Home / Economics / Distributism and the Labor Market Divide

 

The distinctive feature of Distributism, the chief feature which differentiates it from Capitalism, is the widespread ownership of private property. Capitalism, according to the definition of Pope Pius XI in his encyclical Quadragesimo Anno (1931), is “that economic system in which were provided by different people the capital and labor jointly needed for production” (§100). In other words, under Capitalism for the most part capitalists supply the means of production and hire others to work for them, thus some provide the capital, others the labor. Although there are many more laborers than capitalists, capitalists usually are richer both as individuals and as a group and as a result have more political power and control. This is not the place to discuss all the ills which result from this capitalist division of ownership and work; rather I want to point out the differing effects of Distributism and Capitalism on labor or (to use the capitalst term) the labor market.

We might begin the discussion with the following incident. In the December 15, 2011 issue of one of our local weekly newspapers, our congressman, a Republican, was quoted as follows with regard to the extension of unemployment benefits recently passed by Congress.

“Now, I had a business owner call me and complain that he’d had to lay off a woman because of the economy and he called her back when things turned around and said he’d like her to come back. She told him, ‘Call me in 30 weeks when my unemployment benefits run out.'”

Now what can one say about this? Assuming the accuracy of the account, of course one could simply inveigh against this woman, point out her laziness, her disinclination to work, her willingness to live off tax dollars, etc. But although for all I know, the woman in question may be lazy, we do not know whether this is true or not. Perhaps she is a mother with small children—is her desire to stay home with them for another 30 weeks wrong? In any case, I do not think that speculation about this woman’s character is the most important issue here nor the deepest lesson we can learn from the story. For first of all, note that the employer was quite willing to lay off the woman. As the owner he controlled the work of his employees. Although perhaps he is a benevolent employer, who tries to keep his employees working as much as possible, one can nevertheless wonder whether he would be willing to take a cut in his own profits to keep his employees working, even if at reduced hours. For remember that it is not only the employer who draws his livelihood from a business, but all the employees too. If one wants employees to have a sense of solidarity, to be willing to share in sacrifices to keep the firm afloat, then one can rightfully expect some sacrifices on the owner’s part too.

Secondly, one can assume that the owner did not wait 30 weeks before he hired another person for the job. In other words, although he probably wanted his ex-employee back because she was already trained for the job, neither he nor she seems to have had any sense that there was anything more than a business relationship between them, simply a matter of money when all was said and done. And although certainly not all capitalist employers regard their workers as simply production factors, this is the attitude toward employees that the capitalist system fosters. Any employer who has too much sense of responsibility to his workers is liable to be run out of business by those who regard their employees as so many cost items. Therefore since the capitalist is usually willing to lay off employees with little or no regard for their well-being, why should employees have any sense of loyalty to the firm?  The practice of looking out for number one has permeated our culture and influenced almost everyone. Is it surprising that sometimes employees take advantage of the system, since most employers do so routinely? Is it surprising that employees will take from the federal treasury their small sums when bankers have taken their immense sums?

It takes little reflection to see that this problem, this incentive toward greed and other vices on the part of both employers and employees, would not exist, or would hardly exist under Distributism. If a man owns his own business, or if he is a part-owner in a cooperative business, then necessarily he is going to regard both his job and the business itself very differently. Neither will be something simply external to him, something for which he feels no loyalty, something whose only function is the weekly paycheck. I daresay that under Distributism not everyone will love his job or his type of work, for mankind cannot entirely escape the curse of Adam, but no one need feel that he is merely a production factor, an expense, a person treated as a thing, something to be discarded if only that were possible.

The labor market divide, owners vs. workers, is not a healthy divide. Even with the best will in the world—and how seldom does that occur—there will be an incentive on the one part to pay as little as possible, to reduce benefits and workplace safety, and finally to replace employees with lower-paid foreign workers. Under Capitalism employees will always be an expense that reduces profits; this is inescapable. And on the other hand, there will be an incentive for workers to look only to their own perceived interests, to slack off at work, to abuse sick leave and unemployment benefits, etc. But since the capitalists are almost always the more powerful, generally they are the ones who are able to put into effect their wishes, to use the political process to facilitate moving jobs overseas, to weaken workplace safety laws, to attack labor unions.

And it is the keynote of the capitalist system, the division of owner and worker, that actually provides the incentive for this type of behavior.

