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A Third Option to Capitalism and Socialism in the Wake of the Covid 19-Fuelled Economic Crisis

Updated: May 4, 2020

The shocking and unprecedented impact of Coronavirus on global markets has driven conversation about the state of world economics to a fervour probably never seen since the Great Depression. This time though, it is a truly global conversation. Article after article seeks to provide context to our present predicament, and predict what the future of a world post coronavirus, might look like.

Most articles I have read are of one of two vintages. One type of article is written by economists and finance heavyweights about the specifics of how we might expect economic performance, and securities markets to be affected in the months and years to come, and how to adjust our spending and our portfolios for these outcomes. The other type of article is about how the crisis has peeled back the layers to reveal the many deficiencies of the capitalist system under which most of the world operates. In other words, the former aims to tell us how we might keep our current economic system chugging along albeit on thinner rails, while the latter suggests that we might want to give some serious thought to jettisoning the whole thing. This is such an article.

I think the average person finds themselves in a pretty unprecedented situation. Never in our history, have so many people had this much access to so much information, opinion, statistics, and conjecture. As this crisis hurtles onward, and the economic picture becomes clearer, and grimmer, there yawns before us the opportunity to ask some big questions about the state of capitalism, and then begin to move in another direction if we don’t like the answers we find. Unfortunately, the sheer mass of information on offer means we are more likely to freeze in stupefaction and do nothing. This is our current predicament, and there is a genuine possibility that at the end of “all of this”, the status quo will remain, and we will have missed yet another opportunity to reach into the depths and save ourselves.

Part of the reason for the confusion is that most of the proposed solutions to our economic troubles (wealth inequality being the largest trouble) appear fairly opaque. It was similar with the global financial crisis. After all, what does the average person know about regulation? Who should be regulated, and how? Why did we peel back regulation to begin with? We should expect to see similarly inaccessible conversations attend our current crisis, more likely along the lines of taxation.

Here is my first assertion. The legal machinery that keeps capitalism in check is opaque because it is complicated, the reason it is complicated is that the problems inherent in capitalism as currently practiced are several and are diverse, and require a complicated series of patches, like a poorly written code. One side suggests we keep applying the patches because we have nowhere else to go, the other side suggests we need to scrap the code and start from scratch, but often with no alternatives on offer.

Here’s a list of the sort of problems our current economics has spawned. Environmental degradation, global warming, jaw-dropping wealth inequality, exploitative labour practices, increasingly polarized politics, exploitative pricing of raw materials resulting in global wealth inequalities, stagnant wages, reduced social cohesion leading to isolation and depression. The list goes on. Given the list above, (a very abridged version) we are well within our rights to plead for an alternative.

So, ARE there alternatives? I believe there are, though probably not too many. I know of at least one. As you will know, prior to the fall of the Iron Curtain and the end of communism (for the most part), the two competing economic ideologies were socialism and capitalism. Of course there are strains and degrees of both socialism and capitalism, for example the authoritarian capitalism practiced by China is different in some ways to the neo liberal model practiced by the United States. In the late 1800s and early 1900s, as these two ideologies took firm root (capitalism in Western Europe and the United States, and socialism in Russia, and what would become the USSR) a largely ignored but brilliant group of thinkers, predicted with startling clarity and long-sightedness, that both alternatives would result in the concentration of wealth and power in the long-run. In socialism, they foresaw a rapid consolidation of wealth and power in the state, while in capitalism, they anticipated a slower, yet inevitable concentration of wealth and power with the rich few who owned capital, those we currently refer to as the 1%. We in the West, have spent the last 100-plus years on this inexorable journey towards oligarchy. They also predicted that if capitalism won the race, we would resort to implementing socialist practices like higher taxation and greater regulation (the sort of thing the political right hates) in our attempt to deal with the many shortcomings of capitalism. A bastardized, cobbled together system which would polarize our politics, divide our countries, and confuse the average citizen. Were they right? I will leave you to answer that question.

