Socialized Money-Chapter II

Chapter 2: In this chapter, the author begins to flesh-out the idea that government is a marketable product, i.e. merchandise. The cost of producing Government is bore by all of society via public revenue. He then concludes that Government is not only for social consumption, "but is an ideal form of wealth: it is produced necessarily from day to day and from year to year—its services shared or consumed, and its works socially conserved. It is not a thing fashioned into a monster, as is the surplus from economic wealth, to be turned back to prey upon society in the form of perpetually growing indebtedness, itself becoming a parasitical consumer." Obviously, we know that this last statement is wrong. Government can be turned into a monster of perpetually growing debt. How do we know? Because, that's exactly what we have for Government!

 

To continue, Mr. Campbell begins to explain that all wealth is created through the assistance of Government. Therefore, Government has a claim to that wealth. Sound far-fetched? Here's what he said, "In the broader sense, moreover, labor applied directly, or capital and labor applied jointly, are not exclusively productive of wealth. Back of and auxiliary to them are innumerable services that collaterally have part in the production of wealth and without which production could not be carried on." He sites some of those enabling services as "rendered by federal, state and municipal governments, and extending even to the indispensable service of public education." To summarize his position, Government can claim a stake in all wealth, because without the services government provides, the creation of wealth would not be possible. Mr. Campbell could not have gotten his logic more backwards if he tried. Government did not create, in whatever varying degree, wealth; wealth created government. It is now, as it always has been, a necessary evil in society. We, the people, owe nothing to Government. Mr. Campbell moves on the assumption that the "created" is greater than the "creator".

 

He ends the chapter by explaining the interrelationship of people, wealth and government. Combined, these make up a nation. He elaborates: "The economic element, or wealth, is the material substance of the trinity". As the economic landscape grows in complexity, the market must not be allowed to dictate the medium of exchange. The "welfare of Government" induces Government to dictate to the market what mediumship of exchange it will use. Economic stability or national welfare are achieved through a stabilized price level, which in turn produces stabilized production levels and more diversified consumption levels. He claims the interdependency of all men on the unity of all the wealth within the nation demands its socialization. To each according to his needs; from each according to his ability.

CHAPTER II
Socialized Money and Wealth Processes Must
Be Geared in With Our Future
National Development

EVEN IN THE HURRIED PASSING from point to point in sketching the outline of this monetary system, with a pause here and there to add a touch of color, it seems fitting to emphasize the fact that government, as a social product, has the same dependence upon services and wealth for its creation and maintenance as a truly economic product, and that the cost of government becomes a part of the cost of production in general.

Services in themselves are not wealth, not withstanding they are creative of wealth and exchangeable for wealth. The analogy between services and wealth, it would seem, is similar to that between electric current and the light generated by it: the current is convertible into light, but is not light, the thing produced.

The social product Government, it may be said, differs from a truly economic product only in that its cost of production comes from the wealth of all the people, or from the source of public revenue, and also in that it is not exchangeable, but the indivisible possession of society as a whole. Nevertheless, social wealth is an indispensable part of the normal consumption of society, and naturally the cost of its production is turned back to the people and by them added in infinitesimal amounts to complete the values in economic wealth.

Government, therefore, is not only a product for social consumption, so to speak, but is even an ideal form of wealth: it is produced necessarily from day to day and from year to year—its services shared or consumed, and its works socially conserved. It is not a thing fashioned into a monster, as is the surplus from economic wealth, to be turned back to prey upon society in the form of perpetually growing indebtedness, itself becoming a parasitical consumer.

THE ASSUMPTION that labor and service devoted to government are productive of wealth carries with it the idea that government itself is a product—a social product. Those who contribute either services or wealth in the production of government are creating wealth of a definite kind—social wealth, or wealth auxiliary to private wealth—just as truly as are the laborer and the capitalist whose labor and capital produce utilities, commodities or any other of the myriad forms of economic wealth.

Thus the administration of government attaches as a fixed item of cost in the production of all wealth within the political sphere of such government.

The structure of public wealth, however, differs from economic or private wealth in that it is conserved to public use and ordinarily occupies a place apart from exchangeable values. In other words, one cannot come into possession of his share of the entity we call government, although one has paid for it and owns it.

In the broader sense, moreover, labor applied directly, or capital and labor applied jointly, are not exclusively productive of wealth. Back of and auxiliary to them are innumerable services that collaterally have part in the production of wealth and without which production could not be carried on. Such, for instance, are the services of physicians and surgeons, dentists and opticians, and those of similar professions—the specialists who adjust, tune up and keep in running order the human machine employed in production.

Entering still more as primary although collateral factors in the production of wealth are those services in behalf of society as a whole, rendered by federal, state and municipal governments, and extending even to the indispensable service of public education.

So it is that production of wealth in the modern sense cannot be conceived as existing apart from these various auxiliary services.

It will be seen, therefore, that wealth is not only public and private, but that through government all wealth is in a sense socialized; that is, every dollar of wealth owes some part of its value to services of government.

CONFUSION ARISING from conflicting theories regarding the nature of wealth has stood in the way, undoubtedly, of wider understanding of its significance. It was quite natural in the circumstances that wealth should have been considered to be—like the primitive concept of the universe—an aggregate of unrelated little things, instead of one unified big thing. It follows quite naturally that, due to this confusion, theories as to the nature of money should have been even worse confounded.

