Thirteen Years of Progress
A Review of the Official Labour Party
Publication,
"Socialism and Social Credit,"
1935
By A. HAMILTON McINTYRE, C.A.
AUTHOR'S NOTE
In writing this review of "Socialism
and Social
Credit"--a Report issued by the Labour
Party last year
and priced at twopence--I have had,
first of all, to
consider whether the subject should be
dealt with at
length or whether it should be disposed
of in as short
a manner as possible. Was it worth
while to deal with
the pamphlet, as it were, page by page,
or should the
method to be adopted be one of putting
down the
fundamental ideas of the authors of the
pamphlet with
regard to the matters under
consideration, and then,
shortly, contrasting these ideas with
the fundamental
ideas of the Social Credit
movement?
My decision was taken in favour of
dealing with the
matter at some length, following fairly
strictly the
order of the Report. Whether or not the
adoption of
such a method makes the review more
interesting I
leave to the reader. The method
obviously has
disadvantages, but these are possibly
outweighed by
the ease with which the reader may deal
with the
Report and this review
concurrently.
INTRODUCTORY
It is stated that the Report was
prepared by a
subcommittee at the request of the
National Executive
Committee. Nothing is said about its
submission to the
Labour Party Conference at Brighton
early in October,
1935, but it is understood that it was
submitted to
that conference and was adopted. The
following extract
is taken from the introductory note to
the Report:-
"The Report deals fully with Major
Douglas's 'Social
Credit' proposals and the National
Executive Committee
associates itself with the
Subcommittee's conclusions
on this subject." (Page 3, line
4.)
The subcommittee consisted of three
members- E. F. M.
Durbin, Hugh Gaitskell, and W. R.
Hiskett - each of
whom had, previous to their
appointment, repeatedly
expressed their antagonism to the
Social Credit
proposals. I think it is true to say,
however, that no
one of them, in criticising Serial
Credit, has ever
given much indication of having really
studied the
main principles involved. Their
criticisms have been
directed largely against what is known
as the A + B
Theorem.
Mr. Hiskett, from one point of view,
might be called
the most logical critic of the Social
Credit
contentions regarding the gap between
purchasing power
and prices. He, at any rate, realises
that if he is
not going to accept the A + B Theorem
he is logically
compelled to postulate a condition of
affairs where:-
"The total volume of money is
sufficient to purchase
at one time all final products awaiting
sale or in
process of manufacture, all raw
materials and
semi-manufactures and all the machinery
for future
production at its present value after
allowing for
depreciation." ("Social Credits
or
Socialism."-Gollancz, 1935.)
The committee state their purpose in
the following
terms:-
"What is the Douglas Scheme? How does
it compare with
Labour's policy? Are there any points
of agreement
between them? What are the points of
disagreement, and
why?" (Page 6, line 4.)
As to how far the committee have
endeavoured to carry
out their avowed purpose I will leave
the reader of
the Report to judge. It is probably
agreed that they
have searched for all points of
agreement; but have
they made any effort to find out and
disclose in the
Report what the vital points of
disagreement are, and
why? In view of the composition of the
committee, one
naturally expects the Report to be an
attack on Social
Credit, and so it is rather amusing to
find that the
Report begins by setting forth the
alleged "Points of
Agreement."
FIRST POINT OF AGREEMENT?
The first matter about which there is
said to be some
agreement is connected with the
deficiency in
purchasing power. It seems to me the
committee suggest
that Douglas maintains that there is a
chronic
deficiency between total purchasing
power and RETAIL
PRICES, or prices of goods for
immediate consumption.
This is illustrated by a statement in
the Report that
in boom periods there is a surplus of
purchasing power
over prices. This, the committee seem
to think,
disposes of Douglas's case that the
money system is
never self-liquidating.
What the committee do not seem to grasp
or,
alternatively, are quite determined to
ignore, is that
the Social Credit case is that
purchasing power is
never equal to TOTAL PRICES when both
are regarded as
a flow.
