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There is an ancient Chinese
curse, which goes: “May you live in interesting times!”
It seems that we do. The last fourteen months
witnessed the growing crescendo of economic crisis, starting first in America;
then extending globally. Failing banks, crashing stock markets, foreclosed
homes, vanishing savings, tumbling real incomes, mounting joblessness, seizures
of banks by the state, government bailouts, fear and distrust: nothing like it
was seen since the years 1929-1933, which ushered in the Great Depression.
Now, we are told, governments have learned their
lessons, and an improved global economic order lies ahead. The great financial
houses whose miscalculations over investment and debt caused this crisis will be
reigned in, humbled, reduced in size, controlled. Regulators will demand that
the great banks take less risk, reduce scandalous bonuses to executives, and
behave like good corporate citizens.
And, as of yesterday, the Dow Jones Industrial
Average has climbed back over 10,000. The “Crisis Ebbs,” reports today’s W.S.J.
And yet, something is odd about all this. Just a
few weeks ago, The Economist – Britain’s weekly magazine
celebrating global capitalism – reported curious early reform results, so far.
Allow me several quotes from its lead editorial for Sept. 12, “Unnatural
Selection”:
FIRST → “...taken together,
financial firms have not ... really gotten smaller.... [O]ver the past year
the ... underlying risk-adjusted assets of the nine biggest investment banks
worldwide have been broadly flat. Statistical measures... suggest that... they
are taking more risk. Their combined balance sheet is 40% bigger today than in
mid-2005.”
SECOND → “[Bumper bonuses]
certainly have done damage, persuading traders to load the system with toxic
securities and sucking away capital: in the year before its demise, Lehman
[Brothers] paid out at least $5.3 billion in cash compensation [to
executives], equivalent to a third of the core capital left just before it
failed. More recently Morgan Stanley promised so much pay in its latest quarter
that it almost made an underlying loss. In any other business that would be a
risk for shareholders. But finances’ risks are everyone’s because
banks rely both directly and indirectly on taxpayers’ support.”
THIRD → “The scale of that help
is huge. Loans from central banks and debt guarantees alone amount to $2.7
trillion. As with any private industry in receipt of almost unlimited cheap
public funds, finance now has every incentive to be as big as possible –
beyond the point of usefulness.”
AND FOURTH → “Lehman [Brothers]
aside, no big [banking] firms have been allowed to fail (as they would have
done, unaided). Thanks to state aid, the law for big firms today is what Gordon
Gekko, the red-blooded villain of the film, ‘Wall Street,’ dubbed ‘survival of
the unfittest.’”
What is really going on?
I want to suggest tonight that what we are actually
seeing in these “interesting times” may be the culmination of what the English
journalist Hilaire Belloc called “The Servile State,” or what his friend Gilbert
Keith Chesterton called – with somewhat less poetry but equal insight – the
“Business Government.”
Some of you may be familiar with their work.
Others, perhaps not. As a way of understanding our times, allow me to offer a
short summary of their alternative view-of-the-world.
The Chesterbelloc
The leftish English playwright
George Bernard Shaw called their joint program the “Chesterbelloc,” twisting the
two authors’ names into what he called a “fabulous beast,” one that promised
agrarian reform, small-scale production and retailing, and greatly expanded
property ownership. Chesterton and Belloc preferred the label Distributism.
In recent decades, most commentators on their early
20th century reform project have portrayed it as “naïve,”
“reactionary,” “chaotic,” “childishly simple,” and “bizarre.” They have also
dismissed the Distributist League of that era as a “sorry spectacle” composed of
“cranks of various hues,” where the “beer would flow” and “songs ring out” at
their meetings, all to no effect.
In fact, I argue in Third Ways that
Distributism actually displayed impressive levels of clarity, coherence, and
detail. As shaped by Belloc and Chesterton, the Distributist political program
offered the world a compelling “Third Way” alternative to both finance
capitalism and socialism. And Belloc’s analysis of the “Servile State” still
stands as remarkably insightful, with special relevance to our own time.
The origins of Distributism actually lay in the
papal encyclical Rerum Novarum, issued by Pope Leo XIII in 1891.
