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Capitalism, not Communism

Written by Louis Even on Friday, 01 January 1971. Posted in Social Credit

Canada developed and flourished without any need for communist centralization. Without the dubious benefits of socialism, the nation’s virgin forests and plains were cultivated, commerce and industry were developed and the country became a highly ranked world producer. It was not the state’s intrusion into every corner of life in this land, but settlers, driven by personal initiative, free enterprise and private property ownership, who drove this transformation.

Is communism, with its swarm of bureaucrats priming the machinery of an overreaching state, necessary for the descendents of those settlers to provide a decent living for their families? Particularly considering that today’s production techniques are more efficient and families are smaller than in earlier years?

It is easy to conclude that socialism must not be introduced but we also should recognize that capitalism has been poisoned by elements that are contrary to reality. There are obstacles standing between an ever-expanding abundance of production and the needs of families. The obstacles, which vitiate the system of capitalism, must be denounced as contrary to its true nature. We will come back to this theme but first let us consider some other factors.

The Rich and Poor

There is no shortage of people who argue that society must take away from the rich, who have more than they need, in order to give to the poor, who do not have enough. The poor, they conclude, would be less poor if the rich weren’t so rich. Many hold this perspective even after studying the issue.

Clearly, this group must be educated. Can we really make the case that if there are poor people it is because there are rich people? This socialist notion does not hold up well to scrutiny as countries, such as ours, do not consume all the goods produced (or which could be produced).

Even if the rich are greedy and difficult to satiate (and abandon common sense on earth and their souls for all eternity!), they still cannot consume all the food grown and processed by a nation. They cannot wear all the clothing that can be manufactured nor can they use all the building materials that can be produced. There is still an abundant surplus of goods remaining after the rich satisfy their needs. It is not true that the rich person’s big basket of goods makes the poor man’s basket smaller. Ask the local grocer if he has run out of supplies for the poor after the rich have been served.

The issue, some will say, is not the availability of goods but that families do not have sufficient money to purchase what is necessary to maintain an optimum standard of living.

It is a matter of money, not a matter of goods. Reality is not the problem! It is the money system, not the production system, that must be scrutinized and held accountable.

There is a difference between a capitalist system which can produce, transport and deliver products efficiently and a money system which is at odds with the reality of production and distribution.

Capitalism’s Flaws

There are certainly flaws in capitalist economies. However, to correct these flaws we must identify the causes and make appropriate corrections.

What if a person with a treatable condition like cholera asked his physician to inoculate him with the plague in order to spare him from cholera? Those who deplore intolerable economic disparity in our free countries are doing worse than the person sick with cholera. They are seeking a cure in communism, thereby trying to eradicate a treatable condition with a fatal one.

Pope Pius XI said that communism, not capitalism, was perverse in its very essence and, like the devil, there was nothing good or even neutral that could result from such a system.

Capitalism is not inherently bad. It must be distinguished from the financial virus from which it suffers and from which it can be freed. Capitalism, with its features of personal initiative, free enterprise and private property, is the best system to develop a nation and bring prosperity to the families that comprise it.

Production and Distribution

To be effective and socially responsive, an economic system must meet two conditions well. First, it must be capable of producing the goods necessary to meet the population’s needs. Secondly, it must be capable of distributing these goods where they are needed.

Is the system of production, with its material resources, technical know-how and labour supply capable of providing all the goods necessary to meet the needs of an entire population? There is no question that it easily can do so. Similarly, is the system of distribution, with the means to transport goods to all corners of the country, capable of delivering goods to those who need them? It can.

If the production or distribution systems fail to perform, it is not because of a lack by producers or incapacity of distributors. The fault lies with the money system. Money is an effective invention to mobilize production and distribution so that the population can consume what they need. When the mechanism fails, It is simply due to a lack of money.

Money is not the essence of capitalism, it is only a mechanism to serve the system. It certainly was not designed to thwart consumption by restricting production and/or distribution.

The money system produces nothing. Yet, one would think money was a divine and sacred institution, whereas, the capitalist structures of production and distribution (which can successfully serve the population) are derided. Producers and distributors are perennially seeking opportunities to produce and distribute. Unfortunately, the same gusto is not applied to the supply of money. Nothing would be easier than to make money an exact accounting system, reflecting real value. After all, money is nothing in itself.

If we could think and reason in the realm of goods and needs, rather than thinking and reasoning in terms of money, we would recognize the potential of establishing economic conditions satisfactory to the entirety of society. We would be indignant that artificial obstacles are erected by a system of finance which produces nothing and yet dominates everything.

A Clear Distinction

A farmer’s fields are real capital, as are the farmer’s implements and the cultivation of his land. He plows the fields using techniques honed over the years and sows wheat or plants potatoes. At harvest, there will be an abundant yield of a crop. The farmer is a capitalist, not a financier. He derives real income–wheat or potatoes, as a result of the application of real capital.

