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Present economic conditions come from a false and perverted system

Written by Louis Even on Wednesday, 01 March 2000. Posted in Social Credit

As a preamble to his book, The Monopoly of Credit, Major Clifford Hugh Douglas poses the following questions, and expects the reader to find the answers in a study

of his book:

"How is it possible for a world which is suffering from overproduction to be in economic distress?

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

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

"Why should we be asked to have confidence in our money system, if it works properly?"

Numerous contradictions

These questions are born from the perversion of our present monetary system. This fact is amply demonstrated in Major Douglas's book.

We are asked to have confidence in our monetary system. How can we, when we see, on the one hand, immense surpluses of goods with which to meet our needs, and on the other, a staggering lack of money with which to buy them?

We are exhorted to save our money when it is in short supply. If we economize, we do without goods. The result – goods do not sell, unemployment mounts, revenues decrease, and purchasing power continues to dwindle. Can we be blamed if such advice appears stupid to us?

Save today so that you will be able to eat in your old age, we are told. How can we help seeing this bit of "wisdom" as nothing but arrant nonsense? How can we help concluding that there is little relationship between the principles of our present financial system, and the hard realities of our productive system? For, in twenty years hence, we shall (supposedly) be consuming goods of that time, of whose abundance no one today has any doubt. But the abundant goods of today must be left to rot or to be destroyed for the sake of "economizing" for some day in the far-off future.

This is not a matter of just a few contradictions. The entire system is continually breeding contradictions in the same measure that it contradicts realities, and it does so because finance commands instead of serving.

Full employment and automation

All governments today pursue relentlessly the pipe dream of full employment.

They want every available pair of hands hard at work. And if they cannot do this, they feel that a national crisis exists. Well, if such are the only alternatives, then 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 be able to produce more and more with less and less expenditure of time and energy. Consequently and logically, machines are replacing men. In this evolution, the first step was mechanization; the second, motorization; then automation. Today we are in the computer age.

On all sides, we see a progress whose logical outcome is unemployment. At the same time, we hear on all sides the cry for full employment, a cry from governments and labor unions, a cry which is in complete contradiction to the spirit of progress! There is no denying this contradiction. It is inevitable because the money system itself has not kept pace with progress. It is geared to finance only employment. On the other hand, it is of the essence of progress that it liberates men from employment, from labor.

We are told that we must have full employment the year round. There must be no more of what we call in Canada, seasonal unemployment, the falling off of work during the winter.

We were able in the past to accommodate ourselves to this seasonal slackness. And we didn't have the machines which we have today to help men in their toil. But now that we have such machines, men are forbidden to take advantage of this seasonal recess which previously they enjoyed.

Full employment includes not only men, but girls and married women as well. Men in other days, without machines, were well able to provide for their families. And their wives and daughters could stay at home. Then how is it that today, with all the machinery and refined techniques of production, men cannot earn a livelihood for their dependents without sending their wives and daughters into the offices, shops, and factories?

Full employment! A constant striving to find work for men whom the machine is just as constantly liberating from work! A vast contradiction in which a Frankenstein monster of production is being nurtured by taxes, which make it impossible to procure the fruits of that production to meet the human needs of families!

Higher wages and less work

At the risk of raising a hue and a cry from the unions, let us now draw attention to another contradiction: the increasing of wages and salaries, along with the shortening of the workday and the workweek.

A wage is supposed to be a reward for work. If work is cut by a third, or a half, the reward should be cut in the same measure. To demand more money for less work is not to demand a reward. It is to demand a revenue unrelated to work.

Let us explain at once, as some measure of an excuse for the unions, that this contradiction is also a result of that monster which our money system has become. These 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. These increases are asked because of increases in the prices of products, which latter increases existing wages cannot meet.

And the contradiction not only remains, but is widened. This rise in wages engenders new increases in prices, which in turn gives rise to new demands for increases. You have the spiral! And the spiral is the direct fruit of this 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 the hours of work are less. But this other money, unattached to work, should not be a wage, but a dividend related to production, which is born of progress rather than of labor.

