| Subject: | Re: [socialcredit] These Present Discontents | | Date: | Sunday, September 17, 2006 15:43:44 (+1200) | | From: | Peter Haines <cymric @.......nz>
|
Thanks for the recent posting, I havent read them all, have been busy
onotyer things but want to acknowledge them,
regards,
Peter
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Sent: Sunday, September 17, 2006 8:06 AM
Subject: [socialcredit] These Present Discontents
> Serialized in *The New Age,* early 1920.
> ------------------------------------------------------------
>
> These Present Discontents.
> By Major C. H. Douglas.
>
> [The present series of three articles is reprinted
> from the "Nation" by the kind permission of the
> Editor. The series "Credit-Power and Democracy,'' will
> be resumed in our issue of May 27.--ED. N.A.]
>
> I.
> Whether or not the Great War has released the immense
> flood of criticism on every subject, which is the
> feature of the moment, or whether, as is probable, a
> position would in any case have been reached by this
> time in which a large majority of the world's
> population must have become profoundly dissatisfied
> with their lot, is no doubt arguable. But that such a
> position has arrived surely no one would deny. Even
> the hard-shelled Tory, if he be anything at all of a
> realist, must admit that, reasonably or otherwise, his
> opponents are making the working of that pre-war world
> to which his eyes turn back with longing, and to the
> restoration of which his energies are bent, an arduous
> and uncomfortable undertaking; while the audacious
> seekers after that New World so confidently promised
> as the logical consequence of a victorious peace, seem
> united on one subject only--the determination to make
> the old one as uncomfortable as possible for
> everybody.
>
> Viewed dispassionately, therefore, it seems fair to
> assume that we really are on the eve of great, even
> fundamental, changes; that, while change must come, it
> is childish to believe that any sort of change will
> do; and, in consequence, to grant that it is of vital
> importance to know what is amiss with civilisation, as
> a preliminary to prescribing for the malady.
>
> There are already a number of popular remedies on the
> market--there is State Socialism, for instance. State
> Socialism, however, is a little under a cloud--most
> people are more anxious to learn how it can be
> avoided, than conspicuously eloquent on its merits.
> The orthodox, or rather, Majority, Guild Socialists,
> for example, explain that the nationalisation which
> the miners want is something quite different from that
> which Mr. Sidney Webb and the Fabian Society want, and
> are concerned very largely to assure their followers
> that, under Guildism, there will be no bureaucracy,
> or, at any rate, there will be quite a new kind of
> bureaucrat, warranted free from any of the old world
> characteristics on which many people hold strong
> opinions. And there is Bolshevism, the Russian
> "menace"--mysterious, misunderstood, maligned by one
> side, and fanatically idealised by another.
>
> But it is a curious fact that almost the only feature
> that these prescriptions for the disease of the body
> politic have in common is that they are all more or
> less novel systems of adminstration, i.e., they assume
> that a new mechanism is required. It is quite true
> that they are uniformly introduced to our attention by
> moral and metaphysical arguments of an exalted nature,
> but the concrete embodiment of these sentiments seems
> to suggest that the whole problem is to design a
> social structure which will still more effectually
> subordinate mankind to it, rather than that he might
> be enabled progressively to conquer the machine which
> now enslaves him.
>
> Before breaking up the wonderful machine of
> civilisation and industry as we know it, therefore, it
> is well to remember that there is prima facie evidence
> that, considered simply as a machine, it is deserving
> of a high degree of respect. By its aid all the
> wonderful achievements of the nineteenth and twentieth
> centuries have materialised, nor can the misuse which
> has been made of some of them be laid to its
> discredit. An organisation which permits a coolie in
> India to grow rice and jute in the certain knowledge
> that cotton fabric from Manchester will accrue to him
> as a result, is a good organisation per se, and there
> is absolutely nothing in the published plans of any
> Socialist body which offers the slightest prospect of
> replacing effectively the arrangements which at
> present enable such co-ordination of effort to
> function. If, therefore, we are in possession of an
> effective mechanism, built up by centuries of trial
> and error, we want to he very sure that our
> difficulties arise from the system as a whole before
> becoming it revocably committed to its destruction.
