A Few Preliminary Observations: “Social Credit” v. The 28th Amendment

Regarding the whole “social credit” thing:

I think there is something to these notions, very tentatively; but I haven’t much of a clue, at this point, how any of it would be implemented, or even whether it could be.

Briefly, though, it seems to me that it is proper to ask the question of why some things that have obvious economic value have no monetary value.  The “social credit” guru, C. H. Douglas, points out that every advance that adds value to the economy and people’s lives builds upon previous advances, that there is a sort of “heritage” component of all valuable things that isn’t owned by any particular person but is rather more or less the property of everyone.  There is something to this.  I’m not saying that it can be reflected in any action or conduct of the government, or in any monetary system that can be rationally instituted.  I’m not even saying I agree with it, exactly.  I just think that there is a kernel of a truth there, somewhere. It may or may not be meaningful in the sense that something can be done about it. It is entirely possible that nothing intelligible can be done.

Another interesting point Douglas makes concerns the fact that there is monetary value attached to, say, the land on which a factory sits.  And so the profit of the factory is reduced by the payment of rent for the use of the land.  But the factory also depends upon manpower, and it uses the labor of human beings to produce its profit.  Each of the human beings had parents who provided the human beings who ultimately provided that labor.  Yet there is no monetary value attached to this contribution, which is every bit as essential to the operation of the factory as the land on which the factory sits.  No payment is made to the parents, in other words.

Is there some explanation for this absolute difference between the provision of land and the provision of human beings for labor that eludes me at the moment?  Can anyone suggest why the one should have a monetary claim upon the production of the factory but the other should not?

Now, one objection could be that the labor is already being paid for through the wages to the laborer and that is the only cognizable transaction going on, and that to go beyond that and recognize claims of third parties would be something akin to a violation of the rule of self-ownership and proscriptions against servitude.  There’s a kernel of truth in that objection as well.  Maybe.  I’m not really sure.

And as far as implementing such a regime, where – if anywhere – would a line be drawn?  Do you compensate parents only?  What about grandparents?  Uncles and Aunts?

Or maybe this is all to be accounted for by the “heritage” idea that is part of the common pool of capital, human and otherwise.

One thought I have had.  Toyed with.  It is not developed.  Parental discretion is advised.

But one thought that occurred to me was some kind of parallel government currency issued to everyone that would be legal tender – even though in general I hate legal tender laws – not for all debts, but for basics like food, clothing and shelter.  It would function almost exclusively within national boundaries.  It wouldn’t be good anywhere else or for anything else unless of course people wanted to accept it for some reason.  Everyone would get some share of this “scrip” by virtue of simply being a citizen or something, presumably sufficient to have a place to live, food, and some clothing.

This would be similar to food stamps.  But not precisely like food stamps, because the scrip would be more valuable.  Also, there would be no restrictions imposed:  the scrip must be accepted for food, clothing and shelter as legal tender for those things, but could be accepted for other things if people wanted to.

General money would still be “dollars” which would still be gold backed, and the central bank would still be history.

I am open to suggestions both:  1) further explaining and justifying the whole concept of monetizing these hitherto un-monetized things; and 2) how the monetization of such things would work.

One thing I would agree on is that if something ought to be done about the monetary system through a constitutional amendment it should be done all at once.  You can’t keep going back and nitpicking the constitution, because the process of amending it is too cumbersome, and it is meant to be.




Filed under financial crisis

6 responses to “A Few Preliminary Observations: “Social Credit” v. The 28th Amendment

  1. Zarepheth

    I see you’ve finally read C. H. Douglass’ “Social Credit”. He advocates a national dividend. Where the government bridges the gap between the wages and income people receive and the price of goods and services available in the economy. Instead of letting the banking system lend the difference to the community, where everyone end up indebted to the banks for this gap – the government should take the amount of the gap, divide it by the population, and distribute it directly to the people.


  2. Zarepheth

    You can get another perspective on money from reading this articel at the “Michale Journal”.


