Opinion & Features

An end to growth for growth’s sake

Artisanal pizza: no business should be bigger than it needs to be to serve its purpose (AP)

The digital age has brought with it many economic problems. Instead of exploring the possibilities for peer-to-peer exchange and broader business ownership, we have used digital technology to amplify the worst features of the industrial age: an addiction to growth-based business models, extractive economic practices and the disenfranchisement of labour. This is capitalism on steroids.

The challenge is how to stop all the power, wealth and resources ending up in hands of a few – which leads us to the very Catholic tradition of economic thinking known as distributism.

Distributism’s original ideals were first articulated in the encyclical letters of Pope Leo XIII (1891) and Pius XI (1931), who were weighing in on the dangers of both Gilded Age capitalism and the rising tide of Marxism. Neither system is acceptable by itself, the popes explained, because, while private property is indeed a human right (as capitalism argues), the resulting gross inequality is also immoral (as communism argues). Instead of probing for a middle ground, however, the popes offered a radical alternative: to retrieve Catholicism’s pre-Renaissance values of collective ownership and human agency.

Not surprisingly, the popes saw King Henry VIII’s rejection of Catholicism and, more to the point, his “enclosure” of the commons as the moment when everything started to go in the wrong direction. Hearkening back to an era before central currencies and chartered monopolies, the Church argued that the factors of production should once again be spread as widely as possible.

Farmers should have access to land and craftsmen to tools. By inference, today digital creatives should have access to the resources of the net.

The popes saw that one individual’s winnings were less important, in the collective long run, than everyone else’s ability to make a living. While successful capitalists should be allowed to keep what they’ve earned, as winners they should not be able to monopolise the factors of production for themselves at the expense of their workers and peers. In today’s parlance, while the founders of Amazon and Uber should be allowed to keep the money they make, they shouldn’t be able to develop platform monopolies that disconnect workers from the resources they need to do their jobs or from earning an ownership stake in the platform itself. The ability to create and exchange value must remain distributed and available – a free market.

This could be as simple as letting digital workers earn shares in the companies for which they are creating value. What if Uber’s drivers earned shares in the company proportionate to the miles they’ve driven? Then, instead of simply doing research and development for the robot cars that will one day replace them, they are investing their labour in the future of a company that they themselves will own.

Or what if digital companies sought not to bankrupt their markets through extraction – as, say, Amazon does to the book industry – but rather attempted to circulate value throughout the marketplaces on which they are depending? Could businesses survive by selling their goods and services, instead of simply selling their stock?

Early 20th-century writers Hilaire Belloc and GK Chesterton – and, later, a young Marshall McLuhan­ – saw in distributism a definitive answer to the failures of both capitalism and state socialism. They looked to that same brief moment in the late Middle Ages when the market was in ascendance and former peasants were making and trading things as the best example of the ideal economic system.

Wealth was relatively widely dispersed and people had a great deal of control over their livelihoods. They had access to the commons, to a low-cost marketplace, and to their own currencies and credit systems. Craftspeople belonged to trade guilds that both bounded their investment of labour and allowed for the advancement of skills to successive generations. The former peasants of this period became so collectively wealthy that they used their surplus profits to build cathedrals and municipal projects as investments in the future.

According to all three popes, the centralisation of power by the aristocracy and the great Renaissance that followed were less a pinnacle of human achievement than an undeserved celebration of dehumanising technologies, economic injustice, colonial slavery and an increasingly mechanised approach to life. In distributism, they saw a way to bring back what had been forcibly left behind by the industrial age and the rise of Protestant values that were, not coincidentally, much more directed towards personal achievement, individual wealth and progress.

In continuity with his predecessors, Pope Francis has called for new approaches to respond to our current economic woes. Governments, he writes in Laudato Si’, should support “small producers and differentiated production”. Digital technology may just be the perfect opportunity for distributism to come into its own. Computer chips and networks function by allocating tasks and sharing data, which means they promote exchange: in a digital environment, everything gets distributed.

So digital technologies are intrinsically distributed. “Distributed” doesn’t simply mean decentralised; it’s not the principle through which alternative power centres emerge on the periphery of a system. Rather, when power is distributed, it’s available throughout the network. It is everywhere at once. And so is capital, as well as value, energy, resources, companies and people. Everything becomes more available to anyone.

New companies and those with established legacies alike can find in distributism a way to adapt to the highly collaborative yet limited growth landscape before us. It offers a strategy for individuals looking to make the transition from losing jobs to creating value in a peer-to-peer marketplace. And it suggests what governments can do to help rather than hinder this transition to a post-industrial prosperity.

For instance, tax policies in the developing world currently reward those who extract capital from the system, and punish those who earn revenue by creating real value. Capital gains are taxed low; dividends and earnings are taxed high. The tax system is built to favour those who grow companies for growth’s sake, and disadvantage those whose companies earn a steady stream of real revenue. By reversing this policy, governments could instead encourage distributed prosperity and real earnings and discourage the financialisation of the marketplace.

Distributism should not be confused with leftism. It’s calling not for the redistribution of earnings or capital through taxes or state action after the fact but for the widest possible distribution of the means of production as preconditions for a healthy marketplace. Workers ought to own the tools they use, and their contributions to an enterprise should earn them an ownership stake in the business itself.

Like the internet, which spreads its packets through the path of least resistance without regard to hierarchy, distributism is to be guided by an economic principle the popes call subsidiarity. Power is to be granted to the maximum number of the smallest possible nodes – guilds, communities, cottage businesses and the family. This is in stark contrast not only to the self-interested libertarian individual but also to the seething mass of communism’s “the people”.

According to the principle of subsidiarity, no business should be bigger than it needs to be to serve its purpose – whether that’s feeding pizza to the town or making roads for the state. Growth for growth’s sake is discouraged. The ideal business, according to the popes, is the family business because of its limited size, its focus on long-term sustainability and the likelihood that people will treat one another as something more dignified than replaceable employees. Such businesses are also more resilient and long-lived. According to a Harvard Business Review study, the average long-term financial performance for family businesses exceeds that of their non-family peers by double-digit percentage points.

You don’t need to be Catholic in order to appreciate the popes’ vision of a more distributed economy and to see how it can contribute to our own. A form of networked distributism may just be our last best hope for peace in the digital economy today.