In-Reply-To: <1e6.4804964e.30af41ff@aol.com>
Hi Michael.
I think it is a fascinating study this business of just how goods and
services get produced and consumed.
Much of the mechanism was sussed out many years ago, and the descriptions
can be found amongst the works of many "classical" economists. You point
out many of the prime features, like the producer guessing what the
consuming public wants, placing them on a shelf, and waiting for the rush,
or otherwise, of purchasers.
This I think explains why in the modern world Eighty per cent of all new
products fail.
You are right I think that there SHOULD be a mechanism for those goods to
be consumed, IF IN FACT THEY ARE WHAT THE CONSUMER WANTS.
If they are not, they stay on the shelf, or sell in smaller numbers. The
message goes back to the producer. Go back to the drawing board :-)
This I believe is the great strength of the Capitalist system.
But, and for me it is a BIG but, it is not enough. What we have is all
about PRODUCTION, and much effort has been made over the years to perfect
this side of the bargain. What has been neglected within capitalism is the
DEMAND side.
Both Keynes , and Douglas addressed this, along with some others. They
recognised that purchasing power was deficient to make this capitalist
system work, without increasing debt. A means had to be found to augment
the purchasing power that came into existence as a part of the production
system.
Douglas s analysis was the most elegant, in my opinion. The reason it
failed to be adopted was I think because it challenged this worlds most
powerful vested interest. The solution proposed required that the money to
compensate for this "deficiency of effective demand" had to be issued,
outside the employment system, and debt free.
Over the last Three Hundred years a private monopoly system had grown up
to close this gap in available purchasing power. And the power to protect
this monopoly had been developed with enough clout to protect it. Which
means as well controlling what was taught and believed as being possible.
Douglas denigrated and ridiculed the political process. That I think was
his great mistake. Challenge the powerful, as he did, and you have a
POLITICAL battle on your hands :-(
Its why the original study was called "Political Economy".
Ken.
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Subject: [socialcredit] how we give orders
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The words that threw me off in Bill's airline example were, "Additional
seats are continuously being added. . . . More and more seats would go to
waste if more and more tickets are not issued." Seats in the analogy
correspond to consumer goods, so this says not just productive CAPACITY
but PRODUCTION continuously increases. Bill says he didn't mean that, so
I'll take him at his word.
So what I now understand Bill to be saying is that production stands ready
to produce, and we should have the money to order all that it can produce.
There are a few ways of looking at this.
1. We might in general have the capacity to produce all sorts of things
that nobody would want - a bed cushion that doubles as a toaster, for
example. We have the capacity to mass-produce these, but since nobody
wants them, we are not organized to produce them. If such a demand
materialized and a company organized to produce them, only then would we
want the money to order them.
2. Bill's concept is easiest to understand if one thinks in terms of
services or in terms of custom production. A company is set up to
produce, but it does not produce until you come to it and place your
order. A restaurant can serve so many meals a month, or a printer can
print so many invitations per month. Bill is saying the public should
have that amount.
But the key words, of course, are "per month." Suppose the printer stands
ready to print so many invitations per month, but this month the public
only orders -- and the printer only prints -- half that amount, that does
not mean that the printer's unused half-capacity the first month can "roll
over," enabling him to produce at 1 1/2 times capacity the second!
Therefore, since the public already has enough to buy half his capacity,
they only need enough more this month to buy the other half.
Furthermore, if this reduced demand becomes a permanent trend, the printer
must take it as a signal to reorganize to produce less. In that case, no.
1 above will apply, and the public will certainly not receive money to
order invitations in amounts that demonstrably no one wants merely on the
grounds that producers COULD organize to produce it if it was wanted.
3. Now consider the situation in which goods are produced readymade and
put on the shelf. Production responds to consumer demand not directly, as
in no. 2, but after the fact. Radio Shack, let us say, puts so many
electronic gizmos on its shelf in one month. The public should have
enough money that month to buy all the goods put on the shelf that month,
not all the goods that MIGHT be put on the shelf. The way the public
orders more goods to be put on the shelf is by buying faster: if a
month's stock consistently disappears in two weeks, production has
received an order to double output. Then and only then should the public
have the money to buy the increased output.
Michael
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<HTML><FONT FACE=3Darial,helvetica><HTML><FONT SIZE=3D3 PTSIZE=3D12
FAMILY==3D"SERIF" FACE=3D"Goudy Old Style" LANG=3D"0">The words that threw
me off i=n Bill's airline example were, "Additional seats are continuously
being adde=d. . . . More and more seats would go to waste if more and more
tickets are=20=not issued." Seats in the analogy correspond to
consumer goods, so thi=s says not just productive CAPACITY but PRODUCTION
continuously increases.&n=bsp; Bill says he didn't mean that, so I'll take
him at his word.<BR><BR>
So what I now understand Bill to be saying is that production stands ready
t=o produce, and we should have the money to order all that it can
produce.&nb=sp; There are a few ways of looking at this.<BR>
<BR>
1. We might in general have the capacity to produce all sorts of
thing=s that nobody would want - a bed cushion that doubles as a toaster,
for exam=ple. We have the capacity to mass-produce these, but since
nobody want=s them, we are not organized to produce them. If such a
demand materia=lized and a company organized to produce them, only then
would we want the m=oney to order them.<BR>
<BR>
2. Bill's concept is easiest to understand if one thinks in terms of
s=ervices or in terms of custom production. A company is set up to
produ=ce, but it does not produce until you come to it and place your
order. = A restaurant can serve so many meals a month, or a printer
can print so man=y invitations per month. Bill is saying the public
should have that am=ount. <BR>
<BR>
But the key words, of course, are "per month." Suppose the printer
sta=nds ready to print so many invitations per month, but this month the
public=20=only orders -- and the printer only prints -- half that amount,
that does no=t mean that the printer's unused half-capacity the first
month can "roll ove=r," enabling him to produce at 1 1/2 times capacity
the second! Theref=ore, since the public already has enough to buy
half his capacity, they only= need enough more this month to buy the other
half.<BR><BR>
Furthermore, if this reduced demand becomes a permanent trend, the printer
m=ust take it as a signal to reorganize to produce less. In that
case, n=o. 1 above will apply, and the public will certainly not receive
money to or=der invitations in amounts that demonstrably no one wants
merely on the grou=nds that producers COULD organize to produce it if it
was wanted.<BR><BR>
3. Now consider the situation in which goods are produced readymade
an=d put on the shelf. Production responds to consumer demand not
directl=y, as in no. 2, but after the fact. Radio Shack, let us say,
puts so m=any electronic gizmos on its shelf in one month. The
public should hav=e enough money that month to buy all the goods put on
the shelf that month,=20=not all the goods that MIGHT be put on the
shelf. The way the public o=rders more goods to be put on the shelf
is by buying faster: if a mont=h's stock consistently disappears in
two weeks, production has received an o=rder to double output. Then
and only then should the public have the m=oney to buy the increased
output.<BR><BR>
Michael</FONT></HTML>
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