Rejecting both unbridled capitalism and socialism, Leo asserted in this
remarkable document that the answer to the woes of industrialization lay in the
redistribution of property, especially in private homes and productive land. He
argued that the law [quote] “should favor ownership, and its policy should be to
induce as many as possible of the people to become owners.” Leo continued: “If
working people can be encouraged to look forward to obtaining a share in the
land, the consequence will be that the gulf between vast wealth and sheer
poverty will be bridged over, and the respective classes will be brought nearer
to one another.”
Chesterton drew other lessons from Rerum
Novarum: FIRST, the “exceedingly radical” implications of seeing that
men and women are wonderfully different; SECOND, the proposition that public
life exists to defend private life; THIRD, the truth that private property
secures liberty; and FOURTH, the premise that “all political and social efforts
must be devoted to securing the good of the family.” In his 1910 book,
What’s Wrong With the World, Chesterton underscored the political
imperative of delivering the ownership of a house and lot to every
responsibly-created family. “Property is merely the art of the democracy,” he
wrote. “It means that every man should have something that he can shape in his
own image, as he is shaped in the image of heaven.”
The problem in the England of Chesterton’s era was
that only one in ten adults actually owned a house and a piece of land. The
vast majority, in city and country, were renters. In his book The Servile
State (published 1911), Belloc explained how the English landed gentry
had used the seizure of monastic lands in the 16th Century, the legal
enclosure of common fields in the 17th and 18th centuries,
and capitalist monopolies in the 19th Century to consolidate property
ownership in relatively few hands.
In shaping their political program, Chesterton
offered careful distinctions. “If capitalism means private property, I am a
capitalist,” he reported. However, he argued that the label held in his time a
much narrower meaning. A “relatively small” class of owners, he said, possessed
“so much of the capital” that “a very large majority” of citizens must serve
these capitalists for a wage. Such an exercise of monopoly was [quote] “neither
private nor enterprising.” Indeed, “it exists to prevent private enterprise.”
Belloc described the consequence as the Servile
State, where monopoly capitalists and government bureaucrats actually merged
into a “corporate state” practicing state capitalism. Under this deal, the
wealthy capitalists gained order and protection of their property, while the
workers received welfare benefits tied to their labor, providing security but
also confirming their servile status. Chesterton added that this [quote] “new
sort of Business Government will combine everything that is bad in all the
plans for a better world…. There will be nothing left but a loathsome thing
called Social Service.” [unquote]
Socialism was no answer to this situation, Belloc
and Chesterton maintained, for it would only further consolidate power in the
hands of a bureaucratic state. The true alternative would be to build what they
called the Distributist state – premised on the kingdom of the home –
that would encourage the widest possible distribution of property. Put briefly,
property was so vital to true liberty, the “Chesterbelloc” held that ideally
every family should have some.
To that end, they advanced a broad program of
reform:
• To greatly expand
home ownership by families, mobilize “the credit of the community”
through locally-controlled, cooperative credit unions
to enable “private ownership of houses and small plots just outside our great
urban centers.”
• To restore the
small shop, use differential taxation against chain stores (insuring no
more than a dozen shops per corporation) and against big department stores as
well (here, Belloc specifically cited Harrods of London as the problem).
• To redistribute
land and other properties, tax real estate contracts “so as to discourage
the sale of small property to big proprietors and encourage the breakup of big
property among small proprietors.”
• To decentralize
industry and cheapen electricity, expand access grids, “which might lead
to many little workshops.”
• To encourage
agrarian resettlement, the small family farm “must be privileged as against the
diseased society around it.”
• To restore
craftsmen, subsidize “the small artisan at the expense of Big Business.”
• To decentralize
transportation, discourage the railroads and favor the automobile.
• And to encourage
urban home ownership, “there ought to be a simple rule: every [rental] lease
should automatically contain the power of purchase by installment.”
During the 1920’s, Belloc and Chesterton entered
real political battles, employing these principles. They fought, for example,
in the “London Omnibus War,” favoring the small, private bus companies that
challenged the public monopoly held by Lord Ashfield. In the United States of
the 1930’s, Distributist ideas directly inspired many New Deal programs to
counter the Great Depression. These included the Subsistence Homestead Act
(which provided a house, garden, and five acres to families displaced by the
Depression) and the Housing Act of 1934, which revolutionized home financing in
a responsible way.
