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The National Dividend

on Wednesday, 28 December 2016. Posted in From Debt to Prosperity (book)

From debt to prosperity - Chapter XI

How to provide the necessities of life for the millions of unem­ployed, many of them eager to work, is perhaps the most urgent of our problems. Yet the need for their services in industry decreases daily. ”All that is certain is that the number of workers required, however small today, is almost certain to decrease still further tomorrow. The machine becomes more automatic, the number of machines that can be power-driven becomes limitless, and the quantity of power available from rivers, lakes, seas, and the sun itself, limitless.»1 As machines replace men in man’s own struggle to abolish human drudgery it becomes more and more evident that what we have thought of as the “evil of unem­ployment” is simply the natural result of our success in harnessing nature.

Science has so rapidly replaced man-labor with machine-power that today the amount of work necessary to keep everybody employed simply does not exist. “You have to recognize that some of the best brains (scientists and others) have for 150 years or more been endeavoring to put the world out of work — and they have succeeded.”2 To take the attitude that everyone must work in order to live is simply to character­ize oneself as an ignorant remnant from the bygone days of scarcity.

The use of modern power-machinery is here to stay. Were we to throw away our scientific knowledge and the labor-saving devices it has produced, we should turn civilization back to barbarism. We must real­ize that we have a problem not so much of “unemployment” as of unempayment — a condition of lack of money and inability to get it by working. The need is not to make work for the unemployed but to adopt some practical means to provide them with the buying power they require to live.

“The industrial machine is a lever, continuously being lengthened by progress, which enables the burden of Atlas to be lifted with ever-increasing ease. As the number of men required to work the lever de­creases, so the number set free to lengthen it increases.”3

We have agreed that the economic system exists to supply goods and services for consumption yet we make the stupid mistake of behaving as if it existed to supply jobs instead of goods. “Increasing with a di­minishing amount of human labor, abundance is possible for all; that is the reality that can no longer be hidden.”4 We are driven to the conclu­sion that a new leisure, a forced freedom from the necessity to live by the sweat of our brow is an inescapable by-product of modern science. We must accept this conclusion as a fact and deal with it accordingly.

The Final Step

If we are to turn this new leisure from a curse into a blessing, some practical method of supplying buying power to the unemployed must be put into operation. The third and final step in achieving economic security is to adopt another means in addition to employment to distri­bute money-tickets to the nation as shoppers.

Fortunately, we already have a working example of this method. In 1929 we all knew people who lived on dividends — some of them still do. They are not employed. We do not call such people unfortunate vic­tims of unemployment — we call them instead fortunate persons of lei­sure. But the economic difference between the man who has no job and lives on dividends and the man who has no job and can’t buy food for his family, is that one has the tickets that constitute buying power and the other lacks them.

It is an accepted business principle that the dividends of sharehold­ers come from appreciation or increase in net earning power of investment value. To understand the practical background of the National Divi­dend, we may well consider the United States as a great business associa­tion, U. S. A. Inc., of which every individual consumer is a member. The business of this association is to produce and distribute wanted goods for consumption. In this business association every citizen-consumer is a partner, a shareholder in the total enterprise. The association exists for the benefit of each and every citizen and it has elected officers and di­rectors represented by the Government.

The Value of Our Cultural Inheritance

The chief asset of this great association, the richest on the face of the earth, is its enormous power to produce wealth. This power is made possible principally by the sum total of our scientific knowledge such as chemistry, physics, engineering and the control over nature with which these sciences have endowed us. Our ability to produce Wealth in abundance is perhaps four-fifths due to the efficient organization of modern business intensified by the knowledge which centuries of discovery and research have given us.

This body of knowledge is the Cultural Heritage of the Nation. More and more in our daily life we depend upon this inheritance. Even in the last fifty years the findings of science have given us for everyday use energies and abilities undreamed of by our grandfathers. The air­plane and the radio are outstanding examples. We do not ordinarily think much about our inherited power of control over the forces of nature. But our present standard of living is the fruit of the thought, scientific inventions, and labor, of many generations of men. The names of many of them are unknown to us now. In the production of any article today the discoveries of the past are equally as important as the efforts of the living. Now, these discoveries of the past belong to all of us. We inherit them as a birthright. In fact “... it is quite beyond doubt that, to use legal phraseology, the living population of any country is, without dis­tinction, the tenant-for-life of the cultural inheritance.”5

Yet we carelessly take for granted the value of our association. We seldom think of the achievements of our ancestors who labored to dis­cover and organize the knowledge which makes possible our present standard of living. We use telephones, we drive automobiles over paved streets and we live in steam-heated houses lighted by electricity. All of these are every-day experiences of our common cultural inheritance.

By virtue of our association together and our joint participation in this knowledge, every citizen shares in the values of the nation’s cultural inheritance. Every consumer is a joint beneficiary of the great national legacy of wealth left to us by our forefathers.

