Economic options are concentrated on what is presented to us as a spectrum. All acceptable choices for economic organisation are to be found on this spectrum and your job as a citizen is to choose “where you are” on it.
On the left are the planners. The Fabians, socialists, even a few commies. For the sake of efficiency and justice the government is to take in hand the control and distribution of production and distribute it equitably according to need. In order to achieve this the people must relinquish private control of the economy and trust the government to faithfully discharge its duty to the common good by administration of the welfare state.
On the right we have the capitalists, favoured in the West, whose perfect world is one of “free enterprise.” Rather than trust owed to the august throne, the organising principle on the right is what is referred to as “the market.” For these free marketeers government interference or regulation of the economy creates distortions which throw the naturally efficient and ever-just scales of market forces off kilter. The right-wing utopia is the meritocratic, mercantile paradise of boundaryless trade. Left alone the invisible hand sets conditions and the world is made the oyster of the best among us; the entrepreneurs and hard workers.
These are the pure positions which occupy the ends, left and right, of the typical economic spectrum. As an intelligent and reliable person you must take your place somewhere on it. Perhaps you’re an economic “radical” or “extremist” and find your view in sync with one of the two descriptions above. The world is becoming increasingly “polarised” they say. But maybe you’re more of a moderate. You believe in private property but the government should tax to pay for healthcare and education. Maybe, being in the middle, your position shifts with subsequent political and economic failures. Where you are doesn’t quite matter so long as you limit your choice to the range provided and accept the dichotomy as valid. The spectrum is a little box for you to think inside.
In the case of the left the policy is explicitly to centralise control of the economy under the authority of government. It’s a blatant play for power. Orwell said, “Every intelligent boy of sixteen is a Socialist. At that age one does not see the hook sticking out of the rather stodgy bait.”
But what about the right’s insistence that the path to economic freedom lies in letting loose market forces by deregulation?
There are many who rightly maintain that small businesses trading freely, unhindered by excessive government regulation, is a healthy economic scene. In a state of perfect competition the market can actually do its work of regulating prices and allocating resources. Products can be sold at a reasonable profit and no one firm is in a position to corner any vital market. The trouble with this is that it’s a fantasy.
Back to reality. “Big business in Australia faces less competition than almost anywhere else in the world.”1 Our banking sector is a monopoly with the big four accounting for 90% of the lending market and 20% of the total value of the ASX.2 The energy retailers gouge in unison. Qantas and its subsidiary, Jetstar, dominate the airline sector and Transurban owns most of the country’s privatised toll roads. Then we’re afflicted by the grocery duopoly, Coles and Woolworths, who get it their way with consumers and suppliers. I’m old enough to remember walking around the fruit and veg shop when they were outside the supermarkets. Where did they go? Perfect competition I suppose.
Indeed the business model of big business is monopoly. Just ask Peter Theil, tech billionaire and, with Musk, the influence behind the appointment of J.D. Vance as Trump’s VP. In a lecture at Stanford entitled Competition is for Losers, Theil says there are two types of businesses; those that exist in an environment of perfect competition and make no money, like restaurants in San Francisco; and monopolies. Once you have a monopoly the trick is to avoid regulation by lying that you don’t have one.3 Then, I suppose, if you’re big enough you can shore it up with the political influence monopoly money affords.
We’ve had light-touch regulation for a long time and look where it’s got us. The promise of deregulated and competitive markets advocated by the right, especially the big right, is as much bait as the left’s centrally planned utopia. To my way of thinking to regulate or deregulate is little more than a cunning device of the public-private dominator class to head-off real solutions that might curb their coalescing control.
Before moving onto alternatives to conventional economic non-solutions it is worth mentioning the type of regulation which generally escapes scrutiny as such. Monetary policy is a case in point. It’s curious to note how the free marketeers generally ignore the interference by central banks and their ham-fisted interest rate interventions. They’ll question the decisions, never the authority. How can we make any claims to a free market when market conditions can be altered unrecognizably by the edicts of unelected officials in the Reserve Bank? Oh, that’s the banks, they do whatever they want.
