Insightful article on capitalism (particularly for Belloc)

[Anthem]

Sorry, anytime I read the literature of distributism, it involves the state taking property away from some to give to others. It may be done in the name of fairness, or promoting family business, but the essentials are the same: state takes from A to give to B. That's the definition of socialism.  Now, I don't agree about the impossibility of replacing fossil fuels, but the scientists here would be able to cover that topic more effectively than I. But do you see where your premises lead? Capitalism maintains that if there is more demand, human ingenuity will find a way to supply more, but if you want to argue that there must be more growth but no way to control the supply (due to the impossibility of replacing fossil fuels) , then you must control the demand. There is one way of controlling demand, and that is to control the number of people demanding. Which is why I must point out here that all socialist systems, without exception, promote birth control, abortion, and euthanasia.

I thought the same as you, seriously.  But I did read much about distributism.  It is not about using the government to redistribute weatlh.  What literature have you read?  Please post links, if you can, because I would like to read it too.  I had the same arguments as you do, before I realized my error.  I am a scientist myself, not a petroleum geologist, but no matter.  There is nothing on the horizon that approximates the energy utility that fossil fuels, more specifically petroleum, has given to us.  There is no way to effectively increase energy supply to satisfy the demands of our current society, as it exists.  Now, there are many options to address this.  One is dieoff.  That is a distinct possibility.  One is to proactively reduce the population through euthanasia.  Another would be to promote abortion.  The most appealing to Catholics ought to be the idea of returning to a simpler, agrarian lifestyle that does not require the sorts of energy inputs that now sustain our profit-driven economy.  That takes work, agrarianism, and most people are too lazy to buy into it.  It also takes a rejection of our worldly lifestyles which equate acquisition of "stuff" as "success".  We won't have a choice in the fact that capitalism will collapse.  We do have a choice how we address that collapse.

[Mhoram]

Capitalism, regulated or otherwise, is predicated on continual growth

No, it's not.  If I have a dairy cow and you have an apple tree and our neighbor is a fisherman, and we all trade these things back and forth to each other, we're capitalists.  No "continual growth" required.  Now, if we three elect a fourth neighbor to be our president, and he taxes us and establishes a currency and a federal reserve system, and we all borrow money from it to expand our herds and orchards every year beyond what our markets require, that's another story, but it's not capitalism anymore.  What you're talking about is usurious capitalism, or corporatism, or Wall Streeetism, or something like that.  Maybe we need a new word for it.

Equating the US financial system with capitalism is like equating Soviet Communism with the way Jesus's disciples were required to give away their property.  They kinda sound the same when you first look at them from a certain angle, but they're very different.

Oh my goodness.  You are describing bartering, not capitalism.  Capitalism contains, by definition, profit.

By definition?  Not this one from dictionary.com:

an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations, esp. as contrasted to cooperatively or state-owned means of wealth.

Capitalism can use bartering; it can also use some sort of money as a medium of exchange.  That's not the point.  The point is people own property and can trade their production freely with others.  By definition.

Not that profiting from your production can't be part of it.  If I'm a good farmer and you're a good fisherman, by owning our production and trading it (by barter or through a money system), we can both end up with more than if I tried to fish and you tried to farm.  It's not a zero-sum game.  The problems we have with profit today are when it doesn't come from production, but from investments, which, again, are highly regulated and affected by government actions.

Distributism sounds great, really.  If I ever start a new nation, it'll be distributist.  I just don't see how you get from here to there without massive government redistribution.  Does anyone actually think that would result in anything like the distributist model?

[Anastasia]

Well, I read what Chesterton wrote on the subject, the articles published recently in the Remnant, and those articles Belloc so industriously copy/pastes.  As far as the energy goes, I'm in favor of deregulating the industry, and letting the market find a solution. Perhaps there's another, completely different scheme out there, perhaps it can be done with some combination of what we have. But putting the scientist who could find a solution to work on a farm means not only will the agricultural work be badly done, he will not have the time or incentive to work on a solution.
That, and some of us are naturally cosmopolitan; it has nothing to do with laziness or materialism.

[Anthem]

Well, I read what Chesterton wrote on the subject, the articles published recently in the Remnant, and those articles Belloc so industriously copy/pastes.  As far as the energy goes, I'm in favor of deregulating the industry, and letting the market find a solution. Perhaps there's another, completely different scheme out there, perhaps it can be done with some combination of what we have. But putting the scientist who could find a solution to work on a farm means not only will the agricultural work be badly done, he will not have the time or incentive to work on a solution.
That, and some of us are naturally cosmopolitan; it has nothing to do with laziness or materialism.

