The Money Myth - Social Credit

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Social Credit

Disclaimer:
The words below are not written by me. They were written, along with the 20-part story I have also posted on this blog, by Louis Even, a French-Canadian, in the 1930s. I have changed his references to Canada to Australia below for better emphasis.
- Danu

Louis Even

Social Credit considers realities. It refuses to be hypnotized by the halo with which finance has been surrounded.

The economic realities are, on one hand, the production; not only the existing production, but the production immediately possible, the production capacity; and they are, on the other hand, the human needs.

Social Credit gives priority to the realities over the financial signs that are not realities, that must simply represent, and faithfully represent, the realities.

Real credit and financial credit

This is why Social Credit makes a distinction between real credit (a reality) and financial credit (a representation).

The word "credit" comes from the Latin word "credere" and bears the idea of confidence. Even in everyday language, to give credit to someone, is it not to indicate that we have confidence in him?
Social Credit calls real credit of a country what really gives confidence in that country, confidence that one can live there without too much difficulty. The real credit of a country is its production capacity. It is its degree of possibility to produce and deliver the goods to the needs.

And Social Credit affirms that financial credit must be the exact representation of the real credit.
It is therefore the production capacity that must determine the movement of finance. It is absolutely not for finance to command, paralyze or limit the production capacity.

This is why Social Credit demands the establishment of a credit office that would keep an account of national (or state) credit. Any production, those of consumption goods and those of capital goods, would then be entered as an increase of wealth. And all consumptions (or destruction, or depreciation) would then be entered as a decrease of wealth. The net increase in wealth would be production minus consumption.

With very few and passing exceptions where a country would live at the expense of another, the production of a country surpasses its consumption. The country is becoming richer. It is therefore absurd to say that it is going into debt. The public debt is an absurdity.

And when a country is getting richer, its citizens must certainly draw advantage of it. This is what Social Credit recognizes, when speaking of a dividend to all, instead of debts and taxes on everyone.

Money without inflation

The present system is subject to inflation. Inflation means rising prices.

When money cannot begin without, as today, creating a debt, it is necessary that ways be found to draw from the public more money than there was put into circulation, so as to refund the debt plus the interest of the debt. Whence taxes, that are added to prices or that diminish the purchasing power before the prices. Whence also increases of prices by industrials, who must draw from the public not only the money to pay for the products, but also for the financial charges, the interests on the industrial loans.

Social Credit would suppress this cancer, this tumor upon the prices, since the production would be an increase of wealth, and not an indebtedness.

And, Social Credit would lower the prices to be paid by the buyers, since it would have the community pay only what it consumes, and not all what it produces.

If, as an example, in the whole country, the consumption was only equal to three quarters of the production, the buyers would only pay, on any article bought by them, only three quarters of the accounting price. The Credit Office would take care of compensating the retailer so that he may recuperate all of his accounting price.

This means that the amounts of money included in the prices, but not having reached the hands of the public, or directed towards saving or investment, are not applied to the purchase of the production, would be by the organism of credit replaced to the benefit of those who are in need of the products. This would prevent the accumulation of products in the face of needs. And the mechanism to do it would have the advantage of operating with a decrease in prices, therefore in eliminating all possible inflation.

A dividend to everyone

The periodic dividend to everyone, recommended by Social Credit, is also in conformity with the economic realities.

The modern production, in fact, is more and more the result of applied science, of inventions, of improvements in production techniques, and of all these things that constitute a common good: an heritage transmitted and increased from one generation to the other. The modern production is less and less the result of individual labour.

Hoping to distribute the production only through the reward of human labour, is therefore contrary to the facts. It is at the same time impossible, for the money distributed as recompense for work can never buy the production that contains other elements in its prices.

Seeking salary increases with decreases in human labour, is also to change the meaning of the word salary. It is no more a recompense for work; it is the inclusion in the salary of the hired persons of what should be a dividend for all, since it is the fruit of progress and not of labour. This deviation is a hindrance to the desired goal, since in becoming a salary instead of remaining a dividend, these additional amounts go into the prices.

Social Credit would distribute the dividend to everyone, directly, without charging it to industry. It would truly raise everyone's purchasing power and would thus directly establish an adequate repartition of the goods of nature and of industry, instead of leaving the task to the surgery of taxation, that amputates and grafts continually, without ever healing the disease.

A share to each and everyone, guaranteed by the dividend to each and everyone from birth till death; and this share should be sufficient to at least insure what is necessary for life.

So there you go - social credit. A practical, workable solution that's been around for nearly 100 years. It'll never happen of course, not unless everyone agreed, and not without the total collapse of the current economic system... hmm. Actually, you never know.