>
> There is another aspect of the question, however,
> which has only an indirect connection with
> adminstrative mechanism, and that is policy. Now, as
> that sturdy patriot, Sir Marcus Samuel, observed the
> other day, as he made the price of petrol four times
> what it is in America, there is no use in mincing
> matters. There are only two Great Policies in the
> world to-day--Domination and Freedom. Any policy which
> aims at the establishment of a complete sovereignty,
> whether it be of a Kaiser, a League, a State, a Trust,
> or a Trade Union, is a policy of Domination,
> irrespective of the fine work with which it may be
> accompanied; and any policy which makes it easier for
> the individual to benefit by association, without
> being constrained beyond the inherent necessities of
> the function involved in the association, is a policy
> of Freedom.
>
> As between these two policies, there could be no
> greater mistake made than to assume that all would-be
> reformers are aiming at freedom, though many of them,
> no doubt, honestly think that they are. The fanatical
> Labour theorist, who would deny the right to live to
> any person not engaged in orthodox toil, quite
> irrespective of the facts of wealth production; the
> Trust magnate who intrigues for Prohibition because it
> reduces his premium for Workman's Compensation
> Insurance, or corners an essential article under the
> pretext of efficient production, are, no less than the
> mediaeval ecclesiastics who burned men's bodies that
> their souls might live, practical exponents of
> salvation by complusion. It may be worth while,
> therefore, to see whether the industrial and social
> machine, as now operated, may not be equally the
> instrument of either policy.
>
> As to every-day, practical, individual freedom, it
> will no doubt be granted that any man or woman who at
> the present time is in possession of a stable income
> of the "unearned" description, of, say, per annum, is
> economically free, i.e., such a person is sure of a
> reasonably high standard of life, even though his
> opinions may be highly distasteful to a large number
> of people.
>
> This statement is only true, however, so long as the
> general level of the prices of those articles which
> are actually used to make the standard of living,
> i.e., ultimate commodities, remains as at present. But
> let us imagine that the control of all housing came
> into the hands of one man, who bought each house at
> ten times the present market cost, obtaining the (no
> doubt fabulous) sum of money required by means of an
> overdraft at the banks, based on his ability, under
> the circumstances, to make the rents of houses ten
> times what they are now, then this statement would no
> longer be true. Our hypothetical freeman would once
> again have become a slave because his necessities
> would force him to obtain more "money" on any terms
> imposed by those in control of it. The essential thing
> which would have happened is that a Housing Trust
> would have come into possession of the whole of the
> credit-value attaching to the demand for houses, and
> would have been able to make any price for a house, so
> long as that price enabled the Trust to retain the
> bank-credit with which the house was bought.
>
> We may observe that in this simple example, we have a
> complete instance of the embodiment of two
> diametrically opposite policies, the machinery
> permitting either of them, so far as we have so far
> seen, to become effective. The only essential, to the
> complete ascendancy of the hypothetical Trust (which
> might, and probably would be not only economic, but
> moral and intellectual) is that it should centralise
> the credit, and retain the power of price-making. In
> order to make the analysis of any value, however, we
> have both to ascertain whether such a centralisation
> of credit is probable, whether the function of
> price-making is indissolubly attached to it, and
> whether, in the first place, our economic freeman had
> any "right" to be in possession of "unearned" income
> (and so may be the prototype of the New Citizen), or
> whether it was merely obtained at the expense of
> someone else, as the orthodox Socialist would have us
> believe.
> -
>
> II.
> In order to arrive at a sound conclusion in these
> matters it is necessary to start where all things
> start in Nature, and to decide what are the motives
> which, actuate men in this connection with the
> economic and industrial systems; and it is true, as
> well as proverbial, that self-preservation is the
> first law of Nature. Man does not live by bread alone,
> but he does not live very long without a reasonable
> amount of food, clothes, and shelter. Secondly, and
> subsequently, he requires, and this increasingly, an
> outlet for the creative spirit. It may be noted in
> passing, that it is just at this point that the
> "intellectual" is apt to fail in interpreting the
> great mass of humanity engaged in a deadly grapple
> with the weekly household bills, a battle which must
> in most cases be won decisively before the surplus
> energy becomes available for the satisfaction of the
> need of self-expression.
>
> It is in the nature of things that the provision of
> food, clothes and shelter, involves a conversion of
> energy, i.e., it means work, in the mechanical sense
> of the word: and when man had no available store of
> energy on which to draw other than that contained in
> the food he ate and converted into muscular capacity
> to do work, these things inevitably took up a good
> deal of his day, although there is good evidence that,
> by the fourteenth century, in England, a very
> tolerable material standard of comfort was maintained
> without excessive toil. At the present time, when
> every man, woman, and child has on the average at
> least ten times the mechanical energy of the strongest
> man, at the door, if not at command, and the knowledge
> available for its beneficial use is incomparably
> greater, the struggle for existence is yet probably
> more intense than ever it was, and large classes of
> the working population live under conditions which are
> frankly abominable.
