FOR US THE LIVING BY ROBERT A. HEINLEIN

Heinlein also believed that English spelling needed to be streamlined and made more logical; hence, the use of phonetic spellings such as “Astronomikal Almanak and Efmerides” and “corectiv masaj.”

Interesting as well that Heinlein predicts a united Europe, although one different in governing structure and outcome than the one we see today. He also predicted a common European currency, which now exists as the euro.

In 1938, few people considered space travel anything but an insane fantasy. Here, as he so often did, Heinlein advocates rockets and space exploration. He was an avid follower of rocketry, even joining the American Interplanetary Society in 1931 (which became the American Rocket Society, later merged into the American Institute of Aeronautics and Astronautics). After his death, his third wife and widow, Virginia Heinlein, endowed the Robert Anson Heinlein Chair in Aerospace Engineering at the Annapolis Naval Academy.

For today’s readers (and for many in 1938), the most unfamiliar idea is that of his proposed economy. The economic program Heinlein advocates is not original to him, and is known by the name of Social Credit. He used the same economic system in Beyond This Horizon, where it is referred to as the “Social Dividend” paid to each member of that society.

Heinlein’s interpretation of Social Credit Theory was that financial panics and the entire boom and bust cycle are caused by the relationship between production and consumption. Economists recognize that when consumption falls behind production, nothing good can follow. The Great Depression was caused in large part by overproduction in the twenties, followed by layoffs and the resulting decrease in consumption. Farming constantly overproduced, as did other “sick industries” such as textiles and coal mining. FDR’s solution was to pay farmers not to produce—which we have continued to do, although the recipients are mostly agricultural corporations these days and not individual farmers. As Heinlein looked around him in the thirties, what he saw were failed attempts to restore consumption. He pointed out, in For Us, The Living, that FDR had attempted to hand out direct relief and to provide public works, but as we now know, only the massive expenditures of World War II ended the Great Depression—by putting everybody back to work, thus allowing them to consume the goods being offered. Direct relief and public works were simply not enough.

For Heinlein, Social Credit seemed a much better solution.

The economist C. H. Douglas had first proposed the idea of Social Credit in the twenties, and with the onslaught of the Depression, his ideas caught fire in Alberta, Canada. The Alberta Social Credit Party took control of Alberta’s government in 1935, and Douglas became their economic adviser. Eventually, Alberta’s attempts to implement Social Credit were shut down by the courts. But when Heinlein wrote this novel, there were Social Credit factions in the United States as well, including Los Angeles.

Heinlein’s version of Social Credit argues that banks constantly used the power of the fractional reserve to profit by manufacturing money out of thin air, by “fiat.” Banks were (and are) required by federal law to keep only a fraction of their total loans on reserve at any time; they could thus manipulate the money supply with impunity. By loaning out money that literally does not exist, and gaining in return actual cash, banks gather enormous profits. Abraham Lincoln once said, “If the American people knew tonight exactly how the monetary and banking system worked, there would be a revolution before tomorrow morning.” If you took away that power from the banks by ending the fractional reserve system, and instead let the government do the exact same thing for the good of the people, you could permanently resolve the disparities between production and consumption. By simply giving people the amount of money necessary to spring over the gap between available production and power to consume, you could end the boom and bust business cycle permanently, and free people to pursue their own interests.

Until a society fully implements Social Credit, who can speak to the truth of this argument?

But Heinlein believed in it, as late as 1942 in Beyond This Horizon. And Lazarus Long uses the power of the fractional reserve when he works as a banker in Time Enough for Love, so Heinlein clearly hadn’t changed his mind about the way banks functioned by the early seventies.