A B C of modern socialism

53 tions, with embarrassing effects upon prices. Nor is there the least doubt that production can now rise in a constantly decreasing ratio to capital outlay. In other words, function grows increasingly independent of capital.

This divergence between capital and actual production began when the first manager said: “This ought to be done, but the shareholders’ interests must be considered.” At this unconscious but historic moment the banks sided with finance against function. The end is not yet.

Real Credit

Our criticism of banking, finance and currency is simply to apply the functional test. What public purpose do they serve or subserve. It is not disputed that in former days banking and finance did, in fact, pursue a function of some, perhaps even of great, value. But a utility in one generation may become a futility in the next. My own belief is that capital still further diverged from function when it capitalised earning capacity 7 additional to material assets. The point is fundamental and significant. To capitalise profits as such is to create a profiteering class definitely separated from any active function and making a claim upon industry or commerce for something which is not real but fortuitous. Thus, when the banks advance credit on fortuitous profit, however large, they may be, and probably are, withholding credit from some undertaking of great functional value, but yielding less profits. We are long past the day when bankers and financiers, as such, would consider supporting