Social Credit
Encyclopedia
Social Credit is an economic philosophy
developed by C. H. Douglas
(1879–1952), a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy
"; he called his philosophy "practical Christianity". This philosophy is interdisciplinary in nature, encompassing the fields of economics
, political science
, history
, accounting and physics
. Assuming the only safe place for power is in many hands, Social Credit is a distributive
philosophy, and its policy is to disperse power to individuals. Social Credit philosophy is best summed by Douglas when he said, "Systems were made for men, and not men for systems, and the interest of man which is self-development
, is above all systems, whether theological, political or economic."
According to Douglas, the true purpose of production
is consumption
, and production must serve the genuine, freely expressed interests of consumers. Each citizen is to have a beneficial, not direct, inheritance in the communal capital
conferred by complete and dynamic access to the fruits of industry assured by the National Dividend and Compensated Price. Consumer
s, fully provided with adequate purchasing power
, will establish the policy of production
through exercise of their monetary vote. In this view, the term economic democracy
does not mean worker control
of industry. Removing the policy of production from banking institutions
, government, and industry, Social Credit envisages an "aristocracy
of producers, serving and accredited
by a democracy
of consumers."
The policy proposals of Social Credit attracted widespread interest in the decades between the world wars of the twentieth century because of their relevance to economic conditions of the time. Douglas called attention to the excess of production capacity over consumer purchasing power, an observation that was also made by John Maynard Keynes
in his book, The General Theory of Employment, Interest and Money. While Douglas shared some of Keynes' criticisms of classical economics, his unique remedies were disputed and even rejected by most economists and bankers of the time. Remnants of Social Credit still exist within Social Credit parties
throughout the world, but not in the purest form originally advanced by Major C. H. Douglas.
into only land
, labour and capital
. While Douglas did not deny these factors in production, he believed the “cultural inheritance of society
” was the primary factor. Cultural inheritance is defined as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization. Consequently, mankind does not have to keep “reinventing the wheel
”. “We are merely the administrators of that cultural inheritance, and to that extent the cultural inheritance is the property
of all of us, without exception.” Adam Smith
, David Ricardo
and Karl Marx
claimed that labour creates all value. While Douglas did not deny that all costs are ultimately due to labour charges of some sort (past or present), he denied that the present labour of the world creates all wealth. Douglas was careful to distinguish between value
, costs
and prices
. He claimed that one of the factors leading to a misdirection of thought in terms of the nature and function of money was economists' obsession over values and their relation to prices and incomes. While Douglas recognized "value in use"
as a legitimate theory of values, he also claimed that values were subjective and not capable of being measured in an objective manner. Thus, he rejected the idea that the role of money is to act as a standard, or measure, of value. Douglas believed that the role of money is to act as a medium of communication by which consumers direct the distribution of production.
Closely associated with the concept of our cultural inheritance is the Social Credit theory of economic sabotage. While Douglas believed the cultural heritage factor of production is primary in increasing wealth
, he also believed that economic sabotage is the primary factor decreasing it. The word wealth derives from the Old English word wela, or "well-being", and Douglas believed that all production should increase personal well-being. Therefore, production that does not directly increase personal well-being is waste, or economic sabotage.
By modern methods of accounting, the consumer is forced to pay for all the costs of production, including waste. The economic effect of charging the consumer with all waste in industry is that the consumer is forced to do much more work than is necessary. Douglas believed that wasted effort could be directly linked to confusion in regards to the purpose of the economic system, and the belief that the economic system exists to provide employment in order to distribute goods and services.
Douglas claimed there were three possible policy alternatives with respect to the economic system:
Douglas believed that it was the third policy alternative upon which an economic system should be based, but confusion of thought has allowed the industrial system to be governed by the first two objectives. If the purpose of our economic system is to deliver the maximum amount of goods and services with the least amount of effort, then the ability to deliver goods and services with the least amount of employment is actually desirable. Douglas proposed that unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas also believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because he suggested that we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief.
Douglas also criticized classical economics because it was based upon a barter economy
, whereas the modern economy is a monetary one. Initially, money originated from the productive system, when cattle owners punched leather discs which represented a head of cattle. These discs could then be exchanged for corn, and the corn producers could then exchange the disc for a head of cattle at a later date. The word “pecuniary" comes from the Latin pecus, meaning "cattle". Today, the productive system and the monetary system are two separate entities. Douglas demonstrated that loan
s create deposits
, and presented mathematical proof
in his book Social Credit. Bank credit comprises the vast majority of money, and is created every time a bank makes a loan. Douglas was also one of the first to understand the creditary nature of money. The word credit
derives from the Latin credere, meaning "to believe". "The essential quality of money, therefore, is that a man shall believe that he can get what he wants by the aid of it."
According to economists, money is a medium of exchange
. Douglas argued that this may have once been the case when the majority of wealth was produced by individuals who subsequently exchanged it with each other. But in modern economies, division of labour
splits production into multiple processes, and wealth is produced by people working in association with each other. For instance, an automobile worker does not produce any wealth (i.e., the automobile) by himself, but only in conjunction with other auto workers, the producers of roads, gasoline, insurance, etc.
In this view, wealth is a pool upon which people can draw, and money becomes a ticketing system
. The efficiency gained by individuals cooperating in the productive process was coined by Douglas as the “unearned increment
of association” – historic accumulations of which constitute what Douglas called the cultural heritage. The means of drawing upon this pool is money distributed by the banking system.
Douglas believed that money should not be regarded as a commodity but rather as a ticket, a means of distribution of production. "There are two sides to this question of a ticket representing something that we can call, if we like, a value. There is the ticket itself – the money which forms the thing we call 'effective demand
' – and there is something we call a price opposite to it." Money is effective demand, and the means of reclaiming that money are prices and taxes. As real capital replaces labour in the process of modernization, money should become increasingly an instrument of distribution. The idea that money is a medium of exchange is related to the belief that all wealth is created by the current labour of the world, and Douglas clearly rejected this belief, stating that the cultural inheritance of society is the primary factor in the creation of wealth, which makes money a distribution mechanism, not a medium of exchange.
Douglas also claimed the problem of production, or scarcity
, had long been solved. The new problem was one of distribution. However; so long as orthodox economics makes scarcity a value, banks will continue to believe that they are creating value for the money they produce by making it scarce. Douglas criticized the banking system on two counts:
The former Douglas identified as being anti-social in policy. The latter he claimed was equivalent to claiming ownership of the nation. Money, Douglas claimed, was merely an abstract
representation of the real credit of the community, which is the ability of the community to deliver goods and services, when and where they are required.
, critiquing the methods by which economic activity is typically measured:
In 1920, Douglas presented the A + B theorem in his book, Credit-Power and Democracy, in critique of accounting methodology pertinent to income and prices. In the fourth, Australian Edition of 1933, Douglas states:
Beyond empirical
evidence, Douglas claims this deductive theorem
demonstrates that total prices rise faster than total incomes when regarded as a flow
.
