Why does MICHAEL always speak about money, the monetary system, a reform of the money system?
Because most of the problems we encounter daily have to do with money — the problems of individuals, but also the problems of institutions, schools, universities, municipalities, governments, corporations and small-business enterprises.
In today's world, our life depends on obtaining products and services (goods) that are made by others, while other people depend on ours. But we cannot obtain the goods of others unless we pay for them. And to pay for them, we need money.
Thus money is a license to live. Not because we eat money when we are hungry; nor do we wear money to clothe ourselves. But without money, you have nothing except what you can produce on your own, granted you have some means of production at your disposal.
Without money, you don't go very far. Even those who are not attached to money are obliged to have some if they don't want to end up in a coffin too rapidly.
But, some will say, money is an invention of the devil. It is a source of disorder. It is an instrument of domination. It is a tool of perdition.
It is the misuse of money, the mismanagement of the monetary system that comes from the devil, that causes all of this, and many other horrible things.
But money, as an instrument of exchange and of distribution of products, is perhaps the most useful social invention of man; as an instrument of distribution, since this is why it was established. Thanks to the existence of money, the farmer, who has more potatoes than his family needs, and who wants shoes for his children, does not have to find a shoemaker who has too many shoes and who needs potatoes. The same applies to the shoemaker who does not have to visit the countryside in search of a man who has too many potatoes and who would like shoes.
Each one offers, on the market, what he does not need for himself. In return, he obtains this little thing called money that takes up very little space. Then, with this money, he chooses what he wants from the market.
What he wants: This is one of money's greatest qualities. Money can either be used to choose butter or to choose a musical instrument. Everyone accepts money in return for his products or for his work, because everyone knows that this money will be accepted by everyone to buy almost anything.
In itself, money has no value, especially modern money. A simple piece of paper, on which the figure 5 is printed, allows you to buy something you want up to five dollars'worth. And if the piece of paper, not larger, not thicker, shows the number 10, it permits you to choose any products up to ten dollars'worth.
Money has practically no intrinsic value in itself. It is essentially a number that represents a value, that permits one to obtain this value in goods.
Even so, the products have to be there!
Of course, the products have to be there, if we are to get them.
Money is not a commodity, it is an instrument to distribute products. Products that do not exist cannot be distributed.
It would be absurd to say that we can survive using figures that represent values, when there are no products that can be obtained with these figures.
Distribute all the money you want to a man who lives in isolation at the North Pole, or in a desert that he cannot leave: This money will be of no use to him.
But it is just as absurd, and even more aggravating, to run out of figures with which to obtain products that are being offered and that are needed to sustain life.
This means that there must be a balance between the total of products marked with a certain total value, and the total figures in the hands of those who need these products.
Exactly! On one side, there are products, labeled with figures called prices. On the other side, there are pieces of paper, or pieces of metal, or bank accounts, with figures that represent purchasing power.
When you can put the equal sign between the two things, the goods can pass from the producer or the retailer to the consumer who needs them.
So, is the present money system good?
It would be good if the bookkeeping was balanced, and if the figures that give a right to the products were well distributed. But the system is vitiated, because those who run it are using a distorted bookkeeping system, and also because the figures are not fairly allocated.
These accountants are neither the producers nor the governments. The figures originate in the banks, and these figures are not in relation with the production being offered, but in relation with what profits the banker thinks he might make by issuing these figures.
Instead of being a simple bookkeeping system that serves, the money system has been vitiated. Its control has been privately monopolized; it has become an object of speculation, of domination, of tyranny, of daily dictatorship over our lives.
The farmer may increase his production but the accountant in charge of the money supply, the banker, does not increase the amount of cash credits and does not distribute any to those who want to buy the farmer's products.
Does MICHAEL want to get rid of the whole system?
Not at all. They consider the fact that money is a matter of bookkeeping to be a very good thing. But they want the bookkeeping to be exact. They want money to reach its proper end, to be an instrument of exchange and distribution.
This is easy to achieve. Since money is a claim on products, the public must have sufficient purchasing power to draw upon the products they need, as quickly as the productive system can supply these products.
Every individual must own a sufficient share of this purchasing power that is needed to buy the products, since each individual has the right to live and since it is impossible to live without money.