So you see that, in spite of itself, the system is obliged to seek for that which Social Credit has been advocating for over eighty-two years — a revenue unrelated to work. But because this revenue is not tied to work, because it is the fruit of progress, of cultural inheritance, 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 of these price-wage spirals which devaluate our money, multiply 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.

Eighty-three years ago, Major Douglas gave the doctrine of Social Credit to the world. If, at that time, the system of the dividend for all, measured by a production resulting from progress rather than from human labor, had been instituted, prices and salaries would not be in the mess they are in today.

Economics and politics would present a different picture. The system would cease to be so inhuman, and would have regard for the needs of men. The dreadful problems continually harassing administrations of all sorts would disappear as quickly as physical possibilities could be realized to meet both public and private needs. The worries over foreign markets would be replaced by the deep satisfaction of being able to distribute to poor countries the domestic surplus production - once domestic needs had been satisfied. And many other blessings would follow.

But since Social Credit is scoffed at or ignored, we have what we have. And the longer we wait to apply this one remedy, the worse the situation becomes, moving towards a veritable cataclysm in both economics and politics.

Taxes and unemployment

Taxes and unemployment - that these two can exist at the same time constitutes another blatant contradiction.

But is it not necessary to pay taxes for, among other things, the relief of the unemployed? Under the present system, we are driven to such a step, precisely because the system has given birth to such a contradiction.

Unemployment is a sign of one or two things. Either production has been accomplished and can be halted, or human hands are no longer needed to make the production system work. Thus, unemployment, no matter how you look at it, is a sign of surplus wealth.

However, taxes make it extremely difficult for the taxed to get as great a quantity of goods as they could obtain if the taxes did not exist. There is your contradiction. Excess production, restricted distribution!

Unemployment begets distress in the families of the unemployed because, in the present system, there is no other source of revenue beyond that of employment. No wonder unemployment is considered so great an evil.

In order to reduce unemployment, it is necessary to increase the rhythm of production. However, taxes decrease the rhythm of production in that they decrease the purchasing power of those who pay them, and unsold products then command a check in the rate of production.

Again the contradiction.

Instead of taxes, we should have the opposite: the increase of purchasing power through the distribution of dividends. But then that would be Social Credit. And Social Credit would spell the end of the financiers' dictatorship. And so, this absurd contradiction is continued, even at the cost of sacrificing our liberty to enjoy the fruits of our own production!

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 so increase the country's wealth, the debts of governments, school boards, parishes, universities, etc., also increase.

The enrichment of the country is made possible by the natural resources of the country and the labor of its people. Of course, not everyone is on the job of construction – which is just as well. There must be those who can produce the things needed by those who build.

So, we can say that, with the exception of what might have been brought in from another country, the people in their entirety are the author of this wealth. But once the works are finished, the people are asked to pay for them, and at a price well in excess of their actual cost, because of the taxes levied upon these same people. So the people, in their entirety, are pushed into debt for something which they, in their entirety, have produced.

The production of wealth is signified by the imposition of debt on the producers of this wealth. An enrichment, a debt! A blatant contradiction, aggravated by a despoliation on a high scale, the very people who have produced this wealth being laden with debt because of the wealth they have produced.

We could add considerably to the list of above contradictions by continuing to enumerate the multitude of evils that flow from the system.

And yet, how easy would be its correction by inaugurating a financial system that would be in keeping with reality. Reality – goods in abundance, staring us in the face! Reality - the needs and wants which, alas! those in authority turn their backs upon, perhaps because they wish to avoid having to accuse themselves either of stupidity or of betraying the high office the people have conferred upon them.

Modern production, and the means of distributing its fruits poses no problem. Then why does money pose an everlasting problem everywhere?

Social Credit would put an end definitely to this problem by making finance the faithful and constant reflection of reality. Thus would be eliminated the obstacle between production, actual or potential, and private and public wants which clamor for what production has to offer.

Why is Social Credit rejected? Why is it rejected in favor of the continuance of a financial system that is false and fraudulent, a system that dictates to production, that obstructs distribution, that is the source of so much unmerited and unjustified suffering, that gives rise to so many evils whose gravity and extent is immeasurable?

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