Thursday, September 19, 2019

The Distributist Resolution

The General Motors strike has come along to remind us that capitalism contains an internal contradiction: Two opposing forces confront each other in one company. On the one hand, you have the management, representing the shareholders, trying to keep labor costs as low as possible. On the other hand, you have the union, representing the workers, pushing in the opposite direction. And when the parties reach an impasse, you get a strike, like we have now.

GM stands to lose $100 million per day in the process [1], while workers will receive substantially reduced pay. [2] It’s not a pleasant time for anyone. 

One historical solution to this problem is to bring in government arbitration in lieu of a strike. But that requires a neutral government, and the state of American democracy is such that we are unlikely to achieve that anytime soon.

We have to find a way to get everyone pushing in the same direction. And there are two answers for that: socialism, and distributism.

Socialism has become a category so broad as to be almost meaningless. In the interests of combating ambiguity, I’m going to use the Webster definition, which is: (1) any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods; (2) a system of society or group living in which there is no private property; (3) a system or condition of society in which the means of production are owned and controlled by the state, or (4) a stage of society in Marxist theory transitional between capitalism and communism and distinguished by unequal distribution of goods and pay according to work done. [3]
What socialism, thus defined, promises is a society where everyone is basically an employee. Noting in passing that there is reason to be apprehensive about a system where your employer and the police are the same entity, the difficulties that can arise under such a system are manifest. First, it essentially abolishes the market, making the production and distribution of goods a matter of central planning. But we simply haven’t developed the arithmetic to make conscious decisions about such things economy wide. 

Confidence in central planning derives from the fallacy that the fact we can see solutions to problems on an individual basis means that we can conceive of solutions to everything on the same basis; a sort of fallacy of composition. We simply aren’t smart enough to plan an entire economy. But socialism demands that some people be exactly that.

Secondly, socialism doesn’t really do away with the internal contradictions of capitalism. There will still be policy makers, a managerial class that will look to benefit itself; and everyone else, who will be seeking to maximize their own positions. And the managerial class will be able to impose its will by fiat. 

It will be said that this problem can be anticipated by electing the managers by popular vote, but that could be a drain on resources on this finite planet. There will be no one who has interests directed toward the productive process as a whole; there will be a perceived disconnect between individual prosperity and that of the entire social enterprise. 

Say what you will about capitalism, it does unite the interests of business owners and their businesses. That drives business owners to willingly undergo a degree of privation in the interests of their enterprises. But this feature would be completely absent from a full socialist system. In a socialism where democracy prevailed, the result would be several interests pulling in different directions; which may be why socialism has usually resorted to the authoritarian model.

Thus recognizing the social and economic benefit of the united interests of business owners and their businesses, it should be considered how that unity of interests might be more widespread, even universal. This brings us to the second solution for unifying the interests of the population: distributism. 

Hitherto, distributism hasn’t resulted in a unified approach. But it has one characteristic feature, which is spreading ownership of the means of production as widely as possible. Worker cooperatives are one distributist model, but they have not become as common as one might wish. A challenge they face is capitalization. Wealth not being equally distributed in places like the United States, we do not find many who would participate in a cooperative enterprise with the economic resources to begin such a venture. Moreover, there are many who prefer not to be laden with business management.

An absurdity that hides in plain sight in our economic system is that labor is paid for in money, but that capital can only be purchased with money and not labor. And this is true even though business revenue is largely derived from labor. Revenue will be used, in part, to make further capital investments in a business, which will increase the value of ownership shares. But labor sees none of that increase in value, even though it largely contributed to it.

This situation creates a conflict in the interests between capital and labor. Labor, not sharing in the increase in value it contributes to a business enterprise, ends up with only an indirect interest in that increase in value. But if we are to unify the interests of capital and labor, if we are to get everyone pushing in the same direction, a way must be found for labor to receive its share of the value it contributes the company. The only ways that can be done is to distribute proportional ownership shares to the employees or distribute the value by means of cash payments.

Until that is done, we will continue to be beset with conflicts between labor and management, or, with the ascendancy of right-wing nihilism we have witnessed of late, labor action will encounter brutal suppression.