Page 30 - HQ May June July 2020

“Man can easily see that through his
work he enters into two inheritances: the

inheritance of what is given to the whole
of humanity in the resources of nature,
and the inheritance of what others have
already developed on the basis of those

resources...”
John Paul II, Laborem exercens

u
A Double Heritage practical — provided, of course, that individuals
Karl Marx proposed that the work of the pro- have the purchasing power to buy the goods which
letariat was the source of all wealth. Adam Smith will satisfy their needs.
said that capital, by the person investing money in a Purchasing power in the hands of those who
business, was the source. Both men developed eco- have needs is precisely where the present system is
nomic theories but ignored the legacy that Douglas flawed, and it is this defect that Social Credit would
called the cultural heritage. This is the heritage of na- correct.
tural resources and inventions, etc. responsible for Production runs smoothly when it is financed
more than 90% of the country’s production today. properly. Some of the money used to finance pro-
In fact, when we speak of the poor, it is entirely cor- duction will pay for labour costs and constitutes pur-
rect to call this group deprived, because these are chasing power for those who receive it. But bear in
people who have been denied their inheritance. The mind the following:
Social Credit (or Economic Democracy) Dividend is 1. Industry does not distribute purchasing
therefore based on two rationales: the inheritance power at the same rate that it generates prices.
of natural resources and the inventions of previous 2. Production does not distribute purchasing
generations. This is precisely what Pope John Paul power to everyone. It provides it only to those who
II wrote in 1981 in his Encyclical, Laborem exercens, are employed.
on human work (n. 13). Even if banks were to charge no interest on
“Working at any workbench, whether a relati- loans there would remain a deficit in purchasing
vely primitive or an ultramodern one, a man can power since the amount of money that is distributed
easily see that through his work he enters into two as wages cannot buy the entirety of a production.
inheritances: the inheritance of what is given to the Prices are comprised of more factors than just sala-
whole of humanity in the resources of nature, and ries and wages!
the inheritance of what others have already deve- Economists maintain that production automati-
loped on the basis of those resources, primarily by cally finances consumption, that is to say, that the
developing technology, that is to say, by producing wages and salaries distributed to the consumers du-
a whole collection of increasingly perfect instru- ring production are sufficient to buy all the available
ments for work. In working, man also ‘enters into goods and services. But facts prove otherwise. Scot-
the labour of others’.” tish engineer, Clifford Hugh Douglas, was the first
Addressing the Lack of Purchasing Power to demonstrate this chronic shortage of purchasing

Another reason to distribute a Dividend to each power in the A+B theorem.
citizen is a function of mathematics. The current fi- A Cannot Buy A+B
nancial system creates a gap; a chronic lack of pur- The producer must include all production costs
chasing power. in his prices if he is to stay in business. The wages
Today, goods are offered for sale at a given and salaries paid to the employees, i.e. the “A pay-
price. People who have money buy these goods by ments”, account for a fraction of production costs.
exchanging cash with a vendor. This method allows There are other costs that are not spent as wages
people who have money to choose and purchase and salaries that must nevertheless be included
what they want. into prices, such as the payments for raw materials,
Social Credit would not change this system of taxes, bank charges, the maintenance and replace-
disbursing goods. This method is both flexible and ment of machinery, etc. Douglas calls these costs “B
payments”.

30 MICHAEL May/June/July 2020 www.michaeljournal.org