Monetary Reform

[Ryan] Comments inserted.

>From: John Médaille
>Reply-To: monetaryreform@cog.kent.edu
>To: monetaryreform@cog.kent.edu, monetaryreform@cog.kent.edu
>Subject: Re: MONETARY: Monetary Reform -- Reply to "John Medaille"
>Date: Fri, 25 Oct 2002 09:02:24 -0500
>
>At 01:38 AM 10/25/2002 -0500, William B. Ryan wrote:
>
>> >>[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?
>>
>>[Ryan] Will you please restate the question? I don't understand
>>it. Generally, I'll say this: Most numbers written down into
>>account books are quite arbitrary. Social Credit seeks to
>>rationalize the process.
>
>If you say that the "physical costs" do not correspond to the
>numbers written down by accountants, then I ask what *should* be
>written down by accountants.

[Ryan] Accounting is a method of counting a particular class of things. The method that we use today has changed little in eight hundred years.

It was introduced before the Industrial Revolution and the development of mass production, which was enabled by, among other things, the change in the nature of money from being a tangible thing that could be objectively counted to credit, representing potential. Creditary relationships were now predominant in the nexus of contracts. Individualized production shifted to factory production, each producing a narrow range of goods. Workers could not take their pay in kind, because they could not individually consume what they individually produced. They would now take their pay in creditary money, a generalized ticket against the totality of production. The economy became divided into definite sectors: banking, firms and consumers.

Rather than scrap the method of accounting developed in an earlier era, in engineering fashion, because there is nothing available to replace it except command bureaucracy through a system of politburos where supply, price and income are determined by fiat, Social Credit proposes that external adjustment is the simplest and most easily accomplished solution to the disjuncture between supply and demand.

>
>
>> >Everything is free?
>>
>>[Ryan] At the theoretical limit, yes, in terms of cost to the end
>>user. It's related to the engineering concept of efficiency.
>>We'll never get there, but we can get closer to it than we're at
>>now.
>
>Sounds a bit utopian.

[Ryan] Probably.

>
>
>> >>[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?
>>
>>[Ryan] Again, I don't quite follow the question and would hope
>>that you will restate it. Also, I'm not familiar with the term
>>"ISTM." I don't remember seeing it before.
>
>ISTM="It seems to me"

[Ryan] Okay.

>
>
>>Here, too, all I can offer is a generalized answer. Social Credit
>>is not an intrusion or intervention into the market whatsoever. It
>>is an accounting adjustment - really, a set of adjustment
>>mechanisms - to make it work better. There's nothing especially
>>novel about the idea. Accountants make adjustments all the time.
>>They've always done so. Bookkeepers for firms make adjustments.
>>The Federal Reserve makes adjustments for the whole economy. What
>>Social Credit hopes to accomplish is to put the adjustment process
>>on a more scientific footing.
>
>But the question is about your notion of "just price." The market
>sets prices by supply and demand. If SC is not an intrusion into the
>market, how will the just price by reached by the market?

[Ryan] Just as it is now by free choice in free markets. If by supply we mean the cost of what is produced, and by demand we mean the purchasing power placed into the hands of consumers during the course of production that is being spent for what is produced, there is presently a disjuncture between supply and demand inhibiting efficiency. Social Credit would bring supply and demand into equality by utilizing the mechanisms of the Dividend and Compensated Price.

>
>
>
>> >>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"?
>>
>>[Ryan] Prices are not fixed. With certain exceptions, not far
>>different than the exceptions now, everyone can sell whatever they
>>are selling for whatever price they want to sell it, assuming they
>>can find a willing buyer.
>>
>>The Social Credit adjustments are applied macro-economically, to
>>the economy as a whole.
>>
>>Presumably, someone will have to determine the rate of price
>>compensation and the amount of the per capita dividend. That does
>>not necessarily have to be the government, depending on how it is
>>defined. There are many possibilities. Nor does it have to be
>>determined exactly.
>>
>>There should be checks and balances to deter abuse.
>>
>>Really, the structure is already there. What needs to be changed
>>is the policy of those in control of the structure. They have all
>>the tools to accomplish the job.
>
>What "structure" are you talking about? I am having trouble
>envisioning how all this is supposed to work at a practical level.
>
>
>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