In his pamphlet entitled, "The New and the Old Economics", Douglas describes the cause of "B" payments:
In 1932, Douglas estimated the cyclic rate of circulation of money to be approximately three weeks. The cyclic rate of circulation of money measures the amount of time required for a loan to pass through the productive system and return to the bank. This can be calculated by determining the amount of clearings
through the bank in a year divided by the average amount of deposits
held at the banks (which varies very little). The result is the number of times money must turnover in order to produce these clearing house
figures. In a testimony before the Alberta Agricultural Committee of the Alberta Legislature in 1934, Douglas said:
According to Douglas, the major consequence of the problem he identified in his A+B theorem is exponentially increasing debt. Further, he believed that society is forced to produce goods that consumers either do not want or cannot afford to purchase. The latter represents a favorable balance of trade
, meaning a country exports more than it imports. But not every country can pursue this objective at the same time, as one country must import more than it exports when another country exports more than it imports. Douglas proposed that the long-term consequence of this policy is a trade war
, typically resulting in real war – hence, the Social Credit admonition, “He who calls for Full-Employment calls for War!”, expressed by the Social Credit Party of Great Britain and Northern Ireland
, led by John Hargrave
. The former represents excessive capital production and/or military build-up. Military buildup necessitates either the violent use of weapons or a superfluous accumulation of them.
Douglas believed that excessive capital production is only a temporary correction, because the cost of the capital appears in the cost of consumer goods, or taxes, which will further exacerbate future gaps between income and prices.
The replacement of labour by capital in the productive process implies that overhead charges (B) increase in relation to income (A), because "'B' is the financial representation of the lever of capital”. As Douglas stated in his first article, "The Delusion of Superproduction":
If overhead charges are constantly increasing relative to income, any attempt to stabilize or increase income is met with rising prices. If income is constant or increasing, and overhead charges are continuously increasing due to technological advancement, then prices, which equal income plus overhead charges, must also increase. Further, any attempt to stabilize or decrease prices must be met by falling incomes according to this analysis. As the Phillips Curve
demonstrates, inflation and unemployment are trade-offs, unless prices are reduced from monies derived from outside the productive system. According to Douglas' A+B theorem, the systemic problem of rising prices, or inflation, is not "too much money chasing too few goods", but is the increasing rate of overhead charges in production due to the replacement of labour by capital in industry. Douglas did not suggest that inflation cannot be caused by too much money chasing too few consumer goods, but according to his analysis this is not the only cause of inflation, and inflation is systemic according to the rules of cost accountancy given overhead charges are constantly increasing relative to income. In other words inflation can exist even if consumers have insufficient purchasing power to buy back all of production. Douglas claimed that there were two limits which governed prices, a lower limit governed by the cost of production, and an upper limit governed by what an article will fetch on the open market. Douglas suggested that this is the reason why deflation is regarded as a problem in orthodox economics because bankers and businessmen were very apt to forget the lower limit of prices.
, and calculating aggregate
production and consumption statistics.
The price rebate is based upon the observation that the real cost of production is the mean rate of consumption over the mean rate of production for an equivalent period of time.
The physical cost of producing something is the materials and capital
that were consumed in its production, plus that amount of consumer goods labour consumed during its production. This total consumption represents the physical, or real, cost of production.
Since fewer inputs are consumed to produce a unit of output with every improvement in process, the real cost of production falls over time. As a result, prices should also fall with the progression of time. "As society's capacity to deliver goods and services is increased by the use of plant and still more by scientific progress, and decreased by the production, maintenance, or depreciation of it, we can issue credit, in costs, at a greater rate than the rate at which we take it back through prices of ultimate products, if capacity to supply individuals exceeds desire.".
Based on his conclusion that the real cost of production is less than the financial cost of production, the Douglas price rebate (Compensated Price) is determined by the ratio of consumption to production. Since consumption over a period of time is typically less than production over the same period of time in any industrial society, the real cost of goods should be less than the financial cost.
For example, if the money cost of a good is $100, and the ratio of consumption to production is 3/4, then the real cost of the good is $100(3/4)=$75. As a result, if a consumer spent $100 for a good, the National Credit Authority would rebate the consumer $25. The good costs the consumer $75, the retailer receives $100, and the consumer receives the difference of $25 via new credits created by the National Credit Authority.
The National Dividend is justified by the displacement of labour in the productive process due to technological increases in productivity. As human labour is increasingly replaced by machines in the productive process, Douglas believed people should be free to consume while enjoying increasing amounts of leisure, and that the Dividend would provide this freedom
.
A.W. Joseph replied to this specific criticism in a paper given to the Birmingham Actuarial Society, "Banking and Industry":
And in a reply to Dr. Hobson, Douglas restated his central thesis: "To reiterate categorically, the theorem criticised by Mr. Hobson: the wages, salaries and dividends distributed during a given period do not, and cannot, buy the production of that period; that production can only be bought, i.e., distributed, under present conditions by a draft, and an increasing draft, on the purchasing power distributed in respect of future production, and this latter is mainly and increasingly derived from financial credit created by the banks."
Incomes are paid to workers during a multi-stage program of production. According to the convention of accepted orthodox rules of accountancy, those incomes are part of the financial cost and price of the final product. For the product to be purchased with incomes earned in respect of its manufacture, all of these incomes would have to be saved until the product’s completion. Douglas argued that incomes are typically spent on past production to meet the present needs of living, and will not be available to purchase goods completed in the future—goods which must include the sum of incomes paid out during their period of manufacture in their price. Consequently, this does not liquidate the financial cost of production inasmuch as it merely passes charges of one accountancy period on as mounting charges against future periods. In other words, according to Douglas, supply does not create enough demand to liquidate all the costs of production. Douglas denied the validity of Say's Law
in economics.
While John Maynard Keynes referred to Douglas as a “private, perhaps, but not a major in the brave army of heretics, he did state that Douglas “is entitled to claim, as against some of his orthodox adversaries, that he at least has not been wholly oblivious of the outstanding problem of our economic system.” While Keynes said that Douglas’s A+B theorem “includes much mere mystification”, he reaches a similar conclusion to Douglas when he states:
The criticism that Social Credit policies are inflationary is based upon what economists call the quantity theory of money
, which states that the quantity of money multiplied by its velocity of circulation equals total purchasing power. Douglas was quite critical of this theory stating, "The velocity of the circulation of money in the ordinary sense of the phrase, is – if I may put it that way – a complete myth. No additional purchasing power at all is created by the velocity of the circulation of money. The rate of transfer from hand-to-hand, as you might say, of goods is increased, of course, by the rate of spending, but no more costs can be canceled by one unit of purchasing power than one unit of cost. Every time a unit of purchasing power passes through the costing system it creates a cost, and when it comes back again to the same costing system by the buying and transfer of the unit of production to the consuming system it may be cancelled, but that process is quite irrespective of what is called the velocity of money, so the categorical answer is that I do not take any account of the velocity of money in that sense." The Alberta Social Credit government published in a committee report what was perceived as an error in regards to this theory: “The fallacy in the theory lies in the incorrect assumption that money 'circulates', whereas it is issued against production, and withdrawn as purchasing power as the goods are bought for consumption."
Other critics argue that if the gap between income and prices exists as Douglas claimed, the economy would have collapsed in short order. They also argue that there are periods of time in which purchasing power is in excess of the price of consumer goods for sale.
