Capitalism is not Catholic. It's not the default, simple system that many people assume it to be. It has its roots in Enlightenment thinkers, and necessarily requires classical liberalism to justify itself. It begins in the theories of those like John Locke, Adam Smith, and Turgot, and has no tested lineage beyond these innovators. I've never heard of the definition of capitalism outside of circles fundamentally opposed to the Church. And yet distributism, which is in-line with Catholic teaching and based in the market practices of Catholic medieval Europe, is excused as a second-rate economic theory by a grave many believers?
Distributism uses a subsidiary hierarchy of moral authority, of ecclesiastical, political, social, and economic parts respectively, to create an organic society by which its participative members are compelled to distribute the factors of production as widely as possible amongst themselves.Capitalism is the establishment of free enterprise, in the hopes that anarchistic properties of the market mechanism distribute capital in a circulating flow from two separated classes - producer and consumer - as efficiently as possible. The emancipated focus of each system is its human members and capital, respectively.
Let's observe these two definitions. Each is an unbiased definition of what that ideology does, and what is favors. The distributist systems aims clearly at a cohesion that is beyond the act of making money, the goal is literally transcendent from profit. Profit is used as a means to build the social order that promotes its industry in all. Because people are born into a form of social fabric, they become more involved than a mere hireling, and the result transforms into a market that may be slow, but is sustainable for a thousand years. Capitalism is a functional opposite in every way: it favors the elimination of any social caste that would even remotely hinder the sacred goals of profit and turnover. It separates people into argumentative groups of producer and consumer by nature instead of unifying, fosters competition and successive elimination of businesses rather than cooperation, and creates a massive disparity of vision and wealth between industrial business owners and the employed consumer. A review of some of its further champions can vouch for its moral track record.
Capitalism has endorsed usury, which, as we know, is the charging of interest out on loans, as a standard practice. Condemned by great ecclesiastical minds like Thomas Aquinas (he explained that interest is like charging a man for a bottle of wine, and then charging him again to drink it), interest is a tool that has been used by scrupulous bankers throughout the ages to take advantage of those in desperate straits. While forbidden in medieval Christian Europe, our Modern world is built upon the necessity of debt so thoroughly that it's practically required for normal existence, but yet few question the morality of generously taking from - and trapping - individuals who have no other option.
Due of its solid beliefs in the most fluid and efficient flow of capital achievable, capitalism encouraged policies that enable the affluent, monied classes. Concessions for business like private property ownership and equality before the law are frequently toted as heralding symbols of our Modern economic system, but were nothing more than simple heirlooms, already assumed requisites and working parts of the markets in the Old World. Leo XIII iterates this forgotten fact perfectly in his encyclical Rerum Novarum, distinguishes the two by condemning capitalism and relentlessly defending property rights in the same instance. And His Holiness was completely consistent in arguing so; because to say that capitalism exclusively endorses private property rights is like trying to claim that Modern feminism exclusively endorses women. This sort of preferential claim is against all other forms of thought is an ignorant one.
The fundamental understanding of capital as this live asset of investment within hyperactive markets is what distinguishes capitalism from the preceding guild systems of Europe. The invisible hand of free enterprise governs people, rather than people governing business. Money is in control. This set of ideas and its related venture use of capital were not feasible until the eve of the Renaissance, when an excess of prosperity brought the beginning of joint ventures of exploration and trade. New ventures like these birthed investment and some of the first corporations, agitating and ultimately changing the structure of the preceding economy into something wholly new. It's impossible that capitalism existed as some abstract-standard-with-a-different-name before the Enlightenment philosophes called it capitalism. To think that capitalism pioneered property rights or the ownership of the factors of production, for instance, or that these features were the showcase of its definition, is to be a little mistaken. It merely inherited both of these practices from its predecessor, from which commentators like Hillaire Belloc and G.K. Chesterton created the economic theory of distributism. Economic systems were entirely different during the Middle Ages - but for some reason, I'm pretty sure the townsmen then still understood freedoms like private possession just as well.