If purchasing power was chronically
unequal to meet
the prices of consumable goods on the
market at the
time, the system obviously would not
last for very
long.
The true position may be put
thus:-
(a) The rate of flow of purchasing
power will be,
almost certainly, less than the rate of
flow of prices
of CONSUMABLE GOODS when the rate of
production of
intermediate and capital goods is
slackened.
(b) The rate of flow of purchasing
rower will, almost
certainly, exceed the rate of flow of
prices 0F
CONSUMABLE GOODS when the rate of
production of
intermediate and capital goods is
accelerated.
(An inflationary rise of price and the
investment of
excess profits must be mentioned
here--it is embraced
in the A + B Theorem.)
(c) The rate of flow of purchasing
power will always
be less than the rate of flow of TOTAL
PRICES. One
might possibly add here a proviso to
the effect that
this may not be so during momentary
periods of
wholesale bankruptcies and losses. Even
then, however,
the deficiency will only be
deferred.
Industry must recover its bad debts out
of future
prices, and losses must be restored by
future profits.
In other words, bankruptcies and losses
are themselves
a cost against the future.
That the committee hold, or pretend to
hold, the idea
that Douglas alleges a chronic
deficiency between
purchasing power and prices of goods
for consumption,
is further illustrated by the following
quotation:-
"During the boom, he (Douglas) admits
the gap is
temporarily filled, but only by the
creation of
additional debt to the Banks. This is.
to Major
Douglas, evidence of deficiency." (Page
9. line 2.)
The above is rather an extraordinary
comment.
Commonsense would indicate that
industry does not get
into debt unless it is unable to pay
its costs from
its income, so that the fact of a
creation of an
additional debt to the banks should, in
all
commonsense, be evidence of deficiency.
Yet the
committee seem to think that this
particular statement
of theirs strikes a mortal blow at
Social Credit.
SECOND POINT OF AGREEMENT?
The second point of agreement is stated
to be the
common objection to destruction and
restriction
schemes as a cure for economic
depression. This is a
point of agreement, without doubt, but
the Report goes
on to say that "both Socialists and
Social Crediters
recognise the schemes for what they
are--monopolies
which aim at holding up prices and
squeezing the
utmost from the consumer." (Page 9,
line 31.)
I should hesitate to say that this
sentence expresses
a point of agreement. There is just a
subtle
distinction which illustrates the
difference in
.outlook between a Socialist and a
Social Crediter.
The Socialist sees in the situation the
results of
greed, extortion, profit, and so on.
The Social
Crediter sees the results of faulty
arithmetic. The
Socialist sees an evil Capitalist
extorting money from
the worker. The Social Crediter sees a
harassed
business man trying his best to square
his accounts.
THIRD POINT OF AGREEMENT?
The third point of agreement is stated
to be a common
attitude to certain moral aspects of
the banking
system. Reference is made to bank
credit functioning
as money and the power of the banks to
create and
cancel money. The Report then goes on
to say:-
"These facts were not discovered by
Major Douglas.
They are to be found in all orthodox
writings on the
subject and are clearly stated in the
pages of the
Macmillan Report, but Major Douglas and
other monetary
reformers have certainly popularised
them better than
the Text Books and have also pointed to
certain
implications which tend to be slurred
over in more
orthodox accounts." (Page 10. line
9.)
I am sure this paragraph must have
given the committee
much thought in its composition. Major
Douglas, I am
certain, would make no claim to being
the first man to
have discovered the facts, but he is
entitled to claim
that he published the facts and drew
certain
conclusions from them in 1918. The
facts were
certainly contained in textbooks prior
to that
date--for example, H. D. McLeod's--but
the conclusions
from the facts had not, so far as I
know, been drawn
until Major Douglas's first
publications. To suggest
that the Macmillan Committee had any
share in
pioneering is merely laughable. The
phrase "certain
implications which tend to be slurred
over" is, I
think, worth a second thought.
