The Spirit of Distributism: What Occupy Wall Street and the Tea Party Have in Common

The recent events in Manhattan and in cities around the world are just the latest episode in a long succession of popular expressions of disenchantment with the global economic system. Earlier this year — in Wisconsin, London and Greece — it came in the form of opposition to government austerity. Last year the Tea Party exploded onto the scene. Critics of the status quo have variously levied justified attacks against the Federal Reserve, big banks, the nationwide welfare state, the two-party system and corporate lobbying, which has casted serious doubts on the sustainability of any of these institutions. Since the onset of the global economic crisis, there has been a growing sense from both the right and the left that the distribution of wealth is not just, that people are not free to chart their financial futures, and that economic misfortune is often the result of decisions made beyond one’s own control.

Predictably, affiliates of these movements are prone to pit themselves against each other, most notably along the lines of whether they blame corporations or government for the brokenness of the economy. Clearly, however, there is considerable overlap in each movement’s message, because the government often acts in tandem with large corporations in the form of subsidies and bailouts. But partisans on either side have ignored the commonality of each other’s concerns, instead relegating their political opponents to the realm of stereotype. The result has been the left’s dismissal of the Tea Party as well as the right’s dismissal of Occupy Wall Street, which serves as proof that, now as ever, there is nothing so potent as prejudice to justify consigning the concerns of other people to an inferior status and to ignore them entirely.

In the midst of the political posturing and the ad hominem attacks, few partisans have stopped to consider that both movements may be grasping at a fundamental truth that affects all Americans. Indeed, in addition to the obvious example mentioned in the last paragraph, they do share one profound critique of our financial system: decisions pertaining to wealth in this country are too concentrated in the hands of a few.

Still, people divide themselves and form their political identities based on whether they prefer to blame multinational corporations or the federal government — and both sides are supported in their convictions by an ample supply of evidence. Occupy Wall Street collaborators are pointing to instances where, when corporations have been left unchecked by regulation, they have behaved irresponsibly and wasted the money of the American people. Meanwhile, the Tea Party is quick to point out examples where funds have become bogged down in government bureaucracy, in which our elected leaders and their appointees have made very poor decisions and squandered taxpayer money. The natural conclusion to be drawn is that examples of both instances are highly common and that both movements raise legitimate concerns. The fact that both big corporations and big government are prone to mishandle money should give us pause to reflect on what each holds in common. That is to say, both of them are big.

Yet, Western political philosophy has largely taught us that we can’t have it any way but big. It has taught us that less power for multi-national corporations means more power for government and that less power for government means more power for multi-national corporations. So it has been since industrialization’s birth: the politically minded man, with his natural inclination toward polarity, has believed that capitalism and socialism (or some unprincipled mixture of both) were his only options.

The economic theory of Distributism, however, rejects this assumption. Instead, it proposes a reconsideration of ideas long taken for granted in the Modern West concerning the nature of property ownership, assumptions that have fated our economy to instability and inequality. Inspired by Catholic social teaching and fostered by the thought of G.K. Chesterton, Hilaire Belloc, Dorothy Day, and Fr. Vincent McNabb, Distributism believes in putting productive property in as many hands as possible. “Too much capitalism,” Chesterton declared, “does not mean too many capitalists, but too few capitalists.”

Adam Smith proclaimed in 1759 that when owners of capital engage in trade and production unfettered by government, an “invisible hand” crafts a better life for everyone. He could not have foreseen the Industrial Revolution, however, which very quickly created a wealthy ownership class and masses of wage earners without property of their own. Indeed, the ideal of agrarian land ownership that was central to Jeffersonian democracy has died a violent death in the centuries since our nation’s founding. As industrialization marched on across the 19th and 20th centuries, the means of production was slowly concentrated into fewer and fewer hands. The graveness of these developments was echoed by the late American Catholic Archbishop Fulton J. Sheen:

“The basic assumption of bourgeois civilization was that the best interests of the world, the state and the community could be served by allowing each individual to work out his economic destiny as he saw fit. This is known as the principle of laissez faire. As far as possible individual life is unregulated by the state, whose function is purely negative, like that of a policeman. The less the state does, the better. It was not long until the evil of this principle manifested itself. If every individual is to be allowed to work out his economic destiny as he see fit, it will not be long until wealth is concentrated in the hands of the few and the vast majority are reduced, as Hilaire Belloc showed, to a slave state.”

Meanwhile, the ugly clash between the capitalist and the wage earner gave birth to an economic scheme that is just as grotesque as its opponent. A century after Adam Smith, Karl Marx conceptualized the marketplace as a class struggle that pits the haves against the have-nots. Marxist theory led to the widespread formation of labor unions, in which workers relied on solidarity as a bargaining chip against the owners of capital. American history is thus replete with ugly clashes between capital and labor, scenes that betray the underlying unsustainability of a system in which lines are drawn between the owner and the worker. Furthermore, by making the government the sole producer and distributor of wealth, the Marxist solution to the concentration of the means of production is to concentrate it even further. Marxist Socialism aims to eliminate the problem of limited property-ownership by saying that no one can own property at all.

