The following is from Douglas' *Credit-Power and Democracy* published in 1920. The first sentence of the first chapter begins:
"One of the most fundamental fallacies which has ever afflicted a just cause is the delusion...that Labour (by which the broader-minded of such advocates mean labour both by hand and brain power) creates all wealth..." In chapter 2 Douglas introduces formally for the first time the A + B Theorem, which he indicates is merely a restatement of an argument already made in his first book, *Economic Democracy*: "...the possibility of meeting the requirements of society for goods and services is a small and decreasing fraction of the man-hours, or time-energy units, which society has at its disposal comes from improvements in the industrial machine as a whole. If there is one thing more certain than any other in this uncertain world [Post Keynesians take note. Douglas here talks about uncertainty!] it is that the industrial machine is a common heritage, the result of the labours of generations of people whose names are for the most part forgotten, but whose efforts have made possible the triumphs of the past hundred years. Therefore, while society is justified--i.e., is judicious--in demanding that this machine shall be operated by those capable of obtaining the best results from it, irrespective of any other considerations whatever, society as a whole, not the operators--Labour--or any other function of society, has a 'right' to the product, a 'right' founded in the nature of thing s because, if it is denied, the machine begins to develop abnormal friction, with a consequent loss to every constituent member of society. "It must be borne steadily in mind in considering this question that the object of industry is *not* work for its own sake; the industrial system exists *firstly* because society has need of goods and services. The fact that the creative instinct of mankind can find satisfaction in craftsmanship is beside the point; *men associate together in collective industry because they hope, and are justified in hoping, that there is an unearned increment of association;* that they will thereby obtain the required goods and services with less effort than by isolated endeavour. "Let me, if possible, make this point clear beyond any misunderstanding. It is a question of priority. *After* the fundamental requirements of humanity for food, clothing, housing, etc., have been met, any excess energy in the community must find an outlet--any man whose energy is in excess of that necessary to maintain his vital processes wants to work, in fact must work in some way, as an elemental proposition in dynamics. Therefore the more this maintenance of life can be shifted from the backs of men on to the backs of machines the more important it is to find a creative outlet for the human energy released, and the more certain it is that a considerable portion of this energy will, without compulsion, be devoted to the improvement of the industrial machine. That is to say, if a practical policy based on these considerations be pursued there will be a fall in the man-hours required for routine or operating work, and a consequent rise in the man-hours available for desig n and research work. The industrial machine is a lever, continuously being lengthened by progress, which enables the burden of Atlas to be lifted with ever-increasing ease. As the number of men required to work the lever decreases, so the number set free to lengthen it increases. It is true that, owing to the defective working of an outworn financial system, the lengthening of the lever has been offset by obstacles to its beneficent employment, but these very obstacles, by raising up a worldwide unrest, will secure a rectification of the means of distribution, which is the first step to a better state of things..." Towards the end of the book he suggests practical policy: "...Imagine a bank formed by the employees of one of the great producing industries by the simple process of hiring a building and engaging a trained staff, and that all the wages and salaries of the operating side of this industry were paid through this bank--an operation of sufficient magnitude to place an ordinary banking business on a firm foundation at once. Such a bank, backed by the economic power of a Trade Union on which it might rely, might claim with success that, so representing one of the factors of production, and consequently one of the factors in the *credit* attaching to production, it should issue a considerable and agreed proportion of the flow of purchasing-power which forms the vehicle of that credit. This would take two forms--the provision of short-term loans for current business, and of irredeemable loans for capital expansion... "...*In any such transaction,* for it to be effective as a distributing agency, *there must be an issue of purchasing-power from some organ representing the creation of credit by the mere presence of the community--i.e.,* the total purchasing-power should exceed the cost to the extent that the total net *capacity* of society to achieve its desires is enhanced by the operation in question. Overdrafts and similar transactions by banks represent, to a limited degree, such an issue, and without them production is impossible. This is the same thing as to say that price to the ultimate consumer should be that proportion of cost which is represented by the ratio of credit-destruction to credit-production, and as the credit-production is a function of the community, it is quite clear that the credit production and destruction must be *generalized*--you cannot say that a ton of coal raised will represent so much credit-consumption when it is burnt, because some obscure professor [Peda ntics take note!] may devise a method of using coal which at any moment may double its usefulness. The vital and somewhat unfamiliar element which it is necessary to bear steadily in mind in the examination of this subject is its dynamic character--that all the time there is a ceaseless flow of credit-production arising out of countless moral, intellectual and material factors, and a similar but fundamentally smaller drain on this production which can be described as depreciation, and the real general ratio of the generalized income to the generalized expenditure must take account of all these factors. When, as at present, a whole civilisation is profoundly dissatisfied with its economic system, an element of depreciation is introduced which has far more influence on real credit than the most colossal destruction of material property by fire or otherwise... "The bank we are discussing, let it be clearly borne in mind, is not a mining company, it is a bank which we postulate shall finance in increasing proportion a group of mining companies, and be controlled and exist in the interest of, in the first place, those actively engaged in the mining industry. Now, by its issues of credit to these producing companies, it would eventually become possessed of most of their shares, which it would hold for the benefit of its depositors. Assuming a standard rate of dividend and an increasing number of shares due to successive 'capitalisation,' the depositors of this bank would be the beneficiaries equally of all the increasing number of shares held by the bank; so that as improvements in process displaced men from industry the purchasing-power they had helped to create would be available in the form of dividends. The mining industry would thus not have to consider the provision of employment--its sole preoccupation would be the delivery of coal in the right quantity to the right order, the order of the public, acting on the best advice available..." -- _____________________________________________________________ Get 25MB, POP3, Spam Filtering with LYCOS MAIL PLUS for $19.95/year. http://login.mail.lycos.com/brandPage.shtml?pageId=plus&ref=lmtplus ==^================================================================ This email was sent to: archive@mail-archive.com 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 ==^================================================================
