----- Original Message -----
Sent: Thursday, September 21,
2006 10:25 AM
Subject: [socialcredit] A+B as I
C
I wanted to give a brief synopsis of A+B
as I see it.
Martin mentions that the "cost" of
capital production appears in consumer prices twice, because it shows
up in the cost of consumer goods now, as the money that is distributed
for the capital production is absorbed by businesses operating on the
laws of supply and demand, and it appears again when the consumer
goods the capital goods produce pass the cost of the capital goods
onto the consumer in order to recoup the money they invested in the
production of the capital goods.
Douglas said, "Where any payment in money appears twice
or more in series production) then the ultimate price of the product
is increased by the amount of that payment
multiplied by the number
of times of its appearance)
without any equivalent increase of
purchasing power." (The Monopoly of
Credit)
This
can also happen from re-investment of savings, as the money that was
debited to the cost of goods for one production cycle is
re-invested and shows up in the cost of goods of
another.
Bill
likes to point to the fact that labour displacement, or the use of
technology to increase the productivity of labour, causes B to rise
relative to A, and this means that the gap between income and prices
is ever increasing. The result of this is that ever increasing
capital production, or ever increasing exports over imports, is
necessary to bridge the gap.
I
think alot of opponents to the A+B theorem do not like the way Douglas
approached the problem, and I must say that I don't think that the
firm Douglas used in his examples are a "statistical firm", nor do I
think he started with a macro-economy. Douglas was an engineer
and a scientist, so like a scientist, he took an observation, derived
a hypothesis, and tested it. Economists derive a theoretical
model first, and then test it (more of an Aristotilean
approach). Douglas noticed that in the firm he was working the
expenditures on wages, salaries and dividends during any period of
time were always less than the total costs for the company in the same
time period. He then checked to see if this was true for all
firms, and found that only in cases where the firm was going out of
business was it not true, so he concluded that if it was true for all
firms not going out of business, it must be true for the economy as a
whole. In other words, he worked from the firm to the
macro, all the while using a scientific approach to the
problem.
The
criticism of Douglas is that the B payments to other firms are income
for other firms, and this is where the error in their thinking
occurs. It can only be income if it is distributed as an A
payment, so even if one firm's B payment goes to another firm, only
the portion that the firm distributes in wages, salaries, and
dividends is income, which of course comprise it's A payments.
There is money which is "hung up" in the productive system because it
is going to cancel costs from previous accounting cycles. I
believe the confusion results from the belief that money "circulates"
as opposed to "cycles", and has two
"directions".
I
will end my thoughts here, because they are long enough for
now.
Any
comments?
Take
care,
Jim
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