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Triumph
OF THE PAST
Fish will not live where the water is
too clear. But if there is duckweed or
something, the fish will hide under its shadow and thrive. Thus, the people will live in tranquility if
certain matters are a bit overlooked or left unheard. -Yamamoto, Hagakure
December 2005
Social Credit Fragments, 2003-2005, Conclusion
Cultural Heritage
In creating the credit instruments that claim the goods and
services of the entire nation, the bank effectively takes custody of the goods
and services themselves. The question
then is, What obligations are entailed on the banking system when it becomes
custodian of the national wealth? And
the answer is, it has the obligation to issue this credit in a social, rather
than an antisocial, way social credit.
In Douglas's boots example in Economic
Democracy, animal skin is turned into rawhide, the rawhide is turned into
leather, and the leather is turned into boots.
The national credit account is correspondingly written (1) up by the
value of the hides, (2) up by the value of the leather and down by the value of
the (consumed) hides, and (3) up by the value of the boots and down by the
value of the (consumed) leather. If the
national credit account is thought of as representing the Cultural Heritage, then
we can say that the boots enter the stream of the Cultural Heritage
incrementally with each stage of production.
Each stage makes the nation richer and so results in a net increase in
the National Credit Account.
The [nation's] capital account is a statement that the net
assets of the association of the nation are owned on behalf of, and for the
benefit of, us, the citizens. Capital
assets are used by producers, who are always to an extent public agents, on our
behalf; and consumer goods and services are what we actually take possession
of.
"Future production" is an abstraction and as such
doesn't enter in. But we can make it
more concrete if we remember that the economy is a consumer production system
and capital production is consumer production in embryo. So capital production is "future
production"!
"I do the work, I should decide where my fruits are
distributed." Unless you are
building civilization from scratch on a desert island, you are building on the
work of others (some long dead) and require access to the results of their work
by means of money, which is a social product.
So you are a partner with society.
You should decide where the fruits are distributed exactly to the extent
that you do the work. But to the extent
that society is your investing partner, we all have a stake in the product of
your work, and the most democratic way to express that stake is in the form of
a dividend of consumer goods and services to every man, woman, and child.
The cultural heritage giv[es] birth to the national
dividend. The national dividend is,
after all, an allocation of goods, goods that someone has produced, and
therefore a denial of the idea that the producer is the sole and absolute owner
and disposer of the product. To the
extent that the cultural heritage is a factor of production, the product
belongs to all.
The nation, through a banking system as public servant, will
have to devote some quantity of consumer goods on the shelf as an incentive for
new production (by allocating them to production). Due to improvement of process, this quantity
may well be less than the full tally of goods on the shelf. Then the balance of goods constituting the
Cultural Heritage in effect already belongs to the public. They only need to come and take physical
possession by presenting tickets (money).
A National Dividend of tickets is a way to ensure that this National
Dividend of [consumer] goods takes place.
Pace Douglas, it seems to me that money as such should not
appear on the [national] balance sheet any more than tickets would appear on a
theater's balance sheet. (A theater
would record printing tickets as an expense but not tickets themselves as an
asset.) A national balance sheet would
still consist of items recorded at cost in money values. [But] I don't think "Cash" should
be one of those items. The national
balance sheet is not an accounting of money.
It's an accounting of things, and then money is merely the device by
which the members of the association take physical possession. In conventional accounting a dividend is
really a dividend in money. In social
credit accounting a dividend is really a dividend in things, and money is just
a mechanism.
A+B in 47 Words
Payments to individuals today are one thing and the payments
to individuals that make up the cost-history of the goods on the shelf today
are another; and the natural effect of advancing technology is to create a
shortfall of the former in relation to the latter.
The Age of Plenty
"What of the guy who would squander his leisure on,
say, internet porn?" He must have
his dividend. Not only that but as long
as your porn business is legal, it must get the benefit of the compensated
price the same as every other business.
Abolish poverty first, and then see how many women want to be
prostitutes and porn actresses.
The same dividend paid to rich and poor alike will (if it is
real purchasing power) reduce the inequalities between them just as a blanket
of snow reduces inequalities on the ground.
