Before getting into technical details, one must admit principles
You, Social Crediters, say that you want to reduce taxes progressively, and ultimately eliminate them completely. How then 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.
“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 iscommonly 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.