| Subject: | [socialcredit] The Control of Production | | Date: | Sunday, September 17, 2006 15:40:12 (-0700) | | From: | MODERATOR <socredus @.....com>
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I believe this is Douglas's second essay to be
published in *The New Age.*
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May 1, 1919
The Control of Production.
By Major C. H. Douglas.
It has frequently and rightly been emphasised in *The
New Age* that the essence of any real progress towards
a better condition of Society resides in the
acquisition of control of its functions by those who
are affected by the structure of Society; and it is
well if somewhat vaguely recognised by the worker of
all classes that this control is at present not
resident in, but is external to, Society itself, and
that in consequence men and women, instead of rising
to an ever superior control of circumstance, remain
the slaves of a system they did not make and have not
so far been able to alter in its fundamentals.
This system is assailed under the name of Capitalism;
but of the millions who are convinced that by the
destruction of Capitalism the Millennium will be
achieved, not very many have yet awakened to the fact
that Capitalism died an unhallowed death twenty-five
years ago, more or less, and that the driving force of
the system which, more than any other single cause,
has produced the tangle of misery and unrest in which
the world now welters, is Creditism.
Credit is a real thing; it is the correct estimate of
capacity to achieve, and the function and immense
importance for good or evil of this real credit will
be impressed on Guildsmen and others with cumulative
insistence in the difficult times ahead. But for the
moment it is desirable to consider a narrower use of
the word; one conveying, however, a sense with which
it is more commonly associated--financial credit.
Financial credit is simply an estimate of the capacity
to pay money--any sort of money in legal or customary
tender; it is not, for instance, an estimate of
capital possessed; and its use as a driving-force
through the creation of loan-credit is directly
consequent on this definition. The British Banking
system has, since the Banking Act of 1844, based its
operations on the ultimate liability to pay gold, but
in actual fact the community, as a whole, has
dethroned gold, and bases its acceptance of cheques
and bills on its estimate of the bank credit of the
individual or corporation issuing the document, and
for practical purposes not at all on the likelihood
that the bank will meet the document with gold. This
bank credit simply consists of certain figures in a
ledger combined with the willingness of the bank to
manipulate those figures and at call to convert them
into purchasing power. What, then, is likely to induce
a Bank to increase the credit by the creation of
loans, etc., of an applicant for that favour? The
answer is contained in the definition: the capacity to
pay money; and the credit will be extended absolutely
and solely as the officials concerned are satisfied
that this condition will be met. It is quite
immaterial whether the judgment is based on existing
“securities” or contemplated operations; the basis of
bank credit to-day is simply and solely the capacity
within an agreed time-limit, which may be long or
short, to pay money.
Now apply the consideration of this to such a problem
as control of the provision of decent housing for the
miners at rents not exceeding 10 per cent. of the
miners’ earnings. There are a number of idealists who
cannot be labelled otherwise than half-baked, who will
say that it is a “sound business proposition” to house
the miners properly at low rents. There are also a
number of people by no means half-baked who are
prepared to lose a little on housing to retain control
of industry. That it is in the highest sense sound is
unquestionable; but as to being a business-proposition
we suggest to those well-meaning people of the first
class whose minds are above detail, that they go to
the banks unsupported by security, and endeavour to
borrow money for such a project.
We see, then, that it is purely a question of the
financial effect likely to accrue from an enterprise
which will induce the banks to back it with credit,
and the use-value or inherent desirability of doing
certain work is a pure by-product. But the deduction
to be made from this is of transcendent importance--it
is that to control industry in the interest of use
values you must back use-values with credit. And that
means the control of credit. And in order to control
credit the base on which it rests must be altered to
meet the changed aspirations of Society. The economic
power of Labour is a potential power. By withholding
it, Labour (using the term, in its widest sense) can
break down civilisationtion; but it cannot build it up
again by any agency that the mind of man has yet
conceived which does not involve the use of credit
capital in some form or other. The community creates
all the credit capital there is; there is nothing
whatever to prevent the community entering into its
own and dwelling therein except it shall be by sheer
demonstrated inability to seize the opportunity which
at this very moment lies open to it; an opportunity
which if seized and used aright would within ten years
reduce class-war to an absurdity and politics to a
disease.
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The Control of Pro
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