Luxury, poverty, and the Pope

The growing gap between rich and poor has been the subject of recent comment by the Pope. He has called for a fairer distribution of wealth. Some people have accused him of being a socialist and criticised him for not being an economist. They believe that market forces will suffice.

But market forces are unable to produce a just outcome without prior equity. This means that everyone must have equal access to land and other natural resources which are God-given. Whilst Marxist systems of economics produce tyranny and poverty, and Socialist ones have the same effect but do it in a softer way, the mode of economic organisation usually referred to as "Capitalist" invariably leads to a division between a small number of very rich and a mass of poor.

In the absence of free access to land and a genuinely free market, the notion of "Free Market" is a cover-up for a fundamentally unjust state of affairs. Free markets would, for example, rule out things such as restrictions on trading between people in different countries, subsidies, for example, to farmers, intellectual property rights, and many other practices which advocates of the free market conveniently forget to mention when putting their case.

The Pope is indeed no economist and one would not expect him to be. But if systems of economic organisation do not give everyone the right to the basic necessities of life - air, water, land - then there is something fundamentally wrong and it does not need anyone to be an economist to condemn that state of affairs.

Note, however, that the Pope was not calling for RE-distribution. He was calling for proper distribution. There is a difference. Socialists advocate RE-distribution. That is what is ultimately wrong with that system, because it implies an acceptance of an initial MAL-distribution.

Anyone who uses the term DISTRIBUTION is marking themselves off as being in opposition to Socialism, so there is no justification for accusing them of being Socialists. They are setting up a straw man and then attacking. If it sounds like socialist claptrap, they need to read it more carefully, as it most definitely is not Socialist.

The economic stance of the Catholic church has been DISTRIBUTIST since Rerum Novarum was issued in 1891. Socialist it most definitely is not. In fact, Rerum Novarum was deliberately put into circulation as a counter to Socialist notions. People might dislike that but they are putting themselves in opposition to the official views of the Catholic Church. Which they have a perfect right to do, of course as long as they understand this.

Distributism means that the God-given natural resources of the should be fairly distributed and available to all. Once that has been done, and only then, it is essentially Libertarian. It is a subtle position.

The other issue is that there is such a thing as a public realm, which US style Libertarians, and the Thatcherites who still dominate in "New Labour" Britain, seem to have forgotten. And so there are generations of unemployed or mentally ill people wandering the cities and sleeping in shop doorways, and squalid and unkempt public facilities, alongside smart wine bars and shops filled with luxury goods that most people cannot afford.

Those, and there are many, starting with the Pope, who do not find that state of affairs acceptable, are not necessarily Socialists.

The nub of the problem can be expressed by these two parables.

(I) A ship arrives on an uninhabited and fertile island. The people disembark and discover a chest containing title deeds to all the land on the island. They share it out between them. Then a second shipload of people arrive. They have no option but to accept a labour contract from those who got there first.

(II) Four people sit down for a game of Monopoly. When all the sites have been sold, a fifth player joins the game. He quickly finds that wherever he lands, he has to pay rent to one of the other players. He complains that he is having to play on unfair terms as he had no opportunity to obtain a site.

In most developed countries, land is monopolised in this way. The US government sold it all off or gave it away in railroad grants a century ago, though whose was it to dispose of? Where is the equity or morality there, and what of subsequent generations and descendants of those who were not around to take advantage of this distribution of largesse, whose value goes on appreciating?

Given that the distribution has taken place, how might the initial wrong be redressed?

The Capitalist way is to just accept the situation, as a few people can always pull themselves up by their own bootstraps. But the result will be a dwindling middle class and a drift towards tyrannical and corrupt government.

The Marxist way is to start off with a tyrannical and corrupt government and use robbery with violence as an instrument of policy. The Socialist way is to do the same thing, but with a smile. That way, as in Scandinavia, you end up with nearly everyone middle class and almost nobody rich or poor. This is a very good outcome but it is not sustainable, as there is a disincentive to enterprise. The wealthiest man in Sweden is Ingvar Kamprad - IKEA Founder and one of the world's richest men. Only the company is not in Sweden and Kamprad had to live as a tax exile.

But there is another way altogether. Private value is left in private hands but public value is collected for public purposes. What is public value? It is the value of God-given land and natural resources, which acquires a value only as a result of the presence and actions of the community. It was the American economist Henry George who proposed that the rental value of land should be collected and used for public purposes or distributed to all.

This is the kind of fiscal arrangement that would be in alignment with what the Pope is calling for.

Read about Henry George's proposals here