Could it possibly be that we've been looking at the issue
of an "agreed-to limit on the retailer's net profit as a percentage of turnover"
completely backwards? That instead of it being, as we might suppose,
a restriction on the 'upward' side of such a profit, Douglas
might very well have intended that proposal to apply to the 'downward' side
of net profit computed that way instead?
Douglas seemed to make a regular habit out of looking at
things from the opposite angle everyone else was viewing them from. When
others were despairing over a 20% unemployment rate and wracking their brains
how to 'make work', he would be noting that there was 100% , or more, of needed
production being met by the 80% of the workforce still employed. And
the problem wasn't primarily in 'making work' for those without it, but in
getting them access to the sufficiency of goods the others were
making.
And so it may be with this aspect of his Compensated
or Just Price proposal. Go back and look how this limit on profit is
proposed in 'Warning Democracy'. Douglas writes there:-
"Suppose that the large departmental stores, such as
Messrs. Harrods, Barker's, etc. were to agree, as they probably would, to
restrict their net profit on turnover (not, be it noted, on capital) to 10 per
cent."
Note he says "the large departmental stores", not all
merchants selling the same goods as those that might be sold in
those stores. In the 1920's wouldn't the named firms be that era's
British equivalent to today's Wal-Marts, Sears, Hudson's Bay, Home Depots,
etc. Companies which can already undersell most of their smaller
competitors, and for various reasons other than that they happen to be good
at merchandising product. Which they undoubtedly also
are.
It is common knowledge in our area, which is a
region where dairy farming has long been the most prominent and (still)
profitable form of agriculture, that the local, formerly
farmer-owned, mid-sized dairy plant here supplies milk products to the
large 'chain' grocery supermarkets for a far cheaper price than it does to the
smaller mom-and-pop local groceries.
Indeed, one chain of supermarkets here owned by BC's
prominent billionaire, Jimmy Pattison, is in a position where it can dictate the
price it will pay for milk to that dairy on a 'take it or leave it basis'.
The dairy 'takes it' ~ it can't move the same volume of product
elsewhere.
This is something no smaller store could ever get
away with. And only one example of the ability of the larger entities to be able
to profit from 'bulk buying'. There are other 'paper efficiencies' which
'bigness' also enables. Like being able to 'stretch' out payments to
suppliers, and use their money to finance mega-store inventories.
Wal-Mart, so I've heard, is notorious for that.
Now just as there is a long known axiom on the production
side of things that states "unit cost is a function of volume", so I would
suppose there must be some similar axiom that applies in retailing. A
larger sales volume applied against a retailer's fixed costs and advantages of
'bulk buying' and other 'paper efficiencies' should mean that he could lower his
per item profit but still make a greater overall profit through having a larger
turnover.
Already the mega-store is underselling its
smaller competitors, but what is going to happen when there is a further
reduction in price through the CPD? And its sales volume
increases again, and it can take a still smaller percentage of profit from
the larger turnover, using, in effect, the CPD to subsidize predatory
pricing and drive the smaller competitor under. Unless there is an agreed
upon limit, that gives the smaller store an equivalent advantage in the increase
in 'effective demand' provided by the CPD.
If we look at some of what Douglas said before the
MacMillan Commission in regards to the efficiency of 'producers',
which could also apply to 'retailers', and remember that Social
Credit has always opposed 'monopoly', and would hardly be proposing something
that would aid in furthering it by driving the 'little guy' to the wall, I think
there may be some credence to the limit being on the 'downward' side rather than
the 'upward' one. The price with CPD will still be cheaper everywhere, and
the merchants and manufacturers falling rate of profit in ratio to retail sales
will be arrested, but there wouldn't be an unfair advantage given to the 'big
boys' in eliminating their remaining competitors.
Joe
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