The Theoretical Distributist Society

Distributism is the idea that the best economic situation possible is where the productive property of society is diffuse across as many people in that society as possible. Where communism concentrates all the productive property in the government, allowing no citizens to own productive property, capitalism puts virtually all the productive property in the hands of the rich. Both of these have their issues. Communism’s are the more notorious, such as factories ordered to produce 100,000 shoes who slash their expenses making all left shoes and pocket identical subsidies anyway because they met their contract to the letter. Capitalism’s dark side manifests itself in several subtler and easy-to-ignore ways. Firstly, the case study in disaster capitalism: the Great Depression. Second: corporations and all their baggage. If you are not familiar with the evils of large corporations, then you either live in a cave or are in a coma. Look it up.

The ideal distributist society may never arrive, but the concepts invoked by thinking on it are well worth implementing. The most fundamental ideal of distributism is perfect competition. In economic terms, this translates into a situation where no company has the power to act unilaterally in terms unfavorable to their customers. For example, beginning from a state of competitive equilibrium, no company can arbitrarily raise its prices because all the other companies would continue on with the regular prices, and the rogue company would be put out of business unless it set itself straight.

Consider a theoretical society derived from a fundamental tenet shift: the society’s productive property is distributed as much as possible. The first difference between this society and the modern one is the prevalence of small businesses. Another difference is the shift in perspective from the emphasis on liquid assets or capital, and productive property and the goods it produces. This makes possible the stateless society, since the entire rationale behind the state is to compensate for powerful entities in favor of the weaker ones by electing a more powerful entity intended to control them.

Firstly small businesses are quite simply more efficient than large ones. Small businesses can provide better services because they can micromanage at virtually no cost. This translates into the common hunt for the “local coffee house” when you’re overseas, because it’s just better than Starbucks, and cheaper to boot. However, that local coffee house obviously can’t directly compete with Starbucks in its current situation, since Starbucks services the entire planet. Though the local joint outcompetes the colossus in a small area, Starbucks is the more successful organism due to sheer tout. Even in the corporate-dominated world today, small businesses still account for 95%+ of the economic revenue.

Secondly, small businesses employ far more people, and not just at minimum wage. Small businesses that need to employ many people for marginal jobs will pay minimum wage, it’s true, but then so does WalMart. However, among small businesses, if there was enough competition for labor to warrant increasing wages then wages would rise. The same industry sector filled with competing small businesses produces many times more jobs, and even higher demand for jobs than the number of jobs should allow. A city filled with small competing coffee houses produces many more jobs than a city with only a host of Starbucks. This is because in a state of competition the market becomes saturated with small businesses until it looks to any potential startup that it is not possible to make money in that industry. For a huge corporation, it’s just inefficient to fill up a region to that extent, and they only place enough to maximize their profits. Despite all this, the greatest difference between a corporate economy and a distributist economy is a switch to the other side of the labor coin: instead of a demand for jobs, there is a demand for labor. Instead of the workers scrabbling to find a company willing to pay them, the companies are scrabbling to find people willing to work for them. Higher wages, better benefits, anything to get the manpower needed to run the business and make money. There are so many of them that if you don’t like one’s offer, just find another with a package you like better. Corporations have the reverse effect; WalMart can hire at whatever terms they want, and if they are dissatisfied for any reason, they can throw that worker out and let the next one in line have their spot.

Currently it is accepted as the norm that there will be more people than jobs, and that is just lunacy. As long as there are people who are not employed, there is an economic opportunity in employing them because it is possible to pay them to produce something of value. It is a sure sign of a corporate economy when they choose not to employ those people because they have “enough,” just like destroying produce while people starved during the Great Depression because they wanted to keep the prices up. This produced a system where nobody could afford food so they would work at any price just to survive. This is the extreme side of the job demand spectrum, where unemployment was just rampant, and in spite of great wealth everywhere in the nation, millions died of starvation and malnutrition.

Now I’ll elaborate on some applied distributism. Let’s allow for a market, let’s call it the Blue Market, where instead of trading on the value of a company you trade directly in the productive property it uses. To make this system manageable, one company would need to sell very few shares compared to the current stock market; even the largest (still not even close to current sized) companies wouldn’t issue more than a couple thousand shares. Now the point of the stock market is to enable companies to raise the capital needed to start a venture. The standard of using huge companies has produced the norm of selling vast numbers of shares, where each isn’t worth very much.

Let’s allow for a new company that grows apples, and issues 100 shares on the Blue Market. Holding one of those shares entitles the bearer to 1% of the productive property owned by that company, and thus 1% of the product that property is used to make. 100 enterprising individuals purchase one share apiece for perhaps $500. This gives this apple company $50,000 with which to purchase fertile apple-growing land and the apparatus needed to get as many apples as possible from that land. When the land actually ends up producing apples, the shareholders are entitled to their fair fraction of the proceeds. I’m just inventing this number since I don’t know how far $50,000 will go in apple production, but let’s say it makes 100,000 apples per year.  This results in each shareholder getting 1,000 apples each year they hold the share. Where stockholders drive companies to obsessively spiking their stock prices and all the problems the stock market creates as a result, such as pump-and-dump strategies, buyouts, etc. etc.  The  apple grower’s shareholders only want the company to produce as many apples as physically possible. They are then directly entitled to the product.

This doesn’t necessarily mean they get it in the mail, they might just allow the company to hold it for them until they can find a buyer and then ship it directly from the company to the person who would like to buy them, probably a grocery store or some such company. Keep in mind that there will be many small grocery stores competing for many sources of apples, since one apple grower translates into many apple sellers. More sellers than buyers means prices are low. However, each one knows how much their apples are “worth” and may be unprepared to take a loss on their apples. Our apple vendors spent $500 to get their $1,000 apples, so each one is worth $0.50 to them.  Of course, they may hang onto their share until next year and expect, at some probability, to receive another 1,000 apples (perhaps more), and adjust their prices this year accordingly.

There are many intriguing possibilities of distributism, such as its effects in creating an “artisan society” and how perfectly it meshes with the ideas of creating a stateless society. In fact, the stateless society is referring to distributed government utilizing dispute resolution organizations, and it produces a far more efficient system than centralized government. And the distributed economy is a necessary element in the picture painted by Stefan Molyneux, where perfect competition prevents any agent from acting unilaterally. The converse is where, for example, a specific DRO obtains the power to act unilaterally, such as providing unfavorable terms with negligible consequences to business.