social credit theory

[hopefulmonster]

http://en.wikipedia.org/wiki/Social_credit


I'd like to hear your guys' opinion on this economic system.

 

[echoplex]

I only skimmed through that, but it was interesting. Seemed a bit dreamy, but so do all economic philosophies.

"all production should increase our personal well-being."

I don't think you'll find anyone who disagrees with that. lol

"Unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief."

Will "cultural inheritance" pay for dinner though? High taxes?

Better learn to build the machines of the future! Or better yet, invent them (INTP answer).

 

[Da Blob]

Closely associated with the concept of our cultural inheritance is the Social Credit theory of economic sabotage. While Douglas believed our cultural heritage is the primary factor in increasing our wealth, he also believed that economic sabotage is the primary factor decreasing it. The word wealth derives from the Old English word wela, or "well-being", and Douglas believed that all production should increase our personal well-being. Therefore; production that does not directly increase our personal well-being is waste, or economic sabotage.

Herein, lies the major flaw, human nature divides the species based on an Us versus Them mentality - "Our personal well-being" often occurs as a result of "Their discomfort". The whole idea of unethical competition by different groups for various states of "well-being" is not seemingly addressed by Douglas, although the idea of 'voting with money" appears to do so. Any person or group of persons " that does not directly increase our personal well-being is (a) waste, or economic sabotage"

Christianity remained ineffective so long as it remained transcendental.
(Sounds like Nietzsche...)
Religion, which derives from the Latin word religare (to “bind back”), was intended to be a binding back to reality.[37] Social Credit is concerned with the incarnation of Christian principles in our organic affairs. Specifically, it is concerned with the principles of association and how to maximize the increments of association which redound to satisfaction of the individual in society – while minimizing any decrements of association.[38] Social Credit elevates the importance of the individual and holds that all institutions exist to serve the individual – that the State exists to serve its citizens, not that individuals exist to serve the State.[39]

Douglas opposed what he termed "the pyramid of power". Totalitarianism reflects this pyramid and is the antithesis of Social Credit. It turns the government into an end instead of a means, and the individual into a means instead of an end—Demon est deus inversus—“the devil is God upside down.” Social Credit is designed to give the individual the maximum freedom allowable given the need for association in economic, political and social matters.[47] "The progress of human society is best measured by the extent of its creative ability. Imbued with a number of natural gifts, notably reason, memory, understanding and free will, man has learned gradually to master the secrets of nature, and to build for himself a world wherein lie the potentialities of peace, security, liberty and abundance.

I believe that Social Credit theory reflects a system that could work in exclusionary economies, but that perhaps, unrealistic highly idealized humans would have to be the basic unit of such a society. These people do exist as part of our cultural heritage, but they are far out-numbered by those individuals who adhere to the opposing Social Dominance Theory and the overbearing opposing hierarchy and its related institutions. "Social Dominance Theory is a social psychological theory of group conflict which describes human society as consisting of oppressive group-based hierarchical structures. According to the theory, individual people possess varying levels of preference for social dominance, which can be measured by the social psychological measure Social Dominance Orientation." (Wiki)

I do believe that Douglas had some good points about the design of the Christian economy...

 

[hopefulmonster]

I only skimmed through that, but it was interesting. Seemed a bit dreamy, but so do all economic philosophies.

"all production should increase our personal well-being."

I don't think you'll find anyone who disagrees with that. lol

"Unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief."

Will "cultural inheritance" pay for dinner though? High taxes?

Better learn to build the machines of the future! Or better yet, invent them (INTP answer).

read the post in it's entirety . Then complain about it.

BUt here you go:
Douglas proposed to eliminate the gap between purchasing power and prices by increasing consumer purchasing power with credits which do not appear in prices in the form of a price rebate and a dividend. Formally called a "Compensated Price" and a "National (or Consumer) Dividend", a National Credit Office would be charged with the task of calculating the size of the rebate and dividend by determining a national balance sheet, and calculating aggregate production and consumption statistics.
The price rebate is based upon the observation that the real cost of production is the mean rate of consumption over the mean rate of production for an equivalent period of time.

where M = Money distributed for a given programme of production, C = consumption, P = production The physical cost of producing something is the materials and capital that were consumed in its production, plus that amount of consumer goods labour consumed during its production. This total consumption represents the physical, or real, cost of production.