The vital truth of the matter is this:

". . . Wealth in modern society is anything that can be exchanged, or that possesses an exchange value, and money is admittedly the universal medium of exchange. . . . Money is wealth, but wealth is not money."¹

Of course, back of the quality of exchangeability are the qualities which make things exchangeable—such, for instance, as the practical one of utility and the esthetic one of pleasure-giving. And back still farther is the quality of gain or profit from dealing in exchangeable things. This latter classification includes dealings for gain or profit in the medium of exchange itself.

Wm. B. Greene² gets to the heart of the matter when he states that "money is merchandise (wealth) just like any other merchandise (wealth), precisely as the trump is a card just like any other card."

The significance of getting at the true meaning of wealth should now be clear and illuminating: Under present economic policy society grants and fosters the operation of a monopoly incompatible with social progress or economic stability—the monopoly which gives to those who control the medium of exchange the power to limit and condition the exchange of all other wealth.

Its deepest significance, however, lies in the understanding that through adjustments in the composite structure of wealth itself—in one respect, through employment of the right mediumship in exchange—the price level can be stabilized so as to save society from crises, and the tremendous loss and widespread suffering which accompany them.

THE HISTORY OF NATIONS—of our own nation—has its outline in the trinity of people, wealth and government. From these bases come the social, economic and political developments which characterize a people. Each has a surpassing importance at different stages in the growth of the nation. For instance, right political action at the opportune moment may open the way for nobler social development of the nation such, for example, as has characterized the presidential acts of Franklin D. Roosevelt. Or, a corresponding elevation in the ethics and culture of the people may, in turn, give to government a responsive exaltation.

The economic element, or wealth, is the material substance of the trinity; nevertheless society and political organization are inconceivable as existing apart from it. That is why national welfare in its entirety calls for a higher degree of intelligence and a less selfish purpose in the engineering of our economic adjustments than heretofore have characterized their development.

As society grows in complexity, wealth, the economic element, claims more and more a place of surpassing importance. The age in which we are now living is notable for its economic complexity. Yet no fundamentally sound principles have been employed to effect a nearer equality in the distribution of wealth or a modernizing of the mediumship by which it may be more freely exchanged among the people.

Just as the economic is the underdeveloped element as compared with the social and political, so among economic factors that of exchange lags behind production and consumption in comparative development for social utility.

It would seem, therefore, that national welfare must be developed fundamentally from wealth sources, by laying the foundation for greatly increased and diversified consumption and use of wealth here at home by all the people, rather than continue its appropriation and diversion to non-social and selfish uses by the few.

Engineering to reclaim these wealth sources for society must begin with stabilization of the price level. And while it should apply to the broad structure of wealth in its entirety, more particularly it must apply to the monetary system as the instrumentality for effecting stabilization.

Economic stability or national welfare cannot be realized so long as Wealth Production has to exhaust itself, every few years, by climbing the mountain of prosperity, only to join an avalanche which carries it helpless, along with all commodity and physical property values, into the pit of depression.

A stabilized price level supports a stabilized production level and consequently a higher and more diversified consumption level. These form the circle of normalcy.

In this connection it may be well again to emphasize the fact that wealth, in the measure possessed, is the physical extension of each human life. Every man literally stands upon a footing of wealth—his own. He thus establishes himself to cooperate with other men in the betterment of his own life and in the higher development of the greater social life of which he is a part. The man without any wealth—dead broke, as they say—is analogous to the man without a country.

Superficial, therefore, will be any plan of economic engineering which does not recognize the unity of all wealth within the nation, and the interdependence of all the people upon its socialization.

1Principles of Economics, by Edwin R. A. Seligman (Columbia).
²Mutual Banking, by Wm. B. Greene.

INTERLUDE ON OLD TIMES

STRANGE THING, MONEY! Different persons at different times have given it a nature almost irreconcilably contradictory, just as the elephant was different to the blind men who felt of different parts of his anatomy. Before Adam Smith the plain folk held the belief that money is wealth, just sort of felt it in their bones, perhaps. Then, in 1776, coincidently with the birth of the U. S. A., Mr. Smith made a sensational discovery: money is not wealth.

Notwithstanding the great Scottish philosopher forgot, apparently, to tell the people just exactly what wealth really is, his discovery was duly incorporated into the "science" of economics and has since been a part of the schoolboy's education.

The editor of Mr. Smith's Wealth of Nations played up the discovery even so recently as 1869, saying:

"The notion that money is wealth was all but universal a century ago. The correction of this fallacy, the statement and the proof of the fact that money is mere merchandise, was a great achievement in Smith's time."

In the name of all the dismal scientists, what is "merchandise" if it be not wealth?

Then is added, approvingly, an observation by the erudite John Stuart Mill, that the fallacy of money being wealth is "like one of the crude fancies of childhood, instantly corrected by a word from any grown person."

"But," he admonishes, as if to squelch his sophisticated audience, "let no one feel confident that he should have escaped the dilemma if he had lived in the time in which it had prevailed."

Today the truth that money is wealth, after hurdling nearly two centuries of belief reminiscent of the "crude fancies of childhood," is recognized by many of our ablest economists.