"Saving for a rainy day" is a reaction to
artificial scarcity. When we have an
economic system based on real plenty, we will be able to count on the economic
system to provide, not only today but also tomorrow, and the habit of
"saving for a rainy day" will disappear. Douglas asks, "Why ration water on Lake
Superior?"
"Suppose [my grandchildren's] dividends were deposited
by their parents into accounts which could be realized at the age of 21."
(K.) But what has happened to the goods
in the meantime? The failure to consume
them ought rightly to send a message to production to slow up. If so much goods remains over unconsumed from
one period to the next, that is a signal to produce that much less; and that
will naturally make the next dividend correspondingly smaller. It would go better with the idea of the
dividend for parents to buy on behalf of their minor children immediately,
which I think they will do as they get used to the new climate of real economic
security. It won't be necessary to worry
about having enough money 21 years down the road. Remember, money can be created as and when it
is needed. And there is no reason to
produce goods now that aren't going to be wanted for 21 years. It's an inefficient use of productive power.
As we get goods on better and better terms by means of the
dividend, some people currently in the work force will be satisfied with their
standard of living and be tempted to drop out.
That is fine, disemployment is efficiency. As people drop out, there will be less
competition for jobs. As there is less
competition for jobs, people will require bigger incentives in order to do any
unpleasant work. When the point comes
that the incentives required are too high in relation to the public's desire
for more product, production will naturally slow up.
Dividends and compensated prices will allow naturally
falling prices, which are "the most perfect method of passing improvement
of process on to consumers" [Douglas, Brief for the Prosecution],
to occur without dire consequences. They
will increase everyone's economic security, with the result that many will
voluntarily take a pay cut to do a job they like, take a part-time job to have
more time for other endeavors, or remove themselves from the labor force
altogether; and this, too, will be without dire consequences. By reducing workers, they will reduce the
need for automobiles to get to work and fossil fuels to run the automobiles. They will relieve the pressure on a nation to
export in order to keep its own people employed. They will end the production of ever new
editions of cheap junk, because the empowered consumer will be able to demand
quality. So they will secure an equal or
superior standard of living with less work and less waste and therefore less consumption
of resources. By making everyone richer
and relieving them of fears for the future and the next generation, they will
enable people who have reached the standard of living they want, to simply
maintain it and therefore to level off their consumption. They thus enable production to level off,
without dire consequences.
Aristocracy of Producers
Douglas's "aristocracy of producers" means that
production will be run by the people who actually produce, not by professional
managers.
Business will be all the better for being owned by artists
of industry who have their hands on the process without having to answer to a
stockholders' meeting.
The science of economics comes into its own right there
where industry becomes art.
My dad has been throughout his life a Unitarian
minister. For him, being a minister was
its own reward, but he still had a family to support. So you wouldn't have to pay him to be a
minister. You'd just have to enable him
to afford to be a minister, and he would do it for the love of it.
Fred Royce was the creative genius with a passion for work
who designed the Rolls-Royce. Such a
person you furnish with everything he needs, but his labor wouldn't cost you
much indeed, anything because it was what he lived for. The steam engine was a product of individual
creative genius, but now its contribution to civilization belongs to all. The alphabet was once undoubtedly the product
of individual genius, but now it belongs to all. So was fire.
And it is precisely this sharing out of the dividend of leisure due to
technology that will empower individual creative genius that is presently
strangled in the crib for lack of money.
As Douglas famously put it:
"The industrial machine is a lever, continuously being lengthened
by progress, which enables the burden of Atlas to be lifted with
ever-increasing ease. As the number of
men required to work the lever decreases, so the number set free to
lengthen it increases" (my italics).
Serving a Democracy of Consumers
Just as we don't need everyone employed, we also don't need
everyone to administer capital. We need
everyone to enjoy the benefits of capital that, by right, they already
own. Capital should be administered by
the people fittest to administer it organized at the optimal size for
productive efficiency, that is, for maximum service to the consuming
public. As Douglas put it, it is an
"aristocracy of producers serving a democracy of consumers." And the best way to achieve that is to enable
consumers to vote effectively with dollars.
