| Subject: | [socialcredit] the double circuit | | Date: | Tuesday, December 7, 2004 11:08:32 (-0800) | | From: | william_b_ryan <william_b_ryan @.....com>
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You didn't specify what the thought experiment would
be. I am taking Douglas's words literally as they
are understood in dynamics. Douglas was an
accomplished engineer, mechanical and electrical.
Electrical engineers especially are conditioned to
think very abstractly. In semiconductor theory
(transistors, integrated circuits, etc.) they speak
of the flow of "holes" that have no objective
reality. Holes signify an impurity that is the
absence of an electron where an electron would
normally be expected to be. In the early days it was
not known that the electron was the "medium" of
electrical current. Electrons flow from the negative
pole of the battery to the positive. In order to do
their calculations it was assumed that current flowed
from the positive pole to the negative pole. It was
an abstract assumption that didn't hurt their
calculations at all. You might remember that
Douglas's alternate name for A + B was the "double
circuit." But did you know that the double circuit
was a concept from the theory of telegraphy? It was
a technology that allowed communications to travel
simultaneously in both directions along a single
pair. He took much of his inspiration from his own
experience.
It comes down to what is meant by "new production" in
the dynamic system. Douglas spoke of "rates" as in
"rate of production." In that context "new
production" means increase to the rate of production.
That is not accomplished through diverting existing
production but through innovation, discovery and
development. In the financial sense it is not
accomplished through diverting existing income that
has already been costed into the existing production.
While individual savers may do so, the economy as a
whole cannot. The A + B theorem (through the logical
technique of reduction ad absurdum) demonstrates that
it cannot, contrary to orthodox presumption. What
one person may "invest" from his "saving" must
ultimately be balanced by new credit injected
somewhere in the system for the "numbers" to work out
in the economy as a whole. Continual improvement to
the process of production is enabled by modern
creditary mechanisms (technologies like fractional
reserve banking and double entry accounting) without
which continual improvement would not be possible in
the mass production economy. Those mechanisms enable
information regarding consumer preferences to feed
back to entrepreneurs from consumers through
calculation of changes to the individual
entrepreneur's rate of profit--whether it is going up
or down. No other conceivable system other than the
one we fundamentally now have can accomplish that.
"New credits" relating to "new production" enables
entrepreneurs to competitively juxtaposition from the
perspective of consumers, benefiting all of us.
As to consumers creating their own money, they do so
now. The traditional instrument is the promissory
note--the promise to redeem it in the future. What
banking effectively does is endorse it to make it
generally acceptable throughout the community. To
the extent it becomes generally acceptable it is
functioning as money. Which is why banking is
necessarily a monopoly. Without this monopoly in
"fungibility," the competitive market could not
function. The individualized credit instruments of
individual producers are thereby transformed into
fungible bank credit, the type of "ticket" most of us
are accustomed to receiving in our pay vouchers--our
mental image of "money." We are not limited to
shopping in the particular company store of our
employer. Because our "tickets" are fungible, we may
shop with his competitor. Banking in this respect is
called a "natural" monopoly because it is naturally
more efficient when it is a monopoly. But because it
is a monopoly there must be public oversight and
policy direction.
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the double circuit
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