Comment by Dave Hamill on September 17, 2015 at 1:48pm

Hi, here is an excerpt from Mike Greaney's blog series

http://just3rdway.blogspot.com/2014/06/distributism-neo-distributis...

"Classic distributism accepts the “currency principle” as a given. That is, “money” consists of claims issued by the State, private individuals, or institutions against existing wealth, i.e., “savings,” defining “savings” exclusively as the excess of income over consumption. (Cf. John Maynard Keynes, The General Theory of Employment, Interest, and Money, 1936, II.6.ii.)

Within the framework dictated by this “slavery of past savings” (Cf. Louis Kelso and Mortimer Adler, The New Capitalists: A Proposal to Free Economic Growth from the Slavery of Savings. New York: Random House, 1961), there is only one way to finance new capital formation and thus production: produce more than you consume. This contradicts Adam Smith’s basic postulate of economics: “Consumption is the sole end and purpose of all production.” (Adam Smith, The Wealth of Nations, “Part III, Ch. 8, “Conclusion of the Mercantile System.”)

Assuming that you can only finance future production out of past savings also begs the question that, if the only way to produce is to consume less than you produce, where production comes from in the first place. Effect cannot precede cause.

It also contradicts Say’s Law of Markets. Say’s Law is that we do not purchase what others produce with “money.” We can only purchase what others produce by means of their labor and capital, with what we produce with our labor and capital. Money is only the medium by means of which we exchange what we produce for what others produce. If we do not produce, we cannot consume.

Limiting money to a contract conveying a property right only in existing wealth means that credit can only be extended out of existing money savings. A “bank” is defined as a financial institution that takes deposits and makes loans. (This is the definition of a “bank of deposit.”) Financing of new capital is limited to the amount of money savings in the system, most of which by definition belongs to the currently wealthy.

Property, of course, is not the thing owned, but 1) the inherent (inalienable) right to be an owner built into human nature, and 2) the bundle of socially determined rights that define how an owner may use his or her possessions.

The socially determined rights of property must be limited and defined according to the needs of the owner, other individuals, the institutions of society, and the common good as a whole. The inherent right to property, that is, the natural right to be an owner, is part of human nature itself and cannot be taken away.

Thus, while in an emergency the State can justify a temporary redistribution of goods to meet the emergency, instituting redistribution as a permanent solution to anything is contrary to the natural law and is, in fact, the abolition of private property. Not even for the gravest reasons can private property be abolished, whether by redefinition, manipulation of the law, or by outright confiscation. A good overview of the concept of property in the Just Third Way can be found in Louis Kelso’s critique of Das Kapital, “Karl Marx, the Almost-Capitalist.”"

My personal interpretation is that we focus on the ability to create new productive growth through credit, where Distributists seem to focus more on encouraging small enterprises that earn their place in the sphere of existing wealth.

Comment by Paul Sofranko on September 21, 2015 at 10:09am

Thanks! I'll take a look at the post.

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