Proving that the GK Chesterton of Ireland is open to criticism of the great man's ideas, Colm Culleton offers us a critique of GKC's economic philosophy, Distributism, and makes a defence of the capitalism Chesterton often criticised...
Chesterton believed in the economic system called "Distributism", the core of which appears to be that capitalism is not the "natural" state of the economy, and that capitalism treats the workers too harshly. My proposition is that neither of those tenets is correct.
I start by pointing out that there is no such thing as a "Ball of Prosperity", whereby I must become poorer if you become richer by grabbing a piece of the Ball. The fact is that both of us becomes richer at the same time. True, the Third World is much poorer than us, but they were very much worse in the past. Thanks to capitalism, we are all richer now than we used to be, even though there are many more people in the world now. The reality is that a capitalist inevitably makes other people richer from the very fact of making himself richer.
My second basic point is that the Free Market means that both parties who consider trading with each other are free to reject the other’s offer. That is why the market is called "free". The trade does not happen until both parties are satisfied. Not necessarily ecstatic about the trade, but consenting to it. And the reason that they consent is because they derive a benefit from it.
Take a man who invents a gadget called a widget. Either it sells, or it doesn’t. If it doesn’t, he becomes bankrupt, and drops out of the scenario, thereby evading criticism from Distributionists. So, let’s see what happens when the widgets do make him rich.
Start with the people he pays to build his factory, and those who provide the parts for making the widgets. Whatever he pays them, they are richer than if they don’t work for him, because otherwise they wouldn’t work for him; so he makes no widgets, goes bankrupt, and drops out of the scenario as before.
If he borrows from a bank to get started, he makes the bank richer, from the interest he has to pay. Otherwise, they would not provide the loan.
He makes his employees richer. Whatever it is he pays them, they are willing (but not necessarily ecstatic) to accept, otherwise they wouldn’t work for him at all, he goes bankrupt, and drops out of the scenario.
He improves the lives of his customers, and this, too, is a tangible improvement to their lives. They are content ((not necessarily ecstatic) to pay what he asks, otherwise they wouldn’t buy at all, the man goes bankrupt, and drops out of the scenario.
He will pay taxes, thereby giving the state more money with which to make its citizens better off: health care, roads, schools, and all the rest. True, he will try to evade paying taxes or at least reduce them. Oh, boy!, will he ever! But he has to pay an accountant to provide the figures to make the claim, thereby making the accountant richer.
Let’s say he never spends a penny of his profit. But, when he dies, his next of kin and/or the state will benefit, and begin spending the money, as above.
But he will probably invest his profit, thereby making other companies richer; and they in turn will scatter the same benefits as he did.
All the people who benefit directly from the man will, in turn, go on to make other people richer when they spend the money which came to them. And those people will spend that money on yet other people, and so on and on. And thus, from a combination of ideas and work, the Ball of Prosperity just keeps on getting bigger and bigger. Everybody wins, nobody loses.
-- posted by Colm Culleton