where Consumption = cost of consumer goods, Depreciation = depreciation of real capital, Credit = Credit Created, Production = cost of total production
Since less inputs are consumed to produce a unit of output with every improvement in process, the real cost of production falls over time. As a result, prices should also fall with the progression of time. "As society's capacity to deliver goods and services is increased by the use of plant and still more by scientific progress, and decreased by the production, maintenance, or depreciation of it, we can issue credit, in costs, at a greater rate than the rate at which we take it back through prices of ultimate products, if capacity to supply individuals exceeds desire."”.[2]
Based on his conclusion that the real cost of production is less than the financial cost of production, the Douglas price rebate (Compensated Price) is determined by the ratio of consumption to production. Since consumption over a period of time is typically less than production over the same period of time in any industrial society, the real cost of goods should be less than the financial cost.
For example, if the money cost of a good is $100, and the ratio of consumption to production is 3/4, then the real cost of the good is $100(3/4)=$75. As a result, if a consumer spent $100 for a good, the National Credit Authority would rebate the consumer $25. The good costs the consumer $75, the retailer receives $100, and the consumer receives the difference of $25 via new credits created by the National Credit Authority.
The National Dividend is justified by the displacement of labour in the productive process due to technological increases in productivity. As human labour is increasingly replaced by machines in the productive process, Douglas believed people should be free to consume while enjoying increasing amounts of leisure, and that the Dividend would provide this freedom.

 

[echoplex]

I actually like alot of what Douglas is saying here. I just don't get how people are supposed to be able to consume once their labor is replaced long-term. I think it could only work if the system isn't abused.

and Da Blob makes a good point about 'us vs. them' here. Such a system would really require ppl to buy into the idea that there is no them, and thus no one to compete with. Otherwise, who is willing to lose their work so that the system can thrive, effectively ending their ability to compete against the invisible 'them'?

 

[hopefulmonster]

I actually like alot of what Douglas is saying here. I just don't get how people are supposed to be able to consume once their labor is replaced long-term. I think it could only work if the system isn't abused.

and Da Blob makes a good point about 'us vs. them' here. Such a system would really require ppl to buy into the idea that there is no them, and thus no one to compete with. Otherwise, who is willing to lose their work so that the system can thrive, effectively ending their ability to compete against the invisible 'them'?

The theory is based on the fact that all transactions in our current economic systems result in debt creation. Once you nationalize all entities capable of creating fiat money(banks) you can print money at will to issue the social credit or inheritance. Trade with nations using alternative economic systems is handled with pegged money/ resources such as gold,diamonds lumber etc thus allowing us to produce fiat money with NO inflation as long as it is only used within internal transactions. Also this system actually benefits from deflation. The social inheritance increases as prices drop allowing people to enjoy more and more wealth with less and less work.

Us vs them mentality does not result in any more profits. A person producing more will make more but you don't have to produce to survive. A jobless person in this system could still be "comfy". Again, read the link in it's entirety these questions are answered.

 

[Socred]

Hi:

I was doing a google search on Social Credit and came across this thread, so I wanted to join the discussion if you don't mind. I wrote most of the article on Wikipedia. I have studied Douglas's ideas for many years, but it is difficult to put all of those ideas into a small article. Many of Douglas's books are available on-line and are linked at the bottom of the Wikipedia article. Is there anything in the article that was unclear that I could possibly help illuminate?

 

[Da Blob]

Hi:

I was doing a google search on Social Credit and came across this thread, so I wanted to join the discussion if you don't mind. I wrote most of the article on Wikipedia. I have studied Douglas's ideas for many years, but it is difficult to put all of those ideas into a small article. Many of Douglas's books are available on-line and are linked at the bottom of the Wikipedia article. Is there anything in the article that was unclear that I could possibly help illuminate?

Therefore; production that does not directly increase our personal well-being is waste, or economic sabotage.

Herein, lies the major flaw, human nature divides the species based on an Us versus Them mentality - "Our personal well-being" often occurs as a result of "Their discomfort". The whole idea of unethical competition by different groups for various states of "well-being" is not seemingly addressed by Douglas, although the idea of 'voting with money" appears to do so. Any person or group of persons " that does not directly increase our personal well-being is (a) waste, or economic sabotage"

Again, I am curious as to how to implement a "Social Credit"- type corporate entity that could compete successfully with the totalitarian entities in the marketplace today?

 

[Socred]

Again, I am curious as to how to implement a "Social Credit"- type corporate entity that could compete successfully with the totalitarian entities in the marketplace today?

I'm not exactly sure what you mean here, but I'll try to answer your question the best I can.

Administration would not change in a Social Credit society. What I mean is that companies would still compete as they do now in terms of price, quality etc......