The Capitalism made manifest in the Industrial Revolution rested on the assumption that any given enterprise is most efficient when some specialize in ownership and others specialize in labor. Marx’s solution to Capitalism rested on that same assumption, except that it transplanted ownership from Capitalists to the State, with a class of bureaucrats to specialize in its administration. Due to this grave assumption in modern economic theory, owners and governments have invested not in the health of communities but in “human capital.” They have seen not an environment to be appreciated but natural resources to be plundered. They have manufactured not creative art but goods to market and mass-produce. While the economic efficiency of industrialization has done wonderful things for the standard of living of populations around the world, it has been gone about in the wrong way entirely. Socialism, for its part, is a meager response to cut-throat plutocracy, as it has concentrated power completely in the state, limited human freedom, and squashed economic competition. The industrialized world has made mistake after mistake by adopting laissez-faire and Socialist approaches, mistakes for which we are now suffering the consequences. The social democratic economic systems that have prevailed in the West in recent decades are little better, as they are nothing more than attempt to combine two inadequate solutions.

There is a reason why both Capitalism and Socialism have missed the mark in creating sustainable communities or stable, just and free economies. The reason is that they both rely on a Modern view of man as an individual and material rather than a social and spiritual being. Both misguided theories believe that the purpose of the political economy is to allocate material resources, while they fundamentally lack any consideration for man’s creative expression in personal property, the health of the natural environment, or the complementary nature of human liberty and life in community. Indeed, the view of humans as material beings has found expression most recently in the widespread designation of personhood to corporations, which in reality are organizations that do not reflect any aspect of human life besides the profit motive. The social theory of the West’s modern era has therefore seen a departure of spirituality from economic life, a trend which finds itself at odds with the West’s own spiritual traditions as well as those on other continents.

So, if Capitalism went wrong by preaching economic individualism, and Marx overcorrected by advocating Statism, where does Distributism place the heart and soul of a healthy economy? Distributism says that an ideal economy is one run by families, cooperatives, and communities. In a Capitalist scheme, one does all he can to legally take advantage of this store, that worker, or those customers. In a Socialist scheme, one does all he can to take advantage of the government by evading taxes and claiming entitlements. A Distributist system, on the other hand, is one in which, as far as possible, the owner, the laborer and the consumer are made to be the same person, and in which the necessity for government is diminished. Its concern for the poor is counterbalanced with its commitment to subsidiarity, which is the belief that decisions must be made at the lowest possible level. It believes that families and communities are capable of charting their own economic futures, but affirms that government also has a role to play in steering the direction of the economy.

As the world’s largest banks accumulate wealth to the point where their failure would amount to economic catastrophe — so that, in the spirit of “too big to fail,” their risks become public while their profits remain private — we have an opportunity to replace this spirit with that of Distributism. We can replace the large-scale, faceless current system with one rooted in local communities and true competition. We can replace derivatives and irresponsible usury with real capital and trust.

We may be tempted to call Distributism a new and radical vision for economic life, but in reality its principles have already taken root in many areas of the American marketplace. Cooperatives such as your local credit union tie ownership to consumerism; employee-owned companies tie ownership and decision-making to labor; and free and open source software in the quaternary sector tie labor to consumerism. Disparate interests within an economic enterprise create contention and negative externalities, but when owners, workers and consumers are united, many of these externalities become internalized.

Cooperatives, for example, are incentivized to adopt business models that aim for long-term sustainability, not having to answer to the impatient demands of shareholders. Cooperatives, being owned by their customers, are bound to make decisions that benefit the customer while also shooting for efficiency. This is the reason we haven’t been hearing about “big credit unions” having to be bailed out by the federal government. Employee-owned companies will likewise strive to be efficient, but will never take advantage of the worker to do so. Above all, resiliency is the natural result of a system in which the interests of ownership and labor are fused together, as the old battle lines between the large shareholder and the union are erased. Free and open source software, for its part, encourages the development of a product that does not simply translate into profit, but one that is truly easy to use, as the developers themselves are its users.

By extension, an economy founded upon community is one that respects the local environment and resists large-scale cultural homogeneity. While Distributism acknowledges that some decisions must be made on the national level, it asserts that most issues are best left to communities, cities, regions and states. In the interest of retaining economic competition and freedom but eliminating negative externalities, it sees a proper role for government in the regulation of economic activity to this end.

Indeed, the leading Distributist theorists of the early-20th century advocated much the same sort of agrarianism that environmentalists and social ecologists in the sustainability movement now deem necessary to augment quality of life in the 21st. Distributism facilitates the development of a sustainable society while putting property ownership firmly in the hands of the American people. That’s something everyone — from Tea Party Patriots to the 99% — can get behind: we all want the ability to take control of our own futures. We all want to be owners of productive property. We are all Distributists.

Implementation of a Distributist economic system is not to be done through revolution, but by a process of slow evolution. Reform should be surgical rather than sweeping, and should be largely based on local rather than national policies. However, a great place to start would be a reform of the tax code that encourages cooperatives and employee-ownership, internalizes costs, supports local enterprise, and gradually diminishes the role of the federal government. Locally, governments can encourage state and municipal currencies, housing cooperatives, community-supported agriculture, and urban homesteading.

This blog will be the site of further discussions on specific Distributist policies in relation to a broader Christian democratic movement. Stay tuned and don’t hesitate to contribute!