Douglas replied to these criticisms in his testimony before the Alberta Agricultural Committee:
democracy is incompatible with Social Credit, which assumes the right of individuals to choose freely one thing at a time, and to contract out of unsatisfactory associations. Douglas advocated what he called the “responsible vote”, where anonymity in the voting process would no longer exist. "The individual voter must be made individually responsible, not collectively taxable, for his vote." Douglas believed that party politics should be replaced by a "union of electors" in which the only role of an elected official would be to implement the popular will. Douglas believed that the implemenation of such a system was necessary as otherwise the government would be the tool of international financiers. Douglas also opposed the secret ballot
arguing that it led to electoral irresponsibility, calling it a "Jewish" technique used to ensure Barabbas
was freed leaving Christ to be crucified.
Douglas considered the constitution an organism, not an organization. In this view, establishing the supremacy
of common law
is essential to ensure protection of individual rights
from an all-powerful parliament. Douglas also believed the effectiveness of British government is structurally determined by application of a Christian
concept known as Trinitarianism: "In some form or other, sovereignty in the British Isles
for the last two thousand years has been Trinitarian. Whether we look on this Trinitarianism under the names of King, Lords and Commons or as Policy, Sanctions and Administration, the Trinity-in-Unity has existed, and our national success has been greatest when the balance (never perfect) has been approached."
Opposing the formation of Social Credit parties, C.H. Douglas believed a group of elected amateurs should never direct a group of competent experts in technical matters. While experts are ultimately responsible for achieving results, the goal of politicians should be to pressure those experts to deliver policy results desired by the populace. According to Douglas, "the proper function of Parliament is to force all activities of a public nature to be carried on so that the individuals who comprise the public may derive the maximum benefit from them. Once the idea is grasped, the criminal absurdity of the party system
becomes evident."
who pursued his higher education at Cambridge University. His early writings appeared most notably in the British intellectual journal The New Age
. The editor of that publication, Alfred Orage
, devoted The New Age and later The New English Weekly to the promulgation of Douglas's ideas until his death on the eve of his BBC
speech on Social Credit, November 5, 1934, in the Poverty in Plenty Series.
Douglas’s first book, Economic Democracy, was published in 1920, shortly after his article The Delusion of Super-Production appeared in 1918 in the English Review. Among Douglas’s other early works were The Control and Distribution of Production, Credit-Power and Democracy, Warning Democracy and The Monopoly of Credit. Of considerable interest is the evidence he presented to the Canadian House of Commons Select Committee on Banking and Commerce in 1923, to the British Parliamentary Macmillan Committee on Finance and Industry
in 1930, which included exchanges with economist John Maynard Keynes
, and to the Agricultural Committee of the Alberta Legislature
in 1934 during the term of the United Farmers of Alberta
Government in that Canadian province
.
The writings of C.H. Douglas spawned a worldwide movement, most prominent in the British Commonwealth, with beachheads in Europe and activities in the United States where Orage, during his sojourn there, promoted Douglas’s ideas. In the United States, the New Democracy group was headed by the American author Gorham Munson
who contributed a major book on Social Credit titled Aladdin’s Lamp: The Wealth of the American People. While Canada
and New Zealand
had electoral successes with “Social Credit” political parties, the movement in England and Australia
was primarily devoted to pressuring existing parties to implement Social Credit. This function was performed especially by Douglas’s Social Credit Secretariat in England and the Commonwealth Leagues of Rights
in Australia. Douglas continued writing and contributing to the Secretariat’s journals, initially Social Credit and shortly thereafter The Social Crediter (which continues to be published by the Secretariat) for the remainder of his lifetime, concentrating more on political and philosophical issues in his later years.
leadership resisted pressure from Trade union
ists to implement Social Credit, as hierarchical views of Fabian socialism, economic growth
and full employment
, were incompatible with the National Dividend and abolishment of wage slavery
suggested by Douglas. In an effort to discredit the Social Credit movement, one leading Fabian, Sidney Webb, is said to have declared that he didn’t care whether Douglas was technically correct or not – they simply did not like his policy.
In 1935 the first “Social Credit”
government was elected in Alberta
, Canada
under the leadership of William Aberhart
. A book by Maurice Colbourne entitled The Meaning of Social Credit convinced Aberhart that the theories of C.H. Douglas were essential for Alberta's recovery from the Great Depression
. Aberhart added a heavy dose of fundamentalist Christianity
to Douglas' theories; the Canadian social credit movement
, which was largely nurtured in Alberta, thus acquired a strong social conservative
tint that it retains to this day.
Having counselled the previous United Farmers of Alberta
provincial government, Douglas became an advisor to Aberhart, but withdrew shortly after due to strategic differences. Aberhart sought orthodox counsel with respect to the Province's finances, and the strained correspondence between them was published by Douglas in his book, The Alberta Experiment.
While the Premier
wanted to balance the provincial budget, Douglas argued the whole concept of a "balanced budget
" was inconsistent with Social Credit principles. Douglas stated that, under existing rules of financial cost accountancy, balancing all budgets within an economy simultaneously is an arithmetic impossibility. In a letter to Aberhart, Douglas stated:
Douglas sent two other expert Social Credit technical advisors from the United Kingdom, L. Denis Byrne and George F. Powell. But all attempts to pass Social Credit legislation were ruled ultra vires
by the Supreme Court of Canada
and Privy Council
in London
. Based on the monetary theories of Silvio Gesell
, William Aberhart issued a currency substitute known as prosperity certificates. But these scrip
s actually depreciated in value the longer they were held, and Douglas openly criticized the idea:
Under Ernest Manning
, who succeeded Aberhart after his untimely death, the Alberta Social Credit Party gradually departed from its origins and became popularly identified as a right wing
populist
movement. In the Secretariat’s journal, An Act for the Better Management of the Credit of Alberta, Douglas published a critical analysis of the Social Credit movement in Alberta, in which he said, "The Manning administration is no more a Social Credit administration than the British government is Labour". Manning accused Douglas and his followers of anti-Semitism, and went about purging all of the so called "Douglasites" from the Party. The British Columbia Social Credit Party
won power in 1952 in the province to Alberta's west, but had little in common with Douglas or his theories.
Social Credit Parties also enjoyed some national electoral success in Canada. The Social Credit Party of Canada
was founded with support from Western Canada, and eventually built another base of support in Quebec
. Social Credit also did well at the national level in New Zealand
, where it was the country's third party for almost 30 years.
. Douglas believed there was a Canon
which ran through the universe, and Jesus Christ was the Incarnation of this Canon. However, he also believed Christianity remained ineffective so long as it remained transcendental. Religion, which derives from the Latin word religare (to “bind back”), was intended to be a binding back to reality. Social Credit is concerned with the incarnation of Christian principles in our organic affairs. Specifically, it is concerned with the principles of association and how to maximize the increments of association which redound to satisfaction of the individual in society – while minimizing any decrements of association.
The goal of Social Credit is to maximize immanent
sovereignty
. Social Credit is consonant with the Christian doctrine of Salvation
through unearned Grace
, and is therefore incompatible with any variant of the doctrine of salvation through works. Works need not be of Purity in intent or of desirable consequence and in themselves alone are as "filthy rags". For instance, the present system makes destructive, obscenely wasteful wars a virtual certainty—which provides lots of "work" for everyone. Social Credit has been called the Third Alternative to the futile Left-Right Duality
.
