Salient. Victoria University Student Newspaper. Vol. 37, No. 6. April 10, 1974
Social Credit or Disaster?
Social Credit or Disaster?
"Can you hear me? Yeah? Well that's fair enough."
Those were the opening words spoken at last Friday's forum by Les" Hunter, the Deputy-Leader of the Social Credit Political League. But he did, despite this introduction, get on to discuss a few topics of rather more substance, and one could even detect a substantial measure of agreement among his audience with many of the criticisms that he made.
First he told everyone that the two main political parties in New Zealand were the same, and this sameness and ineffectiveness was leading to the build-up of social pressures. The system had to be changed, but it must be thoroughly analysed first. All of this is stuff I can agree with—we must have a thorough analysis of the present system before we can smash it and replace it.
Hunter trotted out the good old Social Credit stock arguments—that orthodox economic doctrines are invalid. And when he started to quote Keynes and talked about things being equal I thought "Good he's attacking the ideas; of equilibrium and Say's Law, just as Marx did. If this is the orthodox economics that he is attacking, I'm all for him". For certainly the idea of equilibrium is the substance of orthodox economics.
But it was not this that he was attacking. Instead he had developed something else which he pretended was the kingpin of orthodox economic theory, something which is actually quite true: "Provided it is agreed that income is equal to the value of current output, that current investment is equal to the value of that part of current output which is not consumed, and that saving is equal to the excess of income over consumption—all of which is conformable both to common sense and to the traditional usage of the great majority of economists—the equality of saving and investment necessarily follows" (Keynes—General Theory, p. 63). This is not, in general, the most important ordering idea in economic theory, and neither in general, as Mr Hunter said, is macro-economics the study of allocation of resources.
But what did Mr Hunter conclude from this lot? It seemed that he found this to be a justification for the Social Credit policy of private ownership of private property in small units—what might be described as "economic individualism". But what he doesn't see is that such a system automatically leads to inequality, and to a return to the system of monopoly capitalism that he dislikes so much. Certainly monopolies are wrong, but the only way in which they can be overcome is through the social ownership of the means of production, distribution, and exchange (please note, Mr Hunter, not state ownership). The desire for economic individualism, for a return to the older forms of nascent capitalism is very much the political philosophy of the petty-bourgeoisie. Marx himself described the petty-bourgeoisie as behaving in such a way.
But not everything that Mr Hunter said was being complete nonsense. His theory of history is sound, in that he sees stages in an evolutionary process until mankind reaches the post-industrial society, as New Zealand society now has. In an economy which is structured on the capitalist model, as is the New Zealand economy at present, there is production for its own sake, and this is a bad thing. That is why, in Mr Hunter's eyes, the present system is decaying. Production must, however, be continued, and maybe even increased in some sectors, so that we can combat poverty.
His analysis of capitalist society, or what he termed post-industrial society, went beyond this however. He said that in a developing capitalist society, power flows to the industrialist through a flow of money and other resources The capitalist earns an economic rent because of the scarcity of capital (students of economics can forget then ideas about the productivity of capital that get fed to them). But Mr Hunter then showed how there was a falling rate of profit in industry nowadays, and said that all the profits were now going to the financiers. The profit of the Commercial Bank of Australia was up 522% and this leads to the Social Credit policy of the socialisation of the creation of credit, to eliminate what Lenin called "the oligarchy of finance capital".
But there would still be a surplus of production available for investment. In the present system, most of this surplus goes into investment for private profit, while social utilities and social necessities like sewage schemes and hospital services are often ignored. Mr Hunter said that this was because of the faulty operation of the monetary system. Social or government control of the creation of credit would make it possible for money to be spent on these social goods, instead of being divided to the creation of private profit.
"Don't stand on the cord! Ha, ha, ha, ha,"
After his attempt to sabotage the microphone and to destroy the public address system, Mr Hunter had one more main point to make. He said that New Zealand, by following present policies, was headed for disaster. An economic crisis would be upon us within two years, and then would be the time for Social Credit to get power to remedy the situation. But such a policy as that advocated by Social Credit would only overcome the problems for one time, and would not prevent the situation from ever occurring again. What is needed is a socialist revolution to destroy the cause of economic crises: we cannot cure all by re-sorting to Social Credit, the political philosophy of the petty-bourgeoisie.