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The Nature of the Present Crisis and its Solution
An Address delivered at the City Hall, Newcastle-on-Tyne,
October 7th, 1932
· It is a fallacy that any one section of society is the only sufferer from the present economic system. The evil effects are by no means confined to any one class of society, although it is commonly assumed that what is called ''labour'' is the chief sufferer.
· It is not an unreasonable deduction that those classes in which suicides, and therefore unbearable suffering, are most frequent would also contain the largest proportion of bearable suffering
· The problem is not, in any sense, a quarrel between the "haves" and "have nots." It is not a class problem. It is one which affects everyone.
· The present crisis is not of unemployment, (by unemployment is commonly meant human unemployment). This fallacy is deeply rooted.
· There is no difficulty, for anyone with money, in obtaining all the goods and services.
· Our best brains have been at work for the past 100 (now nearly 200) years, with the specific object of producing more and more goods with less and less human labour.
· "Capitalism," might be defined as production for profit. Including in this definition is administrative relations between employers and employed these relationships have nothing to do with production for profit.
· What is it that the capitalistic system really claims to do? Broadly, it is a system which enables people to combine together under a suitable organisation, so that together they can achieve results which the same number of people acting separately could not achieve.
· In technical language, the capitalistic
system is a system of organisation designed to use real capital,
that is, tools, land, scientific knowledge, administrative ability,
and many other things, so as to produce something which we call "the
unearned increment of association."
· Socialists made a colossal mistake in arguing about the distribution of what they have called the "product of labour." The product of labour has become increasingly unimportant as compared with the unearned increment of association, that is, the product of the machine.
· It is this unearned increment of association out of which profits, not merely to the capitalist, but to so-called ''labour'' are paid.
· The community is, in a money sense, definitely becoming poorer.
· The failure of the present economic system is not in production, it is in distribution.
· Before tinkering with the production system, you ought to make quite sure that other aspects, such as exchange and distribution, are equally successful.
· If you have a production system which demonstrably produces a glut of goods and services, and at the same time not only those who work in it, but those who operate it, are getting poorer and poorer, by which we mean they can get less and less of those goods and services which the production system generates, there can be only one place to look for the difficulty.
· That is in the link between production and consumption, and that link is the money system.
· The nature and source of money. It is no use wanting goods and services of any description, nor is it any use that those goods and services shall be in existence and available, if your request to be supplied with those goods and services is not backed by something which we call money.
· Money and its source: Practically all money is actually created by the banks, and claimed as their property.
· The situation we are faced with amounts to this -- no matter what the physical realities in regard to food, clothes, houses and luxuries, and no matter how abundant they may be, we cannot obtain them without obtaining something which we call "money".
· All money is derived from the operations of the banking system. Please be quite clear in your mind about this.
· But when a bank makes money, it makes money out of nothing, it gives nothing, and lends everything. It has, as we say in technical language, "a monopoly of credit."
· Only Social Credit seriously attacks the control over human life and Industry which is exercised by the money system. Be quite clear as to what is meant by this.
· The fundamental evil from which the world is suffering at the present time is the control of its destinies by the money system.
· The money system is an accounting system, and if properly operated is of great value as an indication of what is going on in the industrial and productive systems.
· The type of mind which is attracted to banking and finance is not suited to deal with the highly technical organisation of the modern world.
· This matter is so important and so
little understood, it must be made clear to you, even at the risk
of some repetition. If you look at the physical reality of the productive
system in the Western world today, you cannot fail to realise that
we are living in an age of material wealth and plenty.
· It must be obvious to ordinary common sense that one set of statements cannot reflect the condition depicted by the other of statements.
· The proposals put forward seem to be unable to get away from the idea, that it is the function of the barometer to control the weather. The first step is to force those in charge of the finance system to reconsider their position in the scheme of things.
· In the higher realms of financial circles the financier regards himself as the vice-regent of God upon earth.
· The question of taxation is interwoven with this idea of moral government by finance, and I am strongly of opinion that the whole system of taxation, as at present understood, will eventually, if not immediately, become obsolete. It is altogether too suggestive of allowing the policeman to make the law and pocket the fine.
· It is a short step to the organisation
of this country into a co-operative commonwealth, which will not
in the least mean anything like the nationalisation of industry -
while at the same time organising the country in such a way that
every citizen shall draw a dividend from the activities of the community
as a whole -- as his or her inheritance.
THE NATURE OF THE PRESENT CRISIS AND ITS SOLUTION
Because I speak to-night entirely without any personal interest to serve, representing neither any special class nor any special business interest, and am merely concerned to tell you the truth (which, I imagine, is a somewhat novel and not necessarily pleasant experience), one of the first fallacies that I should like to expose is that any one section of society is the only sufferer from the present economic system. So far as I am aware, there is practically no method by which it is possible to obtain statistical information as to bearable suffering, and only one method by which to obtain information in regard to unbearable suffering, and this latter is furnished by the statistics of suicides, and it is not an unreasonable deduction that those classes in which suicides, and therefore unbearable suffering, are most frequent would also contain the largest proportion of bearable suffering. We find that the percentage of suicides, besides increasing at an appallingly rapid rate per 100,000 of the population, is higher in classes which are commonly supposed to be more fortunately situated from an economic point of view than in those commonly classed as destitute. My object in touching upon this is to emphasise that this problem with which we are attempting to deal to-night is not in any sense, as commonly supposed, one which can be regarded as being a quarrel between the "haves" and "have nots." It is not a class problem. It is one which affects everyone.