Since the fall of Adam and Eve, mankind has had a propensity toward evil conduct, toward greed among other vices. The aim of the political art ought to be to reduce the scope for these vices as much as is reasonably possible. It is usually not enough simply to preach to people, for we humans are notorious for not heeding good advice. Rather disincentives to good behavior should be eliminated whenever this is possible. Distributism largely does this with regard to the employer/employee divide–it simply folds the two into one. Probably in any distributist economy there will be some who will be employees. But the point is that self-employment and cooperative employment would be the rule and would encompass the vast majority of workers. Thus the tone of society would not be set by the rivalries of capitalism, the notion of always looking out for number one, the idea that since the other guy is trying to get all he can, I should do the same. Just as Capitalism has an inherent disdain of limits, including the limits of justice, Distributism would promote a sense that everyone ought to receive what is due to him, but no more. Distributism would promote the idea that everyone willing to work is entitled to a living for himself and his family, but that to seek to increase one’s income without measure is to follow the maxims of the Devil.

The lot of mankind since the Fall has been sad enough that we don’t need to heap more misery upon our poor race. Whenever we can, we should shape our institutions to promote human happiness and contentment. Capitalism is the enemy of contentment and simply adds to the strife that afflicts humanity. Distributism does the opposite, and if for no other reason, it deserves our attention as a benefactor of the human race.

 

About the author: Thomas Storck

 

Thomas Storck is the author of Foundations of a Catholic Political Order, The Catholic Milieu, and Christendom and the West. His work has appeared in various publications including Homiletic and Pastoral Review and the book, Beyond Capitalism and Socialism. Mr. Storck is a former contributing editor of New Oxford Review and Caelum et Terra and serves on the editorial board of The Chesterton Review.An archive of Mr. Storck's writings can be found at www.thomasstorck.org.

 

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13 Comments

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  2. The story related by the Congressman about the woman sounds a tad fishy in any case. Perhaps the woman said it as a joke. But if she wasn’t joking she must be pretty stupid because if you decline an offer of work you will very likely lose your unemployment benefits. And anyway, who wants to live on a small unemployment check rather than a normal salary? As they say, it doesn’t pass “the smell test”.

    Mr Storck’s article was excellent and it makes me want to sit down tonight and watch again Fritz Lang’s 1927 film METROPOLIS which had some interesting things to say about Capitalism and Labor.

  3. Dan’s right, the employer can cut off her unemployment benefits if she refused an offer of work. But I don’t think that it’s that fishy that she might want more time off (and an unemployment check) rather than a full time job (and no time). Life is full of trade-offs.

    “One can nevertheless wonder whether he would be willing to take a cut in his own profits to keep his employees working, even if at reduced hours.”

    Storck is assuming (as a lot of people who’ve never run a business do) that the employer has a steady stream of “profit” coming in, and if he were to take a cut, he could keep everyone employed at least part-time. It’s more likely that a business that is laying off people hasn’t make a profit in years. The company has probably been burning through its savings, and even taking on debt, to meet payroll. (If you don’t meet payroll, your employees scatter and your business folds, since there’s no one to provide goods or services to your existing customers. The employer, therefore, will have nothing coming in for himself, even after the economy turns around.)

    The employer is probably still paying himself a *salary*, as distinct from “profit.” If he is making $200,000 a year, and the cost of keeping on an extra employee is $50,000, should he take a $50,000 cut in pay to keep her on, even if there’s little or no work for her to do? I’m sure that if he did take that big of a pay cut, he’d have to cut way back on his other expenditures: charitable giving, say, and maybe pull his kids out of a parochial school because he can’t afford tuition. Even cutting back on “luxuries” (eating out, vacations, home renovations, a new car) is going to negatively affect the businesses that he buys those goods and services from. They, eventually, are going to have to cut back on their own payrolls (the biggest expense for any business).

    The issue isn’t necessarily greed, it’s that we live in a world of finite resources, which means that someone, somewhere is going to have to make hard decisions.

  4. Richard,

    Your comments, some of which are quite true, of course, show, in my opinion, the superiority of the distributist mode of organizing a firm. When the workers are the owners, they can sit down and ask themselves what’s to be done if business is slow. Take pay cuts, cut hours, lay offs, and if so, based on seniority, need, or what? But there is no inherent conflict of interest when the employees are the same people as the employer as there always is in a capitalist mode of organization.

  5. It appears the distributist, like unions, consider the employer as the default ogre in a capitalist system. But I cannot envision a good employer scheming at night on how much he can disrespect and cheat his good employees from what they are due, knowing that with unfair treatment and no consideration of their needs, soon, all of his employees will be not so very good employees. I believe good employers do consider the needs of their employees, but face economic realities and strike, in his judgement, that path which is for the best of the company and the employees.
    If I was answered by an employee asked to come back to work, to call back in 30 weeks, I would make a note to never call back and to deny any future request by the employee to become re-employed.
    Is there no longer an employee that enjoys their work and are happy to have a job doing what they enjoy? Does no one smile and think to themselves, “I cannot believe they pay me to do this”? I was hired to do a job when I was 57 years old. First I didn’t think anyone would hire me at that age. One company did. The job was one I found out I really liked and I can remember praying, thanksgiving, to God that he led me to the job and I actually had employment. It was not the money I was paid that made me a good employee, for it was 1/3 of what I was paid on my previous employment. It was something I enjoyed doing and my employer gave me the opportunity. My employer was and is a capitalist. I did not begrudge the vast about of money he was making and I did not begrudge those other employees that made up to twice what they were paying me. They had a job opening. I asked to have the job. They set the pay. I agreed to the salary. So what is there to complain about. If I didn’t like the deal I would not have taken the job. I would have kept on looking until I was hungry enough to take a less paying job. But if an employer and I come to an agreement on work and pay, then I owe him the work and he owes me the pay. It doesn’t always work like that for there are dishonest employers and dishonest employees. Capitalism works for me.