I don't get Remnant but I have read some of Chesteron's work and haven't seen government confiscation of property advocated.  Perhaps you can give me just one reference, since you seem firm in your position.  When I thought distributism was bunk, and went looking for things about it, I didn't find the sorts of things you say you did.  Something in reading about it must have made a distinct impression on you, opposite of the impression it made on me.  I am thinking I didn't read about it deeply enough, so I am anxious to read the things that swayed you.  I am serious.  It is hard to convey that nonverbal communication that occurs in a face-to-face conversation, so I hope you don't think I am merely posing questions to trap you.  I really want to know what you read that made you come to the conclusion that distributism was lite socialism.

Now, on to your other points.  I am not sure what you mean by "naturally cosmopolitan", but I fear it has much to do with materialism despite your denial.  I do not think you understand the term cosmopolitan as it is normally defined. Cosmopolitanism does not seem to me to have much to do with one's occupation.  Perhaps you meant "suburban" or even urban or metropolitan.  One could be a farmer and believe in cosmopolitanism.  So, you will have to define that.

It seems you hope for technology to always maintain your current standard of living.  I hope for such things too, but I rationally know it cannot be.  As a scientist, I have been trained to evaluate information logically.  There is no solution to a limit to growth.  Resources that are finite are limits to growth.  A miracle (and I mean that in the truest sense) may occur and we might find a limitless source of energy (quite unlikely that this exists apart from direct Divine intervention).  Or, as an alternative, we may miraculously find an easily exploitable source of renewable energy.  This is less unlikely that a limitless source, but we need to find it soon and exploit it soon, hence the need for a miracle.  An easily exploitable source of renewable energy would still require substantial restraint on our part (our being "humanity") to sustain us (read: our way of life) long term, but it could be done.  As it stands now, we are rapidly consuming nonrenewable source of easily exploitable energy, and this is driving us off a huge cliff.  I have little hope that we will avoid die-off.  It is very sad and I pray about it often.  However, prior to this century, famine, and the like, often pared back the excess population in any region.  It has done so recently as well, but not because of a limit to growth, but because of simple human greed.  That is changing now.

[James02]

Look, in capitalism the means of production (capital) is privately held.  If I want to participate in capitalism, I must have the means of production.  How do I get that?  In the simplest terms, I must buy myself the means of production.  That means tools, education, a factory, whatever. But if I do not have any money to buy these things, how can I ever begin to participate?  I guess I can get a job working for someone else, but why would he hire me?  The only way someone is going to hire me is if it will help him make a profit.  I guess someone might give me a job and split his income with me out of the goodness of his  heart, but really for this to work, the boss has to keep what he already has and make enough profit to pay me.  So profit is essential if any new participants are entering a capitalistic system.

True.  The boss hiring you must get a return on his capital employed.  It may be something as simple as his billing/payroll/tax system, or it might be a shop with tools and heavy equipment.  However, "profit" is poorly defined.  Basically, you have to produce something.  So profit is production, or an increase in wealth.  However, how the profit is divided is arbitrary.  How much of what you produce is attributed to your labor, and how much to the capital employed?  The free market determines this through negotiations (yes, including collective bargaining by unions).

The other way I can obtain the means of production is to borrow someone else's money to buy the means of production for myself.  Again, why is anyone going to lend me money?  The lender is only going to lend me money if he makes a profit on it, otherwise his net worth shrinks.

Furthermore, if you DON'T make a return, the lender can't charge you "interest" since his "interest" would be zero.  Otherwise it would be usury.

  Again, expansion of wealth must occur. 

You forget about consumption.  If production and consumption balance, then there is no expansion of wealth, though the system could still be capitalist.

For me to pay back the loan, I have to make a profit. 

Correction.  In order to pay interest, you have to make a profit.  Furthermore, morally you have to make a profit, or paying interest would be usury.  However, you don't have to make a profit to pay back principle.

  Profit cannot exist without expansion of the economy. 

And hence "profits" are good.

[James02]

Fossil fuels have allowed capitalism to continue to expand and now, as our production capacity has reached its peak, at least as regards cheap fuel, capitalism will now begin to contract.  Any contraction (negative growth Smiley) leads to collapse in a profit-driven system.  We are seeing it now.  This is what I said in my original post about our collapsing economy.