Apparently the
committee have also "slurred over"
them.
THE NATIONALISATION COMPLEX
The Report proceeds, at some length, to
consider the
Socialist conclusions from these facts
regarding our
banking system, and it is obvious that
the committee's
whole outlook is coloured by the
nationalisation
complex. There is no suggestion made at
all that even
if the banks were nationalised the
methods used in
accounting the public moneys would be
changed. The
complaint, according to the Socialist
outlook, is
entirely that such powers are in the
hands of private
persons or institutions. That no change
of method is
contemplated is evident, I think, from
the following
extract:-
"That such great powers--of special
significance now
that the money system of this country
is not tied to
others through the Gold
Standard--should be exercised
by bodies which are legally beyond the
control of the
Government, is an anachronism as
dangerous as it is
absurd." (Page 10, line 32.)
I am not at all sure what
interpretation is intended
to be given to this sentence, but the
only conclusion
I can come to is that the committee
would not see so
much harm in the condition described if
the Gold
Standard was in operation. This shows
quite clearly, I
think, how much they have misunderstood
the true
position. That the committee are
suffering from the
complex I have suggested is further
confirmed by the
concern they show over the profits
which the Bank of
England makes. Pointing out that the
profits of the
Issue Department fall to the Treasury,
they seem to
think that so far as the Issue
Department is concerned
that problem is disposed of; but they
also point out
that since credit is not less money
than cash and bank
credit is quantitatively of much more
importance
"there is a strong moral case against
the exploitation
of credit creation for the purpose of
making private
profits." (Page II, line I.)
All the above shows clearly that the
committee have
not concerned themselves with the
method of issue and
cancellation of money, but rather with
the titular
right to create money and the profits
accruing from
such right. It is quite fair to suggest
that if the
committee had their way and the banks
were
nationalised, the same methods of
issuing and retiring
money would still be in operation and
the essential
problem, therefore, would be no nearer
a solution. An
admission is made in the Report that
expenditure on
public works can be carried out only by
incurring
further debt, thus burdening future
taxpayers with
interest and sinking fund payments. The
Report
states:-
"Simply because the right of creating
new money does
not belong to the State. the necessary
impetus to
recovery cannot be given." (Page II,
line 26.)
One is left wondering how, if the right
to create new
money belonged to the Labour Party,
they would account
it. There is nothing in the Report, so
far as I am
aware, to show that they would account
it as anything
else but debt, nor that they would not
insist on its
recovery via taxation. It is true that
this point is
dealt with to a certain extent on page
32 of the
Report, but it is stated that where
debt is not repaid
out of taxation it is only a temporary
expedient and
the quantitative issues of such credit
will not be
large.
Before coming to their criticism of the
Social Credit
analysis the committee make the
following statement:-
"It is most unlikely that the full
Social Credit
proposals could be applied without
either producing
inflation or making it impossible for
the Banks to
exist in their present form." (Page II,
line 34.)
This statement is used as an argument
for
nationalisation. It is quite carefully
worded. If we
amend the terms of it a little, I think
most Social
Crediters would agree with it as
follows:-
Social Credit proposals cannot be
applied within the
present money system. They can be
applied only in a
changed money system and such change
involves a change
in the policy of the banks and the
Treasury.
It is merely childish at this time of
day to say the
Social Credit methods would cause
inflation. Social
Credit could not be applied within any
system which
permits of inflation.
The committee of the Labour Party is
simply up to the
old game of criticising Social Credit
in terms of
orthodox finance.
THE A + B THEOREM
The second division of the Report is
stated to be a
criticism of the Social Credit
analysis, and early in
this section the A + B Theorem is
quoted. This
theorem, it is said, is the central
argument on which
Major Douglas bases his conclusion. I
would suggest
that this is entirely wrong, and that
the A + B
Theorem is the method by which Major
Douglas
illustrates his conclusion.
