for the Social Credit
To promote the good of every man and of the whole man
In economics, with Social Credit
Wealth distributed to all, personal freedom respected
This article was written by Louis Even in 1969, not long after the release of Pope Paul VI’s encyclical letter Populorum Progressio on the development of peoples. Pope Benedict XVI marked the 40th anniversary of this letter with his latest encyclical, "Caritas in veritate" (Charity in truth)
The goal of the economic organism
"In order to be authentic, development must be complete: integral, that is, it has to promote the good of every man and of the whole man." These words are from Pope Paul VI (taken from his encyclical Populorum progressio, n. 14).
His predecessors spoke in a similar way, as ever more efficient means of production left individuals and families in need. The Popes always insisted on the first goal of the economic system — to serve human needs: not as an abstract collectivity but for each person.
Our "Michael" Journal has quoted many times this "all and each" theme of Pope Pius XI in his encyclical letter Quadragesimo Anno (n. 75):
"For then only will the economic and social organism be soundly established and attain its end, when it secures for all and each those goods which the wealth and resources of nature, technical achievement, and the social organization of economic affairs can give."
And we also quoted the words of Pope Pius XII on the fundamental rights of each human to a share in the goods of this earth, as he spoke about in his radio-address of June 1st, 1941:
"Every man indeed, as a reason-gifted being, has, from nature, the fundamental right to make use of the material goods of the earth… "The economic wealth of a nation consists in providing a sufficient material basis for a fair personal development of its members."
"All and each — every man — each and every man — all men — fundamental rights of every man — personal development of its members citizens". These expressions state clearly that we are talking about the human person, each person, and not just a simple collective satisfaction.
It is the satisfaction of the needs of each individual that we are talking about here, a satisfaction that is socially sustained and guaranteed as the productive capacity of the country permits. This is why, Pope Pius XII in his 1944 radio address, after affirming the right of each person to the use of earthly goods, added:
"It is reserved to human will and the juridical forms of the peoples to regulate, with more detail, the practical realization of that right."
"The juridical forms of the peoples," means therefore, the legislation of their respective countries.
An individual right acknowledged and exercised with the support of the established order — Pius XI had also indicated in the phrase quoted above: "For then only will the economic and social organism be soundly established…"
There are no doubts then, about this fundamental right of each person to the possibility to exercise this right that is facilitated by the legislation of his country. The common good does not mean the suppression of legitimate individual rights. On the contrary, the common good should consist of a social order that allows each person to blossom in a better way with the social order rather than without it. And the first responsibility of those in charge of the common good is to see that each individual may have access to the necessities of life.
To what extent should the economic and social organism facilitate the access to material goods for each person? Pius XI said:
"Those goods which the wealth and resources of nature, technical achievement, and the social organization of economic affairs can give."
Not that this would mean the same level of life for each person. But for each person: "These goods must be sufficient to supply all needs and an honest livelihood."
In our industrialized countries, we like to evaluate the economic wealth of a nation according to the abundance of its global production. But Pope Pius XII corrects this view. He says that the economic wealth of a nation rather "consists in what such an abundance does really and effectively mean and provide as a sufficient material basis for a fair personal development of its members."
This is a responsibility that is incumbent upon the legislators. The required share of each person to the necessities of life should not be left to the hazards of circumstance, to the bouts of fever or depression of the credit mechanism, to the periodic or chronic illnesses of the monetary units, the decisions of the creators of prosperous or lean times, to the appetites or indigestion of the beasts of finance and big industry; nor to the good or bad mood of the international lenders from which stupid or subservient governments borrow the permission to make use of the productive possibilities of their countries.
Our developed countries no longer have real problems of production to answer the normal needs of the population. But they suffer shamefully from problems of distribution — something that should be the most simple and agreeable act to accomplish. It’s not because these countries lack the means of transportation or shipping, but because the access that the individual has to the offered products is conditioned by the purchasing power at his disposal. This purchasing power is not linked to the person nor to his needs, but due to various factors that leave people and families without enough means of payments.
For the good of every man — we just said it. But also "for the whole man", added Paul VI.
For the whole man. This means a being who possesses more than a vegetative life, more than an animal life. It means for a being gifted with reason, created free and responsible, who normally aspires to development, to his own growth.
There is more. This being, of whom natural life is already marked with a high dignity, is called to a life incomparably more elevated, that infinitely surpasses his natural life of a reasonable being who is free and responsible. He is called to a supernatural life, to participation — with grace — to divine life itself and this for all eternity.
This certainly goes beyond the competence of a social and economic organism. We are talking here about supernatural means with a supernatural goal. And the Church provides for it magnificently with the means that her Founder put at her disposal.
