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A few questions and principles on Social Credit
by Louis Even Questions You, Social Crediters, say that you want to reduce taxes progressively, and ultimately eliminate them completely. How tehn will governments and other public bodies be able to run the nation? You demand a monthly dividend for each citizen. If there are no taxes, how can these dividends be financed? If everybody receives a periodical dividend, and if this dividend is large enough to ensure a decent livelihood, who will still want to work? If public works and dividends are to be financed by newly-created money, will not this new money bring too much money into circulation, and therefore cause runaway inflation? Will it not cause money to lose its value? And then what will happen with savings and pensions? You are talking about a price adjustment through a discount on prices compensated to the retailers: does this mean that the Government will control prices? You say that money is created by banks, in every country in the worod. Once a Social Credit system is established in a country, its money will not be created by private banks any more. Will this country be able to trade with other nations, and will they accept its currency? What will happen to commercial banks in a Social Credit system? Should they be nationalized, or eliminated altogether? Would a Social Credit system manage to eliminate unemployment, and give a job to al those who are able to work? These
questions, and several others, have been asked and answered many times
in past issues of “Michael”. However, they are still asked by people
who come across Social Credit for the first time, or by people who did
not understand the answers given, because they interpreted them in the
light of the present financial system. The Social Credit financial principles are
incompatible with the present financial system. This does not mean that
Social Credit would do away with the existing financial mechanisms; it
would keep almost all of them, but they would have been purified from
the false philosophy — or lack of philosophy — that poisons them. The present financial system subordinates
the possibilities of production and distribution to finance. Social
Credit subordinates finance to the possibilities of production and to
the needs expressed by people. Here is a concrete example: a town needs a
new school. The present financial system will ask this question: “Can
we find the money to build the school? If so, let's build it; if not, we
will have to do without the school.” A Social Credit would put the question
differently: “Do we have the physical means to build the school? If
not, we will obviously have to do without it, but if we do have the
physical means, we do build it. And what about the money? Money will be
issued for new production, instead of stopping it.” As for the distribution of goods, the same
reasoning applies. There are goods, on the one hand, and needs, on the
other. The present financial systems asks: “Are those who have needs
able to pay for the goods? If so, they will obtain them; if not, the
goods will remain on the shelves of stores, in front of needs that
remain unsatisfied.” Social Credit puts it this way: “Goods are made
to fill human needs, so people with needs must have the required means
of payment to get the goods.” Those who want the financial system to keep
its position of command will obviously understand nothing in a system
that wants to put finance in a position of a servant. Which group is right — those who defend
the present financial system, who reason and decide only according to
the financial possibilities, or the Social Credit advocates, who reason
and want to decide according to the physical possibilities, even if, to
achieve this end, the financial system must be corrected? Which one respects the fundamental rights
of each human being? For it happens that human beings have fundamental
rights. For example, everybody agrees that each newborn has the right to
live, a right that must be recognized and respected until his death.
Which group — the advocates of the present system or of Social Credit
— offer the best possibilities for each individual to exercise this
right? The right to live necessarily implies the right to have access to
the necessities of life. Which of these two groups offers to each
individual the best chances of obtaining these necessities? A few principles So that no one can accuse us of making up
principles, we will quote a few authorities with whom no one will
contest the soundness of doctrine as regards human rights. The Fathers of the Second Vatican Council
wrote, in the Constitution on the Church Gaudium
et Spes (n. 69): “God
intended the earth and all that it contains for the use of every human
being and people. Thus, as all men follow justice and unite in charity,
created goods should abound for them on a reasonable basis... The right
to have a share of earthly goods sufficient for oneself and one's family
belongs to everyone.” Neither governments nor bankers nor
economists created earthly goods. So it is none of their business to
establish, approve, or try to justify rules that ignore or deny this
universal destination of earthly goods created by our Heavenly Father.