According to the committee of the
Labour Party, the
suggestion seems to be that one day
Major Douglas
discovered the A + B Theorem and the
rest of the
analysis followed. However pretty the
mental picture
conjured up by such a suggestion, I am
afraid that
idea must be discarded.
The A + B Theorem is merely a condensed
method of
stating facts which were discovered by
independent
means.
In Major Douglas's first published
book, "Economic
Democracy ," the A + B Theorem does not
appear.
The committee having decided to deal
with the A + B
Theorem, it is a pity, to my mind, that
they could not
quote it correctly in their Report.
They state:-
"A factory, or other productive
organisation, has,
besides its economic function as a
producer of goods,
a financial object." (Page 12,line
34-my italics.)
While it is true that productive
organisations have a
financial object under the present
system, that is
precisely what the Social Crediter says
is wrong. The
correct statement of the A + B Theorem
begins by
saying:-
A factory, or other productive
organisation, has,
besides its economic function as a
producer of goods,
a financial aspect, which is an
entirely different
matter.
The Report proceeds to examine the A +
B Theorem in
its different interpretations. I do not
intend to deal
with these at length, as they have
already, to my
mind, been ably dealt with by Mr. A. W.
Joseph in a
pamphlet called "The A + B
Theorem."
Broadly speaking, the Report ignores
the facts of
accumulation of financial capital and
involuntary
investment and, therefore, its
arguments against the
theorem are weak. I will, however, deal
with a few of
the higher lights in this section of
the Report.
Under the division headed "Repayment of
Bank Loans"
the Report says:-
"Now it is certainly true that if on
balance
throughout the whole of industry loans
are repaid to
the Banks, a deficiency of purchasing
power is bound
to arise...The question here is simply
one of fact. Is
there a tendency for the total of Bank
loans to
diminish? The answer is, that at
certain times--during
depressions--this is the case, but at
other times the
total of loans definitely expands."
(Page 16, line 5.)
Further on in the Report it is
stated:-
"Equally, if a firm is voluntarily
repaying a loan out
of profits, and the Banks do not
immediately create
another loan to another producer, then
again
deficiency is bound to arise, but as we
have already
said, the question here is really one
of fact and the
facts show no general and chronic
tendency for the
total of Bank loans to diminish." (page
17, line 9.)
The argument here is not very clearly
stated, but I
think it is fair to assume that the
committee admit
that repayment of bank loans charged
into prices and
appearing, therefore, as profit, do
create a
deficiency of purchasing power, but
that such
deficiency is corrected by the banks
issuing further
loans to other producers, and,
therefore, so long as
total bank loans do not show any sign
of diminishing,
there is no deficiency.
In my opinion, this illustrates the
fundamental
difference between the views of the
committee and the
views of the Social Crediter. Social
Crediters
realise, as the committee apparently
does not, that
these further bank loans to other
producers have got
to be repaid, and, therefore, do not
correct the
admitted deficiency--they merely
postpone it.
The committee evidently do not see that
bank loans
repaid may undergo a metamorphosis and
become
securities or reserves which still
remain a charge
against the ultimate consumer.
It is surely obvious that industrial
debt and national
debt, requiring ultimately to be met
and forming a
charge against the consumers
(admittedly unpayable
under the present system), are not to
be measured by
the increase in bank loans. While bank
loans have on
balance probably diminished since 1920,
Government,
municipal, and industrial debt has
increased in
fantastic proportions. The committee's
failure to see
this arises from the fact that they
ignore
accumulations of financial capital in
considering the
A+B Theorem.
A little later in the Report it is
stated:-
"It is, in fact, the policy of the
Labour Party to
stabilise prices; and prices can only
be stabilised,
when production is increasing, if there
is an adequate
increase in the quantity of money."
(Page 17, line
3B.)
