The Economic System

Manawatu Times, Volume LIV, Issue 7279, 5 October 1933, Page 9

The Economic System

To the Editor. Sir, May I trespass on your valuable space to try and briefly outline Major Douglas’s analysis of the economic system. It is impossible to give anything like justice to the proposals in a lecture, or writing letters to the Press; they can only bo understood by study. On tho one hand there are idle factories and so-called overproduction and abundance of goods, and on the other hand poverty, unemployment, and all their attendant miseries. Somewhere in the economic system someone has blundered ,and some of us know how, and where. The economic system consists of three parts, tho industrial or producing system, the consuming system (100 per cent of the people) and the financial system, whoso function is to assist in delivering tho goods to the consumers. The object of the economic system is seldom clearly stated. From the newspapor we might gather that it exists to provide employment and fails. From tho big business men that it is a system of rewards for the industrious and punishment for the idle. Now the people do not primarily want work: they want goods and services, and opportunities for voluntary activities; and if we must Toward tho industrious and punish tho idle, there is no need to mobilise the whole of the economic system for the purpose. To real objective of the economic system is to produce and deliver goods and services for whoever, may Tequire them, with least expenditure and effort. Whatever impedes this objective must go or be modified.

I want you to draw a picturo of how money come 3 into existence and goes out of existence altogether. It must be remembered that the producing system cannot make money, that is sacrosanct, it can only make goods and services. It can borrow money, and distribute it only through the media of wages, salaries, dividends and other payments during the process of creating these goods or services. It must account for all this money and try to recover it in prices to ropay the loan. Following this carefully, wo see that tho consuming public first gets its money from tho producing system, via wages and salaries, and it can lend somo "to the industrial system and get dividends, but it all came originally from tho first lender to industry, that is tho banking system, which is a privately-owned institution; now it is easy to soe how reliant the public are on the methods of operating tho banking system for their every needs of lifo.

This money must be recovered in costs and repaid to the banking system for cancellation of advances, etc. The banking system trades in money as a commodity and influences the public to look upon money as a commodity of value In. itself, but it is purely a medium of exchange, a flux between production and consumption, and whoever controls the medium of exchange, controls the policy of the producer and the consumer entirely. The real trouble which wo are saddled with is purely financial, everyone knows there is a superabundance of goods in any store, country, or the world in general, the only reason why this abundance is not used by the public who are in dire want is a shortage of purchasing power. This chronic shortage comes about this way; as tnonoy gets into the public's hands, being advanced only through productive channels, it consistently gathers costs, which eventually come out in prices of the ultimate goods for consumption. This is unavoidable under the present financial system, so we see that all goods cannot be bought by the purchasing power in tho public’s hands at. any given time, which results in surplus of goods. The only way thin can be overcome is to distribute the difference between the public’s ' purchasing power and what the prices of ultimate goods are. It could be done by a reduction of all goods to the amount of the disparity and the difference made up to the retailers by costless credit, so as ho would gaiu his full prices on proof of sale, and nobdy would bo the loser, but the public would get cheaper goods, which is the same as moro money; The modem maehine-ago has stimulated the production of goods and services to an immeasurable degree, in fact unbelievable. The mills of Lancashire alone could in a fow weeks produce enough cotton goods for the whole world for a year. The productive ability of any one of the highly industralised nations could produce enough of everything (working for six months) for the whole world including the teeming hordes of Asia, for one year.

In New York there is a factory equipped with automatic machines, making artificial silk, and one man operates the whole industrial sido of the plant. So as machines replace human labour is it a benefit or a curse? We must allow those who are displaced by science and invention who may be absolutely unemplovble, tho Tight to live and enjoy the fruits of posterity, which is a commercial heritage left to us all by former generations. This could be provided for by the issue of a national dividend for every man, woman and child, paid out of a part of the costless credit which would be used to close the gap between costs and prices. This is an outline of the present system and what could replace it, as formulated by Major Douglas, an eminent British engineer, economist, and costing expert. This method has been scientifically planned and is the only solution to the difficulties which we are facing. It only needs the public’s investigation and it will force tho old hypnotic state of orthodox economists to take a back seat, as they will not admit their false premises. According to them we should be in Paradise, but we arc in Purgatory. Remember there is no power, Governmental or otherwise, outside finance. It is the slavery which man has forever been subservient to. “RIP VAN WINKLE.” Palmerston North, Oct. 3rd.