December 6th 2008


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Articles from this issue:

COVER STORY: Opposition tensions to resurface in 2009?

EDITORIAL: Left-liberals to dominate Obama Administration

GLOBAL FINANCIAL CRISIS: Disentangling the new world disorder

SUPERMARKETS: GroceryWatch is a white elephant

POLITICAL IDEAS: The realisable goal of property for all

STRAWS IN THE WIND: Giving to the have-mores / How long can Labor last? / Degraded educational standards / Future prospects

BANKING: The Medici — manipulators of money and soft power

REPRODUCTIVE HEALTH: Abortion increases risk of pre-term births

EUGENICS: The menace of eugenics, yesterday and today

MARRIAGE: US battle to preserve traditional marriage

CINEMA: Depraved film the symptom of a sick culture - the Coen Brothers' Burn After Reading

Australian Christian Lobby responds (letter)

Chechen terrorists (letter)

BOOKS: WARSAW 1920: Lenin's Failed Conquest of Europe, by Adam Zamoyski

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POLITICAL IDEAS:
The realisable goal of property for all


by Dr Allan Carlson

News Weekly, December 6, 2008
Distributism is a decentralist alternative to big-business capitalism and state socialism, and seeks to promote a more widespread distribution of economic ownership. One advocate of this approach is distinguished US author and family activist Dr Allan Carlson who spoke on the subject during his recent visit to Australia.
Dr Allan Carlson

The last several months have witnessed the growing crescendo of economic crisis, starting first in America, then extending globally.

Failing banks, crashing stock markets, foreclosed homes, vanishing savings, tumbling real incomes, mounting joblessness, seizures of banks by the state, government bailouts, fear and distrust — nothing quite like it has been seen since the years 1929-1933, which ushered in the Great Depression.

Some see this as a crisis of finance capitalism equal to that of the Great Depression. Others warn darkly of a swarming new socialism.

In fact, neither of these explanations helps us much in understanding the present crisis global financial crisis. What we are actually seeing is the culmination of what the English journalist Hilaire Belloc called "The Servile State", or what his friend Gilbert Keith Chesterton called — with somewhat less poetry but equal insight — the "Business Government".

Expanded property ownership

The leftist English playwright George Bernard Shaw called their joint program the "Chesterbelloc", twisting the two authors' names into a "fabulous beast", one that promised agrarian reform, small-scale production and retailing, and greatly expanded property ownership. Chesterton and Belloc preferred the label Distributism.

In recent decades, most commentators on their early 20th-century reform project have portrayed it as "naïve", "reactionary", "chaotic", "childishly simple", and "bizarre". They have also dismissed the Distributist League of that era as a "sorry spectacle" composed of "cranks of various hues", where the "beer would flow" and "songs ring out", all to no effect.

In fact, Distributism actually displayed impressive levels of clarity, coherence, and detail. As shaped by Belloc and Chesterton, the Distributist political program offered the world a compelling "Third Way" alternative to finance capitalism and socialism. And Belloc's analysis of the "Servile State" still stands as remarkably insightful, with special relevance to our own time.

The origins of Distributism actually lay in the papal encyclical Rerum Novarum, issued by Pope Leo XIII in 1891. Rejecting both unbridled capitalism and socialism, Leo asserted in this remarkable document that the answer to the woes of industrialisation lay in the redistribution of property, especially in private homes and land. He argued that the law "should favour ownership, and its policy should be to induce as many as possible of the people to become owners".

Pope Leo continued: "If working people can be encouraged to look forward to obtaining a share in the land, the consequence will be that the gulf between vast wealth and sheer poverty will be bridged over, and the respective classes will be brought nearer to one another."

Chesterton drew other lessons from Rerum Novarum: First, the "exceedingly radical" implications of seeing that men and women are wonderfully different; second, the proposition that public life exists to defend private life; third, the truth that private property secures liberty; and fourth, the premise that "all political and social efforts must be devoted to securing the good of the family".

In his 1910 book, What's Wrong With the World, Chesterton underscored the political imperative of delivering the ownership of a house and lot to every family. "Property is merely the art of the democracy," he wrote. "It means that every man should have something that he can shape in his own image, as he is shaped in the image of heaven."

The problem in England of this era was that only one in 10 adults actually owned a house and a piece of land. The vast majority, in city and country, were renters. In his book The Servile State (1912), Belloc explained how the English landed gentry had used the seizure of monastic lands in the 16th century, the legal enclosure of common fields in the 17th and 18th centuries, and capitalist monopolies in the 19th century to consolidate property ownership in a relatively few hands.

In shaping their political program, Chesterton offered careful distinctions. "If capitalism means private property, I am a capitalist," he reported. However, he argued that the label held in his time a much narrower meaning. A "relatively small" class of owners possessed "so much of the capital" that "a very large majority" of citizens must serve these capitalists for a wage. Such an exercise of monopoly was "neither private nor enterprising". Indeed, "it exists to prevent private enterprise".

