Belloc believed that capitalism is fundamentally unstable and therefore serves as a transitory state of affairs, viewing it as a disruption of the natural development of property and societal norms that arose during the Middle Ages.

While Belloc writes about socialism – which he generally refers to as "collectivism" – as an alternative to capitalism, he believes that attempts at its implementation are ineffective and will only hasten and solidify the reintroduction of the servile state.

As an MP, Belloc is considered to have been a continuation of the new liberals and British Radicals of the late 19th century, identified with John Bright, Richard Cobden, and William Cobbett.

[4] During his time in office, he developed an intense distaste for parliamentary politics,[5] viewing it as unconcerned with the well-being of the proletariat and becoming frustrated by unreasonable compromise and the inability of his colleagues to challenge what he saw as systemic abuse of the working class.

[9] Cardinal Henry Edward Manning, who also was a massive influence on Belloc,[10] was a significant contributor to the development of the encyclical and encouraged English Catholics to engage in politics and seek economic justice, even going so far as to support the 1889 London dock strike.

[16] Belloc later expanded the scope of distributism from a critical analysis of capitalism – what is principally described in The Servile State – to a more robust, descriptive economic theory.

[22] Belloc did not agree with his contemporaries that the Industrial Revolution caused the rise of capitalism in Europe,[25] but rather saw it as a tool that only capitalists had been able to effectively utilize because the distributive state had already been dispossessed of its economic power.

[27] The English Reformation and the subsequent dissolution of the monasteries by Henry VIII led to the redistribution of church-owned property, amounting to – by Belloc's estimate – between 25 and 30 percent of the economic power of England, into the hands of the Crown.

Landowners whose large holdings were still relics of the feudal order remained powerful in English politics, owning – again, by Belloc's estimation – "anything from a quarter to a third of the agricultural values of England",[29] were able to gain control of these newly seized lands.

All over England men who already held in virtually absolute property from one-quarter to one-third of the soil and the ploughs and the barns of a village, became possessed in a very few years of a further great section of the means of production, which turned the scale wholly in their favour.

He says socialism promises laborers the security and organization that capitalism provides – such as pensions, regular promotions, and so on – but that, as administered by the political officers, the system would simply do as it does now, only under different management.

[54] Although this works to the benefit of the capitalist, Belloc believes this kind of socialist acts in good faith, writing: In this way the Socialist whose motive is human good and not mere organisation is being shepherded in spite of himself away from his Collectivist ideal and towards a society in which the possessors shall remain possessed [and] the dispossessed shall remain dispossessed [...] At the end of the process you will have two kinds of men, the owners economically free, and controlling to their peace and to the guarantee of their livelihood the economically unfree non-owners.

The term serves as a metaphor to describe how capital, with or without forethought to do so, makes certain concessions to labor, which over the long-term secure the capitalist class as an institutionalized addendum of the state.

Like the previous reformer, he attempts in vain to confiscate – which would give him perfect control – and then to "buy out" capitalist property, but, in his failure, reorients his path towards simply arranging society into something "orderly in the extreme".

[58] The practical reformer, Belloc holds, cannot define his moral imperatives and cannot follow logically from his own actions, both of which "proceed from one simple and deplorable form of impotence, the inability to think".

[59] He holds these views, and others, because he accepts uncritically that the impoverished are reaping the consequences of their actions, not that they have been robbed of the "co-operative and instinctive institutions [...] society spontaneously breeds" and, in doing so, "gloats on every new detail in the building up of [the Servile State]" and "the destruction of freedom by inches".

Under these circumstances, Belloc writes, what is agreed upon is no longer a contract, but the acceptance of status; the worker surrenders the entirety of his surplus value and his freedom in exchange for security and sufficiency.

Both groups, having agreed to circumstances which provide security and sufficiency, enter into what Belloc calls a "quasi-contract", which has all the legal weight of an equal contract but otherwise compels one party to labor by positive law.

However, should a worker refuse to take part in labor stipulated by the contract, thereby removing the ability of the insurance to perpetuate itself, he is not allowed to partake in its benefits even though he has paid into the system.

In this case, every effort is expended by the state to either place him into work in which he can efficiently provide his labor or educate him in a way that allows him to meet the sufficiency or at least come as close to it as possible, "lest his presence as a free labourer should imperil the whole scheme of the minimum wage, and introduce at the same time a continuous element of instability".

[100] A 1912 review in The Guardian suggested Belloc's embrace of widespread property ownership seemed "impracticable for a proletarian population with no appreciable margin for saving and with no adequate spirit of cooperation.

"[101] A 1913 column in The New York Times by Charlotte Payne-Townshend, wife of Belloc's friend and intellectual rival George Bernard Shaw, called the book an "all-important contribution to economics".

[107][b] In defending aspects of Belloc's thesis, which he considered ubiquitously known among his audience[109] and "at least half untrue",[110] Cole writes: Low wages, supplemented by benevolent and considerate management, may secure a fair standard of material comfort for the employee; but they are demoralising and degrading; they produce a spirit of subornation and acquiescence, in which the Guild idea cannot grow.

[113] In 1920, Eileen Power negatively referenced the book in an article for academic journal History on the guild system in medieval England, calling it a "grotesque account of the appearance of capitalism" and the historicity of Belloc's distributive state "mythical".

[127] In his 1940 essay Notes on the Way, George Orwell stated that the book "foretold with astonishing accuracy the things that are happening now", but despairs that there is "little question now of averting a collectivist society [...] whether it is to be founded on willing cooperation or on the machine-gun".

"[128] In a 1946 article for Polemic entitled "Second Thoughts on James Burnham", Orwell revisited the book, describing it as written in a "tiresome style" and arguing that the remedy it suggested was "impossible".

Still, the review is overall quite positive, commending Belloc for his "courageous" indictment of capitalism, particularly in his conception of the "politically free and economically unfree" paradigm and his assertion regarding "the gap between our moral pretenses and our actual practices".

[132] Calling the book "principally an exercise in logic", he compares some of its conclusions favorably to those of William Cobbett,[132] who, like Belloc, also opposed the Poor Law of 1834 and condemned the traditional British view of the Reformation.

[135] Minogue described Belloc's book as "curious" and "eccentric in some ways even for his own time" and, although somewhat dated, he argued that it continues to offer valuable insights into the development of servility and overdependence on government largesse.

[136] In the 2012 book Property-Owning Democracy: Rawls and Beyond, Oxford historian Ben Jackson compares Belloc's findings to those of American Founding Father Thomas Paine and Scottish Conservative politician Noel Skelton.