Science of the Social Credit Measured in Terms of Human Satisfaction
Christian based service movement warning about threats to rights and freedom irrespective of the label, Science of the Social Credit Measured in Terms of Human Satisfaction

"All that is necessary for the triumph of evil is that good men do nothing"
Edmund Burke

Science of the Social Credit Measured in Terms of Human Satisfaction

Social Credit Fragments, 2003-2005 Part II

December 2005

Conclusion Cultural Heritage

In creating the credit instruments that claim the goods and services of the entire nation, the bank effectively takes custody of the goods and services themselves. The question then is, What obligations are entailed on the banking system when it becomes custodian of the national wealth? And the answer is, it has the obligation to issue this credit in a social, rather than an antisocial, way - social credit.

In Douglas's boots example in Economic Democracy, animal skin is turned into rawhide, the rawhide is turned into leather, and the leather is turned into boots. The national credit account is correspondingly written (1) up by the value of the hides, (2) up by the value of the leather and down by the value of the (consumed) hides, and (3) up by the value of the boots and down by the value of the (consumed) leather. If the national credit account is thought of as representing the Cultural Heritage, then we can say that the boots enter the stream of the Cultural Heritage incrementally with each stage of production. Each stage makes the nation richer and so results in a net increase in the National Credit Account.

The [nation's] capital account is a statement that the net assets of the association of the nation are owned on behalf of, and for the benefit of, us, the citizens. Capital assets are used by producers, who are always to an extent public agents, on our behalf; and consumer goods and services are what we actually take possession of.

"Future production" is an abstraction and as such doesn't enter in. But we can make it more concrete if we remember that the economy is a consumer production system and capital production is consumer production in embryo. So capital production is "future production"!

"I do the work, I should decide where my fruits are distributed." Unless you are building civilization from scratch on a desert island, you are building on the work of others (some long dead) and require access to the results of their work by means of money, which is a social product. So you are a partner with society. You should decide where the fruits are distributed exactly to the extent that you do the work. But to the extent that society is your investing partner, we all have a stake in the product of your work, and the most democratic way to express that stake is in the form of a dividend of consumer goods and services to every man, woman, and child.

The cultural heritage giv[es] birth to the national dividend. The national dividend is, after all, an allocation of goods, goods that someone has produced, and therefore a denial of the idea that the producer is the sole and absolute owner and disposer of the product. To the extent that the cultural heritage is a factor of production, the product belongs to all.

The nation, through a banking system as public servant, will have to devote some quantity of consumer goods on the shelf as an incentive for new production (by allocating them to production). Due to improvement of process, this quantity may well be less than the full tally of goods on the shelf. Then the balance of goods constituting the Cultural Heritage in effect already belongs to the public. They only need to come and take physical possession by presenting tickets (money). A National Dividend of tickets is a way to ensure that this National Dividend of [consumer] goods takes place.

Pace Douglas, it seems to me that money as such should not appear on the [national] balance sheet any more than tickets would appear on a theater's balance sheet. (A theater would record printing tickets as an expense but not tickets themselves as an asset.) A national balance sheet would still consist of items recorded at cost in money values. [But] I don't think "Cash" should be one of those items. The national balance sheet is not an accounting of money. It's an accounting of things, and then money is merely the device by which the members of the association take physical possession. In conventional accounting a dividend is really a dividend in money. In social credit accounting a dividend is really a dividend in things, and money is just a mechanism.

A+B in 47 Words

Payments to individuals today are one thing and the payments to individuals that make up the cost-history of the goods on the shelf today are another; and the natural effect of advancing technology is to create a shortfall of the former in relation to the latter.

The Age of Plenty

"What of the guy who would squander his leisure on, say, internet porn?" He must have his dividend. Not only that but as long as your porn business is legal, it must get the benefit of the compensated price the same as every other business. Abolish poverty first, and then see how many women want to be prostitutes and porn actresses.

The same dividend paid to rich and poor alike will (if it is real purchasing power) reduce the inequalities between them just as a blanket of snow reduces inequalities on the ground.