This influence continued after World War II. By the
late 1940’s American mortgage insurance programs delivered over 99 percent of
their aid to young married couples, so contributing to the marriage and baby
booms of that era. In Great Britain, the Conservative Party adopted large
shares of the Distributist project, pledging to make the nation a
“property-owning democracy.” In Australia, the young Distributist B.A.
Santamaria launched a remarkably successful campaign to end Communist influence
in that nation’s labor unions; later, he founded the Democratic Labour Party,
which featured a “model Distributist [domestic] program,” and held the balance
of political power in that country for nearly two decades.
In our time, I suggest the Distributist worldview
goes far to illuminate the current economic crisis.
• It shows how good, Distributist-inspired programs designed to provide
land and houses to the propertyless have been twisted into vehicles of
irresponsible lending and raw financial speculation. The probable result will
be a further consolidation of wealth in fewer hands.
• The Distributist wordview underscores why and how the true middle class
seems to grow ever smaller: with a relative handful of entrepreneurs climbing
into the capitalist class, while the great majority now sink into the servile
state, toward minimum wage “service” jobs tied to state welfare benefits.
• The Distributist wordview shows why Freddie Mac and Fannie Mae, federally
chartered U.S. mortgage companies that privatized executive pay and profit
and socialized risk and loss, why they serve as perfect examples of the
Business Government at work.
• It explains why all the ‘bailout’ and ‘rescue’ schemes adopted by the
American government will probably have the primary effect of protecting the
wealth and assets of great corporations and the very wealthy.
• It explains the irony of how some of those responsible for this crisis –
such as former Goldman Sachs CEO Henry Paulson who five years ago successfully
fought to weaken the reserve obligations of private U.S. investment banks – also
wound up in charge of various federal bailouts, where the dollars seem to have
found their way mainly into the pockets of their old friends.
• And it explains why the Obama administration prefers to call for
“public-private partnerships” in banks and automobile companies, rather than
outright nationalization. Such “partnerships” are fully in accord with a
growing “Business Government.”
The ‘Myth’ of The Family Wage?
The current financial crisis underscores another
hard truth largely forgotten over the last 30 years: the natural family of
husband, wife, and their children has no place in the uninhibited
market economy.
Between about 1850 and 1970, the non-Communist labor
unions of Western Europe, North America, and Australia pursued a common goal:
payment of a family-wage to husbands and fathers so they would be able to
support their wives and children at home. This cause faced many obstacles.
Most industrialists and other employers favored a
completely free labor market, where men, women, and children alike would bid
wages down to the lowest possible level. Indeed, manufacturers came to agree
with the emerging feminist movement that men and women should receive equal pay
for equal work and that work restrictions on women and children
should be opposed. Such policies would maximize their profits. This explains,
for example, why the American Manufacturers Association secretly funded the
radical feminist National Woman’s Party during the 1920’s, the group that
drafted the proposed Equal Rights Amendment to the Constitution.
For their own reasons, the Communists agreed.
Friedrich Engels saw how the introduction of machines led to the dismissal of
skilled male craftsmen and their replacement “by women and even by children at
one third…of the wages earned by the men.” Karl Marx’s collaborator
continued: “It is inevitable that if a married woman works in a factory family
life is…destroyed.” All Marxist theorists celebrated this end, for it furthered
the process of proletarianization and so hastened The Communist Revolution.
While industrialists and Communists were content to
let a free labor market follow its course, most real leaders of the working
class in the western world pursued a different strategy. In order to shield the
independence of their homes, salvage the essentials of family life, and protect
women and children from exploitation, they favored a family wage for husbands
and fathers: the factory system could have one person per family; but only
one. As the Philadelphia Trade Union warned its members:
Oppose [the employment of women]
with all your mind and with all your strength for it will prove our ruin. We
must strive to obtain sufficient remuneration for our labor to keep the wives
and daughters and sisters of our people at home…. That cormorant Capital will
have every man, woman and child to toil; but let us exert our families to oppose
its designs.
Feminists have long attacked the family-wage concept
for its clear reliance on gender discrimination. However there are other ways
to view this alternative to both unbridled capitalism and socialism. To begin
with, a family-wage system opposes the inherent tendencies of industrial
capitalism to turn all human bonds into money exchanges and all human activities
into a test of efficiency. In addition, such a system combines elements of
medieval “just price” theory with a vision of household autonomy. A family-wage
also insists that pay for work has a social component independent of
“supply and demand.”