The Douglas Social Credit view proposes a different spectrum altogether. At the one end we have an economic organisation which comes together around the principle of freedom of the individual and, at the other we find its opposite, the domination of the individual. Douglas sets up this alternative spectrum:
There are only two great policies in the world today — domination and freedom. Any policy which aims at the establishment of a complete sovereignty whether it be of a Kaiser, a League, a State, a Trust or a Trade Union is a policy of domination, irrespective of the fine words with which it may be accompanied; and any policy which makes it easier for the individual to benefit by association without being constrained beyond the inherent necessities of the function involved, is a policy of freedom.4
If we try to locate the left and the right on Douglas’s spectrum we will see immediately that rather than being opposed, the results of economic policies coming from both ends of the conventional spectrum amount to the same thing — domination of the individual via monopoly. With both we find “Centralisation of power over initiative as opposed to individual freedom is a persistent and conscious policy.”
What is monopoly? Why did Douglas take so much trouble with it? Monopoly is the policy of limiting choice. It’s political equivalent is dictatorship. It’s opposite is expanding choice, i.e. freedom. The falsity in the spectrum can be found in the presumption that big business and governments are at opposite ends. The fact is that they both have a policy of no choice and that makes them more the same in the most important way — their policy to control the individual. The government is a monopoly. You have to pay what taxes are imposed; you have no choice. They have the monopoly of legitimate force; you have to do what the police and the army say. What is the policy of big business? It is the policy of eliminating competitors until the consumer has no choice. Both government and big business pursue the same policy. This is why Douglas could say:
You will be puzzled to find that the conflict in the economic world is not between cartels, monopolies, and nationalised industries and property as between all three and small businesses and privately-owned property.5
CreditorWatch reported this month, “Business failures at highest rate since peak of pandemic; Soft household spending hitting hospitality hardest”.6 Perfect competition again. Business is concentrating and the government has a lot to do with it. “The ATO is in collection mode, and this will be a source of added stress and insolvencies for the foreseeable future.”7 Total non-performing loans have increased, but despite this the credit continues to flow with property lending 18.9% higher in the year to September. House prices have increased 40% since the “pandemic” and there remains “no APRA limits currently in place on higher-risk lending at a system-wide level.” For example on high loan to value ratios and high debt to income lending. APRA notes in their latest update that “household leverage is a key vulnerability” with Australians and Australian banks more exposed to mortgage risk than international peers.8 Makes you wonder.
If we are going to fix the problems with this system there is going to need to be some changes, especially to the financial system. The standard by which these changes should be judged is whether or not they will increase individual freedom. We shouldn’t quail at regulation which improves the functioning of the economy for ordinary people. If we are going to break up the monopoly of credit, which is what we propose, then the public authority must be empowered to issue credit within certain limits and manage prices to avoid inflation on essential items. It’s been done before. The question is, would the reform increase individual freedom? Short of a few well-placed defenestrations we think it is the only thing that would.
1. Quiggan, J. Apr, 2024. Big business in Australia faces less competition than almost anywhere else – and likes it that way. The Guardian. Available from: https://www.theguardian.com/commentisfree/2024/apr/08/big-business-in-australia-faces-less-competition-than-almost-anywhere-else-and-likes-it-that-way#:~:text=The%20role%20of%20monopoly%20power,after%20the%20end%20of%20lockdowns.
2. Kohut,B. May 2024. Australia’s Big 4 Banks – Are They A Good Investment? The Bull. Available from: https://thebull.com.au/analysis-opinion/australias-big-4-banks-are-they-a-good-investment/
3. Theil, P. 2014. Competition is for Losers, how to start a start-up. Available from:
4. Douglas, C.H. 1922. These present discontents and the Labour Party and Social Credit. Cecil Palmer, London. Available from: https://www.socred.org/images/douglas-archives/These-Present-Discontents-and-The-Labour-Party-and-Social-Credit.pdf
5. Douglas, C.H. 1945. The Brief for the Prosecution. Available from: https://thepeoplescredit.com.au/wp-content/uploads/pc-pdf/longform/Brief-for-the-Prosecution.pdf
6. Pollack, M. 20.11.24. Business failures at highest rate since peak of pandemic; Soft household spending hitting hospitality hardest. CreditorWatch. Available from: https://creditorwatch.com.au/blog/business-failures-at-highest-rate-since-peak-of-pandemic/
7. Ibid.
8. APRA. Update on APRA’s Macroprudential settings – November 2024, Available from: https://www.apra.gov.au/update-on-apras-macroprudential-settings-november-2024