Page 46 - Reflexions of African Bishops and Priests

Economic democracy other factors of modern economic production.

(continued from page 39) For Douglas, money is basically a ticket system, a
unit of information: “The proper function of a money
In Caritas in Veritate, Benedict XVI insists force- system is to furnish the information necessary to
fully on the economy of gift, for people and institutions direct the production and distribution of goods and
alike, an economy in which many goods and services services.”
11
can be obtained for free. Everything cannot be calcu- Following his unique conception of money, Douglas
lated in wages and salaries, a lot of good can be done gives a polarity to the various flows of money. Some
through charity work. In a Social Credit system, since monetary flows are positive, some are negative: “The
all citizens would have economic security guaranteed financial mechanism has a positive and negative
by a dividend; mutual aid and volunteer work would nat- aspect, the positive aspect being represented by
urally occur. True happiness and holiness rests in the the issue of money, and the negative aspect being
gift of oneself, in serving others. This is true love. One represented by the exchange of the money thus
could see then, the blossoming of what Pope Paul VI issued for the goods and services, through the
called the “civilization of love”, with “the economy at the medium of prices.” 12
service of the human person, and the daily bread dis-
tributed to all.” (Encyclical letter Populorum Progressio, Douglas’s concept of the true cost of production is
no. 86) a real or physical approach, not a monetary one: “Re-
Some economists, like Milton Friedman, are fond of verting to the physical realities of the productive
system, it can easily be seen that the true cost of a
saying that “there is no such thing as a free lunch” or given programme of production is the consumption
that there is no gift possible in today’s economy; that of all production over an equivalent period of time
one cannot get anything for nothing. But nature abounds (...). In other words, the true cost of a programme
in examples that prove to be the opposite. The air we of production is in general not the money cost, but
breathe, the sun, water, etc., are all free gifts from our considerably less than the money cost, and a given
Creator. He showers us with free production with natural programme of production can be distributed to the
resources and food in plenty, the Social Credit dividend buying public only if sold at its true cost.” 13
would simply be the reflection of this generosity of God.
Financial credit and real credit A chronic shortage of purchasing power
For Douglas, “financial credit is ostensibly a de- Here is what Douglas had to say about the chronic
vice by which this capacity [the real credit] can be shortage of purchasing power: “We are often told that
drawn upon.” Financial credit is therefore “a sort of it is obviously absurd to say that the financial sys-
8
reflection of this real credit in figures, and might be tem does not distribute sufficient purchasing power
defined as a correct estimate of a person’s or a com- to buy the goods that are for sale. We never said
it! What we do say is that, under the present mon-
munity’s ability to deliver money”. 9 etary system, in order to have sufficient purchas-
The true function of the financial system is there- ing power to distribute goods for consumption, it
fore to issue financial credit to be an exact reflection of is necessary to make a disproportionate amount of
real credit: “The business of a modern and effective capital goods and goods for export. (...)”
financial system is to issue credit to the consumer,
up to the limit of the productive capacity of the pro- “That is, broadly speaking, the situation. In this
ducer, so that either the consumer’s real demand country, and in every modern country, in order to
make the present monetary system work at all, you
is satiated, or the producer’s capacity is exhausted, have got to make a whole lot of things that are not
whichever happens first.” immediately bought in order to distribute what is al-
10
This conception of financial credit as being the lit- ready available.” 14
eral expression of real credit rests on a modern and
systemic definition of money. “Orthodox economics” “(...) it must be borne in mind that the existing
defines money as a medium of exchange but Douglas economic system distributes goods and services
goes beyond that definition. through the same agency which induces goods
and services, i.e., payment for work in progress.
According to him, money has ceased to be a medium In others words, if production stops, distribution
of exchange for the last 200 years, since the contribu-
tion of human labour to the central pool of wealth has 11 Douglas C.H.; Social Credit, The Institute of Economic
become smaller and smaller, thanks to automation and Democracy, Canada, (1924), 5 edition, 1979, p. 62
th
12 Ibid, p. 97
8 Douglas C.H.; The Control and Distribution of Production, 13 Douglas C.H.; “The Application of Engineering Methods
Cecil Palmer, London, 1922, p. 10 to Finance, World Engineering Congress Tokyo, 1929”, in The
9 Douglas C.H.; “The only real socialism”, in Warning De- Monopoly of Credit, Bloomfield Books, England, (1931), 4
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mocracy, Stanley Nott, London, (1931), 2 edition, 1934, p. 27 edition, 1979, pp. 165-166
nd
10 Douglas C.H.; Credit–Power and Democracy, Stanley 14 Douglas C.H.; The Approach to Reality, K.R.P. Publica-
Nott, London, (1920), 4 edition, 1934, p. 102 tions Ltd, London, (1936), 1966, p. 26
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