September 2004: The River

Let's think of the economy as what it is, a consumer production system. Some percentage of consumer goods and services are distributed via wages and salaries as an incentive to labor. They are invested, they are tied up. Whatever consumer goods and services are not required as an incentive to labor may be distributed for free via dividends. The more efficient the economy is, the less labor will be required. The less labor is required, the fewer consumer goods and services will have to be invested in production via wages and salaries and the more consumer goods and services will be available for free distribution via dividends. "Free" does not mean these goods and services don't bear a price. It means the money to pay the price is free, it comes to the individual at no sacrifice on his part. In this case, part of the money-and-price system becomes a pure ticket system for distributing free goods and services.

In this paradigm, capital production does not need to be separately considered. It is merely part of the process of consumer production. If capital production contributes to efficiency, this will show up in a shift of consumer goods and services from the wage-and-salary category to the dividend category.

With this in mind, let's divide society into two groups: a Work Force and a Leisure Force. The Work Force consists of recipients of wages and salaries, and the Leisure Force consists of the recipients of dividends. Obviously, they are not mutually exclusive. Also, in speaking of a Work Force and a Leisure Force, I don't mean that the Leisure Force does no work. I mean that the Leisure Force requires no incentive to work. The more efficient the economy is, the more consumer goods and services can be diverted from the Work Force to the Leisure Force. That means they are no longer required as an incentive for work.

Now, who is the Leisure Force? The Leisure Force consists of those who invest money in the consumer production system. But money is claim tickets to goods and services, so the Leisure Force consists of those who allocate goods and services to the Work Force. They don't own the goods and services, but they own the power to buy them, which is just as good.

But where does this money come from in the first place? As we all know, it is created by commercial banks. Thus, commercial banks effectively appropriate and allocate all new goods and services by creating and allocating money. Private investors other than commercial banks acquire money and reallocate it to the Work Force on their own account. Private investors are therefore middlemen. They neither create money, nor do they do any work. Worse, if we are talking about investing personal savings, then they are diverting consumer goods and services from the Leisure Force to the Work Force, which is the exact opposite of efficiency! The middlemen could be dispensed with. They could be dispensed with simply by having the money-creating authority finance everything directly. Producers will be financed direct from the source of money, not by private investors and not by foregoing consumption. I don't think there can be any other possible interpretation of Douglas's second Swanwick principle, that new production must be financed with new credits, not from savings.

Now, the allocation of all new goods and services is universally recognized to be a social function. Therefore, constitutions include money creation as a power of government. If this power were delegated to banks that were then compelled to utilize it as public agents, that would be one thing. But there is no excuse for banks to be permitted to utilize this delegated power for their own exclusive benefit.

So the Leisure Force consists of those who invest money in the consumer production system and receive dividends. If we eliminate private investors as needless middlemen, we are left with the banks. If we compel banks to use their money-creating authority as a public trust, then we are left with the public itself. So production is a partnership between the public and the Work Force. (In Chris Cook's partnership model, these would be called the "Investor Member" and the "User Member," respectively.) The public is the ultimate Leisure Force. As things stand now, however, they provide all the force but get none of the leisure. This must change. The public should receive the dividends, which is the power to buy all consumer goods and services not required for production. Consumer goods and services tied up in wages and salaries also means a portion of human life tied up in work. If we free up human life and bring it together with those consumer goods and services, that is the state called leisure. The richest society is the one that has the best ratio between human life tied up and human life freed up.

I call the Leisure Force a "force" because it is one. If banks and private investors, it has usurped – if the public, it is heir to – what social creditors call the cultural heritage, the cumulative product of millennia of human civilization. It is because of this that everyone can be considered by right of birth an investor in our consumer production system. This is what Louis Even means when he says that we are all capitalists. This is what lies behind the idea of distributing free goods and services by means of an equal dividend to all.