Although Douglas defined Social Credit as a philosophy with Christian roots, he did not envision a Christian theocracy
. Douglas did not believe that religion should be thrust upon anyone through force of law or external compulsion. Practical Christian society is Trinitarian in structure, based upon a constitution where the constitution is an organism changing in relation to our knowledge of the nature of the universe. "The progress of human society is best measured by the extent of its creative ability. Imbued with a number of natural gifts, notably reason, memory, understanding and free will, man has learned gradually to master the secrets of nature, and to build for himself a world wherein lie the potentialities of peace, security, liberty and abundance." Douglas said that Social Crediters want to build a new civilization based upon absolute economic security for the individual—where “...they shall sit every man under his vine and under his fig tree; and none shall make them afraid.” In keeping with this goal, Douglas was opposed to all forms of taxation on real property. This set Social Credit at variance from the land-taxing recommendations of Henry George
.
Social Credit society recognizes the fact that the relationship between man and God is unique. In this view, it is essential to allow man the greatest possible freedom in order to pursue this relationship. Douglas defined freedom as the ability to choose and refuse one thing at a time, and to contract out of unsatisfactory associations. If people are given the economic security and leisure achievable in the context of a Social Credit dispensation, Douglas believed most would end their service to mammon
and use their free time pursuing spiritual, intellectual, or cultural goals leading to self-development. Douglas opposed what he termed "the pyramid of power". Totalitarianism
reflects this pyramid and is the antithesis of Social Credit. It turns the government into an end instead of a means, and the individual into a means instead of an end — Demon est deus inversus — “the devil is God upside down.” Social Credit is designed to give the individual the maximum freedom allowable given the need for association in economic, political and social matters. Social Credit elevates the importance of the individual and holds that all institutions exist to serve the individual – that the State exists to serve its citizens, not that individuals exist to serve the State.
Douglas emphasized that all policy derives from its respective philosophy and that “... Society is primarily metaphysical
, and must have regard to the organic relationships of its prototype.”
Social Credit rejects dialectical materialistic
philosophy. "The tendency to argue from the particular to the general is a special case of the sequence from materialism to collectivism. If the universe is reduced to molecules, ultimately we can dispense with a catalogue and a dictionary; all things are the same thing, and all words are just sounds — molecules in motion."
Douglas divided philosophy into two schools of thought that he labeled the "classical school" and the "modern school", which are broadly represented by philosophies of Aristotle
and Francis Bacon
respectively. Douglas was critical of both schools of thought, but believed that "the truth lies in appreciation of the fact that neither conception is useful without the other".
, especially in his later writings. He asserted that some Jews controlled many of major banks and were involved in an international conspiracy to centralize the power of finance. Some people have claimed that Douglas was anti-Semitic because he was quite critical of Jewish philosophy. In his book entitled Social Credit, he wrote that, “It is not too much to say that one of the root ideas through which Christianity comes into conflict with the conceptions of the Old Testament and the ideals of the pre-Christians era, is in respect of this dethronement of abstractionism.”
Douglas was opposed to abstractionist philosophies, because he believed these philosophies inevitably led to the elevation of abstraction
s, such as state, over individuals. He also believed that what he called Jewish abstractionist thought tended to lead them to communist
ideals and the emphasis of the group over the individual. John L. Finlay, in his book, Social Credit: The English Origins, wrote, “Anti-Semitism of the Douglas kind, if it can be called anti-Semitism at all, may be fantastic, may be dangerous even, in that it may be twisted into a dreadful form, but it is not itself vicious nor evil.”
In her book, Social Discredit: Anti-Semitism, Social Credit and the Jewish Response, Janine Stingel claims, “Douglas's economic and political doctrines were wholly dependent on an anti-Semitic conspiracy theory." John L. Finlay disagrees with Stingel's assertion and argues that, "It must also be noted that while Douglas was critical of some aspects of Jewish thought, Douglas did not seek to discriminate against Jews as a people or race. It was never suggested that the National Dividend be withheld from them."
Provincial political parties:
Organizations:
, William Carlos Williams
, Ezra Pound
, T. S. Eliot
, Herbert Read
, Aldous Huxley
, Storm Jameson
, Eimar O’Duffy, Sybil Thorndyke, Bonamy Dobrée
, Eric de Maré
and the American publisher James Laughlin
. Hilaire Belloc
and GK Chesterton espoused similar ideas. In 1933 Eimar O’Duffy published Asses in Clover, a science fiction fantasy exploration of Social Credit themes. His Social Credit economics book Life and Money: Being a Critical Examination of the Principles and Practice of Orthodox Economics with A Practical Scheme to End the Muddle it has made of our Civilisation, was endorsed by Douglas.
Robert A. Heinlein
described a Social Credit economy in his posthumously-published first novel, For Us, The Living: A Comedy of Customs
, and his Beyond This Horizon
describes a similar system in less detail. In Heinlein's future society, government is not funded by taxation. Instead, government controls the currency and prevents inflation by providing a price rebate to participating business and a guaranteed income to every citizen.
In his novel The Trick Top Hat, part of his Schrödinger's Cat Trilogy
, Robert Anton Wilson
described the implementation by the President of an alternate future United States of an altered form of Social Credit, in which the government issues a National Dividend to all citizens in the form of "trade aids," which can be spent like money but which cannot be lent at interest
(in order to mollify the banking industry) and which eventually expire (to prevent inflation
and hoarding).
More recently, Richard C. Cook
, an analyst for the U.S. Civil Service Commission
, Food and Drug Administration
, NASA
, the U.S. Treasury Department
, and author of the books Challenger Revealed and We Hold These Truths, has written several articles relating to Social Credit and monetary reform
at Global Research, an independent research and media group of writers, scholars, journalists and activists. Frances Hutchinson, Chairperson of the Social Credit Secretariat, has co-authored, with Brian Burkitt, a book entitled The Political Economy of Social Credit and Guild Socialism.
Philosophy
Philosophy is the study of general and fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language. Philosophy is distinguished from other ways of addressing such problems by its critical, generally systematic approach and its reliance on rational...
developed by C. H. Douglas
C. H. Douglas
Major C. H. Douglas MIMechE, MIEE, , was a British engineer and pioneer of the Social Credit economic reform movement.-Education and engineering career:...
(1879–1952), a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy
Philosophy
Philosophy is the study of general and fundamental problems, such as those connected with existence, knowledge, values, reason, mind, and language. Philosophy is distinguished from other ways of addressing such problems by its critical, generally systematic approach and its reliance on rational...
"; he called his philosophy "practical Christianity". This philosophy is interdisciplinary in nature, encompassing the fields of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, political science
Political science
Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
, history
History
History is the discovery, collection, organization, and presentation of information about past events. History can also mean the period of time after writing was invented. Scholars who write about history are called historians...
, accounting and physics
Physics
Physics is a natural science that involves the study of matter and its motion through spacetime, along with related concepts such as energy and force. More broadly, it is the general analysis of nature, conducted in order to understand how the universe behaves.Physics is one of the oldest academic...
. Assuming the only safe place for power is in many hands, Social Credit is a distributive
Distributism
Distributism is a third-way economic philosophy formulated by such Catholic thinkers as G. K...
philosophy, and its policy is to disperse power to individuals. Social Credit philosophy is best summed by Douglas when he said, "Systems were made for men, and not men for systems, and the interest of man which is self-development
Personal development
Personal development includes activities that improve awareness and identity, develop talents and potential, build human capital and facilitates employability, enhance quality of life and contribute to the realization of dreams and aspirations...
