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Hi John,
I'll come back to your Summary and
respond in 'green' beneath yours below:-
(John Rawson wrote:-)
I believe it is time to summarise key points that have emerged
over the course of long discussions:
A+B ANALYSIS.
In terms of Douglas
analysis of individual businesses, this must be taken as factual.
Were it not, someone would have shown the data to be fallacious long
ago.
When it is applied to the whole economy, because other factors may come
it, the model becomes theoretical. But many points of evidence suggest it is
more correct than the orthodox theory, none the least being the fact that
banking systems in modern times have increased money
supplies comparatively astronomically without causing the equivalent
disastrous inflation that orthodox theory would predict. It has only
occurred at a lesser level.
I thought we had established that
A+B was a 'macro-economic' accounting theorem, in the manner of a complex
'reductio ad absurdum'. One that helps illustrate what
happens, for various reasons, when A is diverging in ratio to A+B over time in
the economy as a whole.
That when total incomes are
falling in ratio to the total costs of production coming forward into prices at
the point of final retail, Profit from Sales will be declining and increasingly
unable to fully amortize existing loans. Which won't be renewed,
ultimately pinching off potential production short of existing
plant's actual capacity.
That the 'correction' was
to restore and maintain A+B in constant ratio to A by augmenting A
with sufficient 'new credits' not 'costed' into production. Allowing the
community as a whole a fuller access to the potential goods and services that
would be 'physically' available otherwise, but are 'financially' denied us
through insufficient 'effective demand'.
EFFECTS. Douglas predictions that the tendency towards a deficiency of
purchasing power would cause periodic financial collapse, struggle for markets
and even war appear to have been justified.
Well, the conditions necessary to
try to maintain a sufficiency of purchasing power under the current arrangements
cause those things to occur.
REMEDIES PROPOSED.
1. A system of national accounting for each
country, to determine how much new money would be required over a following
period carried out by a government agency, (note small "g"), a national credit
authority, independent of political institutions, which would also create
the necessary credits and distribute them as:
a. Subsidies (if this word
grates, please provide an equivalent within present accepted lantguage) to
reduce the cost of all comsumer goods (?and services), local or imported, at
retail point, without any price control mechanism, and,
It doesn't grate on me, but Douglas
used the word 'rebate' in his testimony before the MacMillan Commission, and
that's probably a closer description of the idea than 'subsidy', since that
latter is usually thought of as something coming from taxation. In one of
the suggested CPD mechanisms, the customer would indeed be receiving a 'rebate'
after first having paid the regular price.
b. A national
dividend, its value obviously dependent on the state of the economy as per the
national balance sheet, to be paid equally to every adult citizen.
Presumably the authority would decide the proportion to go each way.
Presumably.
It is accepted
that no retailer will raise prices to higher levels, despite the fact that they
would continue to be subsidised at any level. (Because we say so,
presumably.)
If the retailer's costs
increase he might well raise his prices, might he not? But I
think we're assuming that 'competition' will contine to make the lower limit of
price the ruling one. And there's no reason for us to assume otherwise, so
far as I'm aware.
It is also
accepted (I believe reasonably) that sufficient people will desire to better
themselves by working to produce goods etc., or will simply work for the good of
the community because they enjoy so doing.
Most people, given a free choice, WANT to work
at something. Maybe not as much as they work now, in terms of
hours. But that doesn't necessarily always mean that they'll be
any less productive. Sometimes they might even be more productive, and
take a renewed interest in their work. And that's something any manager
should embrace with open arms. People HAVE to do something, most of
us, anyways. We'd be bored to death otherwise. But there's a big
difference between 'forcing' someone to work by making it impossible for him to
live unless he does, and work that is undertaken because the worker feels he is
doing something he wants to do, that "in some way", (maybe not 'monetarily', or
maybe so), is profitable to him.
No new credits will be issued to central or local government agencies,
which will continue to rely on present methods of finance:
1. Taxing, i.e.
taking back from the people money distributed as above, and/or,
But taxing is not as now.
Something which presently makes the 'gap' between prices and purchasing power
ever wider. Something which has a lot to do with trying to keep money
scarce in the hands of the public, to install in us firmly the conception
that we can't 'afford' to do anything for themselves. But rather must
rely on 'government' to do it for us. Under SC we're closing
the 'gap' between earned incomes and prices first, and then, for what taxation
is necessary, only opening it a bit. That's my interpretation of it, from
the example Douglas gave in his testimony in Ottawa, and mentioned elsewhere
later, (like the "Draft Plan for Scotland" for instance.)
Regards,
Joe
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