Distributism and the Current Crisis, Part 3: Localizing the Economy

[Part 1, Part 2] Political subsidiarity would mean little if the industrial system remained concentrated; it does no good to collect taxes locally if the production of goods, and therefore the production of taxable values, is not also widespread. We’ve noted the problems and inefficiencies of the current system, a system that is highly dependent on subsidies and externalized costs. Once these subsidies are removed, it is unlikely that the current production model could actually produce anything at a profit. Localized production will follow in the wake of the demise of the subsidies.

Industrial Reform

Indeed, the large corporations themselves have already opted for distributed production, divesting themselves of actual factories and seeking to retain centralized control through cheap transportation and legal control of the patents. The highly integrated, vertical model pioneered by Henry Ford has been in decline for some time; distributism is the order of the day in corporate America. Unfortunately, they have dispersed the factories around the world, rather than around the country. Nevertheless, this still plants the seeds of their own demise. One day, the workers in Vietnam making shoes for Nike will realize that they can ignore the patents, rip the swooshtika off the shoes, and sell them locally for a tenth of the price, while paying their workers three times the wages and still making twice the profit. Indeed, the Chinese have already discovered this, and all the talk of “piracy” will not change these facts.

This may help the worker in Shanghai or Hanoi, but it doesn’t do much for the worker in Des Moines or Sioux Falls. For these workers to be helped, they will have to have the same privileges as the Chinese and other foreign workers. Moreover, they will have to have a production system that respects localism. Distributism offers here not just abstract models, but functioning, stable systems that anyone can examine and adapt to their own situation. That is, distributism does indeed have a coherent and functioning industrial policy. Here we just summarize the elements of these systems:

  • Flexible manufacturing able to shift between product lines as demand dictates
  • General purpose machinery instead of product-specific machines.
  • Demand-pull rather than supply-push manufacturing
  • Local supply chains wherever possible
  • Widespread worker ownership and open book management
  • Scalability, production techniques that are scalable from the level of the family farm right up to the large factory.

Agrarian Reform

Distributists are frequently accused of being romantic agrarians. We are agrarians, but we are not romantics. “Agrarian” means, in this context, not “moving everybody back the farm,” but “restoring the proper relationship between town and country.” Contrary to corporate opinion, a tomato does not taste better if it is picked green and shipped a thousand miles before it is consumed. But apart from the question of flavor, there is the economic inefficiency inherent in such a system, inefficiencies that are covered up by subsidies.

One thing is for certain: neither the environment nor the economy will tolerate much longer the current system of factory farming. The cabbage grown in Oregon and consumed in Texas consumes more energy in its growing, picking, transportation, and marketing than it supplies in calories. If the energy inputs—the chemical fertilizer, the heavy equipment, the fuel for machinery and transportation, and so forth—were properly priced and the subsidies removed, this transcontinental cabbage would not be a paying proposition. And it will not be in the very near future. Even today, the system depends on an easily exploitable workforce that does not participate in the benefits offered to the rest of society, creating a vast underclass whose legal status is ambiguous, even as their numbers proliferate.

Trade Reform

Trade is a basic part of the human condition; no family, firm, city, or nation can be entirely self-sufficient. But trade is only good when it really is trade, that is, when you earn enough to buy the things you purchase. A “trade” that is based on borrowing to finance consumption is not really trade at all, but the prelude to bankruptcy. This is a basic fact overlooked by our trade policies, which are based on a doctrinaire application of the basic “free trade” theory, called the Theory of Comparative Advantage. However, the people who argue the theory most strenuously seem to be the ones least familiar with the actual theory. The theory is valid only under three conditions: one, that capital is relatively immobile; two, that there is full employment in both countries; and three, the trade is balanced between both countries. Absent these conditions, a doctrinaire “free trade” makes both parties poorer, as the poor in both countries are played off against each other. In the United States, it has resulted in a hollowing out of our industrial base. But no country can expect to grow prosperous except by making things; if we lose this ability, we guarantee ourselves and our children a life of dependence and poverty.

Without the necessary conditions, an insistence on free trade ceases to be a useful economic paradigm to become a mere political ideology. When conditions are less than the ideal of the pure theory, then trade between nations must be managed, just as trade between firms is managed. We should make those deals which make sense, and reject the others.

Distributism and Reform

Since the current system is not sustainable, it will be reformed, one way or the other. The only question is whether we shall get out in front of the collapse and begin an informed movement towards sanity. Since the Enlightenment, the world has experimented with laissez-faire capitalism, socialism, communism, Keynesianism, and mercantilism. While each of these systems contains some partial truth, they are all insufficient to the whole truth. All of these systems have been weighed in the balance of history and found wanting. It is time to return to a more natural system, and that is system is, I believe, distributism, or something very like it. For the past few decades, distributists have mostly withdrawn from the purely economic debates to rest their case on moral and social claims. This is, of course, a necessary aspect of the problem. However, these claims cannot be made credible unless there is also a credible economic argument behind them. As Cardinal Ratzinger (as he then was) stated,

A morality that believes itself able to dispense with the technical knowledge of economic laws is not morality but moralism. As such it is the antithesis of morality. A scientific approach that believes itself capable of managing without an ethos misunderstands the reality of man. Therefore it is not scientific.

My intention in writing Toward a Truly Free Market is to demonstrate that distributism is a robust economic theory, demonstrated by actual practice, and is capable of tackling the difficult and sophisticated problems that we face. I hope that this book will enable the distributist to enter the debate and stand his ground against all comers: socialist, capitalist, Austrian, Keynesian, or whatever. This is the distributist moment. We must seize this moment; it will not come again. We must arm ourselves with both the moral and technical knowledge that will be required to reform our world and preserve our freedom. For make no mistake, although all these other answers have been tried and found wanting, there is yet another answer: slavery. Slave societies have proven themselves stable over long periods of time, and so provide a solution, no matter how distasteful to our Christian heritage, to the problems of social and economic stability. In the end, the question will be, as Belloc predicted it would, between freedom and slavery.

John Médaille is an adjunct instructor of Theology at the University of Dallas, and a businessman in Irving, Texas. He has authored the book The Vocation of Business, edited Economic Liberty: A Profound Romanian Renaissance and just completed Toward a Truly Free Market: A Distributist Perspective on the Role of Government, Taxes, Health Care, Deficits, and More.

This article courtesy of The Distributist Review.