Prices and purchasing power

Products are made to be distributed. People do not produce food, clothing, shoes, furniture, farm machinery, tools, and all types of goods for the sake of producing, and then let these goods rot and decay while crowding up the warehouses.

Goods are produced to reach those who need them. When they do not reach those who need them, they neither reach those who do not need them; they stay where they are, and the producers stop making them, or they make less, or they start producing luxury goods, while basic needs remain unsatisfied.

When do goods reach needs? They do so when those who need them are able to pay for them. To be able to pay for goods means to have enough money to match the prices. The purchasing power therefore depends on two things: money and prices.

He who does not have any money at all cannot buy anything. If he has some money, but if prices are high, he must also pass by products that he would like to buy and that he needs, but cannot buy because of high prices. The lack of purchasing power makes at least two categories of people unhappy: those who cannot buy the products, and those who cannot sell them.

If he, who wants to sell, is obliged to lower his prices too much in order to sell his products, he will not be able to recover his costs. Production is stopped when costs cannot be covered. And when production stops, the products are not there for those who need them.

No products in front of the consumers, or else products that consumers cannot afford — in both cases, needs remain unsatisfied, and individuals and families suffer.

In a country that can easily produce everything necessary, or that can exchange its surplus products for foreign products that cannot be easily produced at home, there surely should not be people deprived of the necessities of life.

Lower prices, compensate retailers

What would a Social Credit system do to allow the products to meet the needs? It would make sure that there is enough purchasing power in the country to buy all of the production on sale on the market that answers human needs.

To this end, all prices would be lowered, so that the total money in the hands of the consumers would match the total of the prices of the goods available. If, for example, the prices are twice as high as the existing purchasing power, all prices would be cut in half, with a fifty percent discount on the retail price of every product.

But for the retailers and the producers to be able to meet their costs, and for production to continue, a Social Credit system would compensate the retailers: the National Credit Office would refund to the retailers the 50% discount that the consumers did not pay. This is called an adjusted-and-compensated price system.

What is done today when the prices are too high, and the consumers cannot afford the goods? Nothing! As a result, consumers have to do without, and production is reduced. Everybody loses; nobody wins.  

Money must be the servant of man

Where would the National Credit Office get the money to compensate the retailers? It would get it from the same place that the Government got it in a world without money, in 1939, to finance a global war that cost billions of dollars.

Money is basically a matter of figures, of numbers, and the source of numbers is inexhaustible. Actually, there can be no limits to figures; the only limit that exists is for production. Figures must be created to match existing production.

To this end, one needs an organism, accountable to the population, and acting on its behalf, to make money the exact reflection of realities. A Social Credit system would establish this organism: a National Credit Office which, just like the judicial system, would be independent from the whims of the politicians, and act according to the realities of consumption and production, to the statistics of the national accounts.

Why could a Social Credit system do this? Because a Social Credit system does not tolerate the absence of figures in front of the products. It does not tolerate that man be sacrificed on the altar of money, of Mammon, but rather makes money a mere instrument at the service of the human person.

Why is this not done in the present system? Because today, money is considered as a god, a sacred thing, and because everything the money controllers decide must be abided by, even global crises and wars, even whole nations starving to death while food is destroyed or production limited through state decrees.

A dividend to all

To lower the prices is all right, but, for he who does not have any money, this does not make any difference. One cannot admit that an individual has absolutely no money, no purchasing power, in today's world.

Modern industry has put the means of production in the hands of a few people. Those who do not possess any means of production cannot produce, unless they are hired by those who possess them. Yet, many people cannot be hired.

If today's economic system cannot put the means of production in the hands of everybody, it should at least put in the hands of everybody the claims on products.

If one possess neither the means of production nor the claims on products, one is condemned to stealing, begging, or starving to death. Today's financial system does not care about human lives; it cares only about the prerogatives of money and the money masters.

Things would be different with a Social Credit system, since it would put money in the hands of everyone. It would give to each and everyone claims (money) on at least the basic necessities of life, by distributing to every member of society a periodical dividend, from the cradle to the grave.

There are many arguments that justify giving this dividend to each individual. The main one is that every human being has the right to live, and this can be done only with at least a minimum of purchasing power available.

All of this is explained quite briefly, and can give rise to many questions. However, our new readers should not get discouraged. The more they will learn about the Social Credit philosophy, the more logical they will find it, being it is in conformity with common sense, respectful of the freedoms and property rights of each individual, and at the service of each and every human being.

                                                                                                 Gilberte Côté-Mercier

This article was  published in the May-June-July, 2003 issue of “Michael”.

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