In John C. Médaille’s book, Toward a Truly Free Market, the argument is made that the modern system is a self-perpetuating cycle that can only lead to more regulation and counterproductive state intervention. As a solution, Médaille resurrects Hilaire Belloc’s concept of Distributism, also known as Distributivism.

The argument is summarized in articles found on Médaille’s website, http://www.medaille.com/distributivism.htm. It is laid out as follows:

Distributivism, also known as Distributism, is an economic theory formulated by Hilaire Belloc and G. K. Chesterton largely in response to the principles of Social Justice laid down by Leo XIII in his encyclical Rerum Novarum. Its key tenet is that ownership of the means of production should be as widespread as possible rather than being concentrated in the hands of a few owners (Capitalism) or in the hands of state bureaucrats (Socialism). Belloc did not believe that he was developing a new economic theory, but rather expounding an old and widespread one against the novelties of both Capitalism and Socialism.

Belloc believed that Capitalism could never achieve economic equilibrium on its own. It is an unstable system for two reasons: divergence from its own moral theory and from insecurity of two kinds. The moral theory of Capitalism is based on freedom, but it tends to accumulate property in the hands of a few owners; as ownership becomes more and more limited, more and more power passes to a small capitalist class. The state increasingly becomes a tool to protect “wage contracts” which are increasingly leonine, that is, based on inequality. One side may refuse the contract (the employer), but the other side, the worker, generally has no choice but to accept it because the alternative is starvation. The state can no longer be a neutral arbiter between classes but becomes a defender of one class upon. whom jobs and growth are increasingly dependent.

In addition to this moral problem, Capitalism also has two kinds of insecurity: insecurity for the workers and even insecurity for the capitalists. There is insecurity for the workers because the wage fetches less in old age, nothing in sickness, and jobs themselves are at the discretion of capitalists (e.g., “outsourcing”). But Capitalism also produces insecurity for the capitalist. Competitive anarchy makes the system as unstable to owners as it is to workers and results in gluts and underselling. Capitalism responds by becoming less capitalistic; it uses the law to raise barriers to competition and to limit liability; the corporation itself is an adjustment to the inherent instability of Capitalism that allows investors to limit liability. The ardent socialist does not fear a pure Capitalism nearly as much as does the ardent capitalist.

Given its instabilities, Capitalism must, perforce, find some way of stabilizing itself. Belloc argues that there are only three stable solutions: slavery, socialism, or wide-spread ownership of property, (or some mixture of the three.) “To solve Capitalism you must either get rid of restricted ownership, or of freedom, or of both.” Of the three solutions, slave societies have shown themselves to be highly stable over long periods of time, but this solution is precluded by our Christian heritage. But the third solution, what Belloc calls the “proprietary state,” is regarded as untenable by the intellectual and political elites, which leaves only the second solution, some sort of socialism. Thus in practice Capitalism breeds a collectivist theory which leads to a servile state.

A question that comes to the inquisitive is: How do we distribute the property without using the centralized power of the state? Is it possible?

I propose a solution in the fourth part of Juggernaut. And I look forward to investigating Mr. Médaille’s theory to see how he has improved upon Belloc’s proposed solutions.