"When the loom weaves by itself and the plectrum makes
music by itself, there will be no more slaves" (Aristotle). You quoted this and said, The loom does weave
by itself, and the plectrum does make music by itself, and we still have
slaves! Since we don't need so many
workers, let everyone become an owner.
Not just a receiver of dividends, you said. Participation is everything, you said. Now suppose I am a mother at home. I am participating, making an
undoubted contribution to society and doing what I do best. Why do you want to burden me with
responsibility for the loom, when all I want is the cloth? I don't know anything about looms, I have no
desire to learn anything about looms, and I don't care to make decisions about
them. The only decision I want to make
is what kind of cloth I want, and about that I will be very fussy. That's how I exercise my voice over the
loom. So by all means, let me own the
loom and receive dividends. Indeed, it
is my right. But don't ask me to take a
creative interest in it. There are
plenty of people who do take a creative interest in it, who for that reason
will do it much better than I. I have my
creative interest right here at home.
The loom weaves by itself, and the plectrum makes music by itself, so we
should indeed have leisure. Right there
is all the justification you need for a dividend to every person. I will spend my leisure as a full-time mother
and homemaker because that is what I love best.
Why give me "leisure" and then tell me I am to take a
Justice-Based Management course so that I can learn to exercise "power and
accountability" in regard to my loom?
A public dividend, on the other hand, gives full scope to the creativity
of the artists of industry to compete in serving my needs.
The public, like shareholders of a company, "own"
the company [i.e., the nation and its wealth]; but social credit wisdom says
that they do not exercise effective control over the company by taking direct
possession of it, nor do they exercise effective control by electing the board
of directors. They exercise effective
control by receiving dividends and spending them by taking charge as
shoppers. This is what we mean when we
call the money system an order system, and this is the way national resources
are "drawn upon" they are "drawn upon" in answer to
consumer demands for goods and services expressed by shopping.
Trade
The consequence of the national dividend and compensated
price is to raise pay and lower prices in a place to make everyone in the
place richer and give them an incentive to buy domestic goods. For that incentive to work, it is not
necessary for domestic goods to be absolutely cheaper than foreign, only that
they be affordable. In addition, a
social credit economy will release the huge energy of production that is now
sabotaged, attract capital [i.e., brains, see below], and sell to the world in
any degree desired. It carefully distinguishes
foreign and domestic inputs and advantages the latter not artificially but by freeing
the domestic economy to achieve unprecedented heights. From a physical, engineering point of view,
production in countries with cheap labor is not really more efficient. It is financially more efficient at present,
but then our own industry is 95% waste.
When we institute a financial system that reflects reality and
eliminates that waste, a completely different picture will emerge.
I just said that capital would fly to, not flee from, a
social credit commonwealth. But capital
in what sense? Not capital in the sense
of money for am I not the one who has been saying financing by absentee
investors will become a thing of the past?
Not capital in the sense of natural resources and physical
infrastructure, for they do not so easily flee or fly. But capital in the sense of brains. The money system is how society allocates the
use of goods and services in the optimal way puts goods and services
in the hands of those able to make the best use of them. The real investment is the investment of our
brains, our time, our energy. Society
provides the money allocates capital goods and services for the work and
consumer goods and services to keep us while we work. A society that does this in an optimal way
will attract brains and become prosperous.
There is no reason in the world why South Africans can't
clothe South Africans. How can you
expect to hold your head up in the world of nations if you don't even clothe
yourselves, if you stand before us naked?
And if you stand before us naked and helpless, what authority have you
to sign trade agreements? If you have
the factories and you have the naked people, you can clothe yourselves. No speech about the complexities of your
ticket system is going to convince me that you can't clothe yourselves. And if these complexities are over my head,
I'm not going to give up and say, "Maybe you're right." I'm going to say, "Of course you can
clothe yourselves! Anyone smart enough
to have factories and machinery and manufacture clothing must be smart enough
to make a ticket system that won't strip them naked!" Starting from there, you need not know a
thing about social credit, but you can still know that there must be a possible
ticket system that will enable South Africans to clothe South Africans and take
advantage of every labor-saving efficiency in the process. Taking advantage of every labor-saving
efficiency, South Africans will find they are rich, richer than they
imagined. Being rich, they will find
they are no longer forced by iron economic constraints to buy the world's
cheapest. They will be able to afford
the priceless convenience of buying South African and dealing with producers
they can know and find and talk to. Now
go design a ticket system to serve that end.
