|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.
From: "William B. Ryan" <email@example.com>
[socialcredit] Douglas: 1923 Ottawa - Part 1
Date: Mon, 1 Jan 2007 15:38:51
>The text appended at the end below is from the 1932
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
Joseph's 1934 pamphlet. It is in
>refinement if not improvement to Douglas'
>formulation. Might we call it the A1, B1, A2, B2
>theorem? But very
contemporaneously was Hayek's
>counter-argument published in his 1931 book,
>and Production," which so far as I know, was never
>answered from the
Social Credit camp. And that
>three quarters of a century ago. It was the very same
repeated by Heilbroner in each of his
>macro textbooks until he stopped
>in the late 1990s. The theoretical development of
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 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
>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
>accounting "profit" in accordance with the definition,
Expense = Profit. But if A is falling in
>respect to A + B, then sales must be
>respect to A + B, then profit must be falling
>"2) Are you claiming that income will always be
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
>leading into the Great Depression. I say that because
spending from personal income from all
>sources is the control variable that
>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
>retail prices brought forward as expense charged
>against sales is
always equal or less than personal
>income in the hypothetical condition of
>state. The real world is characterized by labor
>From C. G. M's pamphlet:-
>1. Imagine industry to be one
gigantic concern which
>produces all goods and services. All incomes
>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
>consumption, e.g., a loaf of bread, a suit of clothes,
> (b) Capital goods, i.e., the goods and services not
>bought by individuals,
but used for producing future
>consumers' goods: e.g., railways, docks,
>3. Take any factory or productive organization.
>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
>dividends drawn by the employees and shareholders of
> (B) Payments to other firms for raw materials,
etc.; plus overhead charges.
>4. The price of the goods produced by this
>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
>the recipients in order to live. It has long ago gone
>back to the banks
in repayment of loans and has been
>5. As A is less than A + B, it
is obvious that the
>joint income of employees and shareholders cannot buy
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
>salaries, dividends) by producers of consumers' goods
> A2 = all similar payments by producers of capital
> B1 = all payments to other organizations by
> B2 = similar payments by producers of capital goods.
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.
the latter case it is usually objected that they
>do not need to.
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'
will rise; if A2 is less than B1, prices of
>these will fall; and if the fall
>and restriction of output will ensue, since
>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
>since it means that capital goods must always be
quantities sufficient to provide a fixed
>purchasing power (i.e. A2 = B1),
>whether this volume of capital goods is required or
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
producers, in which case they become B1
>future consumers' goods.
>10. Add to this problem the activities of
>scientist and the engineer. Their inventions result
>in reducing labour
costs and increasing plant charges.
> As a result B costs are always increasing
>to A costs. In a primitive community B costs are very
to A costs, but in a modern
>industrialized nation B costs are not only
>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
>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
possibly come out of savings from A2 + A1,
>the total national income. They can
only be found by
>creations of bank credit.
>--- Jim <firstname.lastname@example.org>
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