They proposed a third way which they called Distributism. Probably the quickest way to explain distributism is to say that it is the “Democratization of wealth”. While capitalism as practiced tends towards the few holding capital, distributism suggests that as many people as possible should hold capital (the means of production). So, distributism would advocate for the local grocer and discourage the multi-billion dollar grocery chain. It would suggest that we should support our local furniture maker, rather than pack Ikea to the rafters every weekend. In order to understand distributism properly, you have to understand its central goal and this central goal is nothing less than paradigm-shifting in our times. Here it is. Our chief goal as humans is to be happy…not happy in a superficial temporal fashion, but deeply happy. As a part of this aim, we seek to express ourselves in a multitude of ways, but perhaps most frequently through the work we do. Work should be a gift that should satisfy, not an obligation that extracts. We as a race, should therefore seek to organize ourselves economically in a way that gives us the best chance at living out our talents, abilities and passions in ways that are most meaningful to us.

In the 1800s and early 1900s, the typical capitalist industrial enterprise was little more than workers on an assembly line, doing mind-numbing tasks for hours on end, so you can see how the distributist agenda was an urgent priority to those that sought to advance it. The assembly line may be a thing largely of the past in the West, (though it’s a daily reality in other parts of the world) but are most of us not similarly disengaged and uninterested in the work we do? Is it not the common trend that the larger a company gets, the harder it is to build culture and motivate employees? Don’t most of us often dream of owning a little something of our own, no matter how small? The obvious protest to this idea is that some goods require large scale to produce, for example an oil refinery or an airplane manufacturer. For that scale of production, distributism would recommend a cooperative structure, with employees having ownership of the company, rather than the detached, indifferent, often destructive model of public shareholding or private equity. Simply put, distributists would ask, if our chief goal is to pursue the fulfillment of the human spirit, why would we subscribe to a system that reduces us to just another factor of production, all in pursuit of the dollar almighty?

It is important to understand the main goal of distributism in order to appreciate that distributism isn’t primarily about wealth, and truly our grievances today aren’t really about wealth. They are about the fact that wealth often means power, and wealth means agency, and as it pools around the few, we sacrifice choice, we sacrifice autonomy, we sacrifice freedom, we sacrifice individuality, we sacrifice our souls. That is a price too high. Wasn’t that the battle we fought against communism - the battle for our souls? Well a very similar one has found us, though in meeker clothes, and if we don’t speak up now, if we don’t rise to the moment, if we don’t make this moment count, it will bury us.

When shall we rise? Now. Crisis has the silver lining of accelerating change. It forces us to consider alternatives we otherwise might not have. As World War II brought us women's rights, this current crisis can spark the evolution of our economics towards something at least resembling sanity, that puts the human spirit and the environment first, and corporate profits a distant second. Coronavirus has offered us a second of sobriety in the midst of our drunken near-constant pursuit of the meaningless more for which we've sacrificed our air, our water, our land, our health, our societies, our solvency, and our selves.

How shall we rise? Together. The revolution required to shift the current norm will not be of the kind that ushered in communism. We do not need to snatch power, we already have all the power we need collectively. Every decision we make as consumers and producers will shift the balance ever closer to that new norm. They will not let us vote in their boardrooms, but we can vote with our wallets. We can consume locally, we can pay the small premiums for higher quality goods which are kinder to the environment, and produced in our towns. The costs of starting a business are also increasingly cheaper, so never before have the barriers to entry been so much lower. Yes, the monopolists can replicate whatever we create and sell it cheaper, but we don't have to buy it. We can also agitate for real anti-monopoly legislation, and back politicians that will roll up their sleeves to put in place legislation that will finally bring deep structural change. But the biggest factor in all of this is WE.

If you have ever stood next to a landfill, you will know that I am right. If you have ever had to accept that puffers and steroids are now a permanent part of your child's life you will know that I am right. If you or your family members have lost your livelihoods because the factory is now producing in Vietnam to cut costs, you will know that I am right, and if you believe that there is nothing to be done about it, that it's just the best of many worse evils, then you are very wrong indeed. But the only way change will ever come, is through us. This can only be a bottom-up movement.

I have simply attempted to explain the heart of distributism in the preceding paragraphs, there is a lot more to be said about the practical ramifications, many of which are overwhelmingly positive. For example, increasingly localized economies mean less of a need for transportation of finished goods, which impacts fossil fuel consumption and reduces the need for non-biodegradable packaging, which has direct environmental benefits. They also result in greater social cohesion and stronger communities. While this blog covers more than distributism, it is considered to be one of the cornerstones of our evolving understanding of what we would consider Good Business, and so will be covered in more depth in future posts.

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