The New Urbanism
"Global (natural) systems are already strained beyond
the point of sustainability" (L.).
Right, so if we could support a population 20 times greater with the
same strain we already have [by eliminating the 95% waste], we could easily
support any realistic projection sustainably, and continuing technological
advance would increase our ability to do that.
If you put me in a residential zone where I have to drive a
mile to buy an egg and make me spend 40 hours a week at some useless endeavor
so that even if I wanted to walk the mile, I wouldn't have time, then you can
manipulate me into expressing a "demand" for fossil fuel that is not
really my demand at all.
My friends at the Congress for the New Urbanism will show
you that it is socially inefficient to design cities for cars, rather than
people that one-third to one-half the square footage of a major city is
paved, that roads are too wide, that people prefer mixed-use
neighborhoods with a corner store and other basic amenities in easy walking
distance or reachable by good rail transit, as opposed to residential zones
totally dependent on automobile transportation.
The fact that people prefer this gives a clue that we can get it
by empowering the consumer.
People who can afford it pay a premium to live in such
neighborhoods. The narrow streets give you
a comfortable feeling of enclosure and slow down the traffic, making them pleasant
places to walk and shop. They carry that
feeling of "charm" and "romance" that we seek as tourists
but only dream of living in. So if the
economist says, "Let them put their money where there mouth is," I
say, "Okay, give them money, and see where they put it."
Wal-Mart is a case of taking advantage of the
scarcity of money, rather than relieving it.
That is, the price of the object is lower, but you have to put up
with a fight with traffic, a hike across a huge parking lot, ugliness, towering
shelves, no help on the floor, and poorly paid employees. Social credit says we should be able to have
it all a pleasant walk to the store, beauty, human-scale architecture, zealous
service, happy employees, and the object. [By "taking advantage"] I mean that
it offers a worse bargain, but people on limited funds are obliged to
accept a bad bargain because a walking community, beauty, human-scale architecture,
personal attention, etc. are unaffordable luxuries.
Swanwick Principles
1. That the cash
credits of the population of any country shall at any moment be equal to the
collective cash prices for consumable goods for sale in that country, and such
cash credits shall be cancelled on the purchase of goods for consumption;
2. That the credits
required to finance production shall be supplied, not from savings, but be new
credits relating to new production;
3. That the
distribution of cash credits to individuals shall be progressively less
dependent upon employment. That is to
say, that the dividend shall progressively displace the wage and salary.
[No. 2] is one of the three pillars of social credit method,
the other two being equation of prices and purchasing-power and the financing
of leisure.
Obviously, it's the same production [in first and second
part of no. 2]. He could have said,
"new credits for the purpose"; but "new credits . . . new
production" makes a parallel with Swanwick #1. Just as credits and production go out
together (Swanwick #1), so they come in together, they are both new together
(Swanwick #2).
Money should come in with production and go out with
consumption: "cash credits shall be
cancelled on the purchase of goods for consumption," and "credits
required to finance consumption shall be . . . new credits relating to new
production." This cycle is not automatically
self-liquidating. So as necessary, let
banks create money for consumers [nos. 1 and 3].
The whole point of the economy is to disemploy
people, which means to free them to employ themselves (Swanwick #3). The only way to gainfully disemploy as many
people as possible is to match consumer purchasing-power to the cost (including
debt) of consumer goods on the shelf at regular intervals (Swanwick
#1). "At regular intervals"
means not at some hypothetical "eventually" that we keep
deferring. That means we produce only
as much as we want to consume as we want to consume it, and with the
minimum of effort.
It is obvious from principle 1 that the national dividend is
to purchase consumer goods. Stocks and
bonds are not consumer goods, and if they were bought with "cash credits
of the population," that would leave consumer goods on the shelf and no
money to buy them with. And sure enough,
principle 2 says, "Credits required to finance production shall be
supplied, not from savings, but be new credits," which means exactly what
it says. In other words, the social
credit economy itself is our nest egg our insurance and stock-and-bond
trading will become obsolete.
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