Basis of the Dividend

As a shareholder in the cultural heritage of this rich association, every American can receive National Dividends as a birthright. The fact of citizenship would entitle each of us to the right to share in the fruits of the total productive capacity of the U. S. A., Inc.

Such dividends can equal the basic necessities of life — food, cloth­ing and shelter. The dividend represents our share in the increasing bene­fits of power production. As the machine displaces men, the wage income previously paid to these men, must continue to be paid by the machines that displaced them. The dividend is thus the logical successor of the wage.

“Under such conditions every individual would be possessed of pur­chasing power which would be the reflection of his position as a “tenant­for-life” of the benefits of the cultural heritage handed down from generation to generation.”6 We have the wealth and the means to pro­vide more of it in abundance for all. But we lack the money to buy our wealth. For the good of all, consumers must be enabled to consume. For when consumption is shut off by lack of buying power, our wealth grows useless to all, producers and consumers alike.

The National Dividend depends upon our increased ability to pro­duce and deliver wealth. It is based directly upon appreciation, in the actual value of our Real Wealth. On this solid foundation National Dividends can be paid to every qualified American citizen as soon as the National Credit Account reflects in money the actual facts of this Real Wealth.

Let us outline briefly how the Dividend would work in immediate operation. Suppose, for example that the first of next month, and there­after the first of every month, every qualified American citizen, em­ployed or unemployed, should receive a cheque for $12.50 signed by the Treasury of the United States.2 The cheque, drawn against the National Credit Account and issued through an authorized bank, arrives by mail in a government envelope. The postman who delivers our mail would leave it at our residence.

To visualize what would happen we have only to remember the mis­erable conditions of poverty everywhere evident today. Millions now liv­ing on a bare subsistence level would at once satisfy long-suppressed needs and desires for goods. The Dividend cheque would be cashed immedi­ately and the money used to buy needed goods.

This effective demand for goods would be felt first by retailers, then by wholesalers and producers, resulting in millions of dollars worth of new business.. We can hardly exaggerate the impetus that this would give to business and industry, in the form of confidence alone, to say nothing of the actual draft upon our unused productive capacities.

At first thought this example may perhaps seem extreme but in fact it is only a first timid step toward the Plenty that is now possible for all. Necessity, is driving us in this direction, and we cannot resist its pressure. Mounting taxes and growing debt wreck the efforts of business to produce and deliver wanted goods. The burden of increasing relief requirements financed by debt-money borrowed from the banking system is fast be­coming as intolerable as it is hopelessly inadequate.7

In its first month a National Dividend would accomplish much to revive business. And the operation of the Retail Discount and the Nation­al Dividend together would gradually provide a rising standard of living for all American citizens, including the millions who today are struggling to keep body and soul together. It must be clearly understood that increases in the National Dividend depend directly upon increased produc­tion and consequent appreciation of Real Wealth as reflected in the National Credit Account. Beginning immediately and growing in time the payment of National Dividends will progressively abolish poverty and make economic security a fact.

The Importance of Banking

The credit to finance the National Dividend is created by the Uni­ted States Treasury from the National Credit Account, and would be backed by the finest security available — America’s Real Wealth.8 As con­sumers cash their Dividend cheques or exchange them for goods, the can­celled cheques will return to the banks, to be charged against the National Credit Account. The credit represented by the Dividend thus returns to its original source where it is cancelled as production is consumed.9

The banks, as agents of the Treasury, would accept and cash Divi­dend cheques, handling such transactions exactly as they do now. Our present banking system has all the facilities necessary to carry out this function. The banks and their trained personnel are an essential factor in the practical administration of Social Credit. In every field of their public service the banks must continue to operate, minus only their power to create and destroy money at will, and for their services rendered they would be recompensed by service charges. No disruption of the banking system need attend the Dividend.

This great association, U. S. A., Inc., must continue operating on a large scale or go bankrupt. We have the materials, the equipment, the power, and the skill, to produce at least three times as much Wealth as now. Only the lack of money prevents us from doing so; a shortage of buying power denying us the prosperity and the dividends that our resources justify. How long will the shareholders tolerate this shortage, when necessity demands that we declare dividends and achieve a prosperity never before experienced?

Wages Plus Dividends

We must understand that of course the payment of salaries and wages would continue as at present, based on the worker’s contribution to society. The economic and social usefulness of each worker must always govern earning-power. But we know definitely that the aggregate of sal­aries and wages, no matter how high they maybe raised, can never pur­chase the total of the goods that industry produces. The failure of the N R A has demonstrated that raising wages and limiting hours of work cannot solve the problem. Buying power must be increased from some source that does not add to costs and thus raise prices. The National Divi­dend breaks this vicious circle. The Dividend is the logical answer to the problem of a living wage.10

Our minds are so accustomed to scarcity that it is difficult at first to realize the physical and mental benefits resulting from equating buying power with the price of production in this country. Perhaps it sounds too technical when we speak of it in that way. But the Discount and the Divi­dend would not only stimulate business with a new demand for goods; the creation of new and richer human values in the life of every citizen would be more valuable than the material advantages gained. A new un­derstanding growing out of the mutual cooperation of man with man would enrich the experience of every American. The effects of this addi­tion to the positive human values in our national life are beyond calculation.