In addition, a family-wage system challenges and
limits the state. It places the redistribution of earned income within
families, where the employed male laborer trades cash income for the noncash
“social labor” of wife and children. In contrast, the welfare state represents
the socializing of both parts of this exchange, by the taxation of earned income
and by the provision of state services to replace family functions.
Some feminist historians now argue that a family
wage system never existed. However, the evidence is overwhelming that this
ideal dominated labor goals throughout the North Atlantic and Oceanic regions
for over one hundred years and that it had measurable effects on wages and the
job market. In Belgium, for example, historians have shown a “thorough
transformation” in the family life of workers between 1853 and 1891, based on a
withdrawal of married women from the labor market and a sharp rise in the real
incomes of men. The United States also had a family wage regime roughly between
1870 and 1970, although its nature changed over time. Prior to the early
1940’s, the system rested primarily on legal barriers and forms of direct wage
discrimination in favor of male workers. For example, bans on the hiring of
married women were common. After 1945, though, a more powerful dynamic actually
strengthened the American family wage: the cultural recognition of “male” and
“female” jobs, reinforced by taxation and social insurance policies.
Even in Sweden, the dominant voices on this question
between 1900 and 1969 were the Swedish Socialist Housewives, who shaped the
policies of that land’s Social Democratic Labor Party. For them, women’s
liberation meant freedom from having to work in factories; freedom to be full-time mothers, and homemakers. They favored “family wages” for
their husbands, mandatory training of Swedish girls in childcare and home
economics, and state child allowances for themselves. They opposed day care for
failing to give children emotional support. They defended the housewives role
for the care also given to the elderly. The Swedish socialist housewives
defended the family household, for it provided persons with a necessary zone of
liberty.
However, during the 1960’s, family-wage systems
around the globe fell apart. The equity feminist movement –fairly dormant for
decades – came roaring back with new strength, demanding absolute equality
between women and men. As explained in Sweden, wives should no longer be
dependent on husbands, nor children on their parents. Equality would come only
as all citizens become dependent on the welfare state. Citing “labor
shortages,” government labor planners angled to pull the young mothers out of
their homes. Labor unions, which had pressed for a family wage for over a
hundred years, curiously and quickly abandoned the cause.
There were many consequences: some foreseen; some
not. Predictably, as married women poured into the labor force, the real wages
of men fell: in the USA, by 15 percent between 1973 and 1993. This was simple
economics: more persons seeking the same number of jobs means lower wages. In
turn, this placed new burdens on the one-income family with the mother at home;
while – in relative terms – rewarding the two-income household.
Unintentionally, these changes were one factor in
the sharp rise in the proportion of children living in poverty over the same
years. The new gender egalitarian system also had the effect of increasing the
income inequality of households. Moreover, home gardening, food
preparation, childcare, and other residual forms of home production rapidly
diminished. Finally, as the economic logic of marriage (premised on a ‘division
of labor’ within the home) deteriorated, the divorce rate soared while both the
marriage rate and the marital fertility rate declined sharply.
The family-wage system had been the means by which
families had managed to survive as autonomous entities in an industrial world,
with still intact and functional home economies. As historian Jane Humphries
has put it, the “battle for a ‘family wage’ was … [a] demonstration of working
class insistence on the integrity of their own kinship structures.” Its fall
brought the mutually reinforcing expansion of both mega-capitalism and the
centralizing state, and the decay of family life.
The Green International
My book, Third Ways, also deals with
efforts by agrarian theorists and political leaders – mainly in Eastern Europe
and Russia – to craft agricultural democracies resting on small family farms and
cooperatives. They shared with the Distributists and the advocates of a family
wage a focus on family integrity linked to property ownership.
The most promising episode occurred in Bulgaria,
where peasant leader Alexander Stamboliski – named Prime Minister in 1918 – laid
out a remarkable program to turn his country into a “model agricultural state.”
Declaring that the family was the fundamental social and economic unit and –
echoing Leo XIII – that “Land should belong to those who till it,” Stamboliski
pressed for the development of rural cooperatives, effective democracy,
decentralized industry, a fair tax system, the creation of a free trade zone in
Eastern Europe, disarmament, and land reform. He helped to launch the “Green
International,” a union of peasant parties headquartered in Prague. Alas, a
conspiracy of militarists, communists, royalists and fascists launched a coup in
June 1923, which resulted in his torture and death. Similar fates befell
agrarian-led governments in Croatia, Rumania, Poland, and Czechoslovakia over
the next fifteen years.
