"The Economic Democracy dividend is the recognition of everyone's right to life. Each person has a fundamental right to a share of earthly goods."
Little else than human labour at their disposal, the power of animals, and a few simple tools consisted in producing enough goods to sustain themselves. Real poverty, scarcity, was a constant threat. In the twentieth century, with a continent open to progress, with the forces of nature and of applied science at our disposal, the immediate problem is to find the way to distribute an abundant production. The presence of an abundance of goods already realized, or easily realizable, should confer to all men the following political rights in the economic domain:
1) Life — The right for each individual to obtain the necessities of life, food, clothing, lodging, without having to resort to public charity.
2) Freedom — The right for each individual to choose the kind of occupation he is best suited for, instead of being compelled to accept such work as he can find.
3) Pursuit of happiness — The right for each individual to leisure that he would be free to use in accordance with his personal initiative in material, aesthetic, intellectual or spiritual activities.
The possibility of guaranteeing these rights rests on the undeniable capacity that now exists of producing all the goods and services required to guarantee these rights while using only a fraction of the human labour that is now available.
Economic Democracy, also called Social Credit — not the system of control and espionage currently applied in Communist China, but the financial proposals of Scottish engineer Clifford Hugh Douglas conceived in 1917 — is a movement, whose goal is to allow consumers to benefit from the entire production capacity of useful goods. Unemployment, of which people suffer today, is not the result of the saturation of consumer needs, nor of the exhaustion of the productive resources, but results only from the non-distribution of products and services.
Production goes ahead only in accordance with the orders it receives. The orders are limited by the consumers'purchasing power. This purchasing power depends on the money found in the hands of consumers who have needs to satisfy.
Economic Democracy presents a well thought out plan to fill the gap, on an ongoing basis, between the prices of products and the money consumers have in their hands to buy the products meant for their use. This system leaves both inflation and deflation out, but it maintains a mathematical equilibrium between production and purchasing power. It subdues money and puts it to the service of man. It forces it to fulfil its function: the financing and distribution of production, the satisfaction of consumer needs to the extent that the resources of nature and industry will allow.
In its propositions, Economic Democracy embraces doing away with poverty, with the social guarantee of the individual's economic security.
No one will deny that the country is able to produce enough goods so as to provide an honest subsistence to each and everyone. The physical possibility exists; only the financial possibility is lacking. Finance does not serve the people, and this is where a remedy is needed. As Henry Ford pointed out, the products are there, but the dollars to buy the products are not. The producers of goods fulfil their role, but the producers of dollars do not. Admirable techniques are used in production, but there is none in the monetary system. The great American industrialist added: The monetary system is outdated, inefficient, and it is high time it be changed.
Money is not wealth; it is only a title to wealth. Wealth comes from human or mechanical labour applied to the natural resources. We are not short of wealth here; there could be much more wealth since there is much human and mechanical labour not being used. Money comes from the makers of money, and because there is a shortage of it, or since it is not where it ought to be, since the titles to wealth are lacking, the wealth is not sold, production comes to a stop, poverty reigns amidst plenty.
Money is made up of metal coins, of bank notes, and of bank credits and deposits that are put in circulation by our signing cheques. Today, cheques account for more than 95 percent of business transactions. Cheques simply shift credits from one bank account to another bank account, as registered in ledgers.
Bank deposits make up most of the money in circulation. These deposits originate through the credits granted by the banks as loans, discounts, overdrafts, or the purchase of bonds. The banks are the creators of money. But they destroy this money by the recalling of loans, by the reduction of overdrafts. If the creation of money exceeds its recall, the money in circulation increases; if the recall of money exceeds the creation of money, the money supply decreases. There is no equilibrium sought between production and money. Banks do not aim for equilibrium. Their aim is profit.
Moreover, it is at the production level that monetary advances are made. But the rate at which production credits become consumer credits is less than the rate at which retail prices appear, the latter rate being that of production. It is impossible to manage the present monetary system in accordance with both the needs of the population and the production capacity to satisfy those needs.
The nationalization of banks would correct nothing on its own. Changing rulers will not suffice; we must change the policy which governs control. In other words, control must pursue another end; it must seek constant equilibrium between prices and purchasing power.
Money cannot be controlled socially in accordance with the facts of the country's production and consumption unless it is on a national level, with respect to national accounting. There needs to be a national monetary body, the same way there is a judicial body to administer justice.
Private banks can maintain their "for profit" operations in return for the services they render, but they must no longer have the right to increase or lower the money supply. This function must be exercised exclusively by a national monetary body, the National Credit Office.
The National Credit Office registers the statistics of production and consumption, and acts according to facts in issuing money so that all of production might be sold, if it answers true needs. The NCO enjoys all the powers it needs to attain this end. It answers to the nation.
The technique set forth to reach the two ends of Economic Democracy — equilibrium between prices and purchasing power, and the doing away with poverty — consists in distributing new money using two methods: the compensated discount and the dividend.
The compensated discount's goal is aimed at making prices and purchasing power equal to one another. Money would be created and distributed without creating inflation. The money from the compensated discount finances a reduction of prices in favour of the consumer.
If the available production is $12 billion, and the purchasing power in front of it adds up only to $9 billion, the National Credit Office decrees a 25 percent reduction on all prices, a discount on all products at the time they are sold to the consumer. This serves to reduce prices to the level of purchasing power. The discount is compensated to the retailer, that is to say, the Credit Office gives him the money he lost when he granted his customers a discount. This money is created by the Credit Office the exact same way that banks create money today. This new money favours the consumer, provided he buys something; it goes to the retailer, provided the sale was made. This is money which allows production to be sold by lowering prices. This satisfies everyone: the buyer, the retailer, and the producer who is only too glad to sell his products.
The national dividend, as its name implies, is the distribution of a dividend, of a sum of money representing a surplus or the revenue from a capital, to all members of society — therefore to each man, woman and child in the country.
This dividend is based on the existence of the cultural heritage or social capital which belongs to everyone, capital consisting of the discoveries and inventions of science. The part this capital plays in production is increasing, while the part played by human labour is decreasing. Labour needs to be rewarded, but so does capital, even social capital. We are all heirs of generations past, all capitalists, and everyone has a right to a dividend large enough to shield himself from poverty.
In order to understand the feasibility of the monetary system advocated by Social Credit, one must not lose sight of the fact that the world has entered into an era of abundance; that, if there are poor people, it is not because of the rich and wealthy, but because abundance is not distributed. There is no need to take away from the rich in order to give to the poor; we simply need to instill technology into the monetary system. We cannot be contented by saying that money is made for man. We need to establish a system that truly puts money at the service of man, of all men.