It seems to be clear from this
statement that the
committee look on stabilisation as
having some
miraculous quality, and it is also
clear that they
regard the volume of money as being
something which
should control prices which again goes
to show that
they have not understood the principal
Social Credit
contention, which is that the money
system must no
longer be used to control prices
through the so-called
law of supply and demand. Prices should
be controlled
by the real cost of production.
THE ILLUSIVE INVESTMENT
In three paragraphs under the
sub-heading of
"Investment," the committee go on to
record their
criticism of an aspect of the
deficiency. They record
the views of the Social Crediter in the
following
terms:-
"The act of saving withdraws money from
the market for
finished commodities and makes it
impossible to sell a
part of the product. The money which is
saved is
invested and paid out eventually in
wages, and so
passes into consumers' income; but in
the meanwhile,
it is argued, the process of investment
has led to the
production of new capital goods and
there is no
purchasing power available to purchase
these." (Page
IB, line 15.)
The above statement of the Social
Credit case is a
reasonably fair one, but it does
emphasise the problem
as if it was entirely one of individual
consumers or
workers saving actual cash from their
incomes and
buying new investments. It ignores, or
at any rate
does not make it clear, that the
processes of saving
and investing are going on all through
the industrial
system and are being carried on by
producers of all
kinds in the form of reserves and
undistributed
profits.
The Report goes on to say that the
above stated
argument is quite unsound, for the
reason that if
investment takes place concurrently
with saving the
deficiency caused by the saving is
balanced by the
money spent on the investment.
"It is true that if saving increases,
some finished
commodities cannot be sold at their old
prices, but at
the same time some investment goods,
machinery,
buildings, raw materials, etc., will be
sold at more
than cost prices. There will be
depression in certain
industries and boom in others; less
money will be
distributed in some, and more in
others. Consumers'
income as a whole will be unchanged."
(Page 18, line
36.)
One is left wondering what on earth the
committee
meant when they wrote this. Investment
goods,
machinery, buildings, raw materials,
etc., are not
sold in the sense that their costs are
defrayed. They
are merely transferred from one
ownership to another,
the financial costs attaching to thein
still remaining
to be defrayed by the only person who
can defray
costs, namely, the consumer.
The following quotation, I think, shows
clearly the
wrong ideas on which the committee are
working. It
occurs shortly after the previously
quoted extract:-
"As the new capital goods are produced,
they will
continue to be bought by the savings of
consumers.
They will then be used in production.
This will lead
to an increase in the output of
industry. If there is
to be no fall in prices, it is
necessary that the
quantity of purchasing power and the
incomes of
consumers should now be increased. This
is, of course,
implicit in the Labour Party policy of
stabilising
prices. A failure to increase
purchasing power at this
point might be said to constitute a
deficiency; but it
is certain that this is not the main
deficiency to
which Major Douglas refers." (Page 19,
line 12.)
This extract is, I think, worth a
little careful
study. Take the first sentence. The
suggestion that
new capital goods are bought by the
savings of
consumers is nonsense if it is intended
to suggest, as
I think it quite clearly is, that the
costs incurred
in making these new capital goods are
thereby wiped
out. If new capital goods are paid for
by the savings
of consumers, the consumers who did pay
for them are
now investors holding shares,
mortgages, or
debentures, in the form of scrip. They
look to this
scrip to bring them a return in the way
of income and
ulrimately to repay to them the money
originally paid
for the scrip. If consumers, as a
whole, have invested
in capital goods, then they can only
look to
themselves as the source out of which
their dividends
are to come and out of which their
capital is to be
repaid to them.
Consider the sentence above, beginning
"If there is to
be no fall in prices." This again shows
quite clearly
that the committee of the Labour Party
think that the
volume of money should control price.
One can only
assume from the next sentence that the
official Labour
Party policy of stabilisation
recognises that in these
circumstances there would be a
deficiency of
purchasing power and that they have a
remedy for such
deficiency. This remedy can take only
one of two
forms. It can take the form of
encouraging still
further increased production of capital
goods, or it
can take the form of distributing free
credit either
to the consumer or to the producer for
reduction of
prices.