, is above all systems, whether theological, political or economic."
According to Douglas, the true purpose of production
Production, costs, and pricing
The following outline is provided as an overview of and topical guide to industrial organization:Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions...
is consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...
, and production must serve the genuine, freely expressed interests of consumers. Each citizen is to have a beneficial, not direct, inheritance in the communal capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
conferred by complete and dynamic access to the fruits of industry assured by the National Dividend and Compensated Price. Consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
s, fully provided with adequate purchasing power
Purchasing power
Purchasing power is the number of goods/services that can be purchased with a unit of currency. For example, if you had taken one dollar to a store in the 1950s, you would have been able to buy a greater number of items than you would today, indicating that you would have had a greater purchasing...
, will establish the policy of production
Manufacturing
Manufacturing is the use of machines, tools and labor to produce goods for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale...
through exercise of their monetary vote. In this view, the term economic democracy
Economic democracy
Economic democracy is a socioeconomic philosophy that suggests a shift in decision-making power from a small minority of corporate shareholders to a larger majority of public stakeholders...
does not mean worker control
Workers' control
Workers' control is a term meaning participation in the management of factories and other commercial enterprises by the people who work there. It has been variously advocated by anarchists, socialists, Communists, Social Democrats and Christian Democrats, and has been combined with various...
of industry. Removing the policy of production from banking institutions
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
, government, and industry, Social Credit envisages an "aristocracy
Aristocracy
Aristocracy , is a form of government in which a few elite citizens rule. The term derives from the Greek aristokratia, meaning "rule of the best". In origin in Ancient Greece, it was conceived of as rule by the best qualified citizens, and contrasted with monarchy...
of producers, serving and accredited
Accreditation
Accreditation is a process in which certification of competency, authority, or credibility is presented.Organizations that issue credentials or certify third parties against official standards are themselves formally accredited by accreditation bodies ; hence they are sometimes known as "accredited...
by a democracy
Democracy
Democracy is generally defined as a form of government in which all adult citizens have an equal say in the decisions that affect their lives. Ideally, this includes equal participation in the proposal, development and passage of legislation into law...
of consumers."
The policy proposals of Social Credit attracted widespread interest in the decades between the world wars of the twentieth century because of their relevance to economic conditions of the time. Douglas called attention to the excess of production capacity over consumer purchasing power, an observation that was also made by John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
in his book, The General Theory of Employment, Interest and Money. While Douglas shared some of Keynes' criticisms of classical economics, his unique remedies were disputed and even rejected by most economists and bankers of the time. Remnants of Social Credit still exist within Social Credit parties
Social Credit Party
The name Social Credit Party has been used by a number of political parties.In Canada:*Social Credit Party of Canada*Manitoba Social Credit Party*Ralliement créditiste*Ralliement créditiste du Québec*Social Credit Party of Alberta...
throughout the world, but not in the purest form originally advanced by Major C. H. Douglas.
Economic theory
Douglas disagreed with classical economists who divided the factors of productionFactors of production
In economics, factors of production means inputs and finished goods means output. Input determines the quantity of output i.e. output depends upon input. Input is the starting point and output is the end point of production process and such input-output relationship is called a production function...
into only land
Land (economics)
In economics, land comprises all naturally occurring resources whose supply is inherently fixed. Examples are any and all particular geographical locations, mineral deposits, and even geostationary orbit locations and portions of the electromagnetic spectrum. Natural resources are fundamental to...
, labour and capital
Physical capital
In economics, physical capital or just 'capital' refers to any already-manufactured asset that is applied in production, such as machinery, buildings, or vehicles. In economic theory, physical capital is one of the three primary factors of production, also known as inputs in the production function...
. While Douglas did not deny these factors in production, he believed the “cultural inheritance of society
Cultural heritage
Cultural heritage is the legacy of physical artifacts and intangible attributes of a group or society that are inherited from past generations, maintained in the present and bestowed for the benefit of future generations...
” was the primary factor. Cultural inheritance is defined as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization. Consequently, mankind does not have to keep “reinventing the wheel
Reinventing the wheel
To reinvent the wheel is to duplicate a basic method that has already previously been created or optimized by others.The inspiration for this idiomatic metaphor lies in the fact that the wheel is the archetype of human ingenuity, both by virtue of the added power and flexibility it affords its...
”. “We are merely the administrators of that cultural inheritance, and to that extent the cultural inheritance is the property
Property
Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...
of all of us, without exception.” Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...
, David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...
and Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...
claimed that labour creates all value. While Douglas did not deny that all costs are ultimately due to labour charges of some sort (past or present), he denied that the present labour of the world creates all wealth. Douglas was careful to distinguish between value
Value (economics)
An economic value is the worth of a good or service as determined by the market.The economic value of a good or service has puzzled economists since the beginning of the discipline. First, economists tried to estimate the value of a good to an individual alone, and extend that definition to goods...
, costs
Historical cost
In accounting, historical costs is the original monetary value of an economic item. Historical cost is based on the stable measuring unit assumption. In some circumstances, assets and liabilities may be shown at their historical cost, as if there had been no change in value since the date of...
and prices
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...
. He claimed that one of the factors leading to a misdirection of thought in terms of the nature and function of money was economists' obsession over values and their relation to prices and incomes. While Douglas recognized "value in use"
Use value
Use value or value in use is the utility of consuming a good; the want-satisfying power of a good or service in classical political economy. In Marx's critique of political economy, any labor-product has a value and a use-value, and if it is traded as a commodity in markets, it additionally has an...
as a legitimate theory of values, he also claimed that values were subjective and not capable of being measured in an objective manner. Thus, he rejected the idea that the role of money is to act as a standard, or measure, of value. Douglas believed that the role of money is to act as a medium of communication by which consumers direct the distribution of production.
Closely associated with the concept of our cultural inheritance is the Social Credit theory of economic sabotage. While Douglas believed the cultural heritage factor of production is primary in increasing wealth
Wealth
Wealth is the abundance of valuable resources or material possessions. The word wealth is derived from the old English wela, which is from an Indo-European word stem...
, he also believed that economic sabotage is the primary factor decreasing it. The word wealth derives from the Old English word wela, or "well-being", and Douglas believed that all production should increase personal well-being. Therefore, production that does not directly increase personal well-being is waste, or economic sabotage.
"The economic effect of charging all the waste in industry to the consumer so curtails his purchasing power that an increasing percentage of the product of industry must be exported. The effect of this on the worker is that he has to do many times the amount of work which should be necessary to keep him in the highest standard of living, as a result of an artificial inducement to produce things he does not want, which he cannot buy, and which are of no use to the attainment of his internal standard of well-being."
By modern methods of accounting, the consumer is forced to pay for all the costs of production, including waste. The economic effect of charging the consumer with all waste in industry is that the consumer is forced to do much more work than is necessary. Douglas believed that wasted effort could be directly linked to confusion in regards to the purpose of the economic system, and the belief that the economic system exists to provide employment in order to distribute goods and services.
