The upcoming General Election here in the United States coupled with the ongoing economic crisis around the world got me thinking about all things political and economic. In such a mood, I ventured over to one of my book cases and lo and behold there sat on the shelf G.K. Chesterton’s The Outline of Sanity. For those who do not know, The Outline of Sanity is the book in which Chesterton pulls together the arguments for a political-economic theory known as Distributism. On the heels of Pope Leo XIII’s 1891 encyclical Rerum Novarum, the Distributist movement was gaining momentum in the early 1900s when Chesterton wrote The Outline of Sanity, particularly in Great Britain but also here in the United States to a lesser extent. Distributism, often described as the alternative to Capitalism and Socialism, is considered by its proponents to be more in line with Rerum Novarum than either Capitalism or Socialism. Distributism, it is said, avoids the erroneous foundation of greed upon which Capitalism rests and the totalitarian principles upon which Socialism rest. On what exactly Distributism is I shall leave for another post.
The point of this post is to look at Chesterton’s critique of Captialism in The Outline of Sanity. Assuming that most of us in the Western world are card carrying Capitalist to larger or lesser degree, I thought it would be interesting to examine a critique of our preferred economic theory by a writer most of my readers are familiar with and respect. I, for one, think Chesterton makes some very good points even if some of what he is saying is particuar to the time and place in which he lived, and not necessarily analogous to our own situation. However, everything he says is pertinent to our own situation, even if not in the same exact way. In some ways we 21st century subjects of a global economy are worse off than Industrialized England in 1926 when The Outline of Sanity was written. If you think differently, perhaps you have not been reading the newspapers of late. Not that they won’t recover, but the free markets are crashing all over the globe in large part because we are so globalized.
With it becoming more and more apparent with each passing day that our free market economy, built on capitalist principles, is in many ways a house of cards (perhaps I exaggerate – I hope), here is part of Chesterton’s critique of Capitalism. From The Outline of Sanity (IHS Press):
In the Labour disputes of our time, it is not the employees but the employers who declare that business is bad. The successful business man is not pleading success; he is pleading bankruptcy. The case of Capitalists is the case against Capitalism. What is even more extraordinary is that its exponent has to fall back on the rhetoric of Socialism. He merely says that miners or railwaymen must go on working “in the interests of the public.” It will be noted that the capitalists never use the argument of private property. They confine themselves entirely to this sort of sentimental version of general social responsibility. It is amusing to read the capitalist press on Socialists who sentimentally plead for people who are “failures.” It is now the chief argument of almost every capitalist in every strike that he himself is on the brink of failure.
I only have one simple objection to this simple argument in the papers about Strikes and the Socialist peril. My objection is that it leads straight to Socialism. In itself it cannot possibly lead to anything else. If workmen are to go on working because they are the servants of the public, there cannot be any deduction except that they ought to be the servants of the public authority. If the Government ought to act in the interests of the public, and there is no more to be said, then obviously the Government ought to take over the whole business, and there is nothing else to be done. I do not think the matter is so simple as this; but they do. I do not think the argument for Socialism is conclusive. But according to the Anti-Socialist [i.e. Capitalist], the argument for Socialism is quite conclusive…
In the last paragraph it is noted that if we were left to the logic of the leader-writers on the Socialist peril, they could only lead us straight to Socialism. And as some of us most heartily and vigorously refuse to be led to Socialism, we have long adopted the harder alternative called trying to think things out…. Now the capitalist system, good or bad, right or wrong, rests upon two ideas: that the rich will always be rich enough to hire the poor; and the poor will always be poor enough to want to be hired. But it also presumes that each side is bargaining with the other, and that neither is thinking primarily of the public. The owner of the omnibus does not run it for the good of all mankind, despite the universal fraternity blazoned in the Latin name of the vehicle. He runs it to make profit for himself, and the poorer man consents to drive it in order to get wages for himself…. Now the case for capitalism was that through this private bargain the public did really get served. And so for some time it did. But the only original case for capitalism collapses entirely, if we have to ask either party to go on for the good of the public. If capitalism cannot pay what will tempt men to work, capitalism is on capitalist principles simply bankrupt….
Capitalism is contradictory as soon as it is complete; because it is dealing with the mass of men in opposite ways at once. When most men are wage earners, it is more and more difficult for most men to be customers. For the capitalist [i.e. employer] is always trying to cut down what his servant [i.e. employee] demands, and in doing so is cutting down what his customer can spend. As soon as his business is in any difficulties, as at present in the coal business, he tries to reduce what he has to spend on wages, an in doing so reduces what others have to spend on coal. He is wanting the same man to be rich and poor at the same time.
And not to be worried. Chesterton critiques Socialism as well, albeit not nearly as exhuastively. I’m sure it’s because he knows his readers are, in large part, staunch capitalists in no need of convincing that Socialism is wrong. In a later post, I will provide Chesterton’s critique of Socialism, along with why Chesterton believes the capitaist society in which he lived was remarkably similar to the Socialist utopia.