| Subject: | Re: [socialcredit] Douglas: 1923 Ottawa - Part 1 | | Date: | Tuesday, January 2, 2007 03:44:50 (+0000) | | From: | John G Rawson <johngrawson @.......com>
|
| In reply to: | Message 4423 (written by William B. Ryan) |
Greetings for 2007.
Might I suggest that Social Credit ceased to be a science before the 1930's,
whenever Douglas' supporters started trying to "prove" the hypothesis (A+B)
instead of testing it against reality, along the lines this correspondence has
been heading and others.
All that is necessary to remedy the situation is to take it in its true
context, as a scientific model, and test it (and its orthodox opposite) by
inductive scientific reasoning.
But, of course, those with vested interests in the present financial racket
will do their utmost to prevent this happening, won't they?
I agree that this forum is fulfilling its aim of "studying the works of
Douglas", but I believe it has no useful function whatever in promoting his
message to others. Again, I agree that the later is not its function, but I think
others should also ber aware of that.
John R.
From: "William B. Ryan" <w_b_ryan@yahoo.com>
Reply-To:
socialcredit@elistas.com
To: socialcredit@elistas.com
Subject: Re:
[socialcredit] Douglas: 1923 Ottawa - Part 1
Date: Mon, 1 Jan 2007 15:38:51
-0800 (PST)
>The text appended at the end below is from the 1932
>pamphlet from
C. G. M., courtesy as always to Wally
>Klinck. So now I have Joseph's and C. G.
M's A1, B1,
>A2, B2 argument, which Douglas endorsed through his
>foreward to
Joseph's 1934 pamphlet. It is in
>refinement if not improvement to Douglas'
original
>formulation. Might we call it the A1, B1, A2, B2
>theorem? But very
contemporaneously was Hayek's
>counter-argument published in his 1931 book,
"Prices
>and Production," which so far as I know, was never
>answered from the
Social Credit camp. And that
was
>three quarters of a century ago. It was the very same
>counter-argument
repeated by Heilbroner in each of his
>macro textbooks until he stopped
publishing textbooks
>in the late 1990s. The theoretical development of
>Social
Credit apparently ended by the mid-1930s. To
>the extent Social Credit was a
science, it ceased
>being so at that point.
>
>"1) Can you explain precisely how
in a "quasi-steady
>state", the reflux from A will fully amortize
A+B?"
>-------------------------------------------
>--------------------------------------------
>
>Take
a look at the appended diagram, which I post once
>again. The first three curves,
from left to right,
>represent actual flows in terms of "cash flow" for
the
>economy as a whole. The fourth, "expense," is an
>accounting fiction. It is
merely the A + B curve
>delayed in time through the conventions of accounting.
>
It is delayed sufficiently so that it either equals
>"sales" or is less than
"sales." If it is less than
>"sales" at every "point in time," there is
continuous
>accounting "profit" in accordance with the definition,
>Sales -
Expense = Profit. But if A is falling in
>respect to A + B, then sales must be
falling in
>respect to A + B, then profit must be falling
>continuously--an
impossible condition.
>
>"2) Are you claiming that income will always be
less
>than retail
prices?"
>-------------------------------------------
>--------------------------------------------
>
>If
by "retail prices" you mean the cost basis of
>retail prices, it is probably
never actually less than
>retail prices except in the
midst of a significant
>credit contraction--such as after the 1929
crash
>leading into the Great Depression. I say that because
>normally the
spending from personal income from all
>sources is the control variable that
determines the
>cost basis of retail prices. I know that this must
>sound like a
circular argument at this stage in the
>discussion. But I'll say that the cost
basis of
>retail prices brought forward as expense charged
>against sales is
always equal or less than personal
>income in the hypothetical condition of
quasi-steady
>state. The real world is characterized by labor
>displacement,
however.
>-
>
>From C. G. M's pamphlet:-
>
>1. Imagine industry to be one
gigantic concern which
>produces all goods and services. All incomes
(wages,
>salaries and dividends)
are derived directly or
>indirectly from industry.
>
>2. The goods and services
produced by industry can be
>divided into two classes:
>
> (a) Consumer goods,
i.e., the goods and services
>which are bought by individuals for their
own
>consumption, e.g., a loaf of bread, a suit of clothes,
>a theatre
ticket.
