The family’s limited participation in the manufacturing of medium to large-scale goods appears to present us with a challenge. Large-scale industry is needed to accommodate the production of heavy machinery, automobiles, and other technologies we use everyday. To the skeptic, Distributism seems unresponsive to these needs and incapable of fitting into our modern framework. In part, this is the consequence of land and small business ownership figuring in modern debates among Distributists, capitalists, and socialists. Fewer conversations are directed at the core of distributist thought: mass ownership of the means of production. Yet, G.K. Chesterton re-awakened the imagination by recalling how widespread ownership of the means of production was prevalent, and had precedent, in various eras, notably the Middle Ages.
In order to resolve the question of how Distributism can accomplish large-scale manufacturing, we need to examine what the “means of production” are.
The “means of production” are the land, tools, and equipment needed for labor to transform raw materials into goods and services. As wealth is only possible by the combination of the means of production, labor, and raw materials, Distributists argue that these should be in the hands of the masses rather than the few plutocratic or under oppressive bureaucratic control.
Capitalism concentrates both resources and token wealth in few hands, using government to socialize the losses and privatize the profits of the smallest yet richest percentage of its citizens. The socialist reaction to capitalism is to centralize the means of production under the reins of government or what it calls “public ownership”. Inevitably however, both capitalism and socialism strip the masses of their ability to utilize the means of production freely, leaving the family a slave to the State or to the corporation.
Worker-ownership, or “cooperatives” as they are commonly called, alleviates the tensions wrought by the separation of ownership and work because it eliminate this division, and it increase ownership because cooperatives are multi-partnerships, organizations owned and operated by a group, utilizing diversified tentacles of capital investment and resources. The employees are the capital owners. Instead of one person raising capital to incorporate and invest in overhead, the cooperative is a shared investment by several people. Cooperatives benefit from their collective bargaining power, pooling operational costs, and stretching limited resources. So, for example, a cooperative restaurant, its chefs, bartenders, waiters, and hosts pool their money and resources, become equal partners in the business, and work toward the principle goals of social investment, maintenance, and profit of the corporation. Each worker-owner brings in his or her talents and acquired skills into the company and becomes a partner with an equal vote in its direction and future goals.
Cooperatives should not be confused with “collectives”, such as “kolkhozes” or Soviet farms. Collectives in the Soviet Union were worker-operated but not worker-owned businesses. Members of collectives could not enter or exit voluntarily and were typically government-controlled through forced collectivization, which barred individual investment or profit of any sort with the sole purpose of production for the State.
A cooperative, on the other hand, is an exclusive or private business.
In Spain, Mondragón Cooperative Corporation is the seventh top corporation of the country; an umbrella corporation made up of more than 250 cooperatives, rooted in solidarity, with over 85,000 worker-owners in areas such as finance, retail, and education. Mondragón’s industrial model includes production in different areas of fabrication such as appliance, automotive parts, office and home furnishings, as well as the manufacturing of machinery and tools.
Father José María Arizmendiarrieta, a Jesuit priest influenced by the Catholic social encyclicals, founded Mondragón in 1956. Today Mondragón earns over 16 billion in annual revenue. Mondragón’s successful cooperative model is one reason the American trade union, United Steel Workers, has been in discussions with Mondragón to apply its worker-ownership right here in the United States.
But Mondragón is not the only exemplary model of cooperative business. The Emilia-Romagna region of Bologna, Italy, too has proven successful. Cooperatives in this part of Europe make up over 40% of Bologna’s Gross Domestic Product.
To the casual reader co-ops may seem a European phenomenon. However, we can look to our own shores for evidence that there is a rich history of cooperative ownership rooted in our nation. Not only do tens of thousands of co-ops operate in every sector, from fishing to agriculture, but the first cooperative, Philadelphia Contributionship for the Insurance of Houses from Losses by Fire, was established in 1752 by none other than Benjamin Franklin.
Cooperative businesses have a proven track record in the marketplace, whether in agriculture, health care, quality control, legal services, banking, utilities, technical training, and market research, to name a few. Worker-owners manufacture medical equipment, provide medical services, form local construction companies, and operate cafes and movie theaters.
The cooperative business is not only an attractive alternative for large-scale manufacturing. It is also beneficial for those wishing to start small businesses yet lacking in capital investment.
Like any other business, cooperatives set their rules and regulations, establish their articles, and vote democratically under the principle of one person, one vote. They may, if they so choose, establish managerial boards, issue target and goal requirements, and compensate worker-owners based on their investment.
While most large-scale industries reduce the level of ownership in our society and treat labor as a cost instead of a partner in the production process, cooperatives are the Distributist answer to increase widespread ownership of the means of production. Cooperatives can restore the “Made in the USA” label, are the answer to the damage wrought by the North American Free Trade Agreement, and will mobilize workers whose jobs have been shipped overseas, raising American domestic production from the ashes.
Cooperatives are not just fascinating because they serve as the Distributist approach to medium and large-scale industry. They, like G.K. Chesterton, rekindle the imagination.
“Capitalism concentrates both resources and token wealth in few hands, using government to socialize the losses and privatize the profits of the smallest yet richest percentage of its citizens.”