However, the immediate need for a National Dividend is economic: the need to provide for the millions now on relief by a direct drift upon our unused capacity to produce. The Dividend would deliver goods to consumers instead of destroying or plowing them back into the earth. Sabotage would be stopped and surplus turned into useful supply.

Not a “Dole”

Some people on hearing for the first time of the National Dividend, fear that it may be some sort of “dole.” The Dividend is not a dole. The dole, like our present relief program, robs Peter to pay Paul. The dole takes money by taxation from the already inadequate incomes of the employed to support those who are unemployed. The dole does not add a penny to the total national income. The Dividend, on the contrary, is the means of tapping a new reservoir of credit, unused today, but immediately neces­sary to distribute the goods America can produce. It would add directly to the national income. And to every shopper and consumer of goods it represents the right to share in the benefits of modern civilization.

Other people imagine that, like some forms of welfare work, the Dividend would breed laziness. To begin with, the Dividend, although it would provide a basis of definite security, would not be large enough to support any one in luxury. It would increase only as the National Wealth increases. Anyone too lazy to contribute to this increase would simply be reducing the Dividends of those who do wish to work.

But aren’t there always some people, we may ask, who are congenital­ly lazy and would rather exist on a low standard of living than exert them­selves in order to have more? This is a psychological question. Perhaps there are, and such people are supported today out of the pocketbooks of the rest of us. We maintain these drones out of our own personal income and this would become unnecessary.

The Blessing of Leisure

The subject of the National Dividend is a fascinating one from both the economic and human points of view. But despite its many advantages we shall leave this subject with the remark that the National Dividend would abolish Poverty. It would bring economic security to all consumers and put an end to the existing exploitation of human labor. “To be re‑leased from all forced labor, to engage only in voluntary work whilst security and plenty are assured to all — what else has been the motive force behind every invention and discovery since the great industrial awaken­ing?11

As machines replace men to take over human drudgery and the true dignity of labor is at last realized, the curse we now call unemployment will become the blessing of leisure. This leisure represents time for educa­tion and recreation in their fullest sense, the enjoyment of books, the arts, the pleasures of the outdoors, the opportunity for study and self-develop­ment. Unemployment is a present fact, but when out of this fact we use our intelligence to create leisure, then the present evil will become a true blessing. Only through leisure do we find the opportunity to cultivate and multiply the human values.

 


 

1) A. R. Orage, Fortune, Nov. 1933.

2) C. H. Douglas, Oslo, Norway, Feb. 1935.

3) C. H. Douglas, Credit Power and Democracy, p. 20.

4) A. R. Orage, Fortune, November 1933.

5) C. H. Douglas, The Premises of Social Credit.

6) C. H. Douglas, Social Credit, p. 185.

7) “ We believe that the most pressing needs of the moment could be met by means of what we call a National Dividend. This would be provided by the creation of new money— by exactly the same methods as are now used by the banking system to create new money — and its distribution as purchasing power to the whole population. Let me emphasize the fact that this is not collection-by-taxation, because in my opinion the reduction of taxation, the very rapid and drastic reduction of taxation, is vitally im­portant.”

C. H. Douglas, Oslo, Norway, Feb. 1935.

8) It is important to understand that the Dividend is financed out of appreciation, that is, the increased Real Credit of the Nation.

9) This is the importance of issuing the Dividend in the form of a cheque instead of currency. The amount of money represented by the Dividend is used to finance consumption and having accomplished this purpose, the Dividend cheques return to their source (The National Credit Account). This provides an additional safeguard against inflation.

10) The Brookings Institution studies of America’s Capacity to Consume show the economic necessity for the National Dividend. Their findings indicate that even in 1929, our most prosperous year, there were about 12 million families or more than 42 per cent of the total, in a “subsistence and poverty group” with annual incomes under $1,500. Since the average family is considered as 4.4 persons, this group received an average per capita income of about $364 during 1929. This means about $1.00 per day to meet all the expenses of living, yet we called 1929 the “year of Prosperity.”

“If $2,000 may be regarded as sufficient, at 1929 prices, to supply the basic necessi­ties for a family, we find that 16 million families, or about 60 per cent of the total, were below this income level.” Since then the national income has approximately been cut in half. 

11) A. R. Orage, Fortune, Nov. 1933.