Non-sequitur.    A loss of cheap energy will result in a contraction of ANY system, whether communist, socialist, fascist, or capitalist.  Running out of fossil fuels has nothing to do with capitalism.

[James02]

The most appealing to Catholics ought to be the idea of returning to a simpler, agrarian lifestyle that does not require the sorts of energy inputs that now sustain our profit-driven economy.  That takes work, agrarianism, and most people are too lazy to buy into it.

It also takes land, which we don't have for non-industrial farming.  Farming is very energy intensive and requires massive inputs of energy for fertilizer production.  But even assuming a society of rural family farms (with millions starving to death as a result) you would still have capitalism.  You have to exchange your produce for tools, clothes, and other supplies.  Capitalism will do it most efficiently.

Now as far as your "running out of energy" scenario, that is a false crisis.  First, oil is "running out" due to politics.  Venezuela has some elephant fields that are not being developed because Americans and Europeans were kicked out.  Mexico has 3 elephant fields offshore, but they can't develop them and they are not allowed to bring in outside companies.  Then there is the massive fields still undeveloped in Alaska.  Throw in Iraq and Iran, and you have enough oil easily for 20 more years.

Next, you have coal.  You can make everything from coal, including fertilizer, jet fuel, diesel, and gasoline.  However our coal is not being exploited due to the Global Warming hoax.

So if we developed existing oil reserves, and fully utilized our coal and nuclear (forgot about the Yucca Mountain fiasco), then we probably have reliable cheap energy for 75 to 100 years.

In the meantime, the price of solar is dropping dramatically.  Eventually you will buy cheap thin-film solar from Walmart.  Look at how fast chip technology exploded.  Just 20 short years ago our existing technology could barely be imagined.  There also seems to be a lot of hope in cellulose based methanol.  And eventually, we'll have fusion.  But whether you have a distributist, capitalist, or socialist system, an energy crisis will hit hard.  The capitalist system will be more resilient though.

[James02]

Creation of capital requires something.  That something is input from the outside.  Whence does capital arise?  Capital is the "interest", return on investment, wealth above and beyond the work input, that exists in the system.  Capital is the excess. 

Wrong.  Capital is the delayed consumption of production.  Wealth IS the work input.  Part is consumed.  What is left over is capital.  Capital presupposes savings of production.

[Anastasia]

Well, I read what Chesterton wrote on the subject, the articles published recently in the Remnant, and those articles Belloc so industriously copy/pastes.  As far as the energy goes, I'm in favor of deregulating the industry, and letting the market find a solution. Perhaps there's another, completely different scheme out there, perhaps it can be done with some combination of what we have. But putting the scientist who could find a solution to work on a farm means not only will the agricultural work be badly done, he will not have the time or incentive to work on a solution.
That, and some of us are naturally cosmopolitan; it has nothing to do with laziness or materialism.

I don't get Remnant but I have read some of Chesteron's work and haven't seen government confiscation of property advocated.  Perhaps you can give me just one reference, since you seem firm in your position.  When I thought distributism was bunk, and went looking for things about it, I didn't find the sorts of things you say you did.  Something in reading about it must have made a distinct impression on you, opposite of the impression it made on me.  I am thinking I didn't read about it deeply enough, so I am anxious to read the things that swayed you.  I am serious.  It is hard to convey that nonverbal communication that occurs in a face-to-face conversation, so I hope you don't think I am merely posing questions to trap you.  I really want to know what you read that made you come to the conclusion that distributism was lite socialism.

Now, on to your other points.  I am not sure what you mean by "naturally cosmopolitan", but I fear it has much to do with materialism despite your denial.  I do not think you understand the term cosmopolitan as it is normally defined. Cosmopolitanism does not seem to me to have much to do with one's occupation.  Perhaps you meant "suburban" or even urban or metropolitan.  One could be a farmer and believe in cosmopolitanism.  So, you will have to define that.

