This article is an edited excerpt from Alexander William Salter's forthcoming book, The Political Economy of Distributism: Property, Liberty, and the Common Good (Catholic University of America Press, June 2023).
Does free enterprise support free societies? Generations of American conservatives, including many men and women of faith, have vigorously defended private property rights and freedom of contract. Now, however, religious conservatives are growing skeptical of markets—but that's because of their concerns for freedom and flourishing, not in spite of them.
These critics contend that free markets have a "solvent effect on traditional relationships, cultural norms, [and] generational thinking," which turns liberty into license, and that Adam Smith's invisible hand is "self-defeating" because the strict conditions for coordinative commerce never hold in the real world. Even conservative politicians are questioning the virtue of laissez-faire. Senator Marco Rubio is no socialist, but he worries that American capitalism has gotten off track. Despite "years of robust economic growth, we still have millions of people unable to find dignified work and feeling forgotten, ignored, and left behind," he laments.
Conservatives who distrust markets deserve to be taken seriously. But we don't need to abandon a market-oriented political economy to appreciate their concerns. In fact, all we need is old-fashioned economics. The economic way of thinking gives us a way to understand the essential connection between property and freedom. To see how, we need to consult a much-neglected writer and statesman from the early 20th century: Hilaire Belloc, a founding father of the political-economic school of thought known as distributism.
Belloc was one of the 20th century's most prodigious men of letters. He was born in France in 1870 to a French father and an English mother. Growing up in England, Belloc attended Balliol College, Oxford, and obtained first-class honors in history. After becoming a naturalized British subject in 1902, he served in Parliament as a Liberal Party member from 1906 to 1910. For most of his life, he was an independent writer and scholar. A lifelong Catholic, Belloc's faith strongly influenced his public positions and writings. His distributist philosophy, which teaches that widely distributed private property is the key to freedom and flourishing, is strongly influenced by Catholic social teaching.
As a social philosopher, Belloc's main concern is freedom and human flourishing. His short but important Essay on the Restoration of Property convincingly argues that economic freedom makes societies prosperous. But it is not enough for the legal system to prevent force and fraud. If a free society is to remain free, it must guarantee access to the factors of production to a wide segment of society. Those who refuse the burdens of ownership will also shirk the responsibilities of maintaining rights-respecting institutions. Political freedom and economic freedom are necessarily complementary. Only societies that embody an ownership-centric worldview will cultivate a liberty-centric worldview.
Belloc recognizes that markets are very good at producing wealth. The problem, he believes, is that the wealth-maximizing distribution of property rights can and does diverge from the liberty-maximizing distribution of property rights. Belloc lived at a time when large industrial concerns were displacing small shops and peasant proprietors. While titanic corporations clearly were producing goods more cheaply in pecuniary terms, he worried the true price—everything the community was giving up—was far too high. Conversely, purchasing goods from small producers had benefits not reflected in their price. "You are buying something for society at that price, and it is a something well worth society's while," Belloc asserted. "That 'something' is citizenship, and the escape from slavery."
In short, Belloc says that the low prices for consumer goods under capitalism do not reflect the full costs of their production. We may be giving up fewer economic resources to produce these goods, but we are consuming more political resources, and this is not reflected in the pricing process. Low capitalist prices do not take account of the fact that the production methods used, by concentrating property in the hands of the few, result in a widespread loss of freedom. Economists are quite familiar with this kind of reasoning. It implies that Belloc's argument can be understood as an externality argument.
An externality exists whenever economic activity creates costs or benefits for bystanders that parties to the economic activity do not consider. The classic example is pollution: because nobody has a property right to clean air, producers face no private costs from creating pollution as a byproduct for making and selling their goods. Pollution is still an economic bad, however, and its existence makes everyone in society worse off. The solution to negative externalities is to find some way of forcing producers to bear the full costs of their activities: both the private costs associated with using up resources and the social costs associated with the undesirable byproducts.
Interestingly, the textbook economic answer to pollution is a special tax on producers, with the price of the tax reflecting the damage done to society by pollution. This is precisely what Belloc recommends in the case of production by large corporations that have concentrated property. Belloc proposes three kinds of graduated taxes on "bigness": "(1) against chain stores; (2) against multiple shops; (3) against large retail turnover." The goal is tilting the playing field in favor of "the peasant, the craftsman, and the small (and secure) retail tradesman." These ownership-centric socioeconomic classes are the backbone of a free society.
Capitalist economies have political externalities—this is Belloc's claim expressed as concisely as possible. If the costs to human freedom, and hence human flourishing, were reflected in prices, consumers would be much less likely to purchase goods produced by large corporations. Similar goods produced by smaller, decentralized methods entail higher economic costs, but lower political costs, since widely dispersed property supports liberty. Belloc's project can be viewed as an attempt to grapple with the fact that the market cannot put a price on human freedom.
The challenges we confront today are very different from Belloc's. Those seeking to realign free enterprise with the common good will need to look beyond his specific policy proposals. Nevertheless, his perspective on these questions is invaluable. As religious conservatives continue to debate the proper spheres of markets and government, they should keep Belloc in mind. There is much he can still teach us.
Alexander William Salter is an associate professor in the Rawls College of Business at Texas Tech University and a research fellow at TTU's Free Market Institute.
The views expressed in this article are the writer's own.
Uncommon Knowledge
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