So the money-creating authority, representing the public as the Leisure Force, allocates all new goods and services. What does that mean for the sellers? Do they part with their goods and services for nothing? What use is money to the seller? The obvious answer, "It is power to buy," does not work. Sales do not represent a transfer of goods and services to the seller. Why not? Because money coming in to the seller represents a cancellation of goods and services, not a production of new goods and services. There is no guarantee that goods and services corresponding to this money exist. The true answer is: (1) Money is legal tender to pay off debt; and (2) money is proof of sales and therefore establishes credit. Why should sales establish credit? Because the economy is a consumer production system, and so the consumer is the final arbiter of production. If the bank is acting as a public agent, sales should establish credit.

Now suppose that all banks are branches of one bank and that every business has a running account with the bank. (1) and (2) tend to coalesce and become the same thing. Compare two scenarios, one of debt and the other of free credit. In the first, you (a producer) take an overdraft of $1,000, so your account stands at -$1,000. When you deposit $1,000 of sales receipts, your account stands at zero. You have established credit and have access to another overdraft, hopefully another $1,000 or a little more. But if there should be fewer goods and services at this time, it would conceivably be less, because it is an allocation of goods and services that exist.

In the second scenario, instead of an overdraft, you get a free credit of $1,000, so your account stands at 0 (instead of -$1,000). When you deposit $1,000 of sales receipts, it isn't "your" money, because it merely represents goods and services that are no longer available. In fact, it should be thought of as like a cancelled check – not worth anything in itself but evidence of something. It establishes your credit, and the bank will issue you a new free credit, hopefully $1,000 or more, but conceivably less because it is an allocation of goods and services that exist.

There is really no difference between these two scenarios except if your business goes bust. Then in the debt system, you are still liable, and they can take your car; but in the free credit system, you are not liable, and they cannot take your car. And in fact, you should not be liable. The goods and services that you purchased with the $1,000 are a dead loss to society and cannot be undone. Transferring ownership of your car to the bank will not make society any richer. It would merely be punitive. The bank, acting as public agent, simply won't give you another overdraft or free credit. It will say it can invest the nation's goods and services better than that. It will retire you from the Work Force. It will fire you.

The bank as such, like any company, does not require any "return on investment." The bank is merely a conduit for individuals. The individuals who run it and work in it require a return on their investment of work, and this comes in the form of consumer goods and services allocated via wages and salaries issued from the source of money (new credits for new production).¹ This credit may be established by sales, but they do not come out of sales, for I have already shown that sales are mere "cancelled checks," representing consumer goods and services that are no longer available. As for stockholders, I have already argued that they are dispensable.

Imagine a River, a river of consumer goods and services. The length of the river is time. The source of the river is a lake, the Cultural Heritage. The left side of the riverbed is the channel, the deepest, swiftest, coldest part, which is actually moving the water. That is the Work Force. The right side of the riverbed merges with the land to become a marsh. It is shallow and sluggish and warm and also a cauldron of marvelous life. That is the Leisure Force. And let's assume that the Purpose of the river, the only reason it exists, is to pull water down from the lake and deliver it (with nutrients) to where it can nourish the marvelous life in the marsh.

At the head where it joins the lake, the whole river is the channel, all one depth, and there is no marsh. Downstream the channel gets narrower and deeper while the right side of the riverbed levels out into a broad, flat marshland extending for miles. At the head of the river, let us say, the channel is 100% of the width of the bed; a ways downstream, the channel is 50%, the marsh 50%; and further downstream, the channel is 10%, the marsh 90%. If the marsh is the Purpose of the river and a narrow channel can feed a vast marsh, that is improved efficiency.

If this were a society at three stages, the first stage has full employment with plenty of redundancy and invests 100% of its consumer goods and services as rewards for production. The second stage has a smaller, more efficient Work Force, whose services it obtains for the price of 50% of consumer goods and services; and the other 50% can feed the Leisure Force, the marsh. The third stage has the smallest, most efficient Work Force of all, for whom 10% of consumer goods and services provide ample incentive. The other 90% can be distributed to the Leisure Force. At which stage is society the richest? Clearly the one with the most abundant life. The most abundant Life is the measure of society.

