Re: MONETARY: Monetary Reform -- Reply to "John Medaille"

[John Médaille <john@medaille.com>]

At 08:43 AM 10/24/2002 -0700, William B. Ryan wrote:
>[Ryan]  I will not presume to speak for Wally Klinck, but will insert my 
>comments below
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>
>
>
> >From :   John Médaille <john@medaille.com>
>
>Reply-To :   monetaryreform@cog.kent.edu
>To :   monetaryreform@cog.kent.edu,COG Monetary Reform 
><monetaryreform@cog.kent.edu>
>Subject :   Re: MONETARY: Monetary Reform -- Reply to "John Medaille"
>Date :   Thu, 24 Oct 2002 09:03:09 -0500
>At 12:44 AM 10/24/2002 -0600, Wallace M. Klinck wrote:
>     Attention:  John Medaille, Dan Parker and others.
>
>Thank you, John,  for your interesting e-mail message.  I attach some 
>documents re Social Credit for your perusal.
>Says's law becomes increasingly invalid with the introduction of capital 
>relative to labor under the existing system of banking (money being issued 
>essentially only for production and never for consumption, except for 
>escalating consumer debt which must be recovered from future production 
>which is the same thing).  This transfers costs from an earlier cycle of 
>production as a charge against a future cycle with which it has nothing to 
>do realistically.  The physical (as opposed to the financial)
>
>
>[Médaille] I've heard this several times. Could you distinguish for me 
>"physical" vs. "financial" costs.
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>[Ryan]  There are real costs in terms of labor and resources actually 
>utilized in the process of production.  In this respect "real costs" are 
>"physical costs."  They do not necessarily correspond to the numbers 
>written down by accountants or economists.

Okay. How are they written down?

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>
>     cost of production is fully met when that production is completed and 
> ready for use.  Fortunately, the defect in financial accountancy which 
> leads to an exponential deficiency of purchasing-power relative to 
> financial cost provides the the opportunity to address the problem.  The 
> issue is the ownership of credit, the charging of interest on money 
> created as debt and fundamentally the premature cancellation of 
> purchasing-power in respect of repayment of capital loans (the 
> reinvestment of saving creates new costs without creating new 
> purchasing-power and creates a deficiency in a similar matter).  The 
> consumer is charged, rightly, with capital depreciation but wrongly not 
> credited with capital appreciation.  Major Clifford Hugh Douglas dealt 
> with all these problems beginning as early as 1918.  We should be 
> concerned not about a just wage but about providing sufficiency of income 
> via a Just Price (jus pretium) a modern interpretation upon which Douglas 
> based his analysis an!
>d p
>rescriptions--a concept upon which the Church has a locus standi.  A 
>number of Catholic thinkers were apprised of Douglas's "Social Credit" and 
>were strong supporters.
>
>
>[Médaille] Could you be more specific about this last point. Which 
>"Catholic thinkers" would you recommend?
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>     The ideal price level is zero,
>
>
>[Médaille] Really? Why? I certainly don't want to sell my services for 
>nothing.
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>[Ryan]  Wally's point here is not Social Credit, strictly speaking, but it 
>is not necessarily inconsistent with Social Credit.  He is speaking of the 
>effective price to the consumer in the hypothetical future where robotic 
>production has displaced human labor in its totality at the theoretical 
>limit.  You would not have to sell your services for nothing.  If you sell 
>your services for X, the price to the consumer is zero if the compensated 
>price rebate paid to you + the consumer dividend = X.

Everything is free?

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>     the ideal employment rate is zero and the Just Price is financial 
> price times the mean production rate over the mean consumption rate in a 
> given period.
>
>
>[Médaille]  What are the mechanics of this? For example, is there a gov't 
>agency that sets "just price"? Or is this just a theoretical paradigm? And 
>how are these "mean" rates computed?
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>[Ryan]  The Just Price is just to the producer and just to the 
>consumer.  This means that the producer can recover his costs of 
>production and the consumer can purchase all that the producer can 
>reasonably produce.  The absolute numerical value assigned to the price is 
>determined by the market.

But does the market actually price things in this way? ISTM that it works 
by supply and demand. What am I missing here?

>   The mean production rate and mean consumption rate are brought into 
> equality through the Compensated Price and Dividend.
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>
>       The money issued as debt (created) by the banking system belongs 
> neither to the banks nor the government but to the community and should 
> be issued (for consumption) without debt in the form of consumer 
> dividends and compensation to prices.
>
>
>[Médaille] Again, how exactly does this work? Is is like a reverse sales 
>tax? Do we get a check in the mail (from whom?)?
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>[Ryan]  I don't like the term "without debt."  It infers that money is 
>something physical that circulates perpetually.  Real money is a contract 
>that disappears when its terms are fulfilled.  That is the ticket or 
>"chartal" concept of money.
>
>Yes, the Compensated Price is analogous to a reverse sales tax.  It could 
>be a check.  There are other possibilities.

Okay, but how will it work? Will this be some gov't dept. that fixes prices 
and "consumer dividends"?


John C. Médaille

"A dead thing can go with the stream...
but only a living thing can go against it."
         -G. K. Chesterton
http://www.medaille.com/distributivism.htm
john@medaille.com