  6. Mike, capitalists do differ in their degree of benevolence and ruthlessness, yes. But if you don’t realize that quite often capitalists have sought and still do seek to lower wages, export jobs overseas, gut pension plans, even deceive consumers, then I’m afraid you’re naive about economic history.

    You also wrote, “Does no one smile and think to themselves, `I cannot believe they pay me to do this’?”

    Well, yes, some (such as yourself) do, but not everyone is so fortunate. I’m surprised if you don’t know that not everyone likes his job and does not have the opportunity to get another one.

    “If I didn’t like the deal I would not have taken the job. I would have kept on looking until I was hungry enough to take a less paying job.”

    Yes, historically this is how capitalism has often worked. If there are enough unemployed they will compete for whatever crumbs of wages employers offer.

    “But if an employer and I come to an agreement on work and pay, then I owe him the work and he owes me the pay.”

    Mike, I don’t know if you’re Catholic or not, but Pope Leo XIII said there was more to it than such an agreement, there was the right of the employee to a wage sufficient for himself and his family. This is in Rerum Novarum.

  7. I have 45 to almost 50 years of jobs I have done and have been able to work with many many people. A very high percentage of the people I have worked with disliked the job they were working along side of me. However, after we worked a while and exposed our personal feelings I discovered that most of them did not only dislike their current work, they disliked all work. They wanted to be rich so they could do nothing; collect as much unemployment as they could for as long as they could. Doing nothing and freeloading is not an honorable profession. Paul said, those who don’t work, don’t eat. It is a privilege to work. It’s good for the soul and for the body. God is good to us when he gives us work. Doing nothing, not finding a job, is very hard on a man. Work is good for us, even if it is low pay and menial. You have to take what is dealt you in this world and give God the thanks for what he provides. It may take two menial jobs to make a living but that is a blessing. Life is hard and we do not always get the house and picket fence and all the extras. But God is good even if you live in a tenement. I know. I have lived in both. I liked the house and picket fence better but in all things we should give thanks. I have watched and read about how JPII suffered with his infirmities yet gave glory to God. That is very hard to do but that is what we strive for. If a man takes you cloak and you give him another, God will remember what you do. Do you think he will not remember what the thief did? Employers that mistreat their employees, God will remember. Is it any better for the employer if we force from him additional wages? His heart is in the same place. Can we take his property without his permission? God will know how to judge. I also think of the workers sent into the fields at different hours of the day and were paid the same wage. I know the lesson is to tell us about God’s mercy, even at a late hour. But it also tells us we agree to work for a wage and to never mind what the other worker is getting. Do not be envious and covet what your neighbor has.
    P.S. I am Catholic, but this makes sense to me.

  8. “Doing nothing and freeloading is not an honorable profession.” Agreed. What do you think about bankers who contribute nothing to the common good and take billions in governments subsidies?

    Distributists want property and ownership more widely distributed. This has nothing to do with people not working.

  9. Mike said: “Employers that mistreat their employees, God will remember. Is it any better for the employer if we force from him additional wages? His heart is in the same place. Can we take his property without his permission? God will know how to judge. I also think of the workers sent into the fields at different hours of the day and were paid the same wage. I know the lesson is to tell us about God’s mercy, even at a late hour. But it also tells us we agree to work for a wage and to never mind what the other worker is getting. Do not be envious and covet what your neighbor has.”