"Saving for a rainy day" is a reaction to artificial scarcity. When we have an economic system based on real plenty, we will be able to count on the economic system to provide, not only today but also tomorrow, and the habit of "saving for a rainy day" will disappear. Douglas asks, "Why ration water on Lake Superior?"

"Suppose [my grandchildren's] dividends were deposited by their parents into accounts which could be realized at the age of 21." (K.) But what has happened to the goods in the meantime? The failure to consume them ought rightly to send a message to production to slow up. If so much goods remains over unconsumed from one period to the next, that is a signal to produce that much less; and that will naturally make the next dividend correspondingly smaller. It would go better with the idea of the dividend for parents to buy on behalf of their minor children immediately, which I think they will do as they get used to the new climate of real economic security. It won't be necessary to worry about having enough money 21 years down the road. Remember, money can be created as and when it is needed. And there is no reason to produce goods now that aren't going to be wanted for 21 years. It's an inefficient use of productive power.

As we get goods on better and better terms by means of the dividend, some people currently in the work force will be satisfied with their standard of living and be tempted to drop out. That is fine, disemployment is efficiency. As people drop out, there will be less competition for jobs. As there is less competition for jobs, people will require bigger incentives in order to do any unpleasant work. When the point comes that the incentives required are too high in relation to the public's desire for more product, production will naturally slow up.

Dividends and compensated prices will allow naturally falling prices, which are "the most perfect method of passing improvement of process on to consumers" [Douglas, Brief for the Prosecution], to occur without dire consequences. They will increase everyone's economic security, with the result that many will voluntarily take a pay cut to do a job they like, take a part-time job to have more time for other endeavors, or remove themselves from the labor force altogether; and this, too, will be without dire consequences. By reducing workers, they will reduce the need for automobiles to get to work and fossil fuels to run the automobiles. They will relieve the pressure on a nation to export in order to keep its own people employed. They will end the production of ever new editions of cheap junk, because the empowered consumer will be able to demand quality. So they will secure an equal or superior standard of living with less work and less waste and therefore less consumption of resources. By making everyone richer and relieving them of fears for the future and the next generation, they will enable people who have reached the standard of living they want, to simply maintain it and therefore to level off their consumption. They thus enable production to level off, without dire consequences.

Aristocracy of Producers

Douglas's "aristocracy of producers" means that production will be run by the people who actually produce, not by professional managers.

Business will be all the better for being owned by artists of industry who have their hands on the process without having to answer to a stockholders' meeting.

The science of economics comes into its own right there where industry becomes art.

My dad has been throughout his life a Unitarian minister. For him, being a minister was its own reward, but he still had a family to support. So you wouldn't have to pay him to be a minister. You'd just have to enable him to afford to be a minister, and he would do it for the love of it.

Fred Royce was the creative genius with a passion for work who designed the Rolls-Royce. Such a person you furnish with everything he needs, but his labor wouldn't cost you much - indeed, anything - because it was what he lived for. The steam engine was a product of individual creative genius, but now its contribution to civilization belongs to all. The alphabet was once undoubtedly the product of individual genius, but now it belongs to all. So was fire. And it is precisely this sharing out of the dividend of leisure due to technology that will empower individual creative genius that is presently strangled in the crib for lack of money. As Douglas famously put it: "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" (my italics).

Serving a Democracy of Consumers

Just as we don't need everyone employed, we also don't need everyone to administer capital. We need everyone to enjoy the benefits of capital that, by right, they already own. Capital should be administered by the people fittest to administer it organized at the optimal size for productive efficiency, that is, for maximum service to the consuming public. As Douglas put it, it is an "aristocracy of producers serving a democracy of consumers." And the best way to achieve that is to enable consumers to vote effectively with dollars.

