I was just viewing an interview of Paul Brewbaker by Keli’i Akina presented in "Hawaii Today" and am forwarding for your interest some information on Social Credit which identifies a serious flaw in the financial price-system which worsens with the replacement of labour as a factor of production by real capital, i.e., automation and technology.  The founder of Social Credit, Clifford Hugh Douglas, was enlisted by the Royal Aircraft Works in Farnborough, U.K. to sort out a costing muddle into which that industry had fallen.  Douglas made a discovery by following strictly inductive enquiry which revealed that the business was generating financial costs and prices at a much greater rate of flow than it was paying out incomes.  Further research revealed the same to be true of about one-hundred other industries in the United Kingdom.  Douglas generalized his findings in what became known as the A + B Theorem:  Every business has inside costs (A) payments as wages, salaries and dividends.  These are costs of production but are also incomes in the hands of recipients, and outside (B) costs comprising all costs in respect of items brought in from previous costing cycles, which enter costs and prices but are not income in that specific costing cycle.  Obviously, the final product, priced at A + B cannot be purchased with A.  Something must intervene for the economy to carry on.  That something is debt—new money created as loans by banking institutions for new production, attempting to capture credits from exporting real wealth in excess of imports (a major cause of international conflict and war)—and increasingly by consumer loans to finance the purchase of final products.  Orthodoxy objects that incomes were distributed in respect of the B costs and so there can be no fundamental deficiency of consumer purchasing-power.  This is however quite impossible inasmuch as the incomes earned in respect of B production are rapidly spent, prematurely cancelled and will not be available to meet the cost of items currently being produced.  Consumers need to live now and cannot wait for new goods in process to emerge on the market.  Nor can producers wait to pay their workers until such goods are completed—they must be paid for work in progress.  The orthodox criticism does not explain the exponential expansion of debt, the modern difficulty not to produce but to sell, the enormous amount of wasteful and destructive activity such as war production, etc.  

 

From a realistic standpoint when any good is completed the physical costs, i.e, human and non-human energy and materials have all been fully met.  From a macro-economic standpoint there should be no residuum of financial debt at the conclusion of any production and costing cycle.  Production increasingly is accomplished by non-labour factors and distribution should be accomplished with this reality in mind.  Rather than having the economy dependent upon ever-expanding debt to banking institutions the intrinsic deficiency of consumer buying-power should be compensated by equal payments of National (Consumer) Dividends to all citizens as an inalienable Inheritance in the Cultural Heritage, and to all retailers at point of sale enabling them to charge falling or Compensated (Retail) Prices properly to reflect the enormous real advancements we make in production efficiency.  These new credits would be issued without being accounted as debt and would merely be deducted from a National Real Credit Account, being an actuarial capital account, or estimation of the nations productive resources—which always would be growing with the addition of new capital values, although as items of consumption the issue of these  consumer credits would be debited to this Account.  The economy would be cost self-liquidating with consumer incomes always being sufficient to meet the full costs and prices of production.  The new consumer credits would automatically be cancelled in the usual manner as they pass back through industry to cancel the original outstanding production loan issued from the producer's bank.  The purpose of a rational economy is not to create work, but rather to create a maximum of goods and services as, when and where required or desired with maximal efficiency, i.e., replacement of human labour by technology.  The necessity to address the growing deficiency of consumer purchasing-power as B costs (allocated charges) increase relative to A costs (distributed consumer incomes) becomes critically urgent with the rapid displacement of labour by automation and artificial intelligence.  Douglas presciently warned that failure to deal effectively with this problem would cause society to suffer some very lurid passages—which have come to pass in the form of two catastrophic major world wars and continuing tragic military confrontations, not to mention the completely unnecessary and avoidable economic crises with which we have been afflicted.

 

Essentially, as a society we are not allowed to claim what we have produced until we have produced even further goods to obtain the necessary incomes to purchase past production.  This absurd situation is buttressed by a false Puritanical moral imperative which demands that we cannot claim consumer wealth without earning it by labour—an irrational imposition and impossibility as the need for labour is being rapidly eliminated.  We must choose to deal with this situation without incurring false and fraudulent financial debt or by continued slavery to this imaginary debt which is simply the product of legerdemain, being the fraudulent claim of the banking system to ownership of the credit with they create to monetize the real wealth of the nation—wealth which they do not create but upon which they will foreclose in the event of loan default.  The communist will appropriate the productive assets of the capitalist at gun-point.  The banks as the creators of all “money” as debt do essentially the same thing by appropriating the communal real capital by placing upon it a perpetual, accumulating and un-repayble financial mortgage.  This is simply legalized counterfeiting condoned and licensed by a corrupt and/or incompetent political establishment.  It must be stopped.

 

I am listing some web-links as resource material to which you might care to refer.

 

Yours sincerely

Wallace Klinck

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