But since we are talking about social and economic life, there is still the fact that the social and economic life should treat man with all the respect that he deserves in his natural dignity and his supernatural vocation. So the systems, methods and ways established to bring to all a sufficient part of the earthly goods must neither humiliate nor degrade anyone, or inculcate in anyone the mentality of a beggar who would live off others, since every person has the same rights.
In other words, the economic organism, with its method and style for the distribution of goods that answer human needs, must pursue the economic security of each and every person, without humiliating anyone or putting conditions that kill his liberty.
Although temporal happiness is the immediate end of economic life, all institutions that are linked to it should not give rise to difficulties on the road of man towards his eternal destination but, on the contrary, make this journey to his eternal destination easier by liberating him, as much as possible, from material cares.
"The whole man" means this: man of time and man of eternity. The concern of one should not be to the detriment of the other, because the two concern the same being. The worst catastrophe would be to organize a temporal life that contributes to the loss of an infinitely joyful eternal life for one so incredibly unhappy that we call it eternal death.
If Pope Paul VI wanted a social and economic order that took into account the good of every man, it seems to us that this care for "the whole man", even as regards temporal organizations, was also what his predecessor, Pope John XXIII, had in mind when he wrote in his encyclical letter Mater et Magistra (n. 219):
"Individual human beings are the foundation, the cause and the end of every social institution. That is necessarily so, for men are by nature social beings. This fact must be recognized, as also the fact that they are raised in the plan of Providence to an order of reality which is above nature."
Big empty words
We have quoted principles mentioned by the Popes throughout the centuries. But the methods of application for these principles are to be chosen and applied by the nations themselves. It is very far from being realized, even if these principles are not rejected, even if very often, we only pay lip service to them.
Political leaders have forged formulas that were supposed to represent great schemes, but they remained empty words. F.D. Roosevelt’s "New Deal", J.F. Kennedy’s "New Frontier", L.D. Johnson "Great Society", P.E. Trudeau’s "Just Society"… These statesmen are gone and only left behind them higher taxes and increasing debts.
These politicians offered so-called remedies. To talk about remedies, even if we do nothing, it is at least to admit that there is an illness.
More recently, without renouncing the slogan of "full employment" that followed World War II, certain people have mentioned the idea of an income for all, even the unemployed. Trade unions started to use the expression "guaranteed annual salary", which meant that even if the employee is out of work during one or more months, he is paid as if he had worked the twelve months. This was progress: money "not earned" by work was no longer considered as being immoral.
One more step followed. Since all the people in the world are not working for a salary, a guaranteed salary would still not give something with which to live, to each person. One then heard the expression "guaranteed annual income". Income means money. Money means access to the products. An annual income guaranteed to each person would then mean access to production guaranteed to all. It would be a claim on the products attached to the person and not only to the condition of being employed in production.
The (still) rare advocates of this rather imprecise formula of a "guaranteed annual income" are fifty years behind the precise and scientifically based Social Credit proposals, which we will talk about a little further.
It would be inexact to say that nothing was done since the last world war to soften the revolting effects of an economic system that knows how to produce in abundance, but does not know how to distribute. Under the pressure of an abundance of accumulated goods that drives up unemployment and provokes revolts, and because of the luminous teaching of Social Credit that shed light on the mystery of money and got rid of the jargon of the economists, the governments now carry certain measures to allow the distribution of some purchasing power to people who do not receive any money from a job in production. This purchasing power is for them an income disassociated from employment. These measures led to the family allowances in Canada (which stayed too small in front of tripling prices and increased production); to pensions for the disabled and for the blind; to social assistance and old-age pensions.
It is better than the almost complete absence of social security that prevailed before World War II. But it is still just a patch job to repair the deficiencies of an income badly organized at its source and it prevents the total collapse of a faulty system of distribution.
A maladjusted financial system
All the money affected in these so-called social security measures come from incomes that are mostly linked to employment. This money is extracted by taxes and redistributed to the pensioners and other recipients.
But to tax the income of Mr. A and Mr. B in order to give it to Mr. C or Mr. D, means to take from one plate to put into another, while the platter remains full to bursting with the flood of abundance due to modern production. It is not very intelligent.
And as taxes are more and more detested, to the extent that they cut into the income received from employment, it happens that this way of acknowledging the rights of all to the bare necessities, irritates the taxpayers without even sufficiently satisfying the needs of the recipients of such aid. Besides, it also humiliates the many recipients with conditions, inquiries, sermons and reproaches, — something that is not at all in keeping with what is understood by the expression "the whole man."
