On Monday 08 Sep 2003 3:15 pm, Chick wrote: > This message was sent to the Alberta Social Credit Party by someone who > wants a response from the Social Credit perspective. I thought it might be > interesting to see what the list might have to say about it. > Chick --------------------------------
Jessop here:- Chick asked for comment. To quote from the document something which surely needs a calm response:- > In fact, there is no chronic shortage of purchasing power. Sufficient to > buy the product is generated as wages and profits in the course of > production; slumps are not caused by an absolute shortage of purchasing > power but arise when, because of falling profit prospects, capitalist firms > choose not to spend all their profits on fully renewing or on expanding > production. Nor can banks "create credit"; they are essentially only > financial intermediaries, borrowing money at one rate of interest from > people with cash to spare and lending this at a higher rate to those > needing money to spend or invest, their profits coming from the difference > between the two interest rates. IT SEEMS TO ME that:- 1. It must be unarguably true that much spending power in the economy (liquidity?) is hoarded away when a person/organisation has reached a level where all immediate �wants� are satisfied. But where? Is it in land which then stands idle (non-productive) while waiting for a lucrative re-sale? Or does it lie in credit used for currency speculation around the world? Or does it lie in equity speculation, where a change of ownership adds nothing to the corporation except it�s market capitalisation on the Stock Exchange? I�m not thinking here of shares owned by a small operator who uses the dividend income as purchasing power for daily necessities, but of the very wealthy who merely use the system as a means to increase their already over-sufficient buying power -- money which they cannot spend in their lifetime. 2. Do banks in fact create money? Unless we include the Central Reserve Bank in the definition �banks�, this does not seem to hold true in the case of the South African situation as I understand it. The banks (as opposed to the Bank) buy money (credit?) from each other on the money market, and, only when that is exhausted do they buy �money� from the Reserve Bank. Money from the Reserve Bank is bought at the daily refinancing auctions. The Reserve Bank maintains the interest rate (REPO rate) by manipulating the liquidity in the money supply by means of trading with the banks -- soaking up excess liquidity by auctioning its own-creation debentures, and refinancing the liquidity requirement by repurchasing its debentures plus other government instruments such as Treasury Bills, Land Bank bills, central government bonds. It is complex, but in the main, new money comes into being through the operation within the economy of debentures from the Reserve Bank and Treasury Bonds from government. Since these must bear interest, and must eventually be redeemed, the total amount required by their �life� is greater than the amount originaly expended. This can only be financed by nett export/import earnings -- or by the issue of new Treasury Bonds and RA�s. Of course, when the banks purchase Treasury Bonds and RA�s, they do this with credits in their own books which are cancelled out when the instruments are repurchased, therefore that operation does not increase the money supply. In the end, it does seem very much as if the charging of interest on loans is the ultimate cause of the ever-increasing indebtedness of the nation, and the hoarding of money/credit/purchasing power by those who have in excess of their wildest �needs�, is the cause of the shortage of purchasing power which could be distributed by any and every means to the consumer public. (Leaving aside for the moment the joblessness brought about by mechanisation.) The National Dividend and the Just Price would relieve the first, but would eventually add to the second when the profits from the increased trade reach the coffers of the super-rich (people, corporations, or countries). But we would have to say that is okay because, while on its journey, the debt-free money will have helped feed �the dogs that eat the crumbs that fall from the master�s table�. Friends, that is my perception. I would love to be corrected where I am in error, because if I am to �sell� the SC concept to anyone, I need to know the truth, the unarguable truth. Kind regards, Jessop Sutton. --------------------------------- > ----- Original Message ----- > From: Robert Stafford > To: [EMAIL PROTECTED] > Sent: Thursday, September 04, 2003 3:57 AM > Subject: Critical comment > > Hi! > Having recently visited your website, I am sure you will be interested to > read a critical examination of social credit. The essay in question, > Major Douglas rides again, appears below and is taken from the September > 2003 Socialist Standard. > > Needless to say, any feedback would be much appreciated. > > Yours for a world without money, > > R > > Internet Department > [EMAIL PROTECTED] > www.worldsocialism.org/spgb > > Major Douglas rides again > > In the course of our nearly one hundred years of socialist activity, one of > the ideas that we have had to deal with from time to time has been currency > crankism - the idea that economic and social problems are caused by some > flaw in the monetary system and that what is required to put things right > is not to get rid of the profit system that is capitalism but mere monetary > reform (of one kind or another, depending on which particular school the > currency crank belongs to). > > Between the wars the most popular school of currency crankism in Britain > was Social