There seems to be no doubt whatever
which of the above
two forms would be adopted by the
Labour Party. It
must be the former, through which
schemes of public
works or the encouragement of
production of still
further capital goods would provide an
agency by means
of which an increased total volume of
wages would
serve the purpose of preventing too
severe a fall in
the prices of finished goods.
STATIONARY EQUILIBRIUM?
The committee's arguments under the
heading of
"Depreciation" are a re-hash of the old
argument that
while depreciation is being charged on
one factory,
there would, or should, be another
factory in the
process of erection, the wages paid on
the
construction of which would meet the
depreciation
charged on the first factory.
It is merely another aspect of the
argument about
industry being in a state described by
Professor
Robbins as "Stationary Equilibrium,"
or, if one
prefers it, "A steady state of
self-repeating
movement."
The argument takes no account whatever
of the fact
that although a factory may take only
one year to
build, it may take fifty years to wear
out, and seeing
such an argument in print, or listening
to it in
conversation, has always conjured up a
vision before
my eyes in which the erection of the
second factory is
carefully scheduled to take fifty years
to build, in
order that the money distributed in
course of its
erection will correspond to the
depreciation charged
on factory number one.
SUBTLETY
The opponents of Social Credit have
often said, as
indeed the Labour Party's Report
suggests, that Major
Douglas in his writings is very
obscure. What, then,
are we to make of the clarity of the
following extract
from the Report?--
"A more subtle form of this argument
maintains that
the actual change-over from labour to
machines causes
a diminution of the actual monetary
circulation. Since
cost reduction, it is maintained, is
the stimulus to
replace labour with machines, the new
costs will be
less than the old, and hence the amount
of money used
by industry will be less. There are
doubtless
occasions when this will be so, but it
seems equally
probable that since the reduction of
costs offers the
prospect of higher profits, more,
rather than less,
will be borrowed by industry. Because a
firm reduces
its unit costs, it does not necessarliy
reduce the
total amount which it spends, i.e., its
aggregate
costs." (Page 20, line 25.)
The last sentence in the above extract
is, of course,
a clear statement of fact, but what the
meaning, or
intention, of the paragraph as a whole
is, I must
confess I do not know. Presumably this
"subtle form of
the argument" is being fathered on to
the Social
Credit movement, but Social Crediters
will have no
hesitation in disowning it.
LABOUR SAVING
This particular section of the Report
finishes up by
saying that "the real objection to the
replacement of
labour by machinery" is that it
"generally throws
certain workers out of employment," and
that:-
"in any case it continually tends to
reduce the
relative share of labour in the product
and increase
the share of capital." (Page 20, line
40.)
The Social Credit proposal, as we all
know, is to give
every citizen of the country a share in
the capital of
the country in the form of a National
Dividend, or, if
you like to look on it in that way, to
make everybody
a capitalist.
But the Labour Party committee
say:-
"The method of dealing with this evil
is not monetary
policy, but Socialism. The community
must, itself, own
the machines." (Page 20, line 41.)
It is evident, therefore, that the
committee are still
unable to distinguish between titular
ownership and
administration.
Incidentally, no Social Crediter has
any objection,
real or fancied, to the displacement of
labour by
machinery, but, on the contrary,
welcomes it.
WHEN DOCTORS DIFFER
The third section of the Report is
devoted to a
consideration of the Social Credit
cure, and the
Report admits that this cure follows,
for the most
part, quite logically from the
analysis. It is
therefore rather extraordinary that,
having to their
mind completely disposed of the
analysis, they should
be at any trouble at all to deal with
the cure.
However, actually almost seven pages of
the Report
concern themselves with exposing the
"fallacies" of
the cure.
