Having at times been a bit critical of my co-contributor Joe’s enthusiasm for Employee Owned Companies (EOCs) and “economic democracy” in general, it seems only fair that I spend a moment looking at the good sides — and there do definitely seem to be good sides to the employee owned company model.
Being entrepreneurially-minded, employee ownership is certainly not something that I’m in principle opposed to, it’s more that I think it probably works well in certain situations, but is not a panacea.
Where It Doesn’t Work
It seems to me that certain business characteristics will make it particularly hard for EOCs to prosper. This does not mean that employees at such companies should not have company issued stock, but the amount of stock distributed to employees by the company should probably be limited to the traditional 10-20% maximum.
Companies which require large amounts of capital investment (early stage startups which are trying to grow very fast, research-intensive companies) are generally not going to be good candidates. The traditional return for investment is stock — either by the general investing public through a public stock offering, or through specific investors in a privately held company. Such companies often reserve a portion of stock for issue to employees as an incentive (or sell to them at a discount via stock options) and have company performance based compensation, but their need for capital makes it impossible for them to reserve 50%+ of company stock for employees.
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(Part I may be read here. Some of the discussion may be followed on my blog. Note: the presentation of this essay on this blog may differ somewhat from the outline I set forth in the introduction in Part I. The critique of communism/welfare-statism will be published tomorrow.)
In an academic culture that is often characterized by historicist and relativist viewpoints, the notion that Aristotle may have had anything relevant to say about modern economic systems seems a little strange to us. While it must be admitted that we cannot expect the ancient versions of capitalism and communism to be identical to their modern counterparts, we can nonetheless differentiate the historically-shaped form from what is arguably the timeless content. Moreover, by way of critique of the two dominant economic paradigms (for in the final instance, welfare-statism/Social Democracy incorporates the worst features of both), we can arrive at a more clear vision of the Distributist alternative.
Though it ought to become obvious through the critique of communism, it bears stating up front that the Aristotelian critique of capitalism is not an attack on private property. Difficult as it may be for some readers, the notion that the essence of capitalism is the possession and use of private property is a fallacy bequeathed to us not only by certain capitalist ideologists, but by many (though not all) communists and assorted “anti-capitalists” as well.
A definition of capitalism that accords well with Aristotle’s critique is an economy in which production for exchange is predominant, as opposed to production for immediate use/consumption. Though it is modern technology since the Industrial Revolution that actually allows such an economy to come into being, the pre-industrial tendencies towards this type of economy have been in existence since the dawn of civilization, and reached a pinnacle in the great civilizations of antiquity, including the ancient Greece in which Aristotle lived and wrote.
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(Upon request, I am presenting my essay, which I will develop in five parts over the course of this week, here at TAC as well as my blog, Non Nobis)
Distributism is a current of Catholic social thought which holds that a greater distribution of private property, used in accordance with higher moral values and within the context of duties to community and society, is the best economic arrangement. It stands in contrast to both nationalized industry (socialism) as well as the permanent existence of a propertyless class (a feature of modern capitalism). For this, it has sometimes been wrongfully criticized as a reactionary anti-technology theory, a political program that would take society back to the technical level of the Middle Ages.
These accusations are groundless, for Distributism does not depend exclusively upon a particular mode of production; a business wherein shares of ownership were distributed among the employees would qualify as a Distributist enterprise. Thus whether we look to businesses such as the Spanish Mondragon, or to the ten-thousand plus Employee Stock Ownership Programs in the United States, Distributist ideas are not only alive and well, but are growing in appeal.
Although Distributism is most often associated with the modern social teaching of the Church, it is arguable that the first Distributist was in fact Aristotle. This should not be surprising, for insofar as Aristotle’s political and ethical philosophy stressed the importance of discovering and implementing the mean, that is, the middle between two extremes, it is only natural that he would arrive at a Distributist philosophy.
Rather than drown my readers with a lot of words, as I sometimes do, I’m going to write and post this essay in several parts over this following week. I hope that by the end of it at least some will have a somewhat greater understanding/appreciation of Distributism, an idea that Catholics such as myself hope will gain more ground and exposure in the coming years, though I absolutely do not claim to be anywhere near the final word on it (some will say other things, some will say the same things better). I look forward to discussion on this topic.
To read this on the American Catholic click here.
In the many discussions about socio-economic matters we partake in here at The American Catholic – not all of them as charitable as I would like – the topic of wealth redistribution often comes up. Clearly some of us hold different views as to the effectiveness of wealth distribution, or the forms it ought to take. Catholic social teaching does not attempt to confine redistribution to one set of particular policies, and it does not support the enlargement of “the welfare state”.
But there is no question that the redistribution of wealth through taxation is in itself a morally legitimate practice for government to engage in.
(I was going to wait until later to do this, but I just couldn’t :))
After many months of waiting and speculation, Pope Benedict’s third encyclical Caritas in Veritate (Truth in Charity, CV for short) was released to the public today. As I read it this morning, I was grateful that we have been blessed with a Pontiff whose intellectual command of the social and cultural issues of our day is so wide-ranging, dynamic and insightful.
The reaction, thus far, has been more or less what I expected: people of various ideological persuasions attempting to take away what they can from it. I will have more to say about that below. For now, though, I want to highlight what I thought were the most important themes.
First, the Pope reminds us that Catholic social teaching cannot be arbitrarily divided into different categories. Of the Church’s social doctrine, Benedict says: “there is a single teaching, consistent and at the same time ever new” (12). Nothing in this encyclical, then, will fundamentally alter or revise anything that has been said before since the publication of Rerum Novarum in 1891.
