The medieval village of Carnac in Brittany, France

A Reply to David on Distributist Economics

In my summaries of The Servile State I intentionally laid the bait for my good friend David, the backyard-chicken-hating apologist for capitalism.

And it worked! I knew he wouldn’t be able to resist the urge to take a dig at modern distributists.

David is used to arguing with medievalists with a socialist bent. I sympathize with his frustration when it comes to ignorance of free market economics — the marginalist revolution has advanced us far beyond Aquinas’ “just price theory.” But I also hope to highlight clear critiques of capitalism based on Catholic social tradition, and I think Belloc’s is a prime example.

He emailed me some questions, and asked me to join an upcoming podcast conversation he’s having with Fr. Brad Elliott, a former distributist and Dominican priest, on the topic of Marxism.

Here’s what David wrote:

Hi Charlie

Here are some thoughts based upon Belloc’s view of history to throw at you.

1. Is it true that land was more evenly distributed in ownership before the reformation? I thought that the land moved from one set of land owners to another.

1a- and why is land the issue at all?

2. Where is the evidence that what existed before was more just or more desirable for most people prior to the reformation?

3. What is the argument that the guilds had a good effect? What is the good that they created that we seek now? (I’m thinking now of our conversation)

4. What is the argument that the accumulation of wealth is in itself a bad thing or gives unfair or unjust advantage to those few? (If that is the argument?) It’s only the case, some might say, if there is crony capitalism and is it a given that It always occurs? Also, when you don’t have crony capitalism but you do have concentrations of wealth, doesn’t that create positive effects?

I’ll take them in order.

I trust Belloc’s account of the transfer (seizure, really) of lands from the Church and monasteries to the landed class, which already owned about 1/3 of the land. Before that, the Church possessed some 25–30% of land, which was managed by “Cathedral Chapters, communities of monks and nuns, educational establishments conducted by the clergy, and so forth.” Once the already-wealthy class acquired the Church’s portion, it owned more than half of the total land, and it became easy for them to capture the government apparatus and to rig the whole economic and legal system in their favor.

Belloc also implies that the Church’s temporal authority had been an important check on the landlords, guaranteeing peasants some percentage of the output produced on lands owned by the squires or Lords or the Church.

Today in the U.S., agricultural output is just 1% of total GDP. But before the 1600s it was more than half of all economic output. There is frequently path dependence in the economy, whereby some initial conditions — like the unequal wealth during the critical period of the industrial revolution — set the stage for long-run outcomes — like unequal capitalization and property ownership. Since land ownership was unequal at the time when we start to see exponential returns on wealth, there was a natural tendency for the rich to get richer while the poor remained dispossessed wage-earners.

Belloc admits that documentary evidence for conditions during the Middle Ages is scarce, but I think we can speak with some certainty about the sheer awfulness of conditions for workers during the industrial revolution.

Another book I’m reading, The Inclusive Economy, by the Cato Institute’s Michael Tanner, reports that a full 25% of workers in Britain during the 18th century could be categorized as “working poor,” meaning their wages were not enough to provide for the necessities of life. When workers are starving and poor, it ends up creating instability even for the capitalist, who becomes happy to work with reformers to use the coercive power of the state to ensure welfare to subsidize the wages he pays his workers.

In contrast, the old system guaranteed that the people working the land possessed the homes and implements that gave the land its productive value. The incentives were more naturally aligned, and individual cases of indigence could be handled through voluntary charity or aid from the Church.

It’s an interesting counter-history to the one we normally hear about “Progress and Enlightenment,” but I am curious to read more thorough accounts of what medieval life was actually like. (Maybe Rachel Fulton-Brown can give us some additional pointers to readings that can help settle this question.)

Guilds restrained monopolies from developing. Markets work best when there is robust competition. If one person acquires all of the tools to fix ploughs, he can earn extra-normal profits at the expense of plough men.

I will concede that it is possible that these kind of checks cannot be upheld in a more dynamic industrial economy, or that regulating monopolies does more damage than the existence of monopolies.

Usually some new business comes along and breaks up the old monopoly, but I think Belloc would answer that this requires capital, and when a small number of industrialist-monopolists own the capital, it becomes a tough sell to get them to finance your competing enterprise.

Guilds also performed an educational function — akin to vocational training. I’d argue that today there are not enough opportunities for this kind of training. Instead we get conformist worker bees coming out of universities (which are themselves a kind of protected monopoly) and going to work for Big Business. We might get some goods more cheaply under this arrangement, but we shouldn’t ignore the unseen costs of more expensive services for everything from auto mechanics to dentists to plumbing and electrical work.

A great question, which I think Belloc only answers partially satisfactorily. First, he makes a subtle distinction several times that he is concerned with the general stamp of society — whether it is divided between two classes (ruling and servile; capitalist and proletariat) or if there is generally a wide distribution of property that allows people to freely pursue various vocations. He notes that wealth was unequally held before the Reformation, but that the differences between the Lord’s estate and the peasants that worked his land were not that great until the arrival of cronyism. He writes:

“The manorial house, the house of the local great man as it was in the Middle Ages, survives here and there to show of what immense effect this revolution was. The low-timbered place with its steadings and outbuildings, only a larger farmhouse among the other farmhouses, is turned after the Reformation and thenceforward into a palace.” (p. 70)

Of course it depends on how fortunes are made. We can always point to good things being done by the rich — either philanthropic or in their self interest — and perhaps some industries and technologies could only be developed by men with a certain ambition and scale of resources. I’m thinking of the Carnegies and Rockefellers of the world.

There’s still a question about whether the economic system they created is more beautiful than one in which transportation and industrialization happened more slowly and organically.

Concentrations of wealth might lead to more economic growth, but how inclusive is that growth? Even if the relative balance is changing and more people are entering the middle class, I think there are more people living in squalor in absolute numbers than at any other time in history.

Those are my short answers. I look forward to talking about it some more with David and Fr. Brad Elliott on the Way of Beauty podcast next week.

I also wrote a primer on business cycle theory that is not entirely unrelated to the themes in this post. It’s basically free on Amazon, but if you email me I’ll send you a free PDF copy.

Seastead solutions.

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