"But it may be advisable to glance at some of the proximate causes operating to reduce the return for effort ; and to realise the origin of most of the specific instances, it must be borne in mind that the existing economic system distributes goods and services through the same agency which induces goods and services, i.e., payment for work in progress. In other words, if production stops, distribution stops, and, as a consequence, a clear incentive exists to produce useless or superfluous articles in order that useful commodities already existing may be distributed. This perfectly simple reason is the explanation of the increasing necessity of what has come to be called economic sabotage ; the colossal waste of effort which goes on in every walk of life quite unobserved by the majority of people because they are so familiar with it ; a waste which yet so over-taxed the ingenuity of society to extend it that the climax of war only occurred in the moment when a culminating exhibition of organised sabotage was necessary to preserve the system from spontaneous combustion."
Douglas claimed there were three possible policy alternatives with respect to the economic system:
"1. The first of these is that it is a disguised Government, of which the primary, though admittedly not the only, object is to impose upon the world a system of thought and action.
2. The second alternative has a certain similarity to the first, but is simpler. It assumes that the primary objective of the industrial system is the provision of employment.
3. And the third, which is essentially simpler still, in fact, so simple that it appears entirely unintelligible to the majority, is that the object of the industrial system is merely to provide goods and services."
Douglas believed that it was the third policy alternative upon which an economic system should be based, but confusion of thought has allowed the industrial system to be governed by the first two objectives. If the purpose of our economic system is to deliver the maximum amount of goods and services with the least amount of effort, then the ability to deliver goods and services with the least amount of employment is actually desirable. Douglas proposed that unemployment is a logical consequence of machines replacing labour in the productive process, and any attempt to reverse this process through policies designed to attain full employment directly sabotages our cultural inheritance. Douglas also believed that the people displaced from the industrial system through the process of mechanization should still have the ability to consume the fruits of the system, because he suggested that we are all inheritors of the cultural inheritance, and his proposal for a national dividend is directly related to this belief.
Douglas also criticized classical economics because it was based upon a barter economy
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
, whereas the modern economy is a monetary one. Initially, money originated from the productive system, when cattle owners punched leather discs which represented a head of cattle. These discs could then be exchanged for corn, and the corn producers could then exchange the disc for a head of cattle at a later date. The word “pecuniary" comes from the Latin pecus, meaning "cattle". Today, the productive system and the monetary system are two separate entities. Douglas demonstrated that loan
Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....
s create deposits
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...
, and presented mathematical proof
Mathematical proof
In mathematics, a proof is a convincing demonstration that some mathematical statement is necessarily true. Proofs are obtained from deductive reasoning, rather than from inductive or empirical arguments. That is, a proof must demonstrate that a statement is true in all cases, without a single...
in his book Social Credit. Bank credit comprises the vast majority of money, and is created every time a bank makes a loan. Douglas was also one of the first to understand the creditary nature of money. The word credit
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
derives from the Latin credere, meaning "to believe". "The essential quality of money, therefore, is that a man shall believe that he can get what he wants by the aid of it."
According to economists, money is a medium of exchange
Medium of exchange
A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.By contrast, as William Stanley Jevons argued, in a barter system there must be a coincidence of wants before two people can trade – one must want exactly what the other has to offer, when and...
. Douglas argued that this may have once been the case when the majority of wealth was produced by individuals who subsequently exchanged it with each other. But in modern economies, division of labour
Division of labour
Division of labour is the specialisation of cooperative labour in specific, circumscribed tasks and likeroles. Historically an increasingly complex division of labour is closely associated with the growth of total output and trade, the rise of capitalism, and of the complexity of industrialisation...
splits production into multiple processes, and wealth is produced by people working in association with each other. For instance, an automobile worker does not produce any wealth (i.e., the automobile) by himself, but only in conjunction with other auto workers, the producers of roads, gasoline, insurance, etc.
In this view, wealth is a pool upon which people can draw, and money becomes a ticketing system
Ticket (receipt)
A ticket may be a pick-up ticket, for example when retrieving clothing from a dry cleaning shop or an automobile from a repair shop, or putting things in storage at a train station, cloakroom, etc. It is also used in places where people are required to "take a number" to queue up, such as in a...
. The efficiency gained by individuals cooperating in the productive process was coined by Douglas as the “unearned increment
Unearned increment
Unearned increment is an increase in the value of land or any property without expenditure of any kind on the part of the proprietor; it is a early statement of the notion of unearned income. It was coined by John Stuart Mill, who proposed taxing it. Mill's concept was refined and developed by...
of association” – historic accumulations of which constitute what Douglas called the cultural heritage. The means of drawing upon this pool is money distributed by the banking system.
Douglas believed that money should not be regarded as a commodity but rather as a ticket, a means of distribution of production. "There are two sides to this question of a ticket representing something that we can call, if we like, a value. There is the ticket itself – the money which forms the thing we call 'effective demand
Effective demand
In economics, effective demand in a market is the demand for a product or service which occurs when purchasers are constrained in a different market. It contrasts with notional demand, which is the demand that occurs when purchasers are not constrained in any other market...
' – and there is something we call a price opposite to it." Money is effective demand, and the means of reclaiming that money are prices and taxes. As real capital replaces labour in the process of modernization, money should become increasingly an instrument of distribution. The idea that money is a medium of exchange is related to the belief that all wealth is created by the current labour of the world, and Douglas clearly rejected this belief, stating that the cultural inheritance of society is the primary factor in the creation of wealth, which makes money a distribution mechanism, not a medium of exchange.
Douglas also claimed the problem of production, or scarcity
Scarcity
Scarcity is the fundamental economic problem of having humans who have unlimited wants and needs in a world of limited resources. It states that society has insufficient productive resources to fulfill all human wants and needs. Alternatively, scarcity implies that not all of society's goals can be...
, had long been solved. The new problem was one of distribution. However; so long as orthodox economics makes scarcity a value, banks will continue to believe that they are creating value for the money they produce by making it scarce. Douglas criticized the banking system on two counts:
- for being a form of government which has been centralizingCentralizationCentralisation, or centralization , is the process by which the activities of an organisation, particularly those regarding planning and decision-making, become concentrated within a particular location and/or group....
its power for centuries, and - for claiming ownership of the money they create.
The former Douglas identified as being anti-social in policy. The latter he claimed was equivalent to claiming ownership of the nation. Money, Douglas claimed, was merely an abstract
Abstract object
An abstract object is an object which does not exist at any particular time or place, but rather exists as a type of thing . In philosophy, an important distinction is whether an object is considered abstract or concrete. Abstract objects are sometimes called abstracta An abstract object is an...
representation of the real credit of the community, which is the ability of the community to deliver goods and services, when and where they are required.
The A + B theorem
In January 1919, A Mechanical View of Economics by C.H. Douglas was the first article to appear in the New Age, edited by A.R. OrageAlfred Richard Orage
Alfred Richard Orage was a British intellectual, now best known for editing the magazine The New Age. While working as a schoolteacher in Leeds, he pursued various interests, including Plato, the Independent Labour Party, and theosophy...
, critiquing the methods by which economic activity is typically measured:
"It is not the purpose of this short article to depreciate the services of accountants; in fact, under the existing conditions probably no body of men has done more to crystallize the data on which we carry on the business of the world; but the utter confusion of thought which has undoubtedly arisen from the calm assumption of the book-keeper and the accountant that he and he alone was in a position to assign positive or negative values to the quantities represented by his figures is one of the outstanding curiosities of the industrial system; and the attempt to mold the activities of a great empire on such a basis is surely the final condemnation of an out-worn method."