Notes

1. Or along the lines suggested by Charles Ferguson and Chris Cook, wages and salaries could be replaced by a company-specific "dividend" – a share not of "sales" (because sales only represent consumer goods and services no longer available) but of credit earned – a share of consumer goods and services that exist. A bank would establish credit by its performance like any other company.

Douglas-Ferguson Meeting!

With no fanfare whatsoever, our Official Archivist, Wally Klinck, one day sent me evidence of a meeting between C. H. Douglas and Charles Ferguson. It is contained in "Publicity and Credit," a lecture given by Douglas at the Women's Advertising Club and published in New Britain, volume 1, number 2, 1933. Douglas says, "A brilliant writer, who I had the pleasure of meeting – some years ago in the United States, Charles Ferguson, was in the habit of saying that credit and publicity were concentric; that whichever you controlled you could ultimately control the other." Another Douglas article nails down the date of the meeting. The article is titled "This Technocracy" and was published in the New Age in 1933 (FDR had just taken office). "Technocracy" was a descendant of the organization founded by Ferguson and H. L. Gantt in 1916. Douglas is critical of Technocracy: "While accepting gratefully the data both in regard to production and in regard to finance, which have been provided by this organization, with whose progenitors I was already in touch in 1919 in New York, I think great caution is required in accepting the deductions which appear to be being put forward in their name as to the form of organization which is indicated by this data" (my italics).

Is D.I.Y. S.C?

By Dewi Hopkins, Poet, Bangor

After listening to advice from a number of people as ignorant as I myself, I listened anew to the voice of caution inside me and started to take the tiles off my bathroom walls. The voice of sloth had said, "Retile over the old tiles: it's quicker and they'll last just as long." But I "tested the spirits" and recognized them for what they were. "So shall thy poverty come as one that travelleth, and thy want as an armed man," I remarked to the slothful tempter and carefully prized off the first tile. After half an hour, while my wife was dressing my injured hand, the question in the title popped into my head.

It might surprise some of my readers to discover that I am a Do It Yourselfer. In fact, if you have read attentively, you will agree that I didn't say I was; and I'm not – at least, not with capital letters – but I'm willing to have a go (not so willing with electricity or plumbing). Others might be equally surprised that I'm a Social Crediter – and once again I didn't say I was. Did I? Not with capital letters, but I rule nothing out. The trouble with many of those who say they are is that they think it's all about money. There are some who know better, but the ones that like the capital letters tend to focus on money and to have little patience with anyone who doesn't care to do so. Not exclusively anyway. I must admit that I am interested in what lies behind it. Its founder (though if you look carefully into the matter, you will find that he didn't conjure it up out of nothing: there were antecedents going right back to the New Testament, and even beyond that to the Old Testament), one C. H. Douglas, when he gave a succinct definition of Social Credit, didn’t mention money at all. It was, he said, "a movement of the mind and spirit." Elsewhere he said that it was "the policy of a philosophy." And when we come right down to it, the idea appears to be that we were created by God for some purpose that we have to be free to work out for ourselves (though I think we find some pretty broad hints in scripture). Jesus is quoted too – the bit about having life and having it more abundantly. Of course, that is in itself ambiguous – or I should say ambivalent. There are some, who can't care very much for their fellow men it seems to me, who think that he meant more and more spirituality. Others, noting that whatever else Jesus might be, he was a very practical man (which is why his parables are very true at the earthly as well as the heavenly level), take it that he meant that if we follow his teaching and example, no one need go homeless or hungry. And that is why we do need to sort out the money thing.

But of the two, it is the philosophy that interests me more than the policy, and the policy more than the technique; though I must admit that the policy and its technique are what will make it practicable to live out fully the philosophy. As the Book of Common Prayer has it, "as well for the body as the soul."