God has excluded nobody from the right to a share of earthly goods;
however, in a system of purchases and sales, the rules that tie the
purchasing power to employment in production exclude all those who are
not hired in production, and they represent more than half of the
population: children, housewives, the sick and old people, the
unemployed, etc. Pope Pius XII put it very clearly in his
famous June 1, 1941 radio address: “Material goods have been created by God to
meet the needs of all men, and must be at the disposal of all of them,
as justice and charity require. “Every
man indeed, as a reason-gifted being, has from nature the fundamental
right to make use of the material goods of the earth, though it is
reserved to human will and the juridical forms of the peoples to
regulate, with more detail, the practical realization of that right.” Do the present juridical forms facilitate
the practical realization of the right of each and everyone to a share
of earthly goods? The Social Credit financial proposals, through a
social periodical dividend guaranteed to each individual, would
implement this right in a direct way, excluding no one, whether he is
hired or not in production. The right of all to have a share of earthly
goods is a natural right that every man has from nature, as the Pope
said. This right is not tied to belonging to any group, since it is an
individual right. No condition, no leglisation can suppress this right;
it is imprescriptible, as Pope Pius XII put it in the same address
mentioned above: “Such
an individual right cannot, by any means, be suppressed, even by the
exercise of other unquestionable and recognized rights over material
goods.” Even the property rights of those who own
the means of production cannot contravene the individual right of each
person to a share of earthly goods. Social Credit recognizes and strengthens
private property, even that of the means of production, but it also
firmly proclaims the social role of private property. A Social Credit
mechanism of distribution that would allow goods to reach those who need
them would certainly not harm the producers, since their main concern is
to sell their production. We do not offer these quotes to try to
prove that the Popes advocate Social Credit (this is not the
responsibility of the Church), but simply to show how Social Credit
would wonderfully facilitate “the practical realization” of that
individual right proclaimed by these authorities. This individual right is as old as the
creation of man. Civilian authorities, the dictators of the economy, or
sociologists whose minds are closed by human laws and regulations, may
forget or minimize this right, but it has always been asserted by the
masters of moral theology. The various social security measures are an
admission — late and flawed in its application — of this right of
all to a share of the necessities of life. However, the fact that the
redistribution of the claims on goods (money) must be continuously
corrected proves that this redistribution, as presently regulated, is
defective. Instead of having “correctives” that do not correct well,
and which ignore many cases, would it not be infinitely better to
establish a source of purchasing power that functions automatically to
guarantee to everyone, from the beginning, the basic share to which they
are entitled? This is something the present system, which ties income to
employment, cannot do. Ends and means The social and economic sector today suffer
a lot from the confusion between ends and means, which makes people take
ends for means, and means for ends. This is the case, for example, of those who
think that man has been created to be employed in economic activities.
On the contrary, it is economic activities that exist to serve man, and
not the opposite. If progress in the production of material goods makes
it possible to satisfy human needs with a minimum of human labour, it is
all the better. There are other human activities that are superior to
the economic function, and if people have more free time, more leisure
time to devote to these other activities, we must bless God for having
allowed this progress. Similarly, man does not exist for
production, but production for man, to allow the satisfaction of man's
normal needs. To persist in using to full capacity all the means of
production when all human needs are satisfied is to provoke either the
waste of resources, through the production of goods that no one needs,
pressure to create and stimulate new artificial needs (and get people to
buy things they don't actually need), which aggravates materialism that
already turns human beings away from their true end. The full-employment policy is another form
of confusion between ends and means. The purpose of industry is not to
supply jobs, but to supply goods. Employment is part of production only
as a means, not as an end. If production can be done with less human
labour, while maintaining the flow of goods, it is also a good thing,
since man is then free to devote his time to other activities of his own
choosing. To make money the end of a business is,
obviously, another confusion of ends and means. Yet, it is the greatest
heresy of the present economic system. One tries to invest capital in
what will bring in the biggest return (in money), and not necessarily in
what will satisfy basic human needs. If there is more money to be made
in booze and poisons, investments will go to industries that produce
booze and poisons. Workers themselves give in to this confusion: they
will try to be employed where it pays the most, even though the things
they produce are useless or even harmful, even though they then help
monopolies to grow even bigger and to expand their economic dictatorship. To link income to employment also means to
forget the end of income. Income supplies purchasing power which, in
turn, is a means to allow production to achieve its end, which is the
satisfaction of the needs of all human beings. When one talks about international trade,
how many so-called learned people confuse ends and means, while they
lose sight of the only logical purpose of exportation, which is to allow
a greater variety of goods for the population of all the countries
involved — importing and exporting nations. Those who claim that the
economy of a nation is successful if this nation manages to export more
goods than it imports, take money for real wealth. Real wealth is
