| Subject: | [socialcredit] Replying to Jim Schroeder: Re: Social Credit from First Principles | | Date: | Sunday, May 1, 2005 09:12:18 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
"B costs had to have been A costs at one time. I
cannot find the exact quote, but Douglas believed in
the labour theory of value. All 'capitalized' costs
if you trace them back, had to originate as income."
--------------------------
---------------------------
Again, no, but that's the reductio ad absurdum to the
argument.
The model of circular flow ("All 'capitalized' costs
if you trace them back, had to originate as income.")
assumes that A+B equals sales of goods and securities
to the public, whose income to purchase goods and
securities derives entirely from salaries, wages and
corporate dividends. The theorem demonstrates that
is a mathematical impossibility if there is labor
displacement, etc.; that in such cases a portion of
A+B must derive from some source or sources
extraneous to A, which Douglas postulated is from
"favorable" balance in trade, bank credit expansion,
etc.
That is to say, the consumers who are involved in the
production process, through their labor and
ownership, are divorced from sovereignty over the
totality of their own production. Something else is
involved than personal decisions to consume, save or
invest, reflected through sales. Therefore, the
theory of the market is flawed.
The Social Credit reforms would rationalize that
"something else" to the benefit of consumers at the
point of retail, establishing their economic
sovereignty for the first time in history.
As to Douglas believing in the labor theory of value,
you will not find anything supporting that contention
in the writings of Douglas. Indeed, you will find
the contrary.
There is the displacement of labor. But also the
cultural heritage, inherited from the past, entitling
everyone to a share of productive capacity, whether
employed, or not. And taking that share does not
take anything away from anybody, since it derives
from the unearned increment of association, owned
equally by all.
It is dividend paid on capital account.
-
--- Jim <jschroeder@shaw.ca> wrote:
> The more I think about it, the more I think we are
> arguing the same thing in different language, and if
> you humour me I'll explain.
>
> You state, " For example, a B payment places a
> financial asset into the hands of the seller in the
> structure of production, while at the same time
> passing an equivalent "cost" to the point of retail
> without putting anything at all into the hands of
> consumers enabling them to pay that cost as a result
> of THAT PARTICULAR TRANSACTION."
>
> In reality, that is true. The only time that exists
> is NOW. In reality, people can only consume all the
> consumer goods that are at the point of retail NOW.
> People engaged in capital production are a real cost
> to retail NOW, and show up as a cost when the banks
> filch purchasing power from consumers by issuing new
> credit, and thus, decreasing the value of their
> purchasing power.
>
> In financial terms, the cost of capital production
> does not show up in retail until the future (the
> future does not exist, so in real terms, this is a
> fallacy). People engaged in capital production
> receive their purchasing power in advance of the
> cost of the capital showing up in the cost of some
> consumer good. That purchasing power is used on
> consumer goods that exist now. Firms which are have
> the consumer goods now do not save the money they
> receive from the producers of capital goods in the
> form of purchasing power. Instead, they reinvest it
> back in production. By doing so, they are investing
> in capital. And Douglas states, "At the moment the
> point to be borne in mind is that B is the financial
> representation of the lever of capital, and is
> constantly increasing in comparison to A."
>
> From a financial point of view, disequilibrium comes
> when: "The essential point is that when a given sum
> of money leaves the consumer on its journey back to
> the point of origin in the bank it is on its way to
> extinction. If that extinction takes place before
> the extinction of the price value created during its
> journey from the the bank,then each such operation
> produces a corresponding disequilibrium between
> money and prices." (The Monopoloy of Credit)
>
> In reality, the cost of production is the amount
> production consumed over an equivalent time. The
> excess is represented by "B" in financial terms, and
> in financial terms is the physical capital which is
> creating price values for which there is no
> equivalent purchasing power. These "costs" belong
> to us all as our cultural heritage.