I am going to provide everyone with a nice blast from the past- everyone I know respects Pope John Paul II- most orthodox Catholics refer to him as John Paul the Great. So I think what he thought officially as Pope on the question of Capital/Labor/State as part of the tradition deriving from Pope Leo XIII’s Rerum Novarum- is incredibly interesting and relevant. Here is Chapter One of Centesimus Annus with no personal commentary- let the “man” speak without any interference from me:
A typical question, as a previous post here at American Catholic, with regard to worker’s cooperatives has been: if these firms are so great, why aren’t there more of them?
The short answer to that question is that there are more of them, in several countries, than there ever has been before. The trend towards worker ownership of businesses is on the increase, in the United States and elsewhere, and has been for sometime. Gar Aplerovitz, in America Beyond Capitalism, gives us an overview of cooperatives in the United States:
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To follow up my last post on the Papal defense of Distributist ideas, I think it is also time we cleared up this notion of ‘what can work’ and what actually does work.
Distributism, if it is practically defined as a set of social or political initiatives that encourage greater ownership of property, and specifically, worker ownership of the means of production, does exist and does work.
Here are some regional facts to consider:
“In Canada, there are distinct trends in worker co-operatives in Québec and the rest of the country. From 1993 to 2003, there was 87% growth in Québec and 25% growth in the rest of Canada.”
The United States
” In 2004, there were 300 worker co-operatives and 11,500 ESOPs covering over 8.5 million participants and controlling about $500 billion in assets.”
“Spain is home to the world’s oldest and most famous worker co-operative, the Mondragon Corporacion Cooperativa (MCC), established in 1956. In 2004, this group located in the Basque County, had sales of 10.4 Billion euros, 10.0 Billion euros of administered assets, with a workforce of 71,500.”
I can’t seem to go to any Catholic website or forum and talk about Distributism without at least one person accusing me of being a communist.
So, I post this not only for myself, but for anyone reading who is also sympathetic to the idea of spreading, by voluntary means, greater workers’ ownership of the means of production throughout society. Keep these in mind if you ever find yourself backed into a corner.
Rerum Novarum, 46 & 47. Excerpt:
“We have seen that this great labor question cannot be solved save by assuming as a principle that private ownership must be held sacred and inviolable. The law, therefore, should favor ownership, and its policy should be to induce as many as possible of the people to become owners.”
Quadragesimo Anno, 65. Excerpt:
“Workers and other employees thus become sharers in ownership or management or participate in some fashion in the profits received.”
Mater et Magistra, 75-77. Excerpt:
“[I]t is especially desirable today that workers gradually come to share in the ownership of their company, by ways and in the manner that seem most suitable.”
Laborem Exercens, 14. Excerpt:
“We can speak of socializing only when the subject character of society is ensured, that is to say, when on the basis of his work each person is fully entitled to consider himself a part-owner of the great workbench at which he is working with every one else.”
If this is communism, then the Church is the original communist international, and the Bolsheviks were just wasiting their time. Or, maybe, the people who call these ideas ‘communist’ don’t know what they’re talking about. It’s probably that.
I’ve noticed a few posts dealing with the problems of taxation and government spending. With the social teaching of our Church clearly warns against the dangers of burdensome taxation, it nonetheless remains that tax rates have been cut dramatically in the last 30 years, even as government spending has increased. The losses of tax revenue were offset by a massive accumulation of debt, because a society such as ours requires a great deal of wealth to continue functioning.
I will be the one to point out, then, that far more perilous to the position of the working American family is the stagnation and overall decline of real wages – wages adjusted for inflation – during that same stretch of time. Both global pressures as well as corporate and government offensives against the social position of the American worker have contributed to a decline in real wages and have caused a build up of consumer debt that rivals the government’s debt.
We were told by endless propaganda no different in its shrillness and anxiousness that cutting taxes on the incomes of the wealthy, on dividends and capital gains, on estates and every other business venture, would create jobs and prosperity for all.
(Originally published at InsideCatholic.com)
It might surprise some to learn that the basic idea behind the “welfare state” did not originate with either Marxist revolutionaries or bleeding-heart liberals, but rather with a head of state usually identified with conservatism: Otto von Bismarck. Faced with a growing threat from the German socialist movement, in the 1880s Bismarck established four programs that were essentially the minimum of the socialist program: health insurance, accident insurance (or workmen’s compensation), disability insurance, and a retirement fund for the elderly. By implementing these programs, the German leader hoped to steal some of the thunder from the socialists and prevent a revolutionary uprising.
In the United States, a similar motivation guided the architects of the New Deal, Social Security, and other programs now grouped under the broad heading “welfare state.” One might never know, based on today’s heated political rhetoric, that the idea behind the welfare state was to prevent, not bring about, socialism. Yet since the 2008 campaign, welfare, along with regulation and redistribution, have become synonymous with “socialism” in America.
Catholics have been as divided over these issues as the nation at large, with nearly everyone interested in the political debate combing the social doctrines of the Church to support one theory at the expense of another. So where precisely does the Church stand on the issue of welfare?
Pop quiz: what is the difference between a) giving directly to the poor, b) donating to a charity, and c) surrendering taxes that go to help the needy?
While you ponder that, here’s another one.
Question: if you could receive, free of charge, a) generic drugs or b) name-brand drugs, which would you choose?