Now while capitalism does have an overwhelmingly different character, it does confusingly share much in common with the distributist ideal. The difference, primarily - and what made capitalism boldly different, which it did invent itself - was an absence of a certain control. But this isn't control from a centrally controlling power, like a privately regulatory government in the socialist theory. The primary control missing comes from the moral authority created both within the echelons of society, and the Church. If you think hard enough about it, it's curious how the structures within society that businesses serve mean nothing to those businesses today. Only through best profit, through money, is any decision relevant. What makes our margins higher? In that way, capitalism has actually done well to erode social distinctions and the ethics that they create. For profits to be most efficient, industry of scale necessitates the concentration of resources into a centralized corporatism, which many distributists accurately criticize for inadvertently leading into socialism anyway. That's where we are today in the United States, isn't it? In this sense, capitalism is just as unsustainable, perhaps only as possible in theory as communism is. The state of capitalism is not a state of being, but a state of inevitably transforming into something else.
Conversely, distributism necessitates as widely distributed factors of production as possible among the people, and employs social methods to do so. It implies a preference of owning your own business, of working for yourself, which sets the most economic liberty possible before each and every person. Meanwhile systems like Churches, guilds, and an artisan system, rather than industrialized economy, exert the presence of ethical existence that capitalism rids itself of. Guilds act oppositely of unions, and unite tradesman of a craft together in practice, rather than dividing the worker and owner from within. Social structure is as much a study of distributism as the "purely" economic side. So just like Modern science doesn't understand the existence of God, because its horizons are definitely limited to the physical existence, so capitalism is blind to distributism, because its horizons are limited only see the monetary, the economic existence below who uses it. As one distributist said, "In contrast [to capitalism], distributism seeks to subordinate economic activity to human life as a whole, to our spiritual life, our intellectual life, our family life."
Subsidiarity is also a belief that should get some attention, in order to ward off the wrongful idea that we're just reinventing socialism. Now obviously, as Catholics, we believe in the necessity of hierarchy. Socialism has organized central hierarchy, while capitalism does not. Socialism's hierarchy is tyrannical, unfounded, and repressive, whereas capitalism is equally damnable for having no idea of centralism. The distributist offers a third way. We recognize the authority invested in the Church, the undisputed authority of our souls and consequent details of life, but yet realize the freedom of the secular crown to exist and operate within their potential as regulators for the temporal existence of nations. And we're all patriotic and know that our king has precedence (The US is a little different with republicanism, but it's the same idea), but yet we all nonetheless recognize the right of the tradesmen to regulate their own members for fear of government corruption and heavyhandedness. And we all recognize the vast necessity of quality wares and fair pay for which the guilds are responsible for enforcing, but yet we understand that the free nature of the human conscience, and that God desires this to be, must be fundamentally respected. See, these echelons of power - and freedoms - exist together in the concept of subsidiarity: "that no larger unit (whether social, economic, or political) should perform a function which can be performed by a smaller unit."
With each different author, distributism has been articulated as being realized by slightly different mechanisms. Unlike capitalism, unfortunately, distributism has never been a mainstream Modern goal, so its manifestation isn't nearly as tangible. It remains very theoretical. So if you ever had an interest into the further working details of distributism, the best information you can find are at its sources: both the Catholic medieval period, and the authors that ultimately wanted to recreate the more just parts of it. But at any rate, the primary differences between capitalism and distributism remain the same. It's the fundamentals that tell the difference, all authors have agreed on that. After all, the proof lies in the pudding. Examples like the banana republic, the steel titans, the railroad monopolies, the establishment of enormous national banks, and even the excessive existence of insurance companies were not possible feats of the pre-capitalist period most associated with distributism. While most people measure all forms of economy on a two-way scale between capitalism and socialism, these are not good standards at all, and in reality should be on the same side of any scale they occupy!
But even with in their times of their intellectual procurators, many Catholics were nonetheless still skeptic about the precepts of distributism in the face of mainstream economic thought. “Freethinkers” of the Enlightenment wrote extensively on the benefits and freedoms afforded to man in what became capitalism, which is why it’s still associated with the notion of freedom today. They made intellectual assertions about property in the hopes of defining their desire of equality, which translated into the destruction of the nobilities and monarchies that presided socially over the emerging class of traders and craftsmen, whom they favored. These treatises on “liberty, equality, and property” still exist romantically in the minds of many Americans today. It seems like these philosophical writings of theirs have many faithful hung up on how to differentiate the fundamentals of the two systems apart. It helps when you remove the boogeyman that they give to tradition in classical liberalism, to remove their ambiguous statements of freedom in order to observe the real working differences between the two. And those real working differences have absolutely nothing to do with having small details.