Economics by Other Means
Clausewitz defined war as “The pursuit of policy by other means”. If this is so, then peace is also the pursuit of policy by other means. Is there now a case for economic “other means”?
In April 2020 with a world threatened by medical and energy events, and on the cusp of recession, what means do Reserve Banks have to address a deteriorating economy? The ability to lower interest rates is somewhere between very little and nil. Catching a falling knife with quantitative easing for persons of high net worth will hardly attract them whilst markets are still falling. Once the market is at the bottom it may allow the top 1% to attain an increased portion of the earth’s assets, though only in a situation of disputed justice.
Governments are already heavily indebted so the option of large deficits in contracting economies is hardly attractive, for all its unavoidability.
Is this one of those rare times when it is permissible to look a little beyond orthodoxy? In our quest to find some other means to put before you, we make the offering below as an “outside of the square” idea. You might put it into your mental prison and rattle its cage occasionally.
Proletariats or Proprietors?
The role of socialism these last two hundred years has been to represent the proletariat. There is nothing wrong with representing the proletariat. Socialists of all types, Trade Unionists, Fabians, Communists and Social Democrats have all seen this as their special role in political and economic life. Their motive has largely been one of compassion in helping the economically disenfranchised; a commendable aspiration.
It has unfortunately usually brought the conceptual limitation of seeing the proletarian status of most people as being in the main, an unavoidable and eternal condition with little prospect of alleviation. This has not been wholly so, for many have championed such as home ownership and superannuation for the working public.
However those who have represented the builders, butchers and bakers (notwithstanding the provision of social security in dire need) have ever seen the wage as the sole means of sustenance for most. However the world is changing and we are going to have to look a little further in the coming technological revolution.
Technology is both displacing employment and making it both more productive and efficient. Those who see that this is threatening unemployment are missing a major and world changing consideration. Industrialized societies are becoming more profitable in a hitherto little observed way, and this has now been measured and demonstrated. *
In the United States in 2014 the total aggregated income of all US citizens amounted to $10.1 trillion. This was the amount paid to Americans to induce them to produce the sum total of consumer products of $12.5 trillion which were both produced and sold. The excess in value of consumer products over consumes’ incomes given above, was a total deficiency of consumer incomes of $2.4 trillion. This is surely a societal profit!
This profit of $2.4 trillion amounted to $7,500 per person over the whole population, or to $30,000 per family of four. This consumption above incomes was funded by increasing aggregate national debt by $2.3 trillion in 2014.
Modern democracies practice universal suffrage (we all get one vote) and this is in recognition of the fact that we all have a share in the ownership of our respective countries.
If this is allowed, might we also have a just claim to a part of the societal profit?
Americans only got access to this societal profit in 2014 by increasing their total indebtedness to their banking system by $2.3 trillion. It doesn’t have to be done this way. Modern money is almost wholly in the form of digital IOUs created in cyberspace.
These IOUs (US dollars) are issued as claims upon the Nation’s assets and products. They are liabilities which would be issued against the National Balance Sheet if nations did normal accounts. The aforementioned accounts are essential if we are ever to realize the prospect of our proletariat, even those with no investment capital, becoming, and increasingly becoming proprietors sharing in the societal profit issued to them as a National Dividend.
The mechanics of doing this would require the establishment of something in the nature of a National Credit Authority, appropriately empowered to calculate the national profit from our increasing technology, and to issue credit against our National Balance Sheet and distribute it in the form of a National Dividend payable to all.
The banking system would need to be constrained from issuing consumer credit to a like amount. Though politically difficult, especially in our current state of national accounts which are wholly inadequate when viewed from the standpoint of common best practice by all corporations, it has social implications of the utmost importance.
With the increasing displacement of human labour from the economy, and an ever expanding debilitating debt in all sectors of society, the logic is inescapable and the ultimate unavoidability of having all share in a national dividend to maintain the functionality of the economy, summonses the specter of inevitability.
Not the specter envisioned by Karl Marx of us all becoming proletariats, but rather of all becoming progressively, and increasingly, proprietors.
· See the Prototype National Accounts posted at: http://www.socialcredit.com.au/uploads/NationalAccountsPrototype.pdf
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