Many contradictions are born of a perverse economic system

Written by Louis Even on Saturday, 01 January 2022. Posted in Social Credit

In the preamble to The Monopoly of Credit, author Clifford Hugh Douglas posed questions which he proceeded to discuss in the body of his book.

"How is it possible for a world suffering from over-production to be in economic distress?

"Why should we economize when we are making too many goods?

"How can an unemployment problem exist, together with manufacturing and agricultural systems which cannot obtain orders, side by side with a poverty problem?

"Why are we asked to have confidence in our money system if it is working effectively?"

Numerous Contradictions

These dilemmas are born from the perverse nature of our monetary system. This fact is amply demonstrated in Douglas' book.

We are asked to have confidence in the monetary system, but how can we when on one hand there are vast surpluses of goods that could meet the population's needs, and on the other, a staggering lack of money with which to buy them? We are told to save our money when it is in short supply but if we do, then we must manage without basic goods. The result is goods that do not sell, mounting unemployment, decreased revenues and shrinking purchasing power. Can the public be blamed for a lack of confidence in the system when we know such advice is idiotic?

We are cautioned to save today so that we can survive when we are old. This is a bit of "wisdom" which is nonsense. We presume that 20 years down the road, we will be consuming goods made then which will be abundantly available. But there are abundant goods today which we are asked to forego to save for a day in the far off future. In the end, we must conclude there is little relationship between the principles of our financial system and the hard realities of our production systems.

There are more contradictions. The system is continually breeding contradiction to the degree that finance contradicts realities and the current system controls society rather than serving it.

Full Employment and Automation

All governments pursue the will-of-the-wisp of full employment. They would have every available pair of hands hard at work. If the strategy is unsuccessful, a crisis is declared. Society can expect to be in a state of crisis permanently!

It is a fact that in any progressive country, there is a continual striving to advance methods of production, to perfect techniques and machinery in order to produce more and more with less and less expenditures of time and energy. Consequently, and necessarily, machines are replacing workers.

In this evolution, the first step was mechanization, the second motorization. Today we are well along the road to complete automation. The logical outcome of such progress is unemployment. At the same time, governments and labour unions cry for full employment, a contradiction to the spirit of progress!

There is no denying this contradiction. It is inevitable because the money system has not kept pace with progress whose spirit demands the liberation of men from employment.

The demands for full employment affects not only men but girls and married women as well. Men were well able to provide for their families in the past; wives and daughters could stay at home. How is it that today, with all the machinery and refined methods of production, men cannot earn a livelihood for their dependents without sending their wives and daughters into offices, shops and factories?

Full employment requires that society finds work for men whom the machine is liberating from work! A Frankenstein monster that demands production is created which is nurtured by taxation. In the end, the demand for full employment makes it impossible to enjoy the fruits of production, and the needs of families are unmet. What a contradiction!

Higher Wages and Less Work

At the risk of raising a hue and cry from unions, there is another contradiction to highlight: the call to increase wages and salaries despite a reduction of the work day and work week.

A wage is designed to compensate for work. If work is cut by a third or a half, the compensation should be cut in the same measure. To demand more money for less work is a call for earnings not related to work performed.

Let us explain that this particular contradiction is also a result of the monster which our money system has become. Demands for increased wages are not made because of an increase in work, since very often they are accompanied by a demand for shorter hours. Increased wages are demanded because of increases in the prices of products which can not be purchased with existing earnings.

The contradiction not only remains but becomes wider. Increased wages cause prices to increase which in turn give rise to demands for more wage increases. Thus the spiral, the direct fruit of the contradiction.

The productive system exists for the consumer. The consumer can never meet prices with the money which comes from salaries alone. For this reason, other money must be distributed, even if hours of work are less. This other money, unattached to work, should not be from wages, rather, it should be from a Dividend issued in recognition and in relation to productivity which is born from technological and social progress, not from labour.

So you see that, in spite of itself, the system is obliged to offer what Social Credit, or Economic Democracy, has been advocating for years: an income stream unrelated to work. But because this revenue is not tied to work, because it is the fruit of progress, the cultural inheritance and the unearned increment of life in association, this supplementary money should go to everyone, whether they are wage-earners or not.

This additional income, unrelated to work and coming in the form of a social Dividend, would not be the responsibility of industry. It would be distributed by a monetary system in step with realities, that is, in step with progress. There would be no more price/wage spirals which devalue the money supply, aggravate privations and force the state to pile tax upon tax in a vain attempt to correct, by financial juggling, an evil which has its origin in the failure to recognize that all have a right to the fruits of progress.

In 1918, Major Douglas developed the system of reforms called Social Credit. If, at that time, a Social Dividend had been launched, measured by productivity that was the result of progress rather than brute aaaaa

Taxes and Unemployment

That taxation and unemployment coexist constitutes another blatant contradiction. Is it really necessary to pay taxes for, among other things, the relief of the unemployed? Under the present system, we are driven to such odd action.

Unemployment means one of two things: either that production has been achieved and can be halted, or that human hands are no longer required for the system to proceed. Regardless of how one looks at it, unemployment is a sign of surplus wealth.

However, taxation makes it extremely difficult for the population to acquire as great a quantity of goods as they could obtain if taxes did not exist.

There is the contradiction: excess production and restricted distribution!

Unemployment causes distress in the families of the unemployed because, in the present system, there is no other source of money beyond that from employment; little wonder that unemployment is considered so great an evil.

In order to reduce unemployment, it is necessary to increase the rhythm of production. However, taxes decrease that rhythm in that they reduce the purchasing power of the taxpayer.

The contradiction again: instead of taxes, we need the contrary: an increase in purchasing power through the distribution of the Dividend. But then we would have a Social Credit economy and such an economy would be the end of the financiers'control. So, this absurd contradiction continues at the sacrifice of the freedom to enjoy the fruits of our own productivity!

Wealth and Debt

When roads, bridges and railroads are laid out; when schools, churches and universities are built; when laboratories and hospitals are set up, the wealth of the country is increased. No one will argue this.

Nevertheless, in the same measure that we increase the country's wealth, the debts of governments, school boards, parishes, universities, etc., increase. The growth and development of the country is possible because of its natural resources and the labour of its people. Of course, not everyone works in construction – which is just as well. We need other industries to produce the things needed by builders.

We can say that, with the exception of what is imported, the population are the authors of the nation's wealth. But once manufacturing is completed, the same population is asked to pay for it, and at a price exceeding the cost, because of taxes levied upon these same people. Ironic, isn't it, that people are forced into debt for something which they entirely produced?

Producing wealth is met with the imposition of debt on the producers of the wealth! Growth and indebtedness! Certainly this is another egregious contradiction, among many.

We could add to the list by continuing to consider all the evils that flow from the current system. Yet how easily could we correct the system by deferring to a monetary system that was consistent with reality! The reality is that there is an abundance of goods and there could be an equivalent abundance of money.

Those in authority turn their backs on people's wants and needs, maybe to avoid seeing that they have betrayed their high offices or in order to deny their stupidity.

Modern production and distribution pose no issues. So why does money pose such a huge problem everywhere? A Social Credit monetary system would end the money problem by making finance the faithful reflection of reality.

Why is the Social Credit solution rejected in favor of the fraudulent system we now have? It is the source of much undeserved suffering and gives rise to evils whose extent and gravity are beyond measure.

About the Author

Louis Even

Louis Even

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