Alternatives to Capitalism and Socialism

by frankbeswick

The simplistic idea that capitalism and socialism are the only alternatives for the ordering of economic systems is seriously wrong

The twentieth century in Europe saw a polarisation of views between the right and the left, the exponents of the free market and capitalism, and the supporters of state socialism. There were always people who took a different view, but it was often a matter of placing themselves somewhere on the spectrum between right and left. Thatcherism in Britain was the return of an extreme capitalist philosophy. In Britain Thatcher's successor, Blair, gave us capitalism with rights and social benefits, but never challenged the capitalist orthodoxy that had grown up. But there were other systems that challenged the right - left hegemony.

More than two alternatives

When I was seventeen I met an earnest young gentleman who told me that there were only two alternatives, fascism and communism [ he was  a communist.] A milder version of this thinking is the view that the two alternatives are socialism in all its forms and capitalism. However, for the past two hundred years or so there has been a steretotyped division betwen the collectivist left, who emphasise equality and state control, and the individualistic right, who emphasise liberty and free markets.  Those not on the extremes or near them were seen as somewhere in the middle, in the centre ground, apt to be stigmatised by the Conservatives as the muddle in the middle. The British Liberal party and their successors, the Liberal Democrats, fought this stereotypical thinking, but did not win overwhelming support. But there were always philosophical and religious movements that rejected the simplistic left - right model, and it is these that I want to examine.

One  organisation that resisted stereotypical left-right thinking was the Catholic Church. Its thinkers observed that capitalism and socialism were products of the enlightenment, which took away the spiritual purpose of society. They observed that both systems subordinated society and human relationships therein to economics, which they believed was giving materialistic values too high a place. Instead the church believed that while economics had a place, it was a tool to be used, and was to be subordinated to human well being. Society came first, far before economics, and human relationships mattered. They could not be subsumed into economic structures.

During the nineteenth century Catholic social ethics developed, and it was expounded in several famous papal encyclicals, letters from the Pope to the whole church. These are known by their Latin names: Rerum Novarum [of new things] and Quadrigesimo Anno [in the fortieth year, as it was written forty years after  Rerum Novarum. Encyclicals are known by their first two words. In these letters the pope declared that workers, employers and customers had rights, all of which should be properly and fully respected. They emphasised the importance of fair wages and declared that society should be organised to the common good, which is a concept in Catholic thought. It means the good of all. The letters oppose the favouring of any single economic class. The working class are recognized as having rights, but there is to be no hatred or violence to other classes. All groups and individuals are to be treated fairly. Furthermore, Catholic social ethics does not accept the unfettered free market, but believes that the state should regulate markets for the common good. In general Catholic social ethics rejects extremes of right and left. It tends to favour systems in which workers participate in power, as opposed to the modern capitalist way of power coming downwards from the owners.

There were others. Michael Polanyi, a polymatic scholar who had fled Hungary in the 1930s argued for what became known as the substantivist approach, which was that pure markets do not exist and that economies are embedded in societies. For Polanyi, an original thinker in science, markets alone do not work. They must be embedded in social structures.

Catholic Social Ethics

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This is a movement that arose in the nineteenth century and was popularised  by G.K. Chesterton and Hilaire Belloc before the Second World War. Both were Catholics, and the movement owes something to Catholic social ethics, but has its own impetus. Chesterton's life pilgrimage took him through atheism and socialism to Catholicism and Distributism. Chesterton hated the poverty that the capitalist system had generated, but he saw that socialism had its pitfalls, as it merely transfered power from capitalists and markets to politicians and bureaucrats. In a state socialist system the people who might have at other times become capitalists seek jobs in politics and the government and behave just as badly as they would have done in capitalism. Perhaps Chesterton had grasped the John Seymour's insight,expressed in his book the Great Heresy,  that the troubles in the world are not between nations but between people and masters.

Chesterton's solution was to argue for  wider distribution of ownership. For Chesterton and Belloc the socialist view that there were too many capitalists, was wrong. There were too few. What Chesterton meant was not that we should have so many large capitalists, but the ownership of the means of production and the  freedom that this brought should be as widely extended as possible. Lots of small capitalists rather than a few large ones was the preferred idea.

