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May 2003: A Little SuperproducerIn his book Social Credit, C. H. Douglas calls attention to a paradox: "If we regard the distribution of money power to all individuals, in opposition in [sic] the present tendency to concentrate it in group-organisations, as the first aim of economic freedom, we are driven to a somewhat hackneyed conclusion-that the means and the end are in this case identical. We can only defeat money power with money power."1 The social credit movement continues to wrestle with this problem of sanctions. Douglas's predecessor Charles Ferguson has something to teach us in this regard. He finds a key to sanctions in the huge potential energy of production just waiting to be released by a progressive credit science. Douglas quotes Ferguson's associate H. L. Gantt that U.S. industry was only 5% efficient. If it were possible to use money/credit in such a way as to release even a modest fraction of that huge potential, that would be a competitive edge-a sanction-in the marketplace. It is true that the banking system has a monopoly on the creation of money and keeps it on a tether; but it is a long tether, and within broad limits, money can move rather freely.
A social credit system properly so called requires control over the creation of money at the national level or of a money substitute at, say, the provincial level. So we would have to get the reins of government in our hands at one level or another. But Ferguson asks whether we can't take hold of the credit system in a different spot and ultimately get hold of credit creation that way. Even within the limits of the official money economy, can we use our credit science to create a production and service enterprise that will outperform all rivals? He is confident that the capital college will release so much of the untapped energy of production that it will become a little superproducer. It will produce twenty times more efficiently than any competitor in its field. This is why he does not find it necessary to introduce a local "ticket system" to substitute for the national money.
But the Money Power possesses the ultimate sanction to pull the rug out from under the little superproducer! That may be, but it depends on a number of variables: How many capital colleges are there, and how much have they been able to accomplish before being perceived as a serious threat? If the public can get even a taste of the standard of living that is easily achievable and they try to take it away, the public may finally get its dander up. It must be stressed that the awesome power of finance is entirely psychological. If the public ceases to be mesmerized by the specter of debt, everything will change.
Of course, our little superproducer is not a "sustainable" economy or a model for a nation. For one thing, it specializes and sells outside itself 100% of its production. It can succeed only because the rest of the economy is so inefficient. It will lose its advantage as soon as its competitors begin to imitate its methods. But by then it will have attained its end, it will have set a new standard. When by sheer force of competition there are many capital colleges in a nation, the time will be ripe to convert this huge, newly released energy of production to the purpose for which we really intend it-a self-sustaining, large-scale economy of abundance. The little superproducer is really just the "missionary" phase of the larger effort.
A community spreading itself thin so as produce all its own basic needs is one thing. A superproducer venturing to challenge the capitalists at their own game is something else, although it is a community, too. The latter does not need its own internal currency, and indeed might have no use for it (it might specialize in something that no member of the community can use). But even though the capital college does not have its own currency, it does issue a credit instrument. I refer to its capital shares, which "represent substantial land-values acquired in perpetuity, to be administered as the physical estate of the college-furnishing the basis of its credit in New York and throughout the world." It issues these in exchange for land and property, and it also invests 10% of its net earnings into the physical estate, rewarding all workers with corresponding shares of new stock.2
The capital college aims by its advanced methods to give the buying public a better deal than they can get anywhere else and to pay its workers (and investors and suppliers) better than anyone else does. It aims to raise the standard of living in a place. "Place" is defined by contiguous land, and dramatically raising the standard of living on contiguous land will make that land a de facto political jurisdiction. The capital college thinks of itself as a City in the making:
The New Finance goes into the Civilization business. It makes city-building the direct object of business enterprise. Applied on a comparatively small scale in the midst of our ram-shackle cities as they exist, the capital-college plan may be regarded as a scientific method of real estate development. All the cultural values of civilization register themselves as land-values. . . . The business organization that sustains the life of a community shall be identical with the cultural organization that makes life worth while. No distinction will be made between a business system directed to the lowering of the cost of living and a cultural system that aims to raise the value of life.3
So the capital college is a business system and
a cultural system whose success in making life good is reflected in the
increasing value of its physical estate and therefore in the increasing
value of shares of its capital stock.
I have been forwarded a proposal by one Chris Cook
of the UK that has many features in common with the capital college and
is likewise envisaged as leading to a national transformation, Japan LLP.
(Cook sees Japan as a promising site for the experiment.) The idea is,
under the legal category of limited liability partnership (LLP) to create
something new, called a property investment partnership (PIP). A PIP is
an "open corporate" LLP membership agreement between financier-members
and occupier-members in relation to a property. "Open corporate"
means that such people as suppliers and workers, instead of the usual
contractual relations, will be stakeholding members of the PIP.
When divided into proportionate "shares" the aggregate of Land Values forms the basis of Yen 3.0. Property on the other hand would form the basis of locally fungible Money which deteriorates in Value over time depending on the condition of the local housing stock and policy decisions in respect of urban renewal. . . . Integration of such local Money with Local Exchange Trade Schemes (LETS) which are increasingly popular in Japan would allow Individuals to create Value through their own efforts in improving the Property which they occupy.
A close comparison with the capital college is warranted and would undoubtedly enhance our understanding of both ideas. Both present a possible solution to the perennial social credit problem of sanctions.