The financial system is an entirely different matter. It is based on the use of money which can be seen as a type of ticket or permission slip. A producer mobilizes production using money. The consumer uses money to secure what has been produced. However, it is not money that gives value to products. It is the other way around: production gives money value.

So, money must be the flexible component, bending to reality, rather than reality submitting to money. If there is useful and necessary work to be done and workers eager to begin, why must the job be paralyzed by a mere lack of numerical permission slips?

Mackenzie King was Canada’s Prime MInister for 25 years. During the decade before World War II, he did not have a dime for the unemployed. Yet, as soon as war was declared, and Canada entered the fray, numerical figures flew from the inkwells of bankers, effectively creating permit slips to kill and purchase weapons for killing. This shows us that the creation of monetary permission slips is not an issue. Such control can be commandeered by those who are neither the government nor the producers, namely, bankers.

So it is the money system, not capitalism, that is the culprit. The money system makes itself the means and end of all economic activity and has mesmerized us to believe that this is true rather than a fallacy. The system has a human origin and can thus be managed to match productive output and a population’s needs for consumption. It is madness that the system does not function as it could and ought.

The developed world is one of plenty. It is a world in which we do not need to mine and extract gold to serve as a money supply. Indeed, a $100 bill costs no more to produce than a $5 bill. The world is such that, with simple bookkeeping, credits can be transferred from one account to another and payments settled easily between people and firms separated by geography. It is incomprehensible that we suffer by not adjusting the supply of money to meet the demands of production and distribution to all.

The reader can ignore these propositions and believe that the rules of finance are laws of nature, like gravity, or like the seasons and the rotation of the earth around the sun. Even in countries rich in resources one presumes the problem is without a solution. The monetary system is still a mystery for most (except for those who gain from maintaining the mystery). In Canada, real ignorance cannot be claimed because [Douglas] Social Credit has been teaching the principles of sound and efficient finance since the 1930’s.

In this nation, politicians, journalists, educators, sociologists, advocates for social justice and others in positions of trust are without excuse, whether they claim ignorance or are cowardly or complicit. They look at the deprivations of families and individuals and point the finger of blame on everything but the current perverse monetary system. The affected citizenry are lured by communism’s promises for a solution when an economy of abundance is dangling before their very eyes.

All People are Capitalists

Instead of railing against capitalism and sympathizing with communist ideology and its proponents, it is the development of true and full capitalism that is called for. Capitalism which conforms to reality must be extended for all people.

All must be allocated a share of the fruits of the natural resources created by God. All are also heirs of the gains made by the progress born of technological advancements and innovations. This progress, acquired and increased by each generation and passed on to the next, allows production to be more efficient and abundant over generations and has resulted in reliance on the input of less human labour. This is now the primary component of real capital in modern production. It is a legacy, not earned by any one person more than another. We should consider it as a heritage equally shared, a real community capital allocatable to each person alive today.

A Periodic Social Dividend

The populace needs to pressure governments to take action rather than engage in procrastination. Issuing a periodic Social Dividend to each citizen, as a birthright based on the factors just described, and regardless of whether a person had other sources of income, would be a tremendous social achievement.

Welfare dependency would end. Each person would enjoy his due as a capitalist thanks to the Social Dividend. In all ways the Social Dividend can be likened to the dividend paid to the successful business investor. After all, the capital born from progress and a nation’s resources is concrete and a greater factor in the productive process than is the investment of dollars.

The poor are often called the deprived. This is very true as their rights as equal co-heirs of the cofactors of natural resources and progress has been denied them.

When the fruits of production are shared only by investors and paid workers, the portion owing to each person in society is diverted. Taxation, as a mechanism of redistribution to help the poor, does not restore the heritage owed to all but rather keeps the poor in a state of deprivation. Rightfully, all are social co-capitalists and co-heirs. The receipt of a Social Dividend is an entitlement, not aid. Each member of society would earn a measure of economic security and enjoy an adequate standard of living (as long as production continued and in relation to its volume). This feature would stand with, rather than eliminate, the recompense to investors and workers who developed the community capital.

Society would enjoy a humane economy which would realize the fundamental right of each person to the use of earthly goods. Pope Pius XII acknowledged this right, flowing from the sole factor of being human, in his memorable radio broadcast on Pentecost Sunday, 1941.

Technological progress has been a rationale for reducing jobs in the current system. With [Douglas] Social Credit, and its Social Dividend, automation would liberate people to pursue activities apart from the sphere of economics. Presently, we are caught in a system in which new material needs must be cultivated to grow jobs to provide income sources. Indeed, when the right to material goods is dependent on paid employment, crass materialism is accentuated. The Social Dividend feature would, as one philosopher opined, usher “instead of a civilization of work, a civilization of contemplation”.

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