>
> There are several ways of analyzing A+B. I still
> say that B need not be growing relative to A for A+B
> to be true, and Douglas addresses the instances when
> socialists try to make A grow relative to B through
> make work projects which leads to inflation, and
> never brings unity, or equilibrium, between prices
> and purchasing power. The natural tendency, as
> people invest in capital, is for B to grow relative
> to A, and this makes the problem increasingly worse.
>
>
> B costs had to have been A costs at one time. I
> cannot find the exact quote, but Douglas believed in
> the labour theory of value. All "capitalized" costs
> if you trace them back, had to originate as income.
> However; that income is "gone", and no longer exists
> as income, yet the cost still exists.
>
> Like I stated previously, there are a multitude of
> ways to look at A+B, but in the final analysis, the
> point is that prices>income.
>
> Take care,
>
> Jim
>
> ----- Original Message -----
> From: William B. Ryan
> To: ownership@cog.kent.edu ;
> austrianschoolofeconomics@yahoogroups.com ;
> socialcredit@elistas.com
> Sent: Thursday, April 28, 2005 1:11 PM
> Subject: [socialcredit] Re: Social Credit from
> First Principles & A+B andBankers...
>
>
> "To understand how B > 0, or how the economy is
> out
> of equilibrium, we must examine the exact nature
> of B
> costs. B costs represent past A costs..."
> ---------------------
> ----------------------
>
> No they do not. Not by the definitions of the
> theorem. Nor is the flow of B payments
> necessarily
> equivalent to some past flow of A payments. For
> example, a B payment places a financial asset into
>
> the hands of the seller in the structure of
> production, while at the same time passing an
> equivalent "cost" to the point of retail without
> putting anything at all into the hands of
> consumers
> enabling them to pay that cost as a result of THAT
>
> PARTICULAR TRANSACTION.
>
> It may or may not be the case that the seller and
> the
> rest of the structure of production are making
> equivalent A payments simultaneously to final
> consumers.
>
> If it is observed that the flow of the B COST
> component to prices at the point of retail is
> increasing in ratio to the simultaneous aggregate
> of
> the flow of A payments by the entire structure of
> production (which is exactly what we would expect
> from the definitions of the theorem with "labor
> displacement" or "lengthening" to the structure of
>
> production with increasing "division of labor"),
> it
> CANNOT be the case as a matter of mathematics and
> accounting, without compensatory adjustment from
> some
> source extraneous to the consumers directly
> involved
> in the production cycle, meaning their income from
>
> labor or ownership of the means of production
> (received A payments)--that manifest into sales of
>
> goods or securities ("savings") to final
> consumers.
> This is the reductio ad absurdum aspect to the
> Douglas argument, in that it demonstrates a
> fundamental contradiction within the standard
> model
> of circular flow, invalidating the theory of the
> market.
>
> Douglas said that the extraneous sources that
> enable
> the process to work under present conditions were
> primarily the availability of export credit from
> "favorable" balance in foreign trade, and the
> piling
> on of debt made possible through "easy money"
> banking
> policies, effectively enabling non-exported goods
> to
> be sold into domestic consumption for less than
> the
> accounted for costs of production of those
> particular
> goods--the differential being represented by non-
> depreciated capital being brought into existence
> through bank debt with concurrent A payments in
> their
> production, so that A payments lead rather than
> lag
> depreciation, keeping the equity position of the
> firms in positive balance, though at the same time
> with rising prices.
>
> (The situation changes very quickly when and if
> the
> "easy money" policy is substantially "tightened."
> It generally does when at some point the "bubble'
> bursts. Positive balances turn into negative
> balances, collapsing entire industries. So,
> financial policies have real effects.)
>
> The debt accumulates within the manufacturing
> sector
> itself, or is transferred to consumers ("easy
> payment
> plans"), which is increasingly occurring, as can
> be
> observed. Credit card and mortgage debt are
> skyrocketing.
>
> The Social Credit proposals are intended to
> rationalize this naturally occurring process to
> enable the market to develop to its fullest
> potential.
> -
>
>
>
>
>
=== message truncated ===
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