>
> (b) Capital goods, i.e., the goods and services not
>bought by individuals,
but used for producing future
>consumers' goods: e.g., railways, docks,
roads,
>factories, etc.
>
>3. Take any factory or productive organization.
The
>prices of all the goods produced by this firm during a
>given period can be
analyzed under two headings:
>
> (A) Personal Incomes, i.e., the wages, salaries
and
>dividends drawn by the employees and shareholders of
>the
firm.
>
> (B) Payments to other firms for raw materials,
>machinery, plant,
etc.; plus overhead charges.
>
>4. The price of the goods produced by this
firm
>cannot be less than A + B. But only the A incomes are
>available to buy
these goods. The money representing
>the B payments was wages, etc., spent in the
past by
>the recipients in order to live. It has long ago gone
>back to the banks
in repayment of loans and has been
>cancelled.
>
>5. As A is less than A + B, it
is obvious that the
>joint income of employees and shareholders cannot buy
>all
the goods they have produced. This is true to say
>of the whole nation, and of
all nations, that its
>total income cannot buy the total product.
>
>6. But can
the nation's total income buy all the
>consumers' goods available?
In amplification of
>paragraph 3 above, let:
>
> A1 = all payments made to
individuals (wages,
>salaries, dividends) by producers of consumers' goods
>and
services.
>
> A2 = all similar payments by producers of capital
>goods and
services.
>
> B1 = all payments to other organizations by
>producers of
consumers' goods.
>
> B2 = similar payments by producers of capital goods.
>
>7.
As we have seen, incomes represented by A1 cannot
>possibly buy goods priced at
A1 + B1; neither can
>incomes represented by A2 buy goods priced at A2 + B2.
> In
the latter case it is usually objected that they
>do not need to.
>
>8. The
question is: can A1 + A2 = A1 + B1? i.e., can
>the joint income from consumers'
and capital goods buy
>all the available consumers' goods?
They can, if A2 =
>B1. If A2 is greater than B1, prices of consumers'
>goods
will rise; if A2 is less than B1, prices of
>these will fall; and if the fall
continues, bankruptcy
>and restriction of output will ensue, since
producers
>cannot continue to sell their goods below cost.
>
>9. Theoretically it
is possible to make A2 = B1. But
>practically it is impossible to do so
continuously,
>since it means that capital goods must always be
>produced in
quantities sufficient to provide a fixed
>purchasing power (i.e. A2 = B1),
irrespective of
>whether this volume of capital goods is required or
>not. The
result would be a surplus of capital goods,
>which must either be exported, in
the face of severe
>competition with other nations, or must be bought by
>home
producers, in which case they become B1
costs in
>future consumers' goods.
>
>10. Add to this problem the activities of
the
>scientist and the engineer. Their inventions result
>in reducing labour
costs and increasing plant charges.
> As a result B costs are always increasing
relatively
>to A costs. In a primitive community B costs are very
>small compared
to A costs, but in a modern
>industrialized nation B costs are not only
large
>relatively to A costs, but are continuously growing.
>
>11. If B2 is
expanding relatively to A2, and A2 = B1,
>which is expanding relatively to A1, it
follows that
>B2 is expanding rapidly relatively to A1. By adding
>A2 to each
side of the latter statement we see that A2
>+ B2 is expanding rapidly relatively
to A2 + A1.
>Therefore, loans to finance capital development (A2
>+B2) cannot
possibly come out of savings from A2 + A1,
>the total national income. They can
only be found by
>creations of bank credit.
>-
>
>
>--- Jim <jschroeder@shaw.ca>
wrote:
>[snipped]
>
>__________________________________________________
>Do You
Yahoo!?
>Tired of spam? Yahoo! Mail has the best spam protection
around
>http://mail.yahoo.com
>
>---------------------------------------------------------------------
>Some
introductory materials to the discussion topic of this list are
at
>http://www.geocities.com/socredus/compendium
>You're subscribed to this list
with the email johngrawson@hotmail.com
>For more information, visit
http://www.eListas.com/list/socialcredit
><< steady-state.gif >>
Become a fitness fanatic with XtraMSN Health & Fitness!
|
Re: [socialcredit]
Reply to this message