"When the loom weaves by itself and the plectrum makes music by itself, there will be no more slaves" (Aristotle). You quoted this and said, The loom does weave by itself, and the plectrum does make music by itself, and we still have slaves! Since we don't need so many workers, let everyone become an owner. Not just a receiver of dividends, you said. Participation is everything, you said. Now suppose I am a mother at home. I am participating, making an undoubted contribution to society and doing what I do best. Why do you want to burden me with responsibility for the loom, when all I want is the cloth? I don't know anything about looms, I have no desire to learn anything about looms, and I don't care to make decisions about them. The only decision I want to make is what kind of cloth I want, and about that I will be very fussy. That's how I exercise my voice over the loom. So by all means, let me own the loom and receive dividends. Indeed, it is my right. But don't ask me to take a creative interest in it. There are plenty of people who do take a creative interest in it, who for that reason will do it much better than I. I have my creative interest right here at home. The loom weaves by itself, and the plectrum makes music by itself, so we should indeed have leisure. Right there is all the justification you need for a dividend to every person. I will spend my leisure as a full-time mother and homemaker because that is what I love best. Why give me "leisure" and then tell me I am to take a Justice-Based Management course so that I can learn to exercise "power and accountability" in regard to my loom? A public dividend, on the other hand, gives full scope to the creativity of the artists of industry to compete in serving my needs.

The public, like shareholders of a company, "own" the company [i.e., the nation and its wealth]; but social credit wisdom says that they do not exercise effective control over the company by taking direct possession of it, nor do they exercise effective control by electing the board of directors. They exercise effective control by receiving dividends and spending them - by taking charge as shoppers. This is what we mean when we call the money system an order system, and this is the way national resources are "drawn upon" - they are "drawn upon" in answer to consumer demands for goods and services expressed by shopping.


The consequence of the national dividend and compensated price is to raise pay and lower prices in a place - to make everyone in the place richer and give them an incentive to buy domestic goods. For that incentive to work, it is not necessary for domestic goods to be absolutely cheaper than foreign, only that they be affordable. In addition, a social credit economy will release the huge energy of production that is now sabotaged, attract capital [i.e., brains, see below], and sell to the world in any degree desired. It carefully distinguishes foreign and domestic inputs and advantages the latter not artificially but by freeing the domestic economy to achieve unprecedented heights. From a physical, engineering point of view, production in countries with cheap labor is not really more efficient. It is financially more efficient at present, but then our own industry is 95% waste. When we institute a financial system that reflects reality and eliminates that waste, a completely different picture will emerge.

I just said that capital would fly to, not flee from, a social credit commonwealth. But capital in what sense? Not capital in the sense of money - for am I not the one who has been saying financing by absentee investors will become a thing of the past? Not capital in the sense of natural resources and physical infrastructure, for they do not so easily flee or fly. But capital in the sense of brains. The money system is how society allocates the use of goods and services in the optimal way - puts goods and services in the hands of those able to make the best use of them. The real investment is the investment of our brains, our time, our energy. Society provides the money - allocates capital goods and services for the work and consumer goods and services to keep us while we work. A society that does this in an optimal way will attract brains and become prosperous.

There is no reason in the world why South Africans can't clothe South Africans. How can you expect to hold your head up in the world of nations if you don't even clothe yourselves, if you stand before us naked? And if you stand before us naked and helpless, what authority have you to sign trade agreements? If you have the factories and you have the naked people, you can clothe yourselves. No speech about the complexities of your ticket system is going to convince me that you can't clothe yourselves. And if these complexities are over my head, I'm not going to give up and say, "Maybe you're right." I'm going to say, "Of course you can clothe yourselves! Anyone smart enough to have factories and machinery and manufacture clothing must be smart enough to make a ticket system that won't strip them naked!" Starting from there, you need not know a thing about social credit, but you can still know that there must be a possible ticket system that will enable South Africans to clothe South Africans and take advantage of every labor-saving efficiency in the process. Taking advantage of every labor-saving efficiency, South Africans will find they are rich, richer than they imagined. Being rich, they will find they are no longer forced by iron economic constraints to buy the world's cheapest. They will be able to afford the priceless convenience of buying South African and dealing with producers they can know and find and talk to. Now go design a ticket system to serve that end.

