vendredi 22 août 2008

Defending Distributism

In response to by Dr Carol Byrne

The following quote shows Belloc's misplaced criticism of modern bankers who provide financial services to the world's corporations and institutions:

The bankers can decide, of two competitors, which shall survive. As the great majority of enterprises lie in debt to the banks-any one of two competing industries can be killed by the bankers saying: "I will no longer lend you this money"....This power makes the banks the masters of the greater part of modern industry. (Hilaire Belloc, Economics for Helen, p. 96)

But if banks did not exercise such discrimination, they would be guilty of irresponsibility to their customers; credit lines available to the bank would be cancelled and its share price would plunge, to the detriment of many. It was Belloc's view, expressed in The Servile State, that the mass of small owners would have provided the accumulation of wealth for material prosperity "without the leave of the bankers."

My dear Carol: such powers and responsibilities existed in Mediaeval/Renaissance Venice too. As you say, and as is also witnessed by The Merchant of Venice. Difference: the Jew who exercised them was seen as a villain. At least by the Englishmen who watched Shakespear. The ideal back then, as the ideal for distribustists now, is an artsman or merchant not endebted and therefore not subjected to that kind of power used for the ends of such responsibility. You have made pretty heavy weather out of the fact that large scale banking existed in "the Middle Ages" (around 14-15th C) whereas Distributists hanker back to "the Middle Ages" (around 11-12th C). But the salient fact now as compared to those times is not the presence of banking, but the near absence of business (farming or otherwise) not subjected to its powers by endebtment. Also, back then greed and avarice was seen as guilty, now it is irresponsibility (a wide spectrum, most of which includes either non-greed or non-avarice) which is seen so.

We can also cite the Knights Templar Bankers who established financial networks across the whole of Christendom, making them the world's first multinational corporation! They invested their immense wealth not only in land (e.g. they bought and owned the whole island of Cyprus), farms and industrial pursuits (e.g. financing the building of Gothic cathedrals), the shipping industry (they owned their own fleets) but also in the Pilgrimage industry which brought huge revenues to the Church and created jobs for workers like innkeepers and ferrymen. The Knights also arranged safe transfer of funds for international and local trade, and loaned money to kings, emperors and princes, bishops and entrepreneurs alike. In fact, Templar wealth was so great that it helped shift the balance of power in medieval Europe from the feudal lords to the "merchant class".

Remember what Pope and French King did to them? Chesterton or Belloc (I forget which) admitted that the process with torture was a judicial murder. But their claim was that these powers were fighting for their life against - Capitalism. The kind of economy, not in which private property or even entrepreneurs exist, but in which they control ultimately public power.

One only has to think of the merchant-banking organizations bearing the name of single families – Medici, Lombard, Frescobaldi, Bardi, Peruzzi for example – that were in control of commercial companies and enjoyed great political power and wealth. (See Edwin S. Hunt, The Medieval Super-Companies: A Study of the Peruzzi Company of Florence, Cambridge University Press, 2002)

I have not read that particular reference, but I seem to recall that was something like 15th C (North of Alps; maybe earlier south of them). The Fuggers started their great carreer back then. The Medici bank was founded after 1400 by Averardo. And so on, and so forth. The Peruzzis were, indeed, earlier off, starting their Capitalist company in 1300. They are also less known, therefore probably smaller than the Medicis. "Throughout the Middle Ages" means that your "Middle Ages" start around 1300. Others would say that is when the Renaissance starts - on the south side of the Alps, add a hundred years before it crosses that border.

Distributists criticize the capitalist system for being based on credit (banking, mortgages, loans, credit cards etc) without realizing that these aspects of modern banking are the development of traditional methods dating from medieval times.

A - A Distributist may answer that even in Mediaeval times these things were not ideal.
B - He may especially answer that in Mediaeval times these things were not even regarded as ideal or as a normal basis for business.
C - Which means that he may very well be arguing against the development of them.

It is also of interest to note that the usury laws did not forbid lending capital for business purposes and receiving profits on the investments. (George O'Brien, An Essay on the Economic Effects of the Reformation, London, 1923, p. 70: "The usury code never forbade any transaction analogous to what we now call investing money in business. So long as the person advancing the money was prepared to share in the risks of the enterprise on which it was employed, he was perfectly entitled to share in any of the profits in which the enterprise might result.")

It would seem that that was a kind of shareholding rather than a kind of interest taking. And as for shareholding, the novelty is "limited liability" share holding. Maybe what are now called directed loans were back then precursors of these limited liability companies.

It is one of those ironies of history that Capitalism has been instrumental in procuring many of the things Distributism originally hoped to foster but failed to do so: wider ownership of private property, greater economic participation, co-operative enterprise, etc.

Has that maybe happened after distributism?

And what happened to the medieval Mom and Pop merchants who could not produce goods in larger quantities or deliver them to distant ports? They could not compete with the politically dominant "cloth barons", and many found themselves extremely disadvantaged. (For further details see E M Carus-Wilson, who states in Medieval Merchant Ventures: Collected Studies: "This industry, moreover, was already "capitalist", the weavers and fullers being in effect employees of entrepreneurs, amongst whom the dyers were prominent." Professor Carus-Wilson elaborates on this situation in 'The English Cloth Industry in the Twelfth and Thirteenth Centuries', Economic History Review, 1944. As workers in the textile industry, the weavers and fullers lost their independence when the entrepreneurial dyers, using their political influence as members of the Merchants Guild, abrogated their monopoly rights which they had held by royal charter. This meant that they were subordinated to the authority of the dyers who set earnings and established quality control standards. In London and Oxford, for example, the dyers also exercised pre-emptive rights over their weavers' and fullers' production by restricting their business dealings, and preventing them from taking their cloth (the products of their own labour) to the fairs and regional markets.)

