Douglas MacArthur: Distributist

Distributism is a little known economic system which is based upon the principal of spreading OWNERSHIP of property among as much of the population as possible. Distributism rejects the current economic order in which the ownership of property is concentrated in the hands of the few, leaving the many at the mercies of the rich and powerful. Some claim that Distributism is another form of Communism or Socialism but, nothing could be further from the truth; Distributism is based on widespread private ownership of property, whereas Communism and Socialism would place the ownership of all property into the hands of the state.

I find Distributism to be a very attractive economic alternative to the current systems that are collapsing around us today but, have always been a bit reserved in my enthusiasm for the system because it seemed too idealistic and impossible to put into effect in a real society.

Imagine my surprise to learn that Douglas MacArthur was a believer in Distributism and he created a successful Distributist economy on the island of Taiwan during his oversight of that country after World War II.

Effective control of the non-Communist East was in the hands of General Douglas MacArthur, who happened to be a distributist. He worked out a plan of reform for Korea, Japan, and Taiwan. Here we deal just with the reforms in Taiwan. The basis of the plan is that the farmers who actually worked the land would come into possession. The landowners were forced to sell the land to their tenants at a price equal to 2.5 times the average crop. The farmers paid for the land over 10 years. Under this “land to the tiller” program, 432,000 families came into possession of their own land. Where previously they had been paying 50% forever, now they would pay 25% for 10 years.

The results were dramatic. Since farmers got the full rewards of their labor, they were more willing to invest more money and give more labor. Farm production increased as farmers used more fertilizer, went to multiple cropping with as many as four crops/year and diversified production to higher value but more labor intensive crops. Production increased at an annual rate of 5.6% from 1953 thru 1970. The farmers suddenly had something they never had before: relatively large amounts of disposable income. Now they needed some place to spend it. Providing products to buy would require an expansion of industry on the island, if the country was not to be dependent on imports.

Most of the payments to the landowners was not in the form of cash, but in bonds. These bonds were negotiable industrial bonds which the former landlords could invest in any light industry they chose.5⁠ Indeed, there was nothing else they could do with the bonds; it was a case of “invest or die.” The strategy was twofold: get capital, in the form of land, into the hands of farmers; get capital, in the form of industrial investment, in the hands of entrepreneurs. Note that the strategy provided both goods to buy and purchasers to buy them; it was a binary strategy, giving equal weight to production and consumption. A tremendous number of capitalists were created overnight; the former landowners, who previously had no interest in manufacturing, were converted into instant urban capitalists and had to find places to invest the proceeds from the lands sales; the landless peasants became proprietors. By this method, the government provided support to Taiwan’s fledgling industrial base. But the fact that the actual companies to invest in were picked by the former landowners meant better investment decisions than if the government had tried to pick the winners itself. Industrial production expanded, giving the newly empowered peasants some place to spend the money buying locally produced goods.

We can see the Taiwanese experiment for the conjuring trick it was: the government sold land it didn’t own, bought with money it didn’t have and financed industries that didn’t exist; the government managed to both expand the consumer market and to provide the industrial production necessary to serve that market and serve it from local resources. There was no inflation because the money supply expanded at the same rate as production by a sort of automatic method. Redistribution allowed for expansion of the consumer base which allowed for expansion of the industrial base. It is not often in business and economics that one gets to see solutions which are elegant and beautiful, but certainly the land to the tiller program qualifies.

The results have been impressive, both in economic and social terms. Starting with crude products made in small workshops, Taiwan followed the industrial value-added food chain right shipbuilding, electronics, and every sort of industry. Taiwan has managed 50 years of high growth rates, increased equality, and low tax rates (comparatively). Unemployment was low to non-existent through most of Taiwan’s post war history. Before 2000, it rarely exceeded 3% and usually was less than 2%. Since 2000, the rate has risen as high as the low 5’s before dropping back to the 4% range as Taiwan struggles to adjust to outsourcing to mainland China. By human measures, Taiwan’s growth was also a great success. For example, the literacy rate increased from 45% in 1946 to 93% in 1989; life expectancy went from 59 years in 1952 to 74 years in 1989 while the per capita caloric intake went from 2,078 calories to 3,070 in the same period. Living space per person went 4.6 square meters to 23.8.6⁠ Further, Taiwan and the other “Asian Tigers” were able to achieve these successes despite having population densities among the highest in the world, a fact which contradicts the prevailing dogma that population density is an impediment to growth.

The Imaginative Conservative


It looks like Distributism can work in the real world after all.

To learn more:

The Distributist Review

Toward a Truly Free Market

Still not working in Philippines or Zimbabwe.

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This is fantastic info, thanks for posting. I've never heard of distributism before. It seems to gell well with Asian cultures in some ways. I'll have to think about it a little more but it seems like a really neat idea on an abstract level.

