Page 16 - Michael 2024 May

u 2. Production does not
distribute purchasing power Poor donkey! A longer pole won’t bring the turnip closer!
to everyone. It provides it only
to those who are employed.
Economists maintain that
production automatically fi-
nances consumption, that is to
say, that the wages and salaries
distributed to the consumers
during production are sufficient
to buy all the available goods
and services. But facts prove
otherwise. Scottish engineer,
Clifford Hugh Douglas, was
the first to demonstrate this
chronic shortage of purchasing
power in the A+B theorem.
The Social Credit dividend would increase incomes
A Cannot Buy A+B without increasing prices, salaries or taxes.

The producer must include
all production costs in his prices if he is to stay in busi- Progress replaces the
ness. The wages and salaries paid to the employees, need for human labour
i.e. the “A payments”, account for a fraction of produc- The second defect with the present system is
tion costs. There are other costs that are not spent as that production does not provide purchasing power
wages and salaries that must nevertheless be included to everyone. It distributes it only to those who are
into prices, such as the payments for raw materials, employed. As productive output is enhanced by
taxes, bank charges, the maintenance and replace- technological innovation, fewer workers are required.
ment of machinery, etc. Douglas calls these costs “B Productivity increases while the need for workers is
payments”. reduced. There is a conflict between the effects of
The retail price of products must include all costs: technological advancement, which decreases the
wages (A) and other payments (B). So, retail prices need for human labour, and the rule which says that
must total at least A + B. It becomes obvious that purchasing power is only for the employed.
wages alone (A) cannot buy the sum of all the costs (A Yet, everyone has the right to live! Everyone is
+ B). There is therefore a chronic shortage of purchas- entitled to the basic necessities of life. Earthly goods
ing power in the present system. were created by God for all men, and not only for
If one attempts to increase wages and salaries in those with jobs.
order to catch up to prices, the wage increases will That is why Social Credit would do what the
automatically increase prices, and nothing will have present system does not do. Without eliminating the
been gained. (It’s like the donkey chasing the turnip reward for work, it would disperse to every individ-
in the cartoon at the top of this page.) In order that ual a periodic income, called a social dividend — an
all production be purchased, an additional income is income tied not to employment but to the individual.
needed from a source other than wages and salaries
which will be at least equivalent to B. Earthly goods were created for all men
This is what the Social Credit dividend would ac- This is the most direct and concrete means of
complish. This monthly dividend, provided to every guaranteeing the exercise of every person’s funda-
citizen, would be financed with new money created mental right to a share in the goods of the earth. Each
by the nation. Best of all, it would not be generated by person possesses this right — not as an employee in
taxation. production, but simply as a human being.
Without the dividend as another source of income, The notion of the universal destination of goods
there should be, in theory, a growing mountain of un- has been advanced by the Magisterium of the Church,
sold goods. If goods manage to get sold, it is because including in the conciliar document, Gaudium et Spes
we are faced with a growing mountain of debt! Since (paragraph 69), and the social encyclicals of Paul VI,
there is not enough money in the system, retailers John Paul II and Benedict XVI. Pope Pius XII delivered
must encourage customers to use credit in order to a radio message on June 1, 1941, on the occasion of
sell their goods. “Buy now, pay later” is the byword. the 50th anniversary of Leo XIII’s encyclical, Rerum
But to delay paying for goods will not solve the pur- Novarum):
chasing power gap.
“Material goods have been created by God to

16 MICHAEL May/June/July 2024 www.michaeljournal.org