The example tells that this is once again about the English Mediaeval Cloth market, which admittedly led to the growth of Capitalism, as known today.

Late phenomena for Middle Ages, early ones for Capitalism/Renaissance - used to smudge a main picture, in which most artisans, though not most Merchants, were independent of banking.

If Distributism can be seen as ahistorical, it is in this: in towns' trades they go for 11th-12th C, before banking arose in the West. In agriculture they go for the 13th-14th C, when slavery was in practise abolished, when feudalism was decaying and peasantry was there. But maybe there was a golden Moment corresponding to the coincidence of both these stories.

For example, with the discovery of new agricultural technologies, food production has increased much more rapidly than population, enabling millions to stay alive who would otherwise have died of starvation.

Ah, well? Now that is a moot point. How much of the agricultural produce by acre is due to new technologies? How much of the agricultural produce per farmer/farm worker is due to them? A tractor is producing food - for unemployed people who might, some of them, have produced the same food by going behind an ox-drawn plough, having employment as well as food.

Similarly with improvements in technology – the Wright brothers' project would not have taken off the ground without Boeing, Lockheed and other airline companies to develop it for public transport;

Indeed. With consequences like air borne ww epidemics and terrorism. Old technology was not behind september 11, old social morality not behind the indignation for it. And the Airport tyranny (and "plans vigipirates" - ma présence en France, vous savez). And responding to needs of people who live not where their food is produced, because it is produced in new ways that need less men.

In short, it is only the big firms that can turn innovations into products which ordinary consumers (not just the wealthy) can afford to buy or use, surely a benefit to mankind.

You presume that the ordinary consumer must be the one either disemployed or employed by large companies, in whose profits their wage is a small share. If you say that modern Bauhaus architecture ("houses without eyebrows") is the only one affordable for industrial workers and social cases to live in, I may moderately and hesitatingly agree. If you add that a working distributist system is one in which most people have only that class of relative prosperity, I disagree. Also, artisanal products concentrate more than usual on the expensive since the market for the cheap is taken over by ... big business run industries using new technologies. That - along with rising land prices, adapted to an industrial rather than modestly artisanal exploitation - falsifies the prices of artisanal production. At least as far as relative social price is concerned.

A small Wealth Pie brings fewer goods and services, long queues in the shops, stagnation in development, with resultant deprivation of essential commodities (food, hygiene, health care etc.) – not a good idea if you want a long and healthy life above the barest minimum of subsistence.

I take the long queues first, with relief. If fewer live in towns and more on the country - replacing tractors - there are fewer to queue in the shops. Because more eat from what they pick or harvest in fields or gardens. This is where distributism differs most from Communism of the East bloc variety.

Less health care. True. Belloc dreaded a society in which preserving the sick takes priority over giving birth to healthy. Not because he wanted to kill the sick - he was a Christian, and Pol Pot would have nauseated him - but because he foresaw a society in which the balance of generations and otherwise of the working and the depending would verge to a great discomfort. I think this is happening. Death is not a friend, but an enemy. But the fight against death goes by babies more than by preserving invalids. Nowadays doctors are getting closer to dictators, and young mothers ask themselves - or are brutally asked by others, including close relatives - if giving birth is really "responsible". In Germany the old are already so many that old voters outnumber voters raising families. Double working parents with few children; young workers too ill at ease to make fertile couples; all that to maintain a system of old age insurance based on a very big business: the State. It is now supplemented by another big business: insurance companies. But the problem is not who keeps the nominal money between when you earn it and when you get old or sick enough to spend it, but how many work when how many spend. The old age insurance based on bigger things than your own children and your own neighbours ... I do not think it will survive for masses, even if it will for misers.

A little question of definition:

Another advantage of big business is that ownership of such enterprises (and profits from them) is widely dispersed among many shareholders, often including some large institutional investors (insurance companies, pension funds, universities, religious bodies, charitable foundations, and the like.) Their benefits accrue to individuals and to society as a whole. Therefore terms like 'oligarchy' and 'robber barons' are misplaced as a description of the few who become mega-rich in the process. Their wealth is always a source of benefit to communities whether in the form of taxation, job creation, investment, philanthropy or their personal expenditure.

I used the same argument to defend monarchy. If Versailles danced, while peasants starved, Versailles at least employed servants who did not starve. The French King enjoyed not all the food there was in France leaving all other eaters to starve to death. But that does not change the fact that he was King and had powers which neither commons or Aristocrats had. And Capitalism does not means that a small class eats all the ice cream, far from it - but it means that a small class decide who produces most of the ice cream eaten. Because they have shares in Ben & Jerry's or the different avatars of Unilever, but not in the next "Italian" who uses a recipy for more than his own family's private consumption. Unless there is a tourist resort, where people ask for home made ice cream.

Concretely it is in Europe impossible to get Root Beer because A&W has sold its international rights to Coca Cola Company, unless I misremember, who are producing A&W for Asia, but not for Europe.

Difference between a monarchy like Louis XVI and an oligarchy like that of ... well, I had a family connection working for the one which came unsought to my mind, so I pass ... and other big pharmaceutic companies? The job of the monarch is to maintain justice. The job of pharmaceutic companies is not to maintain health, but a consumption of "health related" products. Some of them produce condoms and abortion pills.

Hans Lundahl
9/22 August 2008

Written the day before in the space of SFR Jeunes Talents Photo Exposition (Thanx for their unwilling participation).

series: 1 Defending Distributism 2 Mom & Pop Stores ... 3 What is a cartel? Snow and milk business compared

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