Monday, 19 October 2015

A "Modernisaton" of Social Credit?

Robert Searle

Dear All,

             I am the originator of a system known as Transfinancial Economics. It was created independently of Social Credit, which I discovered later on. The similiarity between TFE, and SOCRED (a good abbreviation!) took me by surprise a number of years ago. I suppose the former could be seen as a "modernisation" of Social Credit. Clifford Douglas was way ahead of his time. However, there are  some basic differences between TFE, and SOCRED.

i) TFE recognizes the huge importance of the fact that the present financial systems is essentially a highly complex network of IT Systems, and that money is essentially in the main electronic data transmitted from one account to another. Ofcourse, Douglas lived before the advent of accessible technologies (eg. computers, and mobile phones) but would have probably approved of my approach. However, he was well aware of tabulating machines which existed in his day.

ii) TFE believes that the "only" way forwards is to work with certain banks, and corporations. Douglas seemed to be against such a pragmatic approach.

iii) TFE is open to the idea of a Universal Dividend, or Basic Income.

There may be other differences of a "minor" nature, but one needs to examine Social Credit more carefully.

Dear Robert,
I cannot speak for Social Credit as a whole- each of us perceives it uniquely- but I think you have got a good idea there.  I can't say I agree 100%, but there seems to be certain similarities, more so than with many other economic ideas.
Social Credit is concerned primarily that the association we call the economy should work to the highest satisfaction of the individuals composing it, as indicated by each of those individuals.  We say that it is not doing this, since, due to the nature of the cost-accounting system, the economy is incapable of distributing in full what it produces, since the rate of flow of costs, and thus ultimate prices, is greater than than the rate of flow of incomes. 

The discrepancy between these flows is made of several things, but the main reason to sum it all up is the development of capital, and the replacement of humans by machines in production.  Hence, included in prices is the "wage of the machine," which is not previously distributed, yet must be accounted for in prices.  The floating universal price subsidy - the compensated price- and the national dividend from new money we propose would reflect the increasing obsolescence of people in production, and of the right of people to be able to purchase all production without needing to work harder than is physically necessary.
We also propose that the banking system should be able to create as much money for production as there is production potential.  No more, no less.  Should enough people be employed via production loans, and incomes become greater than prices, the floating price subsidy would become a tax.
I believe you do have similarities with our proposals.  Your inflation controls seem to be, in some of its forms, very similar to our compensated price.  It sounds a call for more money to be distributed for worthy causes, and that there be no limit on money except what is physically possible.  And no doubt a basic income could be applied, as you say.
We would rather see the new issues of money be distributed direct to citizens, in the form of basic incomes and lower prices, rather than in respect of government programs and grants.  Citizens, with independent financial means, freed from wage and salary slavery, and able to fully exercise their monetary vote, could devote their money and time to more worthy causes- of which, I am certain, sustainability would be one.  We prefer that to government spending (except when approved by democratic mandate) because it would represent merely the furtherance of centralized control over peoples' lives, and in interests not necessarily those of the individual.
I am not completely certain that I represent the position of Social Credit fully and completely- I am still learning.  Others on this board, I think, would be able to give you more insight and reply.  But I hope this has helped.

John Parr

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I just wanted to point out that the contemporary call advanced from many different quarters for a universal, or basic, or citizen's income is not the same thing as Social Credit's call for a National Dividend.

Unlike the typical basic income proposal, the National Dividend is indexed to the productivity of the economy. That is, it would not constitute a guaranteed amount, but would depend on how much additional purchasing power is required to offset the operating costs of real capital and other legitimate production costs for which no or insufficient purchasing power is being distributed to consumers. Thus, it is likely to differ from month to month but would be increasing (in terms of its relative purchasing power) in an economy that was steadily progressing by incorporating more and more real capital and less and less human labour.

Secondly, unlike the typical basic income proposal, the National Dividend is not to be financed via redistributive taxation or by an increase in public debts but by the creation of fresh money (debt-free money, if you like) to bring the capacity to consume in line with the capacity to produce (to the extent that the latter has been actualized in any given period). Redistribution does not increase the aggregate purchasing power and is a political, economic, and social irritant and increasing the public debt is simply more of the same madness in which the world is presently drowning.

I have not yet had a chance to examine 'Transfinancial Economics' but, if it would be open to providing people with an income whether they are employed or not, I hope it is open to such an income in the Social Credit as opposed to the conventional sense.

Parr seems to have a fairly decent understanding for someone who is relatively new to the subject.
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Steve Hummel
John and Robert,

I agree that there are many similarities between Social Credit and TFE, and you Robert should be complimented for comprehending that fact and that you had the openness of intellect to do so. Presently, very few economists have such intellectual openness and that lack of intellectual wholeness is part and parcel of the problems with economics and economic theory.

I would say this about the directness of the dividend and nature: Nature is in a state of feedback/constant association with its component parts, however it receives its source of energy from an external source. We as individuals perfectly reflect this same relationship/circumstance The directness of the dividend is what approximates a natural economic equilibrium, and the discount is what mathematically maintains it through time and circumstance
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Robert Searle
Thank you all for your comments. Yes, TFE is certainly very much like SOCRED. The article which "clinched" this was discovered in the Michael Journal, the link to which I would like to give out.

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