Yet Chesterton was aware that you cannot run an economy on sole traders alone. He envisaged a variety of forms of ownership. Some people would be sole traders, but others would be members of co-operatives, and some activities should be owned by guilds. He did not oppose the existence of companies on the private shareholder model that we have today, but he also argued that some activities should be nationalized. Chesterton would have been appalled that water is privately owned in British society, for to him water would have been  too important to be a capitalist possession. Water belongs to all as a group, not to private individuals.

Sadly the war polarised opinions between capitalist and socialist models, and the subtler systems of thought  were overlooked.The cold war polarisation did not help. I think that it is also the case that while capitalism and socialism provide opportunities for power grabbing, either through becoming executives or owners or bureacrats and politicians, Distributism does not do this, and so people bent on power ignored it. It is not dead, but neglected.


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Small is Beautiful

Elwin Schumacher is a neglected genius, and like Chesterton his life journey took him to Catholicism. Originally a socialist in his native Austria, he fled the Nazis and came to Britain as a refugee, where he became a Catholic some years later. Schumacher's seminal work is Small is Beautiful,subtitled a study of economics as if people mattered,  in which he challenged all of conventional economics. This work opposes centralization  in favour of a decentralized economy. Schumacher observed that capitalism and socialism suck power out of local areas and concentrate it in large centres, and this can lead to lack of investment and the resulting impoverishment. For Schumacher economic control should be found in local communties rather than in central governments, and localities should be encouraged to own resources and businesses in their own areas. This would prevent capitalist companies simply shifting resources at will as and when doing so suits their financial interests.

Schumacher was integral to the move to green economics. Early in Small is Beautiful he observed that human society can only endure if it sustains the natural capital of the world, and he stated firmly that the economics of the time was diminiishing it  and that ultimately it would run out. He therefore has given the strong boost to the new economics, and the New Economics Foundation was established to promote his economic views and insights. This is a worthy body that works for a better, greener, more just world.In this matter, Green economics, he was ahead of the religious economics that the church had promoted, as the religious thinkers of the nineteenth century hasd not yet spotted the danger to the environment that was developing, but nor had most people of the time, and conventional economists have no grounds for feeling superior in this matter.

One of Schumacher's chapters was Buddhist economics. He noted that he had chosen Buddhism as one choice among many, and he had done so because of his experiences in the East, but he said that any religion could have been chosen. Hiis aim was to show that economics did not have to run on materialistic values and that if it ran on more spiritual values it would operate more humanely than it currently does. Schumacher is a good counter to those who want to drive religion from the public sphere.

Small is Beautiful

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These movements demonstrate that the capitalist-socialist conflict does not imprison us. The alternatives to them are not merely different places on the spectrum, but a challenge to the stereotyped thinking of left and right. They have fed the thinking of the green movement and through this have fertilised political discourse in the present time. The thinking on which they are based is subtler than is the thinking of the systems of capitalism and socialism, and they are morally better, as they respect all rights and humanise rather than degrade. The future, I hope, belongs to them rather than to the stale alternatives.

Updated: 01/30/2014, frankbeswick
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frankbeswick on 05/03/2023

The reason for the private ownership of water is that the capitalist gang who misrule Britain are ideologically obsessed with private ownership.

DerdriuMarriner on 05/03/2023

The last two sentences in the third paragraph to your second subheading, Distributism, considers that "Chesterton would have been appalled that water is privately owned in British society, for to him water would have been too important to be a capitalist possession. Water belongs to all as a group, not to private individuals."

How did it come about that water is under private ownership? And what might be the signs and symptoms of that private ownership today?

Should and would it be possible to change that ownership?

Jo_Murphy on 01/30/2014

This is just great. I needed to read this article tonight as I think through some complex tough issues. Great article, Thanks, Jo

cmoneyspinner on 12/21/2013

Alternatives for sure. But alternatives that will likely never be adopted. Just being real. Good article.

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