Belloc described the consequence as the Servile State, where monopoly capitalists and government bureaucrats actually merged into a "corporate state" practising state capitalism. Under this deal, the wealthy capitalists gained order and protection of their property, while the workers received welfare benefits tied to their labour, providing security but also confirming their servile status. Chesterton added that this "new sort of Business Government will combine everything that is bad in all the plans for a better world.... There will be nothing left but a loathsome thing called Social Service."

Socialism was no answer to this situation, Belloc and Chesterton maintained, for it would only further consolidate power in the hands of a bureaucratic state. The alternative would be to build the Distributist state — premised on the kingdom of the home — that would encourage the widest possible distribution of property. Put briefly, property was so vital to true liberty, that every family should have some.

To that end, the two writers advanced a broad program of reform:

• To greatly expand home ownership by families, mobilise "the credit of the community" through locally-controlled, cooperative credit unions to enable "private ownership of houses and small plots just outside our great urban centres".

• To restore the small shop, use differential taxation against chain stores (ensuring no more than a dozen shops per corporation) and against big department stores as well.

• To redistribute land and other properties, tax contracts "so as to discourage the sale of small property to big proprietors and encourage the break-up of big property among small proprietors".

• To decentralise industry and cheapen electricity, expand access grids, "which might lead to many little workshops".

• To encourage agrarian resettlement, the "peasantry must be privileged as against the diseased society around it".

• To restore craftsmen, subsidise "the small artisan at the expense of Big Business".

• To decentralise transportation, discourage the railroads and favour the automobile.

• And to encourage urban home ownership, "there ought to be a simple rule: every [rental] lease should automatically contain the power of purchase by instalment".

Home-financing

In the United States of the 1930s, Distributist ideas inspired many New Deal programs to counter the Great Depression. These included the Subsistence Homestead Act (which provided a house, garden and five acres to families displaced by the Depression) and the Housing Act of 1934, which revolutionised home-financing in a responsible way.

This influence extended after World War II. In Great Britain, the Conservative Party adopted large shares of the Distributist program, pledging to make the nation a "property-owning democracy". In Australia, the young Distributist B.A. Santamaria launched a successful campaign to end Communist influence in Australia's labour unions. Later, the Democratic Labor Party with which he was associated featured a model Distributist domestic program.

In our time, I suggest the Distributist worldview goes far to illuminate the current economic crisis.

• It shows how good, Distributist-inspired programs, designed to provide land and houses to the propertyless, have been twisted into vehicles of irresponsible lending and raw financial speculation. The probable result will be a further consolidation of wealth in fewer hands.

• The Distributist worldview underscores why and how the true middle class seems to grow ever smaller: with a relative handful of entrepreneurs climbing into the capitalist class, while the vast majority now sink into the servile state, toward minimum wage "service" jobs tied to state welfare benefits.

• The Distributist worldview shows why Freddie Mac and Fannie Mae, federally chartered US mortgage companies that privatised executive pay and profit and socialised risk and loss, serve as perfect examples of the Business Government at work.

• It explains why all the "bailout" and "rescue" schemes adopted by at least the American government will probably have the primary effect of protecting the wealth and assets of great corporations and the very wealthy.

• And it explains the irony of how one of the Americans responsible for this crisis — former Goldman Sachs CEO Henry Paulson who five years ago successfully fought to weaken the reserve obligations of private US investment banks — now disperses, as US Secretary of the Treasury, US$700 billion precious public dollars, which many Americans believe will somehow wind up mainly in the pockets of his old friends.

How might Distributist principles translate into current Australian political questions? Regarding housing, we Americans have made a mess of things, but some lessons may have been learned.

The primary one is that the goal of "decent and affordable shelter for families", the initial Distributist impulse, long ago ceased to be the driving force in the American housing system. Around 1970, this system quietly but decisively shifted toward favouring housing as a vehicle for financial investment, and consequent speculation. Something similar appears to have happened in Australia.

What is to be done?

What would be the proper corrections?

First, housing subsidies — be they direct or through the favoured tax treatment of mortgage interest — must be limited to one principal residence per family, and they should be capped. Second homes, vacation homes, "investment" homes, and McMansions should receive no special encouragement.

Second, to the degree possible, government-favoured home subsidies should be made available first to young married couples with children.

Third, mortgage banks should be kept relatively small and locally controlled. While the price might be slightly higher interest rates, the gain would be more honest and responsible lending.

And fourth, borrowing a page from Belloc and Chesterton, real estate contracts might be taxed "so as to discourage the sale of small property to big proprietors and encourage the break-up of big property among small proprietors".

— Dr Allan Carlson, founder of the World Congress of Families, directs the Howard Center for Family, Religion and Society, based in Rockford, Illinois. This article is from a lecture he gave for the Brisbane and Melbourne branches of the Australian Family Association on October 14 and 16, 2008.

— A full version of his lecture is available as a downloadable PDF file (177 KB) at
http://www.newsweekly.com.au/docs/2008/carlson_third_ways_oct2008.pdf




























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