These flaws in the distribution of goods responding to needs results from the fact that economic life is vitiated by its submission to a financial system that is completely diverted from its end. This system has become the master when it should be the servant, a system that falsifies the real vision of economics.
These realities are, one the one hand, the needs of men — public or private — and on the other hand, the possibilities that exist to answer these needs.
If one reasons in real terms, the situation looks like this: Is there enough grain to furnish bread to all the citizens of the country? If so, then all should be able to obtain bread. And the term "bread" here covers all foodstuffs.
The same reasoning goes for clothing, lodging and any other need that humans normally have.
But with the priority given to money, the reasoning is totally different: Families want bread and there really is bread in plenty for everyone; but money is missing to pay for it. They will therefore do without, even if food producers must reduce their production accordingly and suffer themselves because their products do not sell.
Another example: A municipality needs a bridge, or a new sewer system. They can provide it only if they have the money to finance it; but if there is no money, the municipality will have to do without these projects, even though there is all the materials and manpower required to do them.
If the financial system were an exact reflection of reality, as it should be, either of these reasoning’s could amount to the same solution. But this is not the case. We saw to the contrary that in wartime, money abounded even more when the producers were mobilized by the army or war industries that do not serve to feed, cloth or shelter.
Ask the government to triple the family allowances, because they have not been adjusted to the cost of living and you will hear the reply: "It would be very desirable, but our financial situation does not permit it."
If you object: "Do you think that if families who raise children order more milk, fruits, or other utilities, the production capacity of our country will not be able to cope with the demand?" They will tell you: "This is not the point; our country can produce enough goods, but it cannot finance or pay for them, that is all, one cannot do otherwise.
Finance is not in keeping with reality as regards production. It is finance that dictates the decision. It scorns human needs: it is more sacred than children, people, or families. It is at least considered as more sacred in practice by the governments and by all their advisers who are subservient to the present system.
We could write pages on this monstrous subjection to a financial system that is at odds with the real possibilities to satisfy human needs. Monstrous — above all, when we know that the monopoly of money and credit dominates economic life by hoarding and treating as its own property the real credit of society, the productive capacity of society, without which money has no value.
If today’s great production capacity were served by an adjusted financial system, instead of being hindered by it, it would easily answer the needs for an honest livelihood for every family of the country and also answer public needs in their order on the priority list. This would really allow the existence of an economic organism for the good of every man and of the whole man. At the same time, the public powers at all levels would stop being continually harassed by problems of finance. Their main and almost unique function at present seems to be to find money.
With Social Credit
The regular readers of "Michael" will have noticed that, in economic matters, this journal speaks practically exclusively about the financial system. We do not address the methods of production, natural resources, water power, mines, means of transportation, big industries; and if we do so, it is only to criticize their gigantic scale and the depersonalization of the masses that they employ. We never talk either about the methods of farming, trade, apprenticeship, etc.
Why? We certainly do not ignore the importance of all these questions, but we have realized that they are well dealt with by other authors. We also realize that the flood of production is well maintained and that if there is some jamming or congestion in the system, this is not due to the producing system itself but to the financial system, which originates from a totally different source.
Similarly, we leave to others the questions of sociology, even if they are pertaining to the right direction of social life — except, once again, to regret that sociologists examine everything but the financial system, which considerably affects the conduct of social life and economic life as well.
We do not claim that the implementation of a financial system in keeping with the Social Credit proposals would solve all the problems of production by itself, especially of the exploitation of natural resources and the commercial or social relations between people. No, but it would singularly facilitate a solution for those who are in charge of solving these problems.
We believe that, as Pope Benedict XV put it, the social question can be summed up in a just distribution of wealth. We believe that this just distribution could be realized by a financial system that reflects reality and that includes, in its regulations, the guarantee of a sufficient income to each and every member of society.
This is what the application of the Social Credit principles would do, as brought forth by the engineer C.H. Douglas.
Hence the reason for the considerable importance that we attach to these principles.
But to understand Social Credit and the possibilities of its application well, one cannot judge it in the light of the present system.
At first glance, the present system and Social Credit take opposite stands as regards to finance:
The present system subjects the physical possibilities of production to the presence of the means of payment (to money or financial credit).
Social Credit, on the contrary, subjects the financial system to the physical possibilities of answering human needs.
How would Social Credit obtain this reversal? — Because it considers that the financial system should be supple enough to always adapt to economic realities, which are themselves the result of acts of free producers answering human needs expressed unreservedly by free consumers. Hence the title "Economic Democracy," the first book that Douglas wrote on this issue.