>
> There is no doubt whatever that this is an anomaly due
> to misdirection of effort, and, bearing in mind the
> primary motives which actuate men in the mass, it is
> clearly vital to see if possible where this
> misdirection occurs--why men, working hard for
> comparatively long hours, with marvellous tools and
> almost unlimited mechanical energy at disposal, seem
> yet powerless to achieve even elementary economic
> security.
>
> We have agreed that the primary purpose for which men
> work is food, clothes and shelter. The modern
> industrial system does not allow of the direct
> exchange of service for these things, but of necessity
> introduces a common medium which we call "money,"
> which is defined as "any medium which has reached such
> a degree of acceptability that no matter what it is
> made of, and no matter why people want it, no one will
> refuse it in exchange for his product" (Professor
> Walker). Consequently, in order to meet the primal
> necessities, men work for money, having always at the
> back of their mind that so much money represents so
> much satisfaction of these primal needs. It should be
> particularly observed that it is this faith, this
> credit, which gives money its value, and it is
> therefore true to say that all money is, or is
> fundamentally dependent upon, credit.
>
> But (although the fact does not appear to have
> received any general recognition) there are two
> conceptions of credit, one, that of the worker, and a
> second, that of the financier and banker. The worker
> for wages or other forms of pay, gives "credit" to the
> idea that the more he produces the more satisfaction
> of primal needs is thereby made possible, i.e., this
> real credit is based on the rule of delivering the
> required goods. The financier uses this belief as a
> basis for financial credit, which is essentially a
> measure of the rate of making money. The nexus between
> these two "credits" is prices, and it is part of the
> argument with which we are concerned to show that it
> is in the lengthening of this nexus that misdirection
> of effort must occur.
>
> The modern industrial system has an outstanding
> characteristic--it is the Machine Age; and men are
> increasingly employed and paid for making machines
> which themselves perhaps only perform one out of many
> or the processes which go to the production of
> something men really want in itself, an ultimate
> product, and these same men, as individuals, do not
> want these machines for the making of which they are
> paid; they only want the ultimate product.
>
> Consider what happens to the money aspect of these
> ultimate commodities. Men must have them; and "it is
> no use mincing matters, the price of an article is
> what it will fetch." The rules of the game allowing
> it, retail prices will rise until the whole of the
> money paid for the production, not only of these goods
> but of the capital and export goods being produced at
> the same time, has been absorbed, assuming only that
> there is competition to buy and not to sell. This has
> the effect that if the upper limit of price is fixed,
> as at present, by "supply and demand," the price-maker
> is enabled to make such prices for ultimate products
> as will return to him the purchasing power
> distributed, not only in respect of these products,
> but of the plant which produced them, leaving him in
> control of all this plant, a situation which in turn
> enables him to control both the quantity and variety
> of its output, and so maintain his control over
> prices.
>
> We are now in a position to see that a centralisation
> of financial credit is not only probable, but certain,
> so long as certain premises go unchallenged. What is
> the effect of this on real credit?
>
> Now, if the purchasing-power distributed both in
> respect of capital goods (machinery, factories, etc.),
> and consumption (ultimate) commodities is always taken
> back from the public in the price of ultimate
> commodities only, two things will clearly happen.
> Since the illusion of the constant necessity for
> strenuous effort must be kept up, the price-makers
> will want to make as many capital goods as possible,
> and deliver as few ultimate products at home as will
> avoid revolution; and the workers who compose the mass
> of the public will progressively cease to believe in
> the purchasing-power of work for money, and will
> demand goods of the kind for which they have a use.
> That is exactly what is happening at the present time.
> In spite of the fact that, for instance, hundreds of
> thousands of houses are needed urgently in Great
> Britain alone (the position is almost as bad in
> America) the building trades are busy to the limit of
> their capacity in building or extending factories or
> other capital properties; while Labour is more and
> more determined to ignore scales of pay, and to insist
> on adequate standards of life, and, at the same time,
> and rightly, has completely lost patience with the
> generalisation that increased production is the
> solution of all our difficulties.