Another fallacy is that the present crisis is a crisis of unemployment, and that it would he solved if unemployment were eliminated (by unemployment is commonly meant human unemployment) . This fallacy is deeply rooted, because the ordinary man finds it extremely difficult to separate the idea of unemployment from privation and poverty. But, in fact, all our best brains have been at work for the past lot) years, or more, With the specific object of producing unemployment, or, in other words, of producing more and more goods with less and less labour. In addition to that, the unemployment which exists at the present time is not merely unemployment of human labour, but is also, and to an increasingly large extent, unemployment of plant and yet there is no difficulty, for anyone with money, in obtaining all the goods and services which they can possibly require. incidentally, if the problem were one of employment, its obvious solution would be to destroy as much plant as possible, much after the manner of the Luddites a hundred years ago, and to set everyone to work again by the most primitive methods.
A broader generalisation, very popular in Labour politics, is to attribute all our present troubles to something which is called "Capitalism," which is not generally defined, but which, I suppose, might fairly be defined as production for profit, including in this definition administrative relations between employers and employed, although, in fact, these relationships have nothing whatever to do with production for profit, and are not sensibly different in a Government Department.
Now, curiously enough, it never seems to occur to those who complain of production for profit that the so-called capitalistic system always works worst when no producer is making a profit, which is, broadly speaking, the case at the present time. It is an astonishing fact, well worthy of note, that the capitalistic system, in the sense in which it is commonly understood, survives shocks and attacks which one would imagine would be quite sufficient to overthrow it, and one of the greatest dangers with which, in my opinion, the world is faced at the present time would be that by superhuman exertion, those in control of the money system will put into operation such arrangements as will permit the capitalistic system to recover for a time, because I feel confident that if such amelioration can be arranged, the world at large will be only too pleased to return to work on the old terms. So that it is much more correct to say that it is not the capitalistic system, but the breakdown of the capitalistic system, or in other words, the inability of the capitalistic system to do what it claims to he able to do, and as, in fact, in the past to some considerable extent it succeeded in doing, that is the more obvious cause of our present troubles.
Now what is it that the capitalistic system
really -claims to do? I think that broadly speaking it would
This matter is so important and so little understood
that I must try to make it clear to you, even at the risk of some
repetition. If you look at the physical reality of the productive
system in the Western world today, you cannot fail to realise that
we are living in an age of material wealth and plenty. Not only are
the shops full of goods, of all descriptions; not only in corn, coffee,
rubber, all the metals, and, in fact, ever raw material so much in
excess of requirements that practically all producers arc engaged
in all sorts of schemes to endeavour to stem the flow of real wealth,
but nearly every farm and factory in this and almost every other
country, with the exception of Russia, is working much less than
a quarter of its possible output. Yet, if you turn to the Press,
and more particularly to the London Press, which is paid to express
the views of the financial Interests, you will be told that only
severe economy, lower wages, higher taxation, and other symptoms
of severe scarcity can be deduced from the present situation, and
that we have to accept them. Now I think it must be obvious to
The complaint that I, myself, have to make about man y of the proposals which are now becoming so common in regard to the financial system, is that they seem to be unable to get away from the idea to which have previously referred, that it is the function of the barometer to control the weather.
You may quite properly ask me how these somewhat
general statements can be translated into something which will form
a basis for action. The first step in my opinion, is to force those
in charge of the finance system to reconsider their position in the
scheme of things. It is quite beyond dispute that in the higher realms
of financial circles the financier regards himself as the vice-regent
of God upon earth. The late Mr
The question of taxation is interwoven with this idea of moral government by finance, and I am strongly of opinion that the whole system of taxation, as at present understood, will eventually, if not immediately, become obsolete. It is altogether too suggestive of allowing the policeman to make the law and pocket the fine. When we have got so far as that it will, in my opinion, be a comparatively short step to the organisation of this country into a co-operative commonwealth, which will not in the least mean anything like the nationalisation of industry, it is perfectly possible to retain and to extend the present system of private administration and private property, while at the same time organizing the country in such a way that every citizen shall draw a dividend from the activities of the community as a whole, of such magnitude that almost immediately poverty, financial anxiety, economic depression, and all other features of our present social system will disappear like the bad dream that they are. Let no one suppose from this that I am suggesting a state of affairs in which all men and women will be equal. Men and women never were equal, are not equal at the present time, and, in my opinion, never will he equal, but their inequalities rest on a far more fundamental basis than that of differences in a bank pass-book, and the abolition of such artificial inequalities will not only bring into the light of day the real difference in individuals, but will secure by common consent their general acceptance.