The culprit? - Finance, not private enterprise

Written by Louis Even on Friday, 01 April 1960. Posted in Social Credit

An absurd but widespread demand

In New Brunswick as in the other provinces of Canada, the union organizations each year present a memorial to the provincial government. And as in all the other memorials presented by the various unions across the land, this one calls for full employment for all workers. According to a report appearing in the newspaper, Le Madawaska of January 11, the union brief declares:

If private enterprise cannot provide work for all those desirous of working then the government should take the situation in hand.

In other words, the memorial says that if private enterprise cannot furnish sufficient employment then the government should make itself a bigger employer than it is at present and employ all those whom private entreprise cannot absorb.

Such a proposition is manifestly absurd, inspired by a mongrel financial system.

Private enterprise most efficient

Why does private enterprise not employ all workers? — For one or other of the following reasons:

1. Perhaps it is because it has already produced all the goods and services of

which the population has need of.

In this case what is the sense of demanding the government or any other agency to provide full time employment to produce things which have already been produced, or to swell a market which is already full to capacity? The proper function of industry, whether it be in agriculture or manufacturing is to furnish goods to meet needs. When it has done this to perfection why ask the state to intervene? And if private enterprise succeeds in producing all that society requires in utilizing to a lesser and lesser degree all the time human labour, if it can do this and leave people free at home to devote themselves to activities of their own choice, is not this a very definite testimony to the great efficiency of private enterprise?

Then, what are the unemployed going to do?

— They'll do whatever it pleases them to do, for they'll be enjoying free time.

But how will they obtain the fruits of production without the money to pay for it? — This is a question of finance not a matter for production. Private enterprise is supposed to produce goods, not money. The money which private enterprise distributes is not produced by itself but comes from financial credit which is something apart from private enterprise. Private enterprise distributes it to pay for the hands which it still must employ in order to produce; to pay men which it has not as yet liberated from the need to work, which men, however, it tends more and more to liberate by transferring the burden of labor from men to machines. 

But this does not give money to those already liberated from work. And without money they cannot get goods. How are they to live? — Well, for this problem you may quite rightly turn to the government; not however, to demand that it set men to work producing that which private enterprise has already produced with magnificent efficiency. The goods are there in sufficient quantity to satisfy the needs of all and that includes all those who are not working. If there are those who haven't the means of getting a share of these goods for a lack of money, this is not the fault of private production but the fault of finance. Since it is money which is lacking and not products, ask for money and not for employment. Demand that the government adapt the financial mechanism to the mechanicism of modern production. Ask that purchasing power be put into the hands of the people through other means than that of salary only, and ask that this be done in the measure that goods are put on the market without the intervention of human labour.

Production lacking credits

  2. It can happen that private enterprise leaves workers without employment while there is still a large assortment of goods and services needed to meet the demands of the people: houses for families, hospitals for the sick, schools for our children. When this happens it is not because private enterprise refuses to go ahead with production; private enterprise knows very well that it has all the material and necessary labour to produce these goods. And yet it is condemned to sit idly by. Why? Simply because it hasn't the money, the financial credits with which to pay for these materials and these willing hands.

In this case, as in the preceding, why blame private enterprise? Why ask the government to take its place? Is the government any more competent than private enterprise? Is it any more willing to produce than private enterprise?

So then...? Then you must certainly go again to the government; and once again that it may intervene where it is supposed to intervene at the origin of financial credits. The government ought to give the necessary orders to those charged with issuing financial credits to serve instead of obstructing, to furnish the necessary credits in the same measure as private enterprise is prepared to furnish its competence, its labour and its material to furnish the needed goods.

This is what the memorial of the labor council of New Brunswick and all other memorials of like nature ought to ask of the governments. These memorials ought to hew to the line of logic rather than abase themselves before the stupid rules and regulations of existing finance, which regulations do harm to employer and employee alike.

Private enterprise in being refused financial credit is like an electric motor to which one refuses to pass the current of electricity. You'd treat that man as an imbecile who blamed his motor and ordered another, yet refused to do anything about getting the electric current going.

And yet this is exactly what the memorials of the unions are doing when they ask the government to take the place of private enterprise instead of demanding that the "current" be turned on — that is, instead of asking that financial credit be made available, financial credit which begins in the banks and is refused by the banks to private enterprise.

A lack of finance for consumption

3. There is, again, the case where private enterprise has a sufficiency of credits but still is forced to halt production while a large percentage of society's needs are as yet unfilled. Production must be stopped because goods already produced are piling up in warehouses and stores instead of flowing out to meet needs. This happens because those who want the goods have no money with which to buy them.

Here again the culprit is not private enterprise but finance. It is due to a lack of money in homes and not to a lack of products in warehouses and stores. The money which comes into the hands of the public through salaries only, cannot balance with prices because there is another element in prices besides salary costs. Furthermore there cannot be any synchronization between the salaries paid during the course cf production of certain goods and the placing of these goods on the market for purchase.

Here again, it is the function of the government to open a new channel between the source of financial credits and the pocket book of the consumer. This channel should go directly from one to the other without passing through industry, that is, without causing any increase in prices. This channel would be known as the universal dividend, whose end would be to see that the fruits not of toil but of progress were distributed to all.

The culprit — the financial system only

In each case, therefore, we see that it is a question of finance and not of private enterprise. To get after private enterprise and leave untouched the faulty mechanism of the financial system demonstrates either ignorance or bad will, or recompensed obedience to privileged interests or a tendency towards state Socialism.

The authors of these memorials could have in mind public works, the production of things which are not placed on the public market such as roads, bridges, etc., the salaries distributed to those working on these production being purchasing power for consumer goods. It is true that these bridges and roads are not placed on the public market but, nevertheless, we still must pay for them. The taxpayer who furnishes the government with the money to buy a sack of cement cannot, with this money, buy two pounds of butter; the productive capacity of the country, however, is still capable of furnishing both the cement and the butter, and a great deal more.

We are of that number who scoff at unemployment as being nonsense in a country still young, still in need of such vast quantities of goods and services, both in the public and private domain. But the answer to unemployment does not lie in replacing private enterprise, either gradually or abruptly, with state Socialism. Nor does it lie in the taxation of money which has been earned. Nor does it lie in plunging into debt the whole populace for having used their natural resources and their talent and their labour to produce real wealth.

The solution to unemployment

The solution is that we change unemployment into paid leisure when the needs of society have been filled by production. Or let us employ the necessary men in the production, private or public, of those things still needed, but without placing the community in the debt of the dictators of credit and money.

Instead of chasing after universal employment — something which is in complete contradiction to the spirit of progress — we should be going after complete finance of production and complete revenue for the purchase of the fruits of production. This integral or complete revenue is not only something global, something in general; it is a sharing of revenue, a dividing up so that each and every one has his share, as coheir to the accumulated heritage of culture handed down from one generation to the other for centuries, of all the products of science and man's marvellous ability to produce. Thus we should have a finance that would be at the service of production and a production system that would be at the service of man's needs.

The financial propositions of Social Credit offer all the measures necessary to place finance at the service of man's needs, both on the side of production as well as on the side of consumption; also to finance those who are not employed in the measure that man's progress makes it unecessary to employ men in production. Thus Social Credit's principles and policies would make of progress a means of liberating man from toil, not a source of worries and anxieties and privation and hardship to a great number of innocent citizens.

About the Author

Louis Even

Louis Even

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