This particular aspect of the matter is
dealt with by
the committee in the following
terms:-
"Before proceeding to consider this
scheme, we must
emphasise that disagreement with Major
Douglas's
analysis is not in itself an adequate
reason for
rejecting his proposals entirely. It
has already been
pointed out that at a time when
resources are not
fully employed an increase in the
quantity of money is
required. Major Douglas does, in fact,
suggest one way
by which this might be provided. It
remains to be seen
how far this is the best way, and also
how far the
Social Credit proposals can secure not
only the
achievement but also the maintenance of
a high level
of production." (Page 22, line 1.)
The above paragraph confirms my
previous contention
that the committee had, at the back of
their mind,
some faint hope or fear--whichever way
you like to put
it--that the Social Credit proposals
might possibly be
operated within the present system.
Having failed
altogether to consider in any adequate
way the basis
on which the Social Credit proposals
are founded, the
committee naturally adopt the above
outlook. If the
committee had really examined the basic
ideas which
are fundamental to the Social Credit
proposals, and
rejected them, then there would have
been no necessity
whatever for them to deal with the
remedial proposals
at all.
The Social Credit proposals fall under
three heads:-
(I) The setting up of a National Credit
Account: This
proposal is based on a conception of
Real Credit.
(2) The compensated price, sometimes
referred to as
the just price, or the national
discount: This is
based on the axiom that the real cost
of production is
consumption, together with a
realisation of the uses
to which financial credit can be
put.
(3) The issue of a National Dividend:
This is based on
the previous conceptions together with
a realisation
of the part played in production by
what is called
"The Cultural Inheritance."
The astonishing thing about the whole
Report is that
nowhere in it is there any sign that
the committee
have considered either:-
(a) The distinction between Real Credit
and Financial
Credit.
(b) The axiom that the real cost of
production is
consumption, or
(c) The idea of The Cultural
Inheritance.
Nowhere in the Report are any of these
three things
mentioned, and yet, as I have said,
these three things
are the fundamentals of Social
Credit.
With regard to (b), namely, the axiom
that the real
cost of production is consumption, it
is not
surprising that the Labour Party
committee do not deal
with this, because, so far as I know,
no critic of
Social Credit has ever dealt with this.
They have all
considered it much wiser to ignore
it.
STRANGE SILENCE
Assuming, for the moment, that the
present mqney
system works as the committee seem to
think it does:-
In any one year let us suppose that the
financial
figures attaching themselves to the
total production
of the country are as follow:-
Consumable goods
£3,000
million
Capital goods and development £1,000
Total
production
£4,000
million
Then, presumably, the committee's
conception of what
happens is that people as a whole get
£4,000 millions,
out of which they spend £3,000 and
invest £1,000. The
question is, have the community been
fairly charged?
If it is true that the real cost of
production is
consumption, then. the real cost of
this year's
production is only £3,000 million, not
£4,000 million,
and the correct price at which the
£3,000 million of
consumable goods should have been
charged was-£3,ooo x
- 3,000/4,000 or £2,250 million; so
that on a question
which suggests that the community as a
whole are
possibly being overcharged £750 million
per annum, the
Report is curiously silent.
THE DIVIDEND
The section of the Report which deals
with the
National Dividend is very small. Its
value as
effective criticism is even smaller.
Reference in it
is made to the Draft Scheme for
Scotland which should,
at any rate, suggest that the committee
have studied
that scheme. On the other hand, the
paragraph goes on
to suggest that it is proposed to
distribute
purchasing power equal to the total
capital value of
all assets.
There is, of course, no such proposal
in the Draft
Scheme for Scotland. The initial
National Dividend in
the scheme is suggested at one per
cent. of such
capitalised value, so that to the mind
of the
committee one per cent. must be equal
to the total.
This short paragraph on the National
Dividend
illustrates also the previous
contention that the
committee have made no study whatever
of the question
of Real Credit and Financial Credit.
The following
extract will make this clear:-
"An obvious fallacy here lies in the
fact that
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