Credit, based on the ideas of Major Douglas (as he was known). > His explanation for the slump - of poverty amidst potential plenty, of > unmet needs alongside idle factories and widespread unemployment, of piles > of unsold goods being destroyed - was simple, not to say simplistic: it was > due to a lack of purchasing power, to people not having enough money to buy > what they needed or to constitute a market worth catering for. The > solution, too, was simplistic: distribute purchasing power free to people > in the form of a "social dividend" paid by the government. > > Douglas believed that banks could "create credit" by the mere stroke of a > pen, but that they deliberately kept money scarce so as to be able to > charge a higher rate of interest. Hence his solution that the banks should > be taken over by the government and their supposed power to create credit > exercised but in the general interest, as "social credit". > > In fact, there is no chronic shortage of purchasing power. Sufficient to > buy the product is generated as wages and profits in the course of > production; slumps are not caused by an absolute shortage of purchasing > power but arise when, because of falling profit prospects, capitalist firms > choose not to spend all their profits on fully renewing or on expanding > production. Nor can banks "create credit"; they are essentially only > financial intermediaries, borrowing money at one rate of interest from > people with cash to spare and lending this at a higher rate to those > needing money to spend or invest, their profits coming from the difference > between the two interest rates. > > This being the case, the main result of applying "social credit" would be > roaring inflation. All the other problems of capitalism, including > periodically re-occurring "poverty amidst plenty", would continue unabated. > They will only end when the means of production are brought into common > ownership and democratic control so that they can be oriented towards > directly satisfying people's needs - when banks, money and all the rest of > the buying and selling system will have become redundant. > > Normally, lack-of-purchasing power currency crank theories flourish in > times of slump. However, according to an article by Derek Wall, "Social > Credit: The Ecosocialism of Fools", in the June issue of Capitalism, > Nature, Socialism, the modern-day followers of Major Douglas are well > ensconced in the Green Party: > > "Brian Leslie, whose parents were members of the Social Credit Greenshirts > during the 1930s, chairs the Green Party Economics Working Group. The > newsletter, Sustainable Economics, is almost entirely concerned with social > credit and Party economics speaker Molly Scott Cato advocates monetary > reform . . . Frances Hutchinson, a former member of the Green Party left > grouping, the Association of Socialist Greens, has revived the Douglas > Social Credit Secretariat . . . Wilfred Price, a member of the Greenshirts > in the 1930s, joined the Ecology Party (now the Green Party) in the early > 1980s and powerfully spoke for social credit as a form of green politics." > > Currency cranks find it easy to infiltrate the Green Party because of the > tendency amongst its members and supporters to blame "big banks" and > international financial institutions for ecological problems and the > ravages of capitalist globalisation. The Green Party has, for instance, > lined up alongside the Tories, the UKIP and other reactionaries in the > "defend the pound" camp because it sees the euro as an international (in > the sense of anti-national) currency. > > Derek Wall's article concentrates on the political side of Social Credit > rather than on its economic fallacies (though he recognises these), in > particular on the anti-Semitic position it took up between the wars. The > title of his article is taken from August Bebel, a pre-WWI German Social > Democrat, who once quipped that "anti-Semitism is the socialism of the > fool", by which he meant the anti-capitalism of the fool. And it is, of > course, a short step between denouncing "global finance" for causing > problems to blaming "international Jewish bankers" or some other supposed > international conspiracy or cabal. It was a step that Douglas himself took. > Wall quotes him as writing in Social Credit (1933): > > "In a remarkable document which received some publicity some years ago, > under the title of 'The Protocols of the Learned Elders of Zion', a > Machiavellian scheme for the enslavement of the world was outlined. The > authenticity of this document is a matter of little importance; what is > interesting about it, is the fidelity with which the methods by which such > enslavement might be brought about can be seen reflected in the facts of > everyday experience." > > Wall - a Green Party member who describes himself as an "eco-Marxist" - > recognises that Social Credit doesn't have to be anti-Semitic and that its > supporters in the Green movement (with one exception) are not. His concern > is to warn the Green Party and the anti-globalisation movement against > embracing monetary reform as a quick-fix solution but also of the dangerous > company they risk falling into if they continue down the road of blaming > "global finance" for ruining "national" - and local - economies. > --^---------------------------------------------------------------- This email was sent to: [EMAIL PROTECTED] EASY UNSUBSCRIBE click here: http://topica.com/u/?a84IaC.bcVIgP.YXJjaGl2 Or send an email to: [EMAIL PROTECTED] TOPICA - Start your own email discussion group. FREE! http://www.topica.com/partner/tag02/create/index2.html --^----------------------------------------------------------------
