Austrian Distributism

Austrian Distributism describes the unique economic system that was implemented in the Austrian Empire following the Vienna Reform Conference in 1922. Many of the advocates for this system saw it as a third way apart from both Capitalism and Socialism. Other supporters view it as a variation of Capitalism and sometimes refer to it as Distributed Capitalism.

The primary goal of economic policy in Distributist thought is to protect and promote widely distributed private ownership of property and capital. Thus one of the guiding principles of the Austrian system is to resist the centralization of Capital in the hands of the government, private individuals, or corporations. The impetus for the birth of Distributist economics was found largely in Catholic social doctrine and particularly the application of the principle of Subsidiarity to economics.

Land Reform
During the Vienna Reform Conference, one of the major points of contention was the land reform question. The tenant farmers who comprised most of the rural population of the empire had long demanded land reforms that would enable them to own their own land. Socialist agitators often played to this desire by advocating the confiscation and redistribution of lands belonging to the nobility. The nobility, of course, used their considerable political influence and leverage to block any such reforms.

The Rerum Novarum commission proposed a third option. Instead of simply dispossessing nobles and redistributing the land, or simply maintaining the status quo, the government would put in place a system of incentives that would encourage the large land-owning nobles to break up their estates and a system of government loans that would enable the peasant farmers to purchase their own lands.

Under the new system, increased taxes would be levied against agricultural land holdings that exceed certain size limitations while smaller holdings would be lightly taxed. In addition no taxes would be levied on land sales.

Large rural land holdings not designated for agricultural use, such as forests, mountain regions etc. would be subject to slightly different rules. They would see an increased tax rate, but not to the same level as large agricultural holdings. This would enable some recreational estates to still exist, but would make them more expensive.

Industrial Reform
Though the tenant farmers had long advocated for land reform, the primary support base for socialist agitators was among the urban working class. Industrial workers were often mistreated and worked in poor conditions. As with land ownership, industrial worker ownership would be promoted with the use of tax penalties and incentives.

Industrial production companies could be registered under one of three categories, Guild, Corporate, or Private. Companies classed as private were intended to be smaller, family owned operations. These companies were limited to a maximum of 100 employees. Private companies would be subject to relatively low taxation. Companies that exceed 100 employees must be registered as either Corporate or Guild.

Companies registered with the Corporate designation could be organized by whatever charter or by-laws the corporate founders established. However, entities designated as Corporate would face high rates of taxation.

The Guild designation would carry low taxation, but in order to register as a Guild the company would be required to follow the mandated Guild structure. Specifically the governance of the Guild would be accomplished by a Guild Assembly in which all Guild members of Journeyman or Master rank would have a vote. One of the chief duties of the Guild Assembly would be to elect a Governing Council. Only those members of Master rank would be eligible to be elected to the Governing Council. This council would function similarly to a board of corporate board of directors and one of their key duties would be to appoint the Guild officers in charge of daily operations. Although only Master tier members can serve on the council, journeyman tier members may be appointed by the council as Guild officers.

In addition to the Guild Assembly and the Governing Council there would also be a Labor Council elected at large by all Guild members including apprentices. The Labor Council would serve as an advisory body to the Governing Council and Guild Officers advocating for the interests of the workers. Though the Labor Council has only an advisory capacity, if a disagreement arises with the Governing Council, they can take the disagreement to a general vote of the Guild Assembly.

Guilds are further required to follow a ratio pay structure in which different job classifications are paid within ratio guidelines approved by the Guild. Jobs within the guild could be classified, for example, as managerial, technical, or labor. The ratio system would require that a minimum wage be fixed as the bottom ratio, then higher paying jobs could not pay more than a given ratio to the minimum pay. For example, technical jobs might pay a range of 2 to 1 up to 5 to 1 over the labor minimum wage. The exact ratios would be decided upon by the Guild Assembly based on recommendations from the Governing Council and the Labor Council. The government mandates that the Guild must have such ratios, and that they must be decided by the Guild Assembly, but does not mandate what they must be.

Further, companies that receive the Guild designation would have a limit on the number of non-member employees they can employ. To provide flexibility for the company, as well as a reasonable path to membership for new employees, Guild Companies would be allowed to employ up to 20% of their workforce as non-member employees.

If a Guild company grows to include multiple production facilities or sites, then the Guild would be subdivided into local Guild Chapters. Each chapter would be run by Guild officers appointed by the Governing Council, or if over a given size threshold the local chapter would have its own local assembly. The assets and real property of each local chapter will be owned by the members of the local chapter rather than the Guild as a whole.

The addition of new local chapters could occur in one of two ways. Either an existing smaller company wishes to join the Guild, bringing their own existing property with them. In this case the local chapter simply owns its own property outright. It may also occur that the Guild founds new chapters in the interest of business expansion. In this case the cost of new facility and new property is extended to the local chapter by the Guild as a bond. The local Chapter must repay the bond over time. In the event local chapter wishes to separate from the Guild or close and liquidate property, then the bond must be repaid in full or the property and assets equal to the unpaid portion of the bond will revert to the Guild.

If a local chapter were to be dissolved and the assets liquidated, the proceeds of liquidation would be distributed to the members of that local chapter based on the pay ratio scale.

Those industrialists who were interested in embracing the new guild structure would be provided with significant tax advantages as well as limited term deals from the government in the acquisition of property and resources. Those industrialists who were not interested in embracing the new Guild structure could either continue as Corporations and deal with the high taxation, become designated as Private companies if they were small enough, or sell out their assets to Guilds formed from their former employees.

In addition, the government would look to gradually release nationalized industries into private or Guild ownership, such as the railroads.