Having cleared up all that, I now come to the question I mentioned earlier. Is Do It Yourself an aspect or expression of Social Credit?

It might be noticed that the WORDS "Do it yourself" can sound rather ungracious: "Will you help me please?" "Do it yourself!" If that were the spirit of the words, they would be anti-social and no credit to the speaker; but we know that that is not the case. Or put it the other way round, and it sounds not much better: "Can I help you?" "No, thank you, I'll do it myself." That sounds like what used to be called "independence": "I'll not be obligated to anyone!" I don’t think that can be it either. Well, it might well be necessity that is the mainspring of Do It Yourself. I'm sure it often is. I can buy the tools and materials (bit by bit, perhaps), but I can't afford to pay to have the job done; so I'll have a shot at it myself. Then, to my surprise, what I had accepted with misgiving is a source of pleasure and some quite profound satisfaction. Not many people can actually build their own houses – though some do, and set up mutual help groups to do so, which is a very social sort of thing, based on trust (that is, belief, that is, credit) – but I can tile my own bathroom. I know this because the tiles I am taking off now are the ones I put up twenty years ago. They would stay there another twenty years or more, but my wife and I fancied a change. I hate to say this, but if a tiler had done the job, they might have fallen off ten years ago, because he would probably have put a blob of cement on each tile and done the job in a fraction of the time that I took.

I have heard it objected that doing a job yourself is keeping a tradesman away from his work and, therefore, his income, and that is anti-social. I have two things to say to this. One is that if he does not want to do the job as well as he possibly can, he probably does not really want to do it at all: he wants only the money he can get with the least effort. The other is that full employment is not Social Credit policy, partly because it tends thus to reduce a man's pride in his work. It is the policy of a way of thinking that wishes to impose its power on all men, the opposite of which is a policy of enleisurement, which would free all men (whether they grasped the opportunity or wasted it) to do work that they could take a pride in doing well.

That tiler wouldn't have done a good job for me; and he wouldn't have known the pleasure of a job well done. Neither would I, since I wouldn't have done the job at all. Not all are like this, of course, and I have written elsewhere of the joy of watching a craftsman at his work. I read somewhere that in the Holy Land in the second century A.D., some farmers still used wooden ploughs crafted by the carpenter Jesus. I believe this, and it even occurs to me, now I come to think of it, that another of Jesus' sayings might have an earthly, as well as a heavenly, meaning: "For my yoke is easy, and my burden is light." If he made ploughs, I dare say he made yokes as well. If I had to carry two full buckets on a yoke made by the Carpenter of Nazareth, I think it would have been made with such intimate, loving knowledge (after all, he created the timber, and he created the human frame) that it would fit perfectly, or "easily," and the burden would indeed seem light.

It is wonderful to make something out of wood. Not only is there the joy of creating something: there is also the getting of understanding of timbers, that have grown out of the soil, and indeed the sense that one is growing nearer to the Master. Then one knows that one must do the job (as all jobs) as perfectly as possible, so that one can "see that it is good" or occasionally even "very good." Such work can be dedicated to the maker of all things. That's why the medieval guild of doormakers made it a rule that every door made by its members (and who'd buy a door made by anyone else?) must be constructed around a cross. (I wonder whether my Muslim friends over the road realize that their house is full of Christian crosses: I haven't told them but hope that it is an unsuspected blessing to them.) In the same spirit my wife, who bakes excellent bread, pricks a cross into every loaf, and when she takes it from the oven, she "sees that it is very good."

Then gardening: a little woodland in my tiny garden. Adam was a gardener. All this enrichment of my life! It is surely what life is for. It could be the same for everyone, but I was one of the lucky ones, allowed to retire from my employment very early, and I have lived a busy life of leisure ever since – with time to read and think as well. Without the time, without the money . . . but as I intimated at the beginning of this essay, I do not intend to write about money.

My subject here is the end, not the means.