Mac was a real arrogant pearl-handled SOB in some ways but he had a good command of a lot of things that were important for his time and place, and he served his country well. He is one of history's rare examples of a man who was a great social architect in peace (postwar Japan occupation in particular) as well as an incredible military strategist. (The landing at Inchon in Korea is to my mind the classic example of his brand of gutsy initiative-taking.)

Originally posted by eldard
Still not working in Philippines or Zimbabwe.

In Zimbabwe, the land reform was hardly done in a distributist manner. The land was stolen away from its owners based upon their race (white) and was then allocated to political cronies, not to people who worked the land.

Since 2000 the Zimbabwean government has taken most of the farmland previously used by commercial farmers (mostly white) and reallocated it. Most of this happened in a corrupt way and land went to politicians from ZANU-PF, military leaders or leaders in the police forces. These persons were usually inexperienced or uninterested in farming, and could not maintain the intensive, industrialized farming of the previous owners. Short term gains were often made by selling the farms equipment. The loss of agricultural expertise also triggered a loss of agricultural financing and market confidence which made recovery almost impossible.

Wiki

The Philippines became totally independent of US control just after the war so I doubt MacArthur was able to influence their economy towards distributism. I see that they do have a Department of Agrarian Reform whose intent is promoting social justice and industrialization through massive taxation of rich and poor Filipinos alike.

How you promote the widespread ownership of land through excessive taxation, I don't know but, I have a feeling this is why their system has failed.

ETA: I found some more on Philippines land reform and what caused it to fail:

Philippines: During the Macapagal Administration in the early 1960s, a limited land reform program was initiated in Central Luzon covering rice fields. During the martial law era of the Marcos Administration, Presidential Decree 27 instituted a land reform program covering rice and corn farms. Rice and corn production under this land reform program was heavily supported by the Marcos Administration with land distribution and financing program known as the Masagana 99 and other production loans that led to increased rice and corn production. The country produced enough rice for local consumption and became a rice exporter during that period. The Aquino Administration in the mid 1980s instituted a very controversial land reform known as CARP which covered all agricultural lands. The program led to rice shortages in the succeeding years and lasted for 20 years without accomplishing the goal of land distribution. The program caused entrepreneurs to stay away from agriculture and a number of productive farmers left the farming sector. The CARP was a monumental failure in terms of cost to the government and the landowners whose lands were subjective legal landgrabbing by the government. CARP expired at the end of December 2008.

Wiki

MacArthur's method used some heavy handed government intervention to force the landowners to sell their land to the tillers but, at least it did not involve outright theft. The landowners were compensated for their land and the system MacArthur used promoted industrial production on an island which had previously been an agrarian backwater.

It seems he had success with the program in South Korea as well:

South Korea: In 1945–1950, United States and South Korean authorities carried out a land reform that retained the institution of private property. They confiscated and redistributed all land held by the Japanese colonial government, Japanese companies, and individual Japanese colonists. The Korean government carried out a reform whereby Koreans with large landholdings were obliged to divest most of their land. A new class of independent, family proprietors was created.

Wiki


His reforms in Japan helped out the small farmers but had mixed results in other areas:

To support these political changes, the Americans instituted reforms to make economic power in Japan more "democratic." In prewar Japan, two-thirds of the agricultural land was rented, not owned, by the farmers who farmed it. The farmers, who made up over 50 percent of the labor force, often rented the land from landlords who lived in distant cities and paid them as much as half of the crops they grew. Since the average "farm" was little more than an acre, many farm families lived in poverty. The land reform took land away from big landlords and redistributed it to the farmers, so that farm families could own the land they worked. Because farm families became more independent economically, they could participate more freely in the new democracy.

The Americans also tried to make workers in the industrial sector more independent by changing the laws to allow free trade unions. Before the war there were only a few small unions; by 1949, about half of all industrial workers belonged to a union.

To democratize economic power further and create competition, the Occupation intended to break up the giant business corporations, the zaibatsu, but this reform was not implemented, in part because it would have made Japan's economic recovery more difficult.

The American Occupation of Japan, 1945-1952


Its a shame that people can't get around the false dogma that the only economic alternatives available are socialism or capitalism. There are plenty of alternatives out there if people would just open their eyes and their minds to try to find a better way. Capitalism and socialism have both turned out to be failed systems IMO and it is time we looked in a new direction, one that widely disperses economic power instead of concentrating it in the hands of the few as our two competing systems do today.

Originally posted by eldard
Still not working in Philippines or Zimbabwe.

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Jesus himself can come down and set up an economic system for those two countries and it still wouldn't work. If there was ever a poster child for corruption, cronyism, and nepotism, it would be the politicians and business elite of these countries.