The New Urbanism

"Global (natural) systems are already strained beyond the point of sustainability" (L.). Right, so if we could support a population 20 times greater with the same strain we already have [by eliminating the 95% waste], we could easily support any realistic projection sustainably, and continuing technological advance would increase our ability to do that.

If you put me in a residential zone where I have to drive a mile to buy an egg and make me spend 40 hours a week at some useless endeavor so that even if I wanted to walk the mile, I wouldn't have time, then you can manipulate me into expressing a "demand" for fossil fuel that is not really my demand at all.

My friends at the Congress for the New Urbanism will show you that it is socially inefficient to design cities for cars, rather than people - that one-third to one-half the square footage of a major city is paved, that roads are too wide, that people prefer mixed-use neighborhoods with a corner store and other basic amenities in easy walking distance or reachable by good rail transit, as opposed to residential zones totally dependent on automobile transportation. The fact that people prefer this gives a clue that we can get it by empowering the consumer.

People who can afford it pay a premium to live in such neighborhoods. The narrow streets give you a comfortable feeling of enclosure and slow down the traffic, making them pleasant places to walk and shop. They carry that feeling of "charm" and "romance" that we seek as tourists but only dream of living in. So if the economist says, "Let them put their money where there mouth is," I say, "Okay, give them money, and see where they put it."

Wal-Mart is a case of taking advantage of the scarcity of money, rather than relieving it. That is, the price of the object is lower, but you have to put up with a fight with traffic, a hike across a huge parking lot, ugliness, towering shelves, no help on the floor, and poorly paid employees. Social credit says we should be able to have it all - a pleasant walk to the store, beauty, human-scale architecture, zealous service, happy employees, and the object. [By "taking advantage"] I mean that it offers a worse bargain, but people on limited funds are obliged to accept a bad bargain because a walking community, beauty, human-scale architecture, personal attention, etc. are unaffordable luxuries.

Swanwick Principles

1. That the cash credits of the population of any country shall at any moment be equal to the collective cash prices for consumable goods for sale in that country, and such cash credits shall be cancelled on the purchase of goods for consumption;
2. That the credits required to finance production shall be supplied, not from savings, but be new credits relating to new production;
3. That the distribution of cash credits to individuals shall be progressively less dependent upon employment. That is to say, that the dividend shall progressively displace the wage and salary.

[No. 2] is one of the three pillars of social credit method, the other two being equation of prices and purchasing-power and the financing of leisure.

Obviously, it's the same production [in first and second part of no. 2]. He could have said, "new credits for the purpose"; but "new credits . . . new production" makes a parallel with Swanwick #1. Just as credits and production go out together (Swanwick #1), so they come in together, they are both new together (Swanwick #2).

Money should come in with production and go out with consumption: "cash credits shall be cancelled on the purchase of goods for consumption," and "credits required to finance consumption shall be . . . new credits relating to new production." This cycle is not automatically self-liquidating. So as necessary, let banks create money for consumers [nos. 1 and 3].

The whole point of the economy is to disemploy people, which means to free them to employ themselves (Swanwick #3). The only way to gainfully disemploy as many people as possible is to match consumer purchasing-power to the cost (including debt) of consumer goods on the shelf at regular intervals (Swanwick #1). "At regular intervals" means not at some hypothetical "eventually" that we keep deferring. That means we produce only as much as we want to consume as we want to consume it, and with the minimum of effort.

It is obvious from principle 1 that the national dividend is to purchase consumer goods. Stocks and bonds are not consumer goods, and if they were bought with "cash credits of the population," that would leave consumer goods on the shelf and no money to buy them with. And sure enough, principle 2 says, "Credits required to finance production shall be supplied, not from savings, but be new credits," which means exactly what it says. In other words, the social credit economy itself is our nest egg - our insurance - and stock-and-bond trading will become obsolete.