actually products; so if more products leave our country than what
enters, it represents an actual impoverishment for the nation, since
there are less products available for the population of that nation. A few other notions To be able to understand Social Credit, one
must also admit a few basic notions that are almost totally ignored in
the present system. First, the notion that money, whatever
forms it may take — pieces of metal, paper, bank account (and now data
in computers) — has a social function, because it is accepted by
everyone, not because of its intrinsic value, which would be only the
value of metal or paper, but because of its legal status. Money has a
social function also because, for each monetary unit — one dollar, for
example — one can obtain, up to this sum, any good or service offered
on the market, goods issued from any factory, any farmer, produced by
anybody, and professional services of any type. Money can therefore
mobilize, according to the whim of he who has some, the productive
capacity of the nation in any sector. However, money is not the fruit of a
spontaneous generation. It begins somewhere; it has to be created
somewhere in order to exist. Even the money that is presently in
circulation has to begin somewhere. Any new increase in the money supply
of the nation begins somewhere. Wherever this money is created, and by
whom it is authorized to be created, one question always arises: To whom
does money belong when it is created? To this important question, Social Credit
replies: “Money, right from its “birth” (creation),
belongs to society.” What individual, what group, what private institution can, from its own
authority, pretend to own all that is produced in the country? Only
society, as a whole, has this right. Only
society, through the Government that represents it, can issue the claims
on goods. Everybody
knows today that it is not the Government that creates money, and
neither producers. All those who took the time to study the subject know
that all new money is issued from the banking system in the form of
loans. When
a bank creates this financial credit for a borrower, it gives him a
claim on the percentage of national production that corresponds to the
amount of the loan. The bank considers this issue of financial credit as
its own property, since it lends it on its own terms. On what authority
can the bank give a borrower claims on the work and products of other
people? One
can admit that money is issued by banks, provided this money, or
financial credit, is considered the property of society as a whole, and
not of the banks, and treated as such. This is not the case in the
present system. On the contrary, it is society today that must pay the
bank for the use of its own financial credit, to obtain the permission
to use its own productive capacity. Clifford
Hugh Douglas, the founder of the Social Credit school, wrote in Economic Democracy (p. 120): “There
is no doubt whatever that the first step towards dealing with the
problem is the recognition of the fact that what is
commonly called credit by the banker is
administered by him primarily for the purpose of private profit, whereas
it is most definitely communal property... The banking system has been
allowed to become the administrator of this credit and its financial
derivatives with the result that the creative energy of mankind has been
subjected to fetters which have no relation whatever to the real demands
of existence.” Once
this is understood, one has every reason to be shocked to see citizens
pay twice, and even more, for schools and other public utilities made by
the work of society as a whole. It
is this control by private interests of a social instrument — money
— that causes Canadian taxpayers to pay billions of dollars ever year
in interest charges on a debt that keeps growing. (Even if the debt of
the Federal Government goes down, the total debt of all administrations,
corporations, and individuals necessarily keep growing year after year.
Otherwise there would be no money at all in circulation.) Here
is another notion that everybody should admit, but which is also
violated by the present system: The
population must not pay for what it produces, but for what it consumes. One
does not ask the baker to pay for the bread he produces. It is those who
buy the bread, the consumers, who are expected to pay for it. It must be
the same thing for the production of the country. If this notion was
applied, there would be no public debt, for one cannot consume more than
what is produced. *
* * The
present financial system has been accepted with all its terms, without
asking if it achieves the real purpose of a sound financial system. This
purpose, or end, should certainly not be to control, rule, or dictate,
but to serve; to serve the economic system and supply a practical way to
mobilize the productive capacity of the nation, to satisfy the needs of
the consumers, and supply a way to distribute efficiently the goods so
they can reach those who need them. Since
it is the consumers themselves who know best their needs, it is they who
must dictate to production what to do. They can do it efficiently only
if they possess the financial means to express their needs. They express
their needs when they choose products, but they can make this choice
only as long as they have some purchasing power. Douglas
wrote about this, in Credit
Power and Democracy: “The
business of a modern and effective financial system is to issue credit
to the consumer, up to the limit of the productive capacity of the
producer, so that either the consumer's real demand is satisfied, or the
producer's capacity is exhausted, whichever happens first.” One
notices today that neither case exists. The demand of the consumers is
not satisfied, and the producers' capacity is not exhausted; the
financial credit issued to consumers did not reach that limit. Social
Credit would solve this problem with the dividend to all. As
for the methods to apply the Social Credit principles, they may vary.
The point is that they take into account the principles mentioned above.
One must also take into account what already exists, and what we want to
achieve, and see to it that the results required be obtained with a
minimum of changes and upheavals, having constantly in mind the end, the
objective of these changes. Louis Even This article was published in the August-September, 2003 issue of “Michael”.
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