This is not a valid definition of free market capitalism. This is the definition of Corporatism or perhaps mercantilism. You should examine what type of markets Chesterton/Belloc were exposed to in England. I doubt they were free markets. In a free market system companies grow and shrink based on the value they provide to the consumer. Rarely does a company in such a system take over and dominate the market for a long period of time. There is always someone smarter or a new technology that creates more value/wealth than the current dominate company. An example of this can be seen in the Grocery industry. In the early 1900’s the primary grocers were small general stores. Then stores like A&P appeared which provided a greater value to the customer. Safeway replaced them and Walmart replaced them each providing greater value more efficiency than the previous. Each of these stores started out as a small family business. It is only when you have a large central government when these companies can wrest control of the market and suppress their smaller more competitive brothers.
I believe free market capitalism gets you closer to your Distributist dream than anything in existence. This is evidence by the large number of small businesses and great amount of wealth, of even the poor, in the US, the most free market capitalist country in the world. To ensure that this wealth is not taken away to fund companies liabilities as you mentioned, one needs a distributed government system and strong private property laws.
I am not sure your Distributist dream will survive the heavy regulation of the Socialist Spain unless the employee owned company begins to capture the regulatory mechanisms of the state.
“are the answer to the damage wrought by the North American Free Trade Agreement, and will mobilize workers whose jobs have been shipped overseas, raising American domestic production from the ashes.”
The reason jobs are being shipped overseas is because there are some tragically poor people who are willing to work for a wage that is far below what Americans feel they are entitled to. If a Mexican can work for $200 a month building a car that provides value to the consumer, why should that consumer be forced to pay an American worker $5000 a month building a car that is of equal or less value? Does not that Mexican worker deserve to support his family (which can be done in that country on that wage) for what he can get for his labor? Why is the US worker entitled to more money just because he was lucky enough to be born in the right country?
You might say: “But that foreign worker is being exploited and is forced to work for those low wages.”
Not true. Workers in places like India and China (economies that have taken on capitalist policies yet are still semi socialist) now routinely expect 30% annual raises because as their economies grow and the labor becomes more efficient (produces more wealth/value) the world is willing to pay more for their work. Where the wages do remain static, the government usually has a hand in it, deciding what the people deserve to make and what business deserve to earn as profit.
Socialists, as well as Distributists usually, only look at a snapshot in time of how an economy is rather than looking at the trajectory that that system is taking. Yes there were a lot of poor people in early 1900’s USA but that economy was the greatest manufacturing power in the world and it grew into an economy where most poor people have more wealth than most kings 1000 years ago.
Now the US has actual competition, as opposed to the devastated/undeveloped world we were competing against after WWII. American workers will now have to be innovative enough to provide enough value to their work that people around the world will pay for it what US workers think they deserve.
It would be interesting to hear discussion of the coordination costs that the European cooperatives mentioned incurred in beginning their operations. These start-up difficulties seem like the primary impediments to the creation of new cooperative businesses: once in motion, they can operate like many other businesses. The examples cited of American cooperatives are primarily of businesses that can be founded with very low coordination costs: partnerships between a small number of individual professionals (law firms, doctor practices, brokerages). These professionals tend to be able to self-finance and have can operate with comparatively low overhead anyways. It would be very difficult to open a manufacturing business along the same lines as a small law firm.
I wonder whether a model that tried to harmonize distributed ownership with the coordination advantages of outside investors could work. For instance, A, who is wealthy, wishes to invest. He injects $X into the PQR Corporation, and in return receives 90% of its stock. The stock purchase agreement that he enters with PQR states that the corporation will redeem (buy back) the stock from him over the course of several years after his investment has paid a particular total dividend; this sale is non-discretionary. PQR then redistributes the shares it redeems to its employees, in equal shares. In the employees’ hands, the stock is limited by a rider that makes it non-transferable outside the company.
Doesn’t that get you some of the best of both worlds?
If a Mexican can work for $200 a month building a car that provides value to the consumer
The legitimate objection is not that the Mexican is being exploited or coerced: that’s an argument rightly dismissed as a canard. The problem is the impersonal quality of stretching industrialization and commerce to such great extents. Simply put, Mexicans ought to make things for Mexicans and Americans ought to make things for Americans: not because Mexicans make inferior products or Americans deserve jobs more, but because the entire undertaking of making things becomes dehumanizing when it is so thoroughly detached from any relationship to one’s community. That’s not to say there shouldn’t be international trade at all, only to say that the degree to which we rely on it has its negative sides. And the fruits of NAFTA are not just jobs for Mexicans but not Americans: the treaty has devastated Mexican agriculture.
“Mexicans ought to make things for Mexicans and Americans ought to make things for Americans: ”
Mention that when you see someone drinking a Dos Equis.
>>Simply put, Mexicans ought to make things for Mexicans and Americans ought to make things for Americans<< The problem with that is that it really ends up getting rid of almost all trade. If Americans should make for Americans, then shouldn't Virginians really make things for Virginians? And shouldn't counties and cities make things for themselves? Should we eventually say that families should be self-sufficient? At what point should we stop it? Many saints of the Church have lauded trade as being part of God's plan. I could get you the references, but I think it was Aquinas who said that the fact that not every good of the earth is found in every location shows that God meant for men to trade.