It seems you hope for technology to always maintain your current standard of living.  I hope for such things too, but I rationally know it cannot be.  As a scientist, I have been trained to evaluate information logically.  There is no solution to a limit to growth.  Resources that are finite are limits to growth.  A miracle (and I mean that in the truest sense) may occur and we might find a limitless source of energy (quite unlikely that this exists apart from direct Divine intervention).  Or, as an alternative, we may miraculously find an easily exploitable source of renewable energy.  This is less unlikely that a limitless source, but we need to find it soon and exploit it soon, hence the need for a miracle.  An easily exploitable source of renewable energy would still require substantial restraint on our part (our being "humanity") to sustain us (read: our way of life) long term, but it could be done.  As it stands now, we are rapidly consuming nonrenewable source of easily exploitable energy, and this is driving us off a huge cliff.  I have little hope that we will avoid die-off.  It is very sad and I pray about it often.  However, prior to this century, famine, and the like, often pared back the excess population in any region.  It has done so recently as well, but not because of a limit to growth, but because of simple human greed.  That is changing now.

I suppose the quotes that would be easiest for you to access will be the debates I've had here on FE on distributism. In the end, all admitted that to get from where we are right now to a distributist economy, the government would redistribute land to make everything "fair". If there's another way of moving from A to B, no one seems to have discovered it yet.
As for cosmopolitan, I use the terms as it is generally used, to mean a person who lives, and is happy to live, in cities. Urban will do just as well. I don't wish to dictate where everyone should live , some have skills and great enjoyment for the rural life; I just am not one of them.The kind of work I do requires close access to libraries, for one thing, and I should fail miserably if I should pretend to be a farmer growing all my own food. I have not the aptitudes for a rural life. Nor the desire for one: in a city I can travel a few minutes and see famous works of art, great buildings, have Ethiopian food, French wine, and listen to an English concert. Before anyone decries this as materialist, this is the way I see Beauty in creation, and God's inspiration in man. You may see it in your fields, but it is still using the material world to get a glimpse of the Beauty innate in God's design for the universe.
Now, as James points out, if you think the energy crisis is so unsolvable, even moving to distributist farms will not provide food for everyone. And if capitalism can provide a solution where humanity doesn't succumb to famine, why wouldn't we want to try that first?

[didishroom]

Can I marry you, Anastasia?

[Anastasia]

Can I marry you, Anastasia?

+1 for making my day!

[didishroom]

No problem.   You just keep saying all the things I want to say but can't.

[James02]

if you think the energy crisis is so unsolvable, even moving to distributist farms will not provide food for everyone. 

It's worse than that.  If you have an energy crisis, the last thing you want are inefficient farms.  Breaking up industrial farming and giving it out in small chunks will result in higher energy consumption per pound of food.

Maybe they favor "communal" farms?  Then you're back to communism.  Ask the Ukrainians how well that worked out.

[Mhoram]

Well, distributism doesn't require everyone to farm; it just has a larger limit on the amount of land a farmer can own compared to other kinds of businesses.

I think distributism is probably a workable system, but it would still be possible for people to get rich and find ways to exploit others, as in any system.  It's probably harder for people to see the weaknesses in it because it hasn't been tested as thoroughly as the alternatives.  To the extent that any system is free, some people always will find ways to exploit it better than others.  (In an un-free system, the powers that be exploit everyone else.) 

Any economic system will look bad if it's not supported by a good culture.  If there were a political-economic system that could make millions of people live together in wealth and harmony, we would have found it by now.

[James02]

Any economic system will look bad if it's not supported by a good culture.  If there were a political-economic system that could make millions of people live together in wealth and harmony, we would have found it by now.

This will never occur due to Original Sin.  Now obviously a Catholic culture would be better than other cultures, but the participants would still be under the curse of Original Sin, even after baptism the effects remain, though muted.

The good part about capitalism is that competition and freedom make it "intrinsically safe" against Original Sin.  The genius of our Constitution was the 10th amendment, something arrived at not by religious theory, but by real world observation.  If you read the writings of the "progressives" in the early 20th century, you can see their number one goal was to get around the 10th amendment, it acted as a natural check against their Utopian ideas, which ideas have since brought us to our current sad state.

Off on a quick tangent, I always like it when non-religious people come to the same conclusion as Catholics, but arrive via a different path.  As Catholics we can theorize that a competitive, free economy is better as it counter acts Original Sin.  And an agnostic can observe the real world and say "You know what, when we have limited government, things work more efficiently and wealth is spread more evenly".

Anyhow, that is why I am not anarcho-capitalist.  I am against monopoly, and I am for some restrictions on corporate governance of publicly traded companies, such as not allowing the CEO and Chaiman being the same person.  I am also for labor unions, though only after they have been radically reformed: local unions only, restricted to collective bargaining and dispute resolution, no "work rules".