>
> The end of all this is surely clear. In the moment
> when the victory for financial centralisation is
> complete, so also will the separation of real credit
> from financial credit leave the "victors" with a mass
> of monetary wealth which will not induce the baking of
> a loaf of bread. We shall then have Bolshevism; not
> the Bolshevism of the idealist, probably including in
> that category M. Lenin, but the Bolshevism which the
> policy of the destruction of the credit attaching to
> money has forced on M. Lenin, which replaces
> inducement by compulsion, the banknote by conscription
> of Labour. Perhaps the realisation of this has
> reconciled our masters to Bolshevism.
>
> However that may be, to those who do not look forward
> with undue enthusiasm to the apotheosis of the
> machine-gun, the re-identification of real credit with
> financial credit is the vital issue; and it is
> proposed to show that this is dependent, in the first
> place, on the removal of the price-fixing process from
> the play of financial supply and demand, and the
> reference of it to the ratio between the credit-value
> of capital-production, and the diminution of that
> credit-value by consumption.
> -
>
> III.
> It is to be hoped that the previous articles have made
> it clear that the decay of real credit is inextricably
> involved with a disbelief in the bona fides of those
> in control of the policy of industry; a disbelief
> which cannot fail to be intensified by the observation
> of the luxury which this control enables its
> possessors to enjoy. It is entirely beside the point
> that, in one sense, the accusation of conscious
> turpitude may be unjustified; that many so-called
> Capitalists are men of the highest probity and
> culture, and that most of them can no more help making
> money than a cork can help floating--the embittered
> toiler is apt to say, in effect, that, being in
> control, they should deliver the goods, and that as
> they do not deliver the goods, except to themselves,
> they must be put out of control.
>
> Eliminating rhetoric and personalities, he is right.
> The practical object of the whole economic and
> industrial system is to deliver, not "more," but the
> right quantity of the right goods to the whole of the
> people, with the minimum of discomfort to all
> concerned, the people themselves, i.e., individuals,
> being the judge both as to quantity and rightness.
> After that object has been attained, the productive
> organisation may legitimately be an outlet for
> creative activity. At no time is it a legitimate
> object of the general productive process to "provide
> employment" for the purpose of distributing wages--to
> make things which the public do not need, and the
> makers do not enjoy making, in order that some canon
> of obsolete theological morality, or the premises of
> an effete financial system, may thereby be satisfied.
> Still less is it a legitimate tool of the
> will-to-govern.
>
> It will be seen, therefore, that the new motive in
> industry which is required, is not something founded
> on a half-understood altruism, but rather on a
> well-founded assurance that if the best results are
> not being attained, it is because they are practically
> unattainable, not because some person or class is
> obstructing their attainment. This amounts to a demand
> for the control of the policy (not the processes) of
> industry in the interest of the consumer, since his
> demand is the source of all economic production, and
> we may notice in passing that it is no doubt here, in
> all probability, that the State Socialist error (for
> it is an error) took its rise--in the idea that this
> control of policy is resident in administration;
> whereas it is resident in Finance, in Credit issue,
> and price making. "Socialise" these, and there is no
> need to, and you had far better not, nationalise
> administration.
>
> At this point it is necessary to make clear a
> fundamental proposition. Men associate together in
> industry because there is a true unearned increment in
> association--a telephone system requires a population
> to give it a value; ten men pulling on a rope can
> accomplish that which ten separated men could never
> achieve. With the growth of machine production and the
> utilisation of non-human sources of energy, this
> unearned increment is growing enormously more
> important than the earned increment about which the
> Syndicalist, in particular, is so concerned.
>
> This unearned increment rests inalienably on a basis
> of Capital, not of Labour; and if Capital derives
> from, and should be vested in the community, as is,
> broadly speaking, incontestable, then it is as members
> of the community, tout court, unconditionally, that
> individuals should benefit by this unearned increment.
> The dividend is the vehicle for the distribution of
> this unearned increment, and it is in the
> universalisation of the dividend, and not in its
> abolition, that we shall achieve freedom. Only when
> this is realised will it be grasped that it is better
> for everyone concerned, and especially for Labour,
> that the routine operators of the plant of
> civilisation should be selected solely for efficiency,
> subject to the most drastic competition, and
> progressively displaced by machinery.
