasonous pseudo-intellectuals,and certain religious elites say it’s God’s will… there they go again… claiming to speak for God and to God on their private bat phone.  The light of Truth scatters the cockroaches.

    • Roger McKinney

      And what part of that litany applies to capitalism? None, because they all result from socialism in the US. There would be no corporate welfare if socialists didn’t give Congress control over the economy. It’s impossible to give politicians absolute control over the economy and not have vast corruption.

  • http://www.acton.org/ John Couretas

    My comment was aimed at Puharic’s assertion that “middle class male wage earners have had their wages decrease by 27% between 1969 and 2009.” The information I posted looks at *household* income and the author shows that “a substantial part of the growth dividend was shared by the masses of the middle class.” Median household incomes up 33 percent in the last 26 years, the author says.

    Maybe that explains why Americans really do have a good grasp on reality, even though HuffPo writers think they’re simply too stupid and too foolish to resist all that brainwashing by the right wing mythmakers.

  • Roger McKinney

    Bob, there are a lot of things wrong with this country. Median household income has stagnated since 2000. We have created no net jobs since 2000 except in government. Most of the gains in living standards have gone to the wealthiest.
    But none of that has anything to do with free market capitalism. It’s all the result of government intervention in the economy.
    For example, credit expansion by the Fed rewards those in the financial services industry at the expense of wage earners because those in financial services get the new money before prices rise while wage earners get the money last, after prices have risen.
    Tell me anything you dislike about the US and I’ll show you how the government has caused the problem, not capitalism.

  • Anonymous

    I’ve been studying Black Liberation Theology.  I don’t believe your discussion is complete without considering BLT’s contribution to the ills of society today.

    • http://www.acton.org/ John Couretas

      I’m not sure how BLT relates to what we’re discussing on this post, but if you want to know more may I suggest Anthony Bradley’s “Liberating Black Theology – The Bible and the Black Experience in America” available in the Acton Bookshoppe? Link: https://secure.acton.org/BookShoppe/main/title.php?id=689

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