It is easy to correct since the money system is a bookkeeping system now. All that needs to be done is to formulate exact accounting, instead of this false accounting that expresses real development, made by the population of the nation, by a public debt to be paid by its citizens. And there are many other bad fruits issued from this faulty accounting.
To understand Social Credit, one must also admit that as a whole, the population should only pay the price of what it consumes and not the price of what it produces. This looks fair, but it is not what happens today. Today the consumer is required to pay the bookkeeping price of production, whereas the total cost of what was consumed to make this same production is not the same as the total sum of expenses, which constitutes the retail cost.
This of course can seem obscure to those who are reading about this subject for the first time. But we have explained this in detail several times in past issues of "Michael". (You can find some explanations on this point in our brochure "A sound and efficient financial system" or in the books "In this Age of Plenty" and "The Social Credit proposals explained in 10 lessons".)
Douglas defined the just price to be paid by the consumer in a few words: "The just price of production is the cost of what was consumed to realize that production." For example, if the bookkeeping price of the production for a period of six months is $20 billion and the total consumption during this same period of six months is $15 billion, the bookkeeping price obviously remains $20 billion, even if the real cost is only $15 billon. The population should pay only $15 billion, whereas producers should get back $20 billion. The consumers will pay only ¾ of the price and the financial organism will compensate for the rest.
This is the scientific adjustment of prices, unknown in the present system. This is why Social Credit cannot be inflationary or deflationary. It adjusts the situation of finance and prices to the reality of production and consumption. The result is that nothing can hinder the productive possibilities as long as they answer human needs and that people have access to all that production offered: if we need more, more is produced. According to an expression from Douglas, the only limit of production is either the limit of physical possibilities or the saturation of needs.
The scientific adjustment of prices allows us to socially regulate the methods of the distribution of the riches produced. If the producer is entitled to get the retail price back, once this is guaranteed to him, he does not have the right to determine under what conditions the consumers will get the products. This falls within the competence of the social organism established for this end to serve society: just like the judicial system is established to serve justice on behalf of society, judgments being given according to laws that the judges do not make themselves and according to the testimony of facts with which the judge has nothing to do.
Another principle of Social Credit that should be admitted, because it corresponds to reality, but is not applied in the present system is that:
The abundance of modern production is much more the fruit of invention, of successive improvements, of scientific application and discoveries of powerful sources of energy — in one word, of progress that is due to the work of men employed in production. It is a heritage, an immense real capital. This capital is much more important than money-capital, which is, after all, nothing but capital-numbers. The social financial organism could create these capital-numbers just as efficiently as the pen of a private banker, whereas the capital called progress took centuries to form.
This common heritage, which is the greatest factor in production, is not the exclusive property of one living being. It is a common good from which the use should bring a social income, a periodic dividend to all co-heirs, to all the members of society. All this would happen without suppressing payment to those who participate in bringing this capital to yield.
As you can see, Social Credit has a conception of the financial system and a method of the distribution of wealth that is very different from today’s rapacious and antisocial system. A social credit economy could use the same channels to put the financial credit into circulation and its return, but in a way inspired by a totally different philosophy. A philosophy that is perfectly in agreement with the service "of the good of every man and the whole man," as called for by the Popes, in order to have a sound and authentically social economic organism.
All this is obviously said briefly and you can find an even more succinct way to summarize the Social Credit principles in the following three propositions for practical application, formulated by the master, Clifford Hugh Douglas:
- The cash credits of the population of any country shall at any moment be collectively equal to the collective cash prices for consumable goods for sale in that country and such cash credits shall be cancelled on the purchase of goods for consumption.
- The credits required to finance production shall be supplied not from savings, but be new credits relating to new production and be recalled only in ratio of general depreciation to general appreciation.
- The distribution of cash to individuals shall be progressively less dependent upon employment. That is to say that the dividend shall progressively displace the wage and salary.
The first two propositions oversee the automatic financing of production and the application of the scientific adjustment of prices in the return of financial credit.
The third proposition deals with the guarantee of a social dividend to all, replacing more wages and salaries as purchasing power and progress eliminate paid work as a factor of production.
Here is something to occupy the mind of any reader. But those who are new to this subject should not become discouraged. No-one ever received a master’s degree in elementary economics in one or two hours.
So, to understand Social Credit, one must transport ourselves into a social credit perspective, in order to envision this new conception of the financing of production and the distribution of products.
Above all, don’t forget that we are talking here about a new financial system that bows to reality and not realities that bow to finance.
This study should be meditated in order to understand this light better, as well as understand its powerful efficiency. The result is worth the effort.