Khell_Sennet post=18.72780.775718 said:
werepossum post=18.72780.773307 said:
Khell, I really don't see any difference between Douglas' Social Credit and Marx's model of communism. It's still the government deciding what you can buy, how much you should have to buy it with, and how much it should cost whilst insisting that the people are in control. Just another search for the famed triple-breasted woman in my view.
In the "For Dummies" view of things: Social credit is the belief that there should be exactly as much money in the economy as there are goods to purchase. Communism is the belief that everyone deserves the same everything as everyone else. There's no comparison between them. Social credit doesn't preach equal pay to all jobs, just that a nation's combined wealth in currency should be representative of the nation's resources and goods on a 1:1 basis.
From the wikipedia article:
Based on his conclusion that the real cost of production is less than the money distributed in production, the Douglas price rebate (Compensated Price) stems from 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 labor in the productive process due to technological increases in productivity. As human labor 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.
Five points. First, this would require a really huge central government, as production and consumption would have to be tracked for every product to establish the current "National Dividends" credit. Tracking production and consumption for every product made or sold would be a huge endeavor, as would distributing the "National Dividends". All that takes a lot of labor and resources - money, in other words. Either the central government pays its employees and buys required goods, services, and resources with additional "National Dividends", creating hyperinflation, or the central government would need to impose a heavy tax burden to finance its operations.
Second, its basic premise, that production tends to exceed consumption over any given period, is demonstrably false because it requires that inventories continually increase. In reality production and consumption must be equal over the long run, because as supplies increase, prices must fall, followed by cuts in production as certain goods become less profitable to manufacture and sell.
Third, no human government capable of calculating and distributing these "National Dividends" could resist social engineering - for example, deciding that since meat is relatively bad for you and greens are relatively good for you, meat should have an artificially low dividend and greens should have an artificially high dividend. This is in a nutshell why I automatically equate Social Credit with communism, because the central government would have enormous power to set prices and control production.
Fourth, while it's true that money created by banks via loans is inflationary in the short run because it increases the amount of money without increasing the amount of goods and services to purchase, it is not inflationary in the long run because the money must be paid back with interest and because significant portions of borrowed money go to develop new means of production. For example, a loan to build a widget factory will eventually increase the supply of widgets available to be purchased; a new restaurant offers a greater supply of places to dine (a service.) By contrast, the credit in the "National Dividend" is apparently open-ended, based on some arbitrary and imaginary credit due to society. Unless the central government also issues fines when you buy something whose production is currently less than consumption, the money supply will continuously increase just as with bank loans, except under Social Credit, the increase will be exponential rather than fractional. As more goods are purchased, more dividends will be issued, leading to more purchases and therefore more dividends. As the money supply increases, either prices will increase or some people will be left with money but nothing to buy.
Fifth, without banks to loan money, socio-economic roles in society would be largely fixed for life. It would be almost impossible for an average citizen to save enough money to open a new factory or store, much less to send her children to college. Thus either the rich keep getting richer at an ever-increasing rate, or the central government must give loans or grants to others, thereby functioning with the same role as banks (which I suspect is the point of Social Credit.)
The only way I can see Social Credit functioning at all would be with a large, all-powerful central government. All business and factories would have to be part of the government's databases, to deliver up-to-the-minute numbers for production and consumption. All citizens would have to have compatible accounts within a centralized banking system so that "National Dividends" could be calculated automatically and credited (or debited) immediately via electronic transaction. I don't know how you would handle stagnation; it appears that Douglas assumed that society was set forever, with the existing stores and factories continuing and no new stores or factories being started. (The alternative would be for the central government itself to act as a bank for venture capital, a variation of the communist system where the central government not only funds, but controls and owns new businesses.
This would make a good thread, but if you start it, please include some good links on Social Credit as an economic system. The ones I found made it sound like pseudoscience.