That is why Economic Democracy proposes:
A. The establishment of a (national or provincial) Credit Office that would keep a record of the total production and the total consumption (including depreciation) in the country or the province. The present Department of Statistics already gives almost all of this information; besides that, an on-going approximate estimation is quite sufficient.
B. The total purchasing power in balance with the productive capacity, and justly distributed among the members of society:
1. Through rewards for work, like today, distributed by industry itself.
2. Through a periodic dividend to each individual, whether he be employed or not, from birth to death, that guarantees every one will receive a share large enough to cover their basic needs This dividend would be distributed by the Credit Office.
3. Through a reduction of prices, a discount that would be compensated to the retailer by the Credit Office.
Where would the Credit Office get the money for the dividends and compensations to the retailers?
Since money is a figure that permits us to obtain things from the production of the country, the Credit Office would simply issue these figures inasmuch as the productive capacity can answer these orders. It is only a matter of bookkeeping.
These figures may well be simple writings of credit in an account opened for each citizen and a simple cheque drawn upon the national (or provincial) credit, sent to the retailer, on presentation of his discount vouchers.
There is no need here to go into technical details. The methods of application may vary. One of these methods is explained in Louis Even's booklet, A Sound and Efficient Financial System.
Do you believe that such credits would circulate and be accepted as money?
Of course! They are already being used and accepted today. The loans and the overdrafts granted to the manufacturers and retailers, the credits that allowed Mackenzie King, Roosevelt, Churchill and the others to organize a human slaughter that lasted six years, are not and were not gold, not even paper. They were mere figures entered into accounts to be mobilized by writing up cheques.
But do you think a money system can be run just like that?
Do you prefer money to lead mankind?
Moreover, you must notice that there is nothing arbitrary in the monetary bookkeeping proposed by Economic Democracy.
Production remains the business of the producers themselves. Consumption remains the business of the consumers themselves. The accountants of the Credit Office only note down each total amount. They mathematically deduce what is lacking on one side to make it equal to the other.
There are therefore no expropriations, no nationalizations, nor decrees that dictate what needs to be produced or consumed. Social Credit (not China's Communist system, but the solution created by Scottish engineer C.H. Hugh Douglas and advocated by MICHAEL) is a perfect economic democracy.
Everything remains the business of free men. Freer than today, because those consumers who have sufficient purchasing power would order much more freely the products of their choice than those whose wallets are always flat and often empty.
It's like a ticket collector on a train telling passengers who want to board: "You can't get on—we've run out of tickets!" —even though all the train seats are empty.
It's like a woman going to the post office in May to buy a stamp and being told by the clerk:
"Sorry ma'am, we've run out of stamps—we've reached our annual quota. Please come back next year!"
The sign (the ticket) must match reality. We should issue as many tickets as there are available seats, and as many stamps as there are items to mail.
It's like a construction foreman telling workers: "Stop working! We can't continue—we've run out of centimeters!"
Money is also a unit of measurement—it allows us to compare the value of goods and services. Like any unit of measurement, it's a symbol, not the reality itself, and it must be adjusted to match reality.
Likewise, in the case of postage stamps, it is not the number of stamps available that should dictate how many letters can be mailed, but the opposite:
The number of stamps should be adjusted to match the number of letters.
You understand the absurdity in all three examples—the train, the post office, the construction site: everything is blocked due to a lack of numbers, of symbols.
Saying "we're out of money" when products are physically available is just as absurd.
This situation is only getting worse, because today, more and more production is done through automation and robotics, and less and less by human labor.
(As shown in the previous issue of MICHAEL, many advances in artificial intelligence are enabling the creation of robots that replace human workers.)
If fewer people are earning wages, and we continue to distribute purchasing power only to those employed in production, we are headed for disaster.
People will starve in the midst of an abundance of goods—produced by robots.
This is why Economic Democracy proposes a monthly dividend to every citizen, based on our common heritage of natural wealth and technological progress—so people can have the purchasing power to buy what is produced by machines.
We call it a dividend, because each citizen is a co-owner of the country's natural resources and of the inventions passed down by previous generations.
And where will the money come from to fund these dividends? From the source of numbers itself—in this case, a National Credit Office, acting as the central bank of the nation, issuing all the money needed for the economy to function properly—interest-free.
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