In 1920, Douglas presented the A + B theorem in his book, Credit-Power and Democracy, in critique of accounting methodology pertinent to income and prices. In the fourth, Australian Edition of 1933, Douglas states:
"A factory or other productive organization has, besides its economic function as a producer of goods, a financial aspect—it may be regarded on the one hand as a device for the distribution of purchasing-power to individuals through the media of wages, salaries, and dividends; and on the other hand as a manufactory of prices – financial values. From this standpoint, its payments may be divided into two groups:
- Group A: All payments made to individuals (wages, salaries, and dividends).
- Group B: All payments made to other organizations (raw materials, bank charges, and other external costs).
Now the rate of flow of purchasing-power to individuals is represented by A, but since all payments go into prices, the rate of flow of prices cannot be less than A+B. The product of any factory may be considered as something which the public ought to be able to buy, although in many cases it is an intermediate product of no use to individuals but only to a subsequent manufacture; but since A will not purchase A+B; a proportion of the product at least equivalent to B must be distributed by a form of purchasing-power which is not comprised in the description grouped under A. It will be necessary at a later stage to show that this additional purchasing power is provided by loan credit (bank overdrafts) or export credit.”
Beyond empirical
Empirical
The word empirical denotes information gained by means of observation or experimentation. Empirical data are data produced by an experiment or observation....
evidence, Douglas claims this deductive theorem
Theorem
In mathematics, a theorem is a statement that has been proven on the basis of previously established statements, such as other theorems, and previously accepted statements, such as axioms...
demonstrates that total prices rise faster than total incomes when regarded as a flow
Stock and flow
Economics, business, accounting, and related fields often distinguish between quantities that are stocks and those that are flows. These differ in their units of measurement. A stock variable is measured at one specific time, and represents a quantity existing at that point in time , which may have...
.
In his pamphlet entitled, "The New and the Old Economics", Douglas describes the cause of "B" payments:
“I think that a little consideration will make it clear that in this sense an overhead charge is any charge in respect of which the actual distributed purchasing power does not still exist, and that practically this means any charge created at a further distance in the past than the period of cyclic rate of circulation of money. There is no fundamental difference between tools and intermediate products, and the latter may therefore be included.”
In 1932, Douglas estimated the cyclic rate of circulation of money to be approximately three weeks. The cyclic rate of circulation of money measures the amount of time required for a loan to pass through the productive system and return to the bank. This can be calculated by determining the amount of clearings
Clearing (finance)
In banking and finance, clearing denotes all activities from the time a commitment is made for a transaction until it is settled. Clearing is necessary because the speed of trades is much faster than the cycle time for completing the underlying transaction....
through the bank in a year divided by the average amount of deposits
Deposit account
A deposit account is a current account, savings account, or other type of bank account, at a banking institution that allows money to be deposited and withdrawn by the account holder. These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the...
held at the banks (which varies very little). The result is the number of times money must turnover in order to produce these clearing house
Clearing house (finance)
A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions...
figures. In a testimony before the Alberta Agricultural Committee of the Alberta Legislature in 1934, Douglas said:
“Now we know there are an increasing number of charges which originated from a period much anterior to three weeks, and included in those charges, as a matter of fact, are most of the charges made in, respect of purchases from one organization to another, but all such charges as capital charges (for instance, on a railway which was constructed a year, two years, three years, five or ten years ago, where charges are still extant), cannot be liquidated by a stream of purchasing power which does not increase in volume and which has a period of three weeks. The consequence is, you have a piling up of debt, you have in many cases a diminution of purchasing power being equivalent to the price of the goods for sale."
According to Douglas, the major consequence of the problem he identified in his A+B theorem is exponentially increasing debt. Further, he believed that society is forced to produce goods that consumers either do not want or cannot afford to purchase. The latter represents a favorable balance of trade
Balance of trade
The balance of trade is the difference between the monetary value of exports and imports of output in an economy over a certain period. It is the relationship between a nation's imports and exports...
, meaning a country exports more than it imports. But not every country can pursue this objective at the same time, as one country must import more than it exports when another country exports more than it imports. Douglas proposed that the long-term consequence of this policy is a trade war
Trade war
A trade war refers to two or more states raising or creating tariffs or other trade barriers on each other in retaliation for other trade barriers...
, typically resulting in real war – hence, the Social Credit admonition, “He who calls for Full-Employment calls for War!”, expressed by the Social Credit Party of Great Britain and Northern Ireland
Social Credit Party of Great Britain and Northern Ireland
The Social Credit Party of Great Britain and Northern Ireland was a political party in the United Kingdom. It grew out of the Kibbo Kift, which was established in 1920 as a more craft-based alternative for youth to the Boy Scouts....
, led by John Hargrave
John Hargrave
John Gordon Hargrave , nicknamed 'White Fox', was one of the leading figures in the Social Credit movement in British politics.-Early life:...
. The former represents excessive capital production and/or military build-up. Military buildup necessitates either the violent use of weapons or a superfluous accumulation of them.
Douglas believed that excessive capital production is only a temporary correction, because the cost of the capital appears in the cost of consumer goods, or taxes, which will further exacerbate future gaps between income and prices.
"In the first place, these capital goods have to be sold to someone. They form a reservoir of forced exports. They must, as intermediate products, enter somehow into the price of subsequent ultimate products and they produce a position of most unstable equilibrium, since the life of capital goods is in general longer than that of consumable goods, or ultimate products,
and yet in order to meet the requirements for money to buy the consumable goods, the rate of production of capital goods must be continuously increased. "
The replacement of labour by capital in the productive process implies that overhead charges (B) increase in relation to income (A), because "'B' is the financial representation of the lever of capital”. As Douglas stated in his first article, "The Delusion of Superproduction":
"The factory cost--not the selling price--of any article under our present industrial and financial system is made up of three main divisions-direct labor cost, material cost and overhead charges, the ratio of which varies widely, with the "modernity" of the method of production. For instance, a sculptor producing a work of art with the aid of simple tools and a block of marble has next to no overhead charges, but a very low rate of production, while a modern screw-making plant using automatic machines may have very high overhead charges and very low direct labour cost, or high rates of production.
Since increased industrial output per individual depends mainly on tools and method, it may almost be stated as a law that intensified production means a progressively higher ratio of overhead charges to direct labour cost, and, apart from artificial reasons, this is simply an indication of the extent to which machinery replaces manual labour, as it should."