>
> Dividends on Capital, then, come from a true unearned
> increment, and the recipient of dividends is only the
> pioneer of the future Citizen. But a dividend, in the
> ordinary sense of the word, is a payment of "money,"
> of which we have already seen credit is the vital
> component, and although credit derives from the
> community, the organ of credit-issue, its mobiliser,
> is the bank. The most important and fundamental
> function of a bank should be to envisage the capacity
> of the community it serves, taken in conjunction with
> its plant and culture, to meet the demands made upon
> it; and, under democratic control, to issue purchasing
> power, on behalf of the community (the true State) up
> to the limit of this capacity, so that as individuals
> the units composing the community can set in motion
> the machinery which will make such demands effective.
>
> Let me repeat, there must be somewhere something which
> stands as Trustee for the unearned increment of
> association above referred to, the greater part of
> which is inherited from a past generation. This
> Trustee we may call the State, and his agents, the
> banks. Then it must be clear that it is the business
> of this Trustee to divide amongst the tenants-for-life
> of the estate, its benefits, i.e., the State should
> lend, and not borrow, purchasing power, and that for
> the benefit of individuals, the consumers.
>
> Currency being merely a sort of conveyor-belt for this
> purchasing power, the form the currency may take does
> not affect the question at issue. The strenuous
> efforts being made at this time to re-establish gold
> as the basis of currency are simply the outcome of the
> desire to monopolise the conveyor-belt in the
> interests of a comparatively small gang of persons who
> own the gold.
>
> If, therefore, we can make the bank the servant of the
> consumer and not, as at present, the tool of the
> financier and the price-maker, we can see that the
> bank only "lends" to those enterprises which result in
> ultimate goods and services needed by individuals for
> personal use; in other words, we can democratise the
> policy of production.
>
> While the dividend is clearly indicated as the final
> method of distributing the goods and services which
> form the material basis of civilisation, it is not yet
> universalised, and, while aiming at its rapid
> extension, it is vital to the survival of real credit
> that the unearned increment should at once be widely
> distributed. If we reduce prices below cost, i.e.,
> below the sum of the purchasing-power distributed
> during the production of the goods for
> consumption-use, and make an issue of financial credit
> to the producer to enable him to carry on his business
> on the orthodox principles, we have, in effect, given
> a share of this unearned increment to every consumer,
> and left him with an additional credit-power to form
> the basis of his future dividends. The basis of this
> financial credit issue has already been indicated; it
> is dependent on the ratio between the credit value of
> both capital production and ultimate production, and
> total consumption.
>
> It should be noticed that the control of credit issue
> and the regulation of prices are interdependent--you
> cannot tackle one of them alone. Such issues of credit
> are constantly in progress at present, and simply put
> up prices. Similarly, any attempt to fix prices
> results in the stifling of all initiative and the
> inevitable ascendancy of a bureaucracy. It is outside
> the scope of these paragraphs to deal with the
> mechanism necessary to put the principles herein
> outlined into practical operation, but it may be said
> that it is of the simplest description, and is
> practically all of it in existence. The writer will be
> happy to explain it to anyone who is sufficiently
> interested to write to him on the matter. In
> conclusion, it may not be out of place to glance
> briefly at some of the results which might be expected
> to accrue from the adoption of the policy indicated;
> and this aspect of the question can hardly be better
> put than in the words of Mr. A. R. Orage, quoted from
> a pamphlet printed for private circulation :-
>
> "...these results are brought about with the minimum
> disturbance of existing social arrangements, yet with
> immediate social relief. No attack is made upon
> property as such, or upon the rights of property. No
> confiscation is implied, nor any violent supercession
> of existing industrial control. No sudden or difficult
> transformation on the part of the State is
> presupposed. Nor are men expected, as a condition of
> the practicability of the scheme, to be better than
> they are. The scheme, in short, presupposes only what
> is.
>
> "Nevertheless, from the moment that it is adopted,
> considerable changes are effected, and fundamental
> reconstruction is induced. Prices would fall to a
> level unknown in this country for five hundred years,
> and that without loss to the producer; and real wages
> (in other words, the purchasing power of wages) would
> correspondingly rise. Production would be enormously
> stimulated by the diffusion of spending power; yet, at
> the same time, extravagant consumption would be
> checked by the operation of the ratio of Price and
> Cost. Invention would obviously be encouraged by a
> common and palpable interest in labour-saving: and in
> general the whole of Industry would at once begin to
> respond to the spirit of a real co-operative
> Commonwealth.
>
> "What democracy has effected in politics, that and
> much more would be effected by democracy in
> economics...It is certain...that its adoption would so
> profoundly modify the commercial relations of all
> nations as to remove the principal cause of war
> between them."
>
> (THE END.)
> -
>
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