THE DOUGLAS CREDIT THEORY

Otago Daily Times, Issue 21579, 26 February 1932, Page 10

THE DOUGLAS CREDIT THEORY

TO THE EDITOR. Sib, —If it were possible for. Mr Lloyd Ross to clear hig mind of the lumber with which it seems to be choked, it would be possible for him to see certain fundamental issues much more clearly. In the first place, all his contentions in regard to credit proceed from basic assumptions “ with which,” in the words of Major Douglas, “it is our special business to disagree.” Mr Ross says “ the amount of credit it limited.” He speaks of “ giving power to an institution to refuse credit,” of “ avoiding the waste or maladjustment of credit.” Underlying all these phrases is the orthodox banking assumption that “ financial credit is a tangible thing, limited by conditions inherent in itself,” whereas Douglas defines “ financial credit ” as a phrase having no meaning whatever apart from the “ real credit” of the community, which is a correct estimate of its ability to deliver goods and render services as, when and 'where required. Financial credit is a device adopted in order to set the real credit of the community in motion; and in the Douglas analysis the purpose of its being set in motion is the deliyery of goods and the rendering of services as, when and where required, by individuals. If individuals want wireless sets, then wireless sets will be forthcoming, if it is -possible for individuals to' co-operate so as to produce them. The purpose of production is consumption. The only function of a financial system that commends itself to the reason is distribution of that which is produced, as when and where required. If there is more coal than people need for the time being, why should Mr Ross worry about it? If, with the recognition of the common cultural heritage, comes the cessation of the condition, absurd and impossible in the face of the advance of science, whereby industrial employment is held to be the only title to a livelihood for the vast majority of the people, the existence of an over-stock of anything will be merely a sign that the industry concerned could take a holiday, or that a proportion of the energy concentrated upon it could be diverted to other ends. Mr Ross asks, “How can you estimate the price factor when you do not know beforehand whether the people want the goods which are to be turned out? Such knowledge, or the lack of it, bag nothing whatever to do with the estimation ot the price factor, which is based on previous production and consumption, not on computations of the future. The question, if Mr Ross will pardon plain speaking, is an outstanding example of muddled thinking, but by no means a solitary one. Mr Ross’s clamour for details of the practical application of the principles laid down by Major Douglas seems to me to be much in the spirit of the questions which a witty writer once imagined to be addressed to the unfortunate inventor of the wheel. “ What is the good of this absurd rolling t'liing? How is -it to go up-hill? Who is to stop it going down? And even if you succeed with it, what is to become of all those who carry burdens on their backs? ” and so on. It is notorious that humanity, or some section of it, has always opposed innovation. Ihe people of the seventeenth century opposed the lighting of the streets of London. “ There were fools in that age,” writes Macaulay, “who opposed the introduction of the new light as strenuously as fools in our own age have opposed the inrtroduction of vaccination and railroads, as strenuously as the fools of an age before the dawn of history doubtless opposed the introduction of the plough and of alphabetical writing.” And they have always asked what was going _to happen under the new regime, and insisted that a 1 host of things would happen that did not happen, or that did not matter if they did. “We smile at these. things,” continues the historian; “it is not impossible that our own when they read the history of the opposition offered by cupidity and prejudice to the improvements of the nineteenth century, may smile in their turn.” . When we have a sufficiently general acceptance of the principles laid down by Major Douglas as to the purpose of our economic system. I imagine there will ho much less trouble than Mr Ross anticipates in working out the practical details. I am confident that the difficulties will be trfling in comparison with the trouble and misery attendant on trying to make the present arrangements work. —I am, etc.. Truth.