What Next?
By the 1990’s, in any case, the search for a Third
Way economy was over. Part of the reason was that the “Second Way” of Communism
was dissolving around the globe. However, free market liberalism has also now
experienced its own crisis. Who really won the great ideological contest of the
20th Century?
Perhaps the actual winner was that phantom entity
first identified by Hilaire Belloc nearly a century ago: the Servile State.
Here, owners accept certain paternalistic obligations toward workers, commonly
mediated through the state; workers accept their servile status in exchange for
basic security.
Beyond examples over the last year of the merger of
big government and finance capitalism, where might other signs of the
contemporary Servile State be seen? To begin with, the reality of private
property may be dimming. As early as 1969, for example, Sweden’s Justice
Minister premised a basic reform of Sweden’s marriage laws on what he called
“declining public interest in material property” in favor of pensions,
annuities, and other claims on the welfare state. As Belloc predicted, modern
men and women may favor the security of servility to the risks and
responsibilities of property ownership.
Another sign of The Servile State is the strange new
subjection of women. After the Swedish Socialist Housewives were politically
routed in 1970, that nation moved to the open nationalization of women’s labor.
Sweden today actually has few female CEO’s. Most Swedish women still perform
classic “women’s work”: child care, elementary school teaching, eldercare, and
social service. However, rather than performing these tasks for their families,
they now do so as specialists working for the state. As feminist historian
Yvonne Hirdman explains, radicals successfully invaded Swedish homes under the
label of “family policy,” so smuggling socialist forms into the domestic life of
capitalist society, bringing the entire system down from the inside.
Traditional women’s tasks in Sweden have been socialized, so becoming the
“loathsome thing called Social Service,” a phrase coined by and a process
foreseen by Chesterton.
Still another sign of the Servile State as winner
comes from Russia, where Agrarian dreams of a family-centered peasant economy
died three-quarters of a century ago under the violence of Lenin and Stalin. By
the early 21st Century, “Mafia capitalism” had clearly won out in
this land; property is highly concentrated among a small group of men who
proudly call themselves “oligarchs”; while a minimalist welfare state inherited
from the communist era keeps the large majority of the population alive: traits
that are almost pure expressions of Belloc’s pleasant nightmare.
The new China may represent the Servile State as
well. In 2002, for example, authorities announced that the ruling Communist
Party of China would open its membership to capitalists. Lenin’s mummified
corpse must have turned over in its elaborate tomb. Meanwhile, Western
corporations have moved their factories to China, sure that its authoritarian
regime – a reliable Business Government – will keep the workers docile, cheap,
and strike-free.
In terms of political economy, then, there now seems
to be only one big player, not two: be it called the “Servile State”; or the
“Business Government” of Chesterton’s analysis; or the “State Capitalism” of
modern parlance. Belloc said that despite periodic crises, this system would be
highly stable; resilient to challenge. However, those who still seek an
authentic liberty premised on personal autonomy, family integrity, and a true
culture of enterprise might look again to what we could relabel The Family
Way. Phrased positively, this model would:
• First, Treasure private property firmly in family hands as the
foundation of a free society.
• Second, Seek to decentralize, decentralize, decentralize.
• Third, Understand that the central social and political challenge is to
keep competition and the quest for efficiency out of the family and the local
community; and at the same time to keep family-styled altruism out of central
government.
• Fourth, Defend the natural family economy through appeals to human
biology and human history, emphasizing marriage and the generation of children.
• Fifth, Place primary faith in cultural affirmations and defenses, and
only secondary trust in state actions.
• Sixth, Look to the infusion of religious energy into culture, politics,
and economic life as the surest source of renewal. Only homo religiosus,
economist Wilhelm Röpke’s name for man created in the image God, only this
‘religious man’ can stand up to the servile heir of homo economicus, or
‘economic man.’
• And finally, build on small acts. In the end, the Family Way means
reconnecting everyday tasks with the great purposes of the Creator. Only
then do common deeds bend toward transcendence. | 