You focused on a paragraph on the concept of "Economic Sabotage". I wrote an entire article on "Economic Sabotage" at my blog:

http://social-credit.blogspot.com/2008/12/economic-sabotage_05.html

Douglas said that most people are blind to this concept, because they are so familiar with it. The current economic system is not self liquidating, which means that there is never enough income to liquidate all the costs of production (contrary to "Says Law"). Now, if it were not for "economic sabotage", the entire economic system would collapse, but the system is maintained by production of useless and wasteful goods/services in order to distribute income which is necessary for people to purchase the goods and services they actually do desire. War is the epitome of "economic sabotage", and is the production of destruction.

The following is from Douglas's book entitled "Economic Democracy", which was written in 1919 and is a very good description of the term "economic sabotage". The problem is FAR worse now.

"But it may be advisable to glance at some of the proximate causes operating to reduce the return for effort ; and to realise the origin of most of the specific instances, it must be borne in mind that the existing economic system distributes goods and services through the same agency which induces goods and services, i.e., payment for work in progress. In other words, if production stops, distribution stops, and, as a consequence, a clear incentive exists to produce useless or superfluous articles in order that useful commodities already existing may be distributed. This perfectly simple reason is the explanation of the increasing necessity of what has come to be called economic sabotage ; the colossal waste of effort which goes on in every walk of life quite unobserved by the majority of people because they are so familiar with it ; a waste which yet so over-taxed the ingenuity of society to extend it that the climax of war only occurred in the moment when a culminating exhibition of organised sabotage was necessary to preserve the system from spontaneous combustion.

The simplest form of this process is that of " making work " ; the elaboration of every action in life so as to involve the maximum quantity and the minimum efficiency in human effort. The much- maligned household plumber who evolves an elaborate organisation and etiquette probably requiring two assistants and half a day, in order to " wipe " a damaged water pipe, which could, by methods with which he is perfectly familiar, be satisfactorily repaired by a boy in one-third the time ; the machinist insisting on a lengthy apprenticeship to an unskilled process of industry, such as the operation of an automatic machine tool, are simple instances of this. A little higher up the scale of complexity comes the manufacturer who produces a new model of his particular speciality, with the object, express or subconscious, of rendering the old model obsolete before it is worn out. We then begin to touch the immense region of artificial demand created by advertisement ; a demand, in many cases, as purely hypnotic in origin as the request of the mesmerised subject for a draught of kerosine. All these are instances which could be multiplied and elaborated to any extent necessary to prove the point. In another class comes the stupendous waste of effort involved in the intricacies of finance and book-keeping ; much of which, although necessary to the competitive system, is quite useless in increasing the amenities of life ; there is the burden of armaments and the waste of materials and equipment involved in them even in peace time ; the ever-growing bureaucracy largely concerned in elaborating safeguards for a radically defective social system ; and, finally, but by no means least, the cumulative export of the product of labour, largely and increasingly paid for by the raw material which forms the vehicle for the export of further labour.

All these and many other forms of avoidable waste take their rise in the obsession of wealth defined in terms of money ; an obsession which even the steady fall in the purchasing power of the unit of currency seems powerless to dispel ; an obsession which obscures the whole object and meaning of scientific progress and places the worker and the honest man in a permanently disadvantageous position in comparison with the financier and the rogue. It is probable that the device of money is a necessary device in our present civilisation ; but the establishment of a stable ratio between the use value of effort and its money value is a problem which demands a very early solution, and must clearly result in the abolition of any incentive to the capitalisation of any form of waste.

The tawdry " ornament," the jerry-built house, the slow and uncomfortable train service, the unwholesome sweetmeat, are the direct and logical consummation of an economic system which rewards variety, quite irrespective of quality, and proclaims in the clearest possible manner that it is much better to " do " your neighbour than to do sound and lasting work. The capitalistic wage system based on the current methods of finance, so far from offering maximum distribution, is decreasingly capable of meeting any requirement of society fully. Its very existence depends on a constant increase in the variety of product, the stimulation of desire, and in keeping the articles desired in short supply." ( C.H. Douglas, "Economic Democracy" pge 74-78)


I hope I answered your question?

 

[alex2]

Very interesting discussion. I am currently studying social credit and its pretty neat.

Why banks fail nowdays? They can create extra money, only not a hard cash or central banks deposits. I guess their deposits with central banks are low at the moment due to the leverage extended to the hedge funds? Any other reasons? And I dont understand why they refuse to create new loans even with 20 percent deposits? Any ideas?


Alex.

 

[merzbau]

Due to developments in technology and technique the age old problems of production and scarcity have been all but solved, the issue now is one of distribution.
http://social-credit.blogspot.com/

how has the problem of scarcity been solved? as far as i understand we are still working with finite resources. population growth increases exponentially, so consumption will also increase exponentially. surely this means there will be dwindling resources?