WBR, you are coming on. This time you added the extra information one expects
from a competent teacher to the abuse used by one who is not on top of his job.
But I believe you could have made the point with one of Douglas' more concise
statements.
But you still missed the point. All I was pointing out is, from experience,
that some of our extremists latch on to this sort of thing out of context and
embarass the rest of us by making outlandish claims, such as abolishing all
taxation even in the modern econmy.
Regards. John R.
>From: "William B. Ryan" <w_b_ryan@yahoo.com>
>Reply-To:
socialcredit@elistas.com
>To: socialcredit@elistas.com,
cogexec@cog.kent.edu
>Subject: [socialcredit] Re: productive capacity
>Date: Sat,
6 Aug 2005 08:33:18 -0700 (PDT)
>
>A very extreme exemplification of the
"gap",
>presumably based on deep slump conditions and
>certainly not applicable
to today.
>
>This is one of the Douglas concepts which, taken out
>of context,
lead SCers to promise the moon without
>foundation.
>
>John
R.
>-------------------------------
>
>And you completely miss the point, don't
you? The
>major point Douglas is making in the excerpt I
>supplied is irrelevant
to the specific ratio that he
>suggests "we
imagine." He is asking that we engage
>with him in a thought experiment. The
specific
>numbers in the experiment are not important.
>
>Would it have offended
your fine sensibilities so much
>if he had said, instead, "let us imagine" that
actual
>consumption was only "nineteen twentieths" of
>potential production, and
that "clearly" the community
>would only have exercised "nineteen twentieths" of
its
>potential demand?
>
>If you find that ratio more amenable to your
easily
>offended sensibilities, then by all means substitute
>it in your mind
when you think the matter through. Do
>make the effort to get beyond the mental
blocks,
>please!
>
>The change in perspective represented by Douglas now
>nearly
a century ago is radical and revolutionary.
>Notice I say this in the
present tense. It's not just
>"economists" who don't get it, "social crediters"
like
>you don't get it either. I am merely stating a fact.
>
>Economists in the
classical tradition had said that we
>trade goods for goods, and that goods that
we
>individually produce in the division of labor are the
>demand for goods that
others produce. Money is merely
>an intermediate good in a process that is
essentially
>barter.
>
>Money as effective demand is an entirely
different
>concept.
>
>If not only goods are produced, but increasing
>productive
capacity is also produced -- money is not
>simply an intermediary but an
_independent variable_
>in the process. That is to say, it is definitely
>itself
a factor or tool of production in the fullest
>sense of the word. Understanding
it is
understanding
>an element of critical
technology.
>--------------------------
>
>
>The following is from Chapter X of *Credit-Power
and
>Democracy.* :-
>
>...it must be obvious that the _credit-value
of
>production -- the amount by which the work of a
>community during a given
period of time increases the
>correct estimate of the capacity of that
community,
>with its plant, culture, and labour, to deliver goods
>and services_ -- is
enormously in advance of the
>actual consumption. Every single telephone
instrument
>installed, every improvement in transport, every new
>process for
producing nitratic fertilisers, only to
>indicate the principle by a few trivial
examples,
>clearly increases this real credit at compound
>interest.
>
>Financial
credit, even now, is
issued roughly against
>all forms of real credit. _The only sane limit to
the
>issue of credit for use as purchasing-power is the
>limit imposed by ability
to deliver the goods for
>which it forms an effective demand, providing that
the
>community agrees to their manufacture._
>
>Consequently, if as the result of six
months' work the
>capacity to deliver goods and services has been
>increased per
unit of time, it would appear to be
>simply common sense, with the foregoing
proviso, to
>distribute the means which make it possible to draw on
>this
potential production, without forced export.
>
>When the Capitalist system takes
back from the public
>the whole of the costs incurred in production, it
>takes
back the whole of the financial credit, and the
>purchasing-power covering the
period
of activity in
>respect of which that credit was distributed, whereas
>the
_real_ credit of that period includes the
>overwhelmingly important unearned
increment of
>association during that period. To take the most
>elementary of
examples: if we consider a factory,
>engaged only on one article, during the
second six
>months of its first year of existence, it will
>probably increase its
output very considerably beyond
>that possible in the first six months.
>
>If,
however, of the financial credit, or
>purchasing-power, which we distribute
during the first
>six months we only take back in prices that
portion
>represented by the ratio of the actual consumption to
>potential
production, we can, _if we so desire,_
>produce up to the limit of our capacity
during the
>second six months in the
assurance that an effective
>demand awaits us.
>
>It is vitally necessary to be
clear as to the
>difference between what actually takes place under an
>economic
system based, essentially, on currency, and
>the position which would result from
the modification
>to the financial system which we are discussing; which
>would
be based, essentially, on the capacity of
>society to achieve its
desires...
>
>Financial wealth can only be placed on a solid basis
>by selling
something to the public -- it is, for
>instance, no use owning a factory only
suitable for
>the manufacture of high-explosive shells if the public
>taste for
high-explosive shells has completely
>departed.
>
>But further than that, even if
the public wants
>nothing but high-explosive shells in the
largest
>quantities (which, from the behaviour of its
>"representatives," seems
highly probable), it would be
>necessary that an effective demand -- that is to
say,
>a demand backed by "money" -- should be forthcoming
>from the public. Now,
_the value of our hypothetical
>shell factory would vary from zero when there is
no
>effective demand to infinity when there is no demand
>for anything else, and
no other means of supply._
>That is to say, to drop the metaphor, the
capital
>value of the plant of civilisation is as much
>dependent for its value
on the existence of an
>effective demand for its product as it is on
its
>capacity to meet that demand. If this is grasped, it
>will be clear that the
distribution of the
>_credit-capital,_ the power to draw on the resources
>of
_real capital_ (the
leverage of civilisation on the
>work of society) increases the value of capital
by the
>ratio which the new output bears to the old output, a
>proposition which
clearly has nothing to do with the
>administration of the plant itself. The only
way,
>therefore, to get that increased production of the
>things which
individuals really want, which as here
>defined everyone may agree is desirable,
is to get
>increased effective demand, which, as we have seen, we
>do not get
under the present financial and price
>system by any general increase in
manufacturing.
>-
>
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