Here are some comments offered from a Social Credit
perspective (as I understand the matter) in regard to discussion of issues on
another internet group regarding the nature of industrial cost accountancy,
inflation, etc. I reproduce them here alone inasmuch as they should
stand on their own. The suggestion had been made that inflation might be
caused by capital not being able to produce sufficient wealth to provide a
motivating profit. The counter claim was made that the phenomenon of
inflation was related, rather, to a financial cost accounting problem--a claim
with which I concurred.
Wally Klinck
[WALLY KLINCK COMMENTS: That's right--a costing error relating
to
industrial and national accountancy. It is related to
labour
displacement. Allocated financial charges in respect of
physical capital
which do not create commensurate new purchasing power
are added to final
consumer prices. This results in a premature
withdrawal and cancellation
of available consumer purchasing-power and
a growing deficiency of
effective demand-- necessarily carried by debt
which becomes an increasing
financial accountancy costing load on
future production cycles. The
accounting implication is that we
consume all of our production in each
cycle--including our physical
capital. Of course we know that in reality real
capital
depreciates or obsolesces over a considerable period of time.
We have made
astonishing advances in productive efficiency through the
development and
application of non-labour factors of production, i.e.,
physical capital.
Unfortunately, as C. H. Douglas observed, the
consumer is charged with
capital depreciation but not credited with
capital appreciation.
The core of Douglas's ideas is that the true cost
of production is the mean
rate of consumption divided by the mean rate of
production over time. Thus,
by this measure the true (physical) cost
of production has been
progressively, even exponentially, reduced--but this
has not been reflected
in final prices by our existing defective system of
accountancy. Indeed, it
has been increasingly misrepresented.
Real efficiency increases can only be
realized by application of accumulated
knowledge (the "Cultural Heritage" in
Social Credit terminology) to
increasing refinement of physical capital and
its progressive replacement of
labour. Under the present system of
accountancy this leads to an
increasing deficiency of consumer purchasing
power because of the need, as
noted above, to carry financial costs of prior
cycles of production over as
a charge against future cycles. Each cycle,
however, should provide
sufficient effective demand to distribute the entire
final product and to
completely liquidate the financial costs incurred in
that
cycle.
Inflation results inevitably because of the need to resort to ever
expanding
bank credit (debt charges) against future production merely that
we may be
allowed to "carry on." Evermore false promises and shrill
exhortations to
increased production efficiency so as to achieve greater
competitiveness as
the means to economic salvation are, under the existing
defective system of
industrial and national accountancy, an exercise in
futility. The very
increased physical efficiency developed through the
displacement of labour
by capital will only increase the deficiency of
consumer purschasing power and
intensify, thereby, the exponential burden of accumulating and,
therefore, unrepayable financial debt and the inflationary pressures which
ensue from it.
The appropriate solution is not to restrain or
sabotage physical capital
refinement but rather to modify the financial
system so that money, or
"credit," serves the interests of mankind by
facilitating not only the
production and distribution of physical abundance
for all but also
increasing opportunity to partake of the higher cultural
experiences which
should be open to all citizens with increasing
leisure.
An economic system in Social Credit terms is not performing at full
potential when all
resources are employed to achieve an all out production
of goods and services. The
appropriate purpose of production is
consumption--not the creation of more
"work." The production of goods
and services in a wasteful manner or for
purposes of destruction (e.g., war)
merely to distribute financial incomes
so that these can claim past
production is what Social Credit aims to
eliminate. The gross national
product is not a measure of human
satisfaction or well-being. A
successful economy should provide not only
increasing consumer-desired
physical abundance but also expanding leisure
and freedom for each
citizen. A social policy of "full-employment" has no
place in a Social
Credit dispensation--and is positively antithetical to
it.]
Social Credit and 
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