Social Credit: Exact, Logical, Humane

Social Credit considers realities. It refuses to be hypnotized by the halo with which finance has been surrounded.

Economic realities are made up of two things: Production and human needs. Production includes not only the existing production, but also the production that can readily be made; together, they make up production capacity.

Social Credit gives realities priority over financial signs. The latter must simply and faithfully represent realities.

Real credit and financial credit

This is why Social Credit makes a distinction between real credit (a reality) and financial credit (a portrayal).

The word "credit" comes from the Latin word "credere" and carries the idea of confidence. Even in everyday language, to grant someone credit implies that we have confidence in him.

Social Credit calls a country’s real credit, the confidence we have that we can make a living in that country without having too much difficulty. The real credit of a country is its production capacity: the capacity to produce and deliver goods and services as needed, where needed and when needed.

Moreover, financial credit must be the exact representation of real credit.

Production capacity must determine financial activity. Finance must never command, paralyze or limit production capacity.

This is why Social Credit requires that a Credit Office be established to keep count of the national credit. The production of consumable goods and of capital goods would be registered as increases in wealth. Consumption, destruction or depreciation would be registered as a decrease in wealth. The net increase in wealth would be equal to: production minus consumption.

With very few exceptions, such as when a country might live at the expense of another, a country's production usually surpasses its consumption. Countries become wealthier. It is therefore absurd to say that they are going into debt. Public debt is an absurdity.

The citizens must draw an advantage from their country's increased wealth. This is what Social Credit recognizes when speaking of a dividend to all, which is the opposite of indebting and taxing everyone. 

Money without inflation

The present system is subject to inflation. Inflation means rising prices.

When money cannot be created without creating a debt, as is the case today, ways must be found to draw, from the public, more money than the amount that was put into circulation, to repay the debt and the interest on the debt. Where from taxes that are added to prices or that lower purchasing power with respect to prices. Where from the increase in prices by industrialists who must draw from the public, not only the money to cover their costs, but also the money to cover financial charges, that is, the interests on their industrial loans.

Social Credit would get rid of this cancer, of this proliferation of prices, since production would be considered an increase in wealth, and not an indebtedness.

And, Social Credit would lower the prices to be paid by the buyers, since it would have the community pay only what it consumes, and not all that it produces.

For example, if a country's consummation only amounted to three quarters of its production, the buyers would pay only three quarters of the cost price for the articles they bought. The Credit Office would compensate the retailer so that he may recover all of his accounted costs.

This means that the amounts that are now part of prices, but for which there exists no means of payment in the public's hands, would be supplied by the Credit Office. In the same way, the means of payment, which have been directed towards saving or investment rather than for buying consumer goods, would be replaced by the Credit Office to the benefit of those who are in need of the products. This would prevent the accumulation of products in the face of needs. The mechanism by which this is done, the compensated discount, would lower prices and would therefore prevent inflation.  

A dividend to each and everyone

A periodic dividend to each and everyone, as recommended by Social Credit, is also in line with economic realities.

In fact, modern production is more and more the result of applied science, of inventions, of improvements in production techniques. All these things constitute a common good: an heritage that is transmitted and increased from one generation to the next. Modern production is less and less the result of individual labor.

Hoping that production can be distributed solely as a reward for human labor goes against facts. Money that is distributed as a reward for work cannot buy a production that includes costs, other than salaries, in its prices.

Seeking salary increases, while the amount of human labor decreases, changes the meaning of the word “salary”. It is no longer a reward for work since it includes, in the wages of the employed, what ought to have been a dividend given to all. Production is the fruit of progress more so than of labor. We are led away from a desirable goal since salaries are included in sales prices while dividends are not.

Social Credit would distribute a dividend to everyone, directly, without it being charged to industry. It would truly raise everyone's purchasing power.

A dividend would recognize the existence of a very productive social capital. It would also guarantee the fundamental right to earthly goods: "Earth and its riches were created for all men" (Pius XII). This right is totally ignored by the present economic system, by the way it finances distribution.

Social Credit would establish an adequate allocation of the goods provided by nature and industry, instead of leaving this task to the surgery of taxation that amputates and grafts the wound continually without ever healing it.

There needs to be a share given to each and everyone, guaranteed by a dividend to each and everyone, whether young or old, and this share needs to cover all of life's necessities.