    I don’t really see how that is relevant. That man sins in the economy doesn’t mean we do nothing to correct it. Moreover the parable about the laborers has nothing to do with the economy, nor does it mean that it is just to pay a man starvation wages just because he agrees to since there is nothing else available and he is dispossessed of capital. The parable is our Blessed Lord’s use of the situation of the day to explain salvation. In the mediteranean the economy worked generally as it does today, the employer offers what he will and you had no vehicle to demand anything better. God is the owner (of the universe) and when you contract with him you are contracting for the wage, salvation, and he disposes of the wage because he owns it, its his way or the highway, with the added bonus that God is infinitely just where men are not. It also has nothing to do with envy, but rather to indicate the wages of salvation are the same.
    This is not an approval of the human system where the owners of capital lord it over others and use wealth to get government to keep others from owning capital.
    Distributism has nothing to do with envy of neighbor’s goods, it has everything to do with enfranchising them so they can work. To say oh well, the rich get richer because that’s the way it is, like in Martial’s epigram “semper pauper eris, si paper es..” is just simply a learned helplessness contrary to the gospel. We are responsible for creating justice on earth as well, though it will never be perfect. It is not enough to say oh well, God will punish them. Part of building the kingdom of God on earth is also building Justice, though it will always be imperfect. This means dismantling the banker gulag we live in and creating a system where money represents our production and work, not debt to banks and servitude to future generations for the class that does nothing but push paper.

  10. Mike,
    There are certainly people out there who want everything for nothing. The article did point out that, while the employer is always seeking to lower costs, the employee tends to seek the highest income for the least work and abuses benefits. The point is that a significant factor contributing to these attitudes is the Capitalist system itself, which separates ownership and labor to the greatest extent.
    You cannot deny the shifts that occur in attitudes between employer and employee. With your years of experience, you must remember when “personnel” departments all across the country got renamed to “human resources.” Did you not catch the significance of that name change? Capitalist companies tend to view their employees as resources rather than persons, resources which are used to greatest advantages and discarded when no longer desired – like a stapler. This name change simply made blatant an attitude that had been in place for years.
    I have worked for several companies in my own career. Some of my employers have been great, while others treated me and my co-workers with very little regard. We were treated as cogs in a machine instead of people with families and lives outside of work. Essentially, they viewed us as a little better than slaves – and, in my opinion, that was only because we had the option of leaving.
    Why would I feel any type of loyalty for a company that treats its employees that way? Yes, when the economy was good, we got out and took jobs with other companies, hoping that our new masters would treat us better. In times of economic hardship, when employees can’t just leave because other job opportunities are very scarce, that is not really an option. I see this among some of my acquaintances in the present time. Their employers, knowing that the employees can’t leave, are treating them worse than ever. Some will argue that this is stupid on the employer’s part, but consider their view of employees. They are simply taking advantage of the situation to maximize the resources they have on hand. When those human resources eventually leave, they will simply be replaced other ones.
    Of course, there will still be employees in a distributist economy, but the overall nature of the distributist system – locally owned businesses primarily serving the local community – will mitigate the tendency to mistreat employees in a way that Capitalism cannot.

  11. I’m beginning to think that many of these problems are due to the corporation that can be owned by thousands of people. When you invest in a mutual fund, the main thing you worry about is the “bottom line”, since you own tiny fractions of many companies. On the other hand, if you are a rich guy who owns a factory and has all the creature comforts one needs, you can afford to treat your employees well. Many factory owners in the past, like Milton Hershey, tried to take a fatherly approach toward their employees. It would be interesting to compare companies that are sole proprietorships with those that are publicly traded corporations, with regards to employee well-being, while adjusting for other factors like company size.

  12. Mr. Huber,

    I think you’re right, at least partly so. A corporation is the most capitalist form of a firm, in which the separation of ownership and work becomes extreme. And when the stockholders of the corporation are not even natural persons, but mutual funds, pension funds, etc., this becomes even more extreme. At the same time, while some individual industrialists have been more or less paternal, not all were. Recall some of the labor strife in the late 19th century when most firms were still individually owned, and yet owners used violence, sometimes even murder, against striking workers. And in some cases when an owner had good qualities, he sought to control the lives of his workers, as I understand Henry Ford did. He paid good wages but wanted to be paternal to an extent that was insulting to other adults. Workers are not children.

    In any case, we cannot rely on the hit or miss chance that an owner will be benevolent. That’s why, as long as we have capitalism, we need labor unions.

  13. The main problem is the loss of ‘humanity’, especially in the West, where people are seen as objects. I don’t think this is how other cultures operate, at least in the past. The person you hire is a human who has to provide for his family, does your conscience feel right when you know you are paying them a wage that wont allow them to survive?

    This is why I think the whole idea of paying monthly Rent for an apartment is evil, because it is based on a “life” where the moment you cannot pay the faceless landowner you’re thrown out on the street. Anyone with a conscience would have to stop and realize they’d be damned to hellfire for casting a family on the street (simply because they couldn’t make rent that month). But the conscience of so many is so clouded and warped today that they can at most only see this on the individual level, not on a societal one. The Distributist model of business should also apply to housing (which it does), where a truly free and successful society is based on promoting widespread home ownership. To me, most housing prices are obscene and are over twice the cost of labor and materials. Who is making the profit here? The 30 year mortgage folks who basically make money off of your back from day 1.