If overhead charges are constantly increasing relative to income, any attempt to stabilize or increase income is met with rising prices. If income is constant or increasing, and overhead charges are continuously increasing due to technological advancement, then prices, which equal income plus overhead charges, must also increase. Further, any attempt to stabilize or decrease prices must be met by falling incomes according to this analysis. As the Phillips Curve
Phillips curve
In economics, the Phillips curve is a historical inverse relationship between the rate of unemployment and the rate of inflation in an economy. Stated simply, the lower the unemployment in an economy, the higher the rate of inflation...
demonstrates, inflation and unemployment are trade-offs, unless prices are reduced from monies derived from outside the productive system. According to Douglas' A+B theorem, the systemic problem of rising prices, or inflation, is not "too much money chasing too few goods", but is the increasing rate of overhead charges in production due to the replacement of labour by capital in industry. Douglas did not suggest that inflation cannot be caused by too much money chasing too few consumer goods, but according to his analysis this is not the only cause of inflation, and inflation is systemic according to the rules of cost accountancy given overhead charges are constantly increasing relative to income. In other words inflation can exist even if consumers have insufficient purchasing power to buy back all of production. Douglas claimed that there were two limits which governed prices, a lower limit governed by the cost of production, and an upper limit governed by what an article will fetch on the open market. Douglas suggested that this is the reason why deflation is regarded as a problem in orthodox economics because bankers and businessmen were very apt to forget the lower limit of prices.
Compensated Price and National Dividend
Douglas proposed to eliminate the gap between purchasing power and prices by increasing consumer purchasing power with credits which do not appear in prices in the form of a price rebate and a dividend. Formally called a "Compensated Price" and a "National (or Consumer) Dividend", a National Credit Office would be charged with the task of calculating the size of the rebate and dividend by determining a national balance sheetBalance sheet
In financial accounting, a balance sheet or statement of financial position is a summary of the financial balances of a sole proprietorship, a business partnership or a company. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A...
, and calculating aggregate
Aggregate data
In statistics, aggregate data describes data combined from several measurements.In economics, aggregate data or data aggregates describes high-level data that is composed of a multitude or combination of other more individual data....
production and consumption statistics.
The price rebate is based upon the observation that the real cost of production is the mean rate of consumption over the mean rate of production for an equivalent period of time.
 |
| where M = Money distributed for a given programme of production, C = consumption, P = production |
The physical cost of producing something is the materials and capital
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may depreciate in the production process...
that were consumed in its production, plus that amount of consumer goods labour consumed during its production. This total consumption represents the physical, or real, cost of production.
 |
| where Consumption = cost of consumer goods, Depreciation = depreciation of real capital, Credit = Credit Created, Production = cost of total production |
Since fewer inputs are consumed to produce a unit of output with every improvement in process, the real cost of production falls over time. As a result, prices should also fall with the progression of time. "As society's capacity to deliver goods and services is increased by the use of plant and still more by scientific progress, and decreased by the production, maintenance, or depreciation of it, we can issue credit, in costs, at a greater rate than the rate at which we take it back through prices of ultimate products, if capacity to supply individuals exceeds desire.".
Based on his conclusion that the real cost of production is less than the financial cost of production, the Douglas price rebate (Compensated Price) is determined by the ratio of consumption to production. Since consumption over a period of time is typically less than production over the same period of time in any industrial society, the real cost of goods should be less than the financial cost.
For example, if the money cost of a good is $100, and the ratio of consumption to production is 3/4, then the real cost of the good is $100(3/4)=$75. As a result, if a consumer spent $100 for a good, the National Credit Authority would rebate the consumer $25. The good costs the consumer $75, the retailer receives $100, and the consumer receives the difference of $25 via new credits created by the National Credit Authority.
The National Dividend is justified by the displacement of labour in the productive process due to technological increases in productivity. As human labour is increasingly replaced by machines in the productive process, Douglas believed people should be free to consume while enjoying increasing amounts of leisure, and that the Dividend would provide this freedom
Economic freedom
Economic freedom is a term used in economic and policy debates. As with freedom generally, there are various definitions, but no universally accepted concept of economic freedom...
.
Critics of the A + B theorem and rebuttal
Critics of the theorem, such as J.M. Pullen, Hawtrey and J.M Keynes argue there is no difference between A and B payments. Other critics, such as Gary North argue that Social Credit policies are inflationary. "The A + B theorem has met with almost universal rejection from academic economists on the grounds that, although B payments may be made initially to “other organizations,” they will not necessarily be lost to the flow of available purchasing power. A and B payments overlap through time. Even if the B payments are received and spent before the finished product is available for purchase, current purchasing power will be boosted by B payments received in the current production of goods that will be available for purchase in the future."A.W. Joseph replied to this specific criticism in a paper given to the Birmingham Actuarial Society, "Banking and Industry":
"Let A1+B1 be the costs in a period to time of articles produced by factories making consumable goods divided up into A1 costs which refer to money paid to individuals by means of salaries, wages, dividends, etc., and B1 costs which refer to money paid to other institutions. Let A2, B2 be the corresponding costs of factories producing capital equipment. The money distributed to individuals is A1+A2 and the cost of the final consumable goods is A1+B1. If money in the hands of the public is to be equal to the costs of consumable articles produced then A1+A2 = A1+B1 and therefore A2=B1. Now modern science has brought us to the stage where machines are more and more taking the place of human labour in producing goods, i.e. A1 is becoming less important relatively to B1 and A2 less important relatively to B2.
In symbols if B1/A1 = k1 and B2/A2 = k2 both k1 and k2 are increasing.
Since A2=B1 this means that (A2+B2)/(A1+B1)= (1+k2)*A2/(1+1/k1)*B1 = (1+k2)/(1+1/k1) which is increasing.
Thus in order that the economic system should keep working it is essential that capital goods should be produced in ever increasing quantity relatively to consumable goods. As soon as the ratio of capital goods to consumable goods slackens, costs exceed money distributed, i.e. the consumer is unable to purchase the consumable goods coming on the market."
And in a reply to Dr. Hobson, Douglas restated his central thesis: "To reiterate categorically, the theorem criticised by Mr. Hobson: the wages, salaries and dividends distributed during a given period do not, and cannot, buy the production of that period; that production can only be bought, i.e., distributed, under present conditions by a draft, and an increasing draft, on the purchasing power distributed in respect of future production, and this latter is mainly and increasingly derived from financial credit created by the banks."
Incomes are paid to workers during a multi-stage program of production. According to the convention of accepted orthodox rules of accountancy, those incomes are part of the financial cost and price of the final product. For the product to be purchased with incomes earned in respect of its manufacture, all of these incomes would have to be saved until the product’s completion. Douglas argued that incomes are typically spent on past production to meet the present needs of living, and will not be available to purchase goods completed in the future—goods which must include the sum of incomes paid out during their period of manufacture in their price. Consequently, this does not liquidate the financial cost of production inasmuch as it merely passes charges of one accountancy period on as mounting charges against future periods. In other words, according to Douglas, supply does not create enough demand to liquidate all the costs of production. Douglas denied the validity of Say's Law
Say's law
Say's law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say , who stated that "products are paid for with products" and "a glut can take place only when there are too many means of production applied to one kind...
in economics.
While John Maynard Keynes referred to Douglas as a “private, perhaps, but not a major in the brave army of heretics, he did state that Douglas “is entitled to claim, as against some of his orthodox adversaries, that he at least has not been wholly oblivious of the outstanding problem of our economic system.” While Keynes said that Douglas’s A+B theorem “includes much mere mystification”, he reaches a similar conclusion to Douglas when he states:
“Thus the problem of providing that new capital-investment shall always outrun capital-disinvestment sufficiently to fill the gap between net income and consumption, presents a problem which is increasingly difficult as capital increases. New capital-investment can only take place in excess of current capital-disinvestment if future expenditure on consumption is expected to increase. Each time we secure to-day’s equilibrium by increased investment