  3. Zarepheth: hello

    I have looked at it. I believe there is something to it. I don’t know if anything could actually be done to implement the ideas behind it.

    I don’t believe it is as simple as “the government” “bridging the gap” between wages and what people receive in income and the prices of goods and services in the economy. Even if you agree that something like this is proper, how do you bring it about? How do you determine what the gap is? Who determines it? A lot depends on these questions, if you’re serious about it.

    Assume someone that agrees with you 100%. How is that person supposed to carry out what you are suggesting?

    Do you see what I mean? You haven’t thought this through at all. You have a formula in your mind that you see as being self-evident. Others require an explanation. How do you explain it?

    How is the distribution to be accomplished? On what basis?

    Try to understand. Even if I agreed with you – and I don’t – if I tried in good faith to come up with something that embodied this idea I wouldn’t be able to do it. Nobody would. The idea itself has a certain surface appeal but is ultimately unintelligible. You want to “distribute” something to “the people”. But the “something” cannot be quantified and “the people”, whoever they are, will want to know what their fair share is, which will be impossible if we can’t quantify it in the first place.

    You’re talking about some flat sum of something or other to be distributed to everyone by the government, which is the repository of some kind of unidentifiable value. This is not a workable idea. It cannot be translated into legislation or a constitutional amendment.

    At the risk of being accused of condescension, I have to say you have a lot of work to do if you want to communicate this in an intelligible form to someone else. As far as I can tell, C.H. Douglas didn’t do that, either. The Alberta experiment may well have been a failure because nobody understood what they were doing.

    I’m not saying you can’t do it. Maybe you can. I’ll help you if you can. But I’m not seeing it at all. Sorry.


  4. Zarepheth

    My understanding of Mr. Douglas’ idea, is that the government already gathers statistics on people’s wage and dividend income for tax purposes. And other parts of government are already gather statistics on the value of goods and services produced (or available) in the economy. Both numbers are measured by the nation’s current monetary unit, and close enough in time that inflationary effects are negligible. The difference between the two numbers is how much additional money the system needs to allow all the goods and services to be purchased, rather than sitting idle on storeshelves, in warehouses, or labor sitting idle watching soap-operas from the sofa. So the amount of money that needs to be produced is readily determined from existing statistical information. The next step is determining the population. Again, the government already has this information – either by periodic census, or via individual tax returns.

    Now that all the numbers are available, subtract the sum of all individual wages from the combined price of all goods and services. Then divide by the population. The resulting number is how much money to distribute to each person in the country.


    • “The difference between the two numbers is how much additional money the system needs to allow all the goods and services to be purchased, rather than sitting idle on storeshelves, in warehouses, or labor sitting idle watching soap-operas from the sofa.”

      What is accomplished by distributing this “difference” in “additional money” per capita? What if people simply didn’t want to purchase the un-purchased goods and services? What purpose is served by monetizing this particular “gap”? If someone produced a million too many boots that no one needed and therefore no one bought them, why does this become part of a measure the government should use to distribute money to the populace?


      • Zarepheth

        That is an example I had not thought of.

        However, Major Douglas made his observation and proposal by watching the world enter a major depression. He saw stores filled with goods that people wanted to buy and merchants wanted to sell – but the customers did not have the money to purchase and the merchant could not afford to lower the prices. Instead of those goods meeting anyone’s needs, everyone suffered — all for a lack of money.

        He also saw another aspect of the money shortage. Businesses with work they needed done but not having the money to hire workers while simultaneously there were many unemployed people looking to do the very work the businesses needed done.

        But Mr Douglas’ observations aside – how badly would the economy suffer if some unwanted items are included in the total goods and services? The customers won’t buy what they don’t want or need. That business will either reduce production of those items or go out of business no matter how much money the customers get from the government. Over production will quickly take care of itself. The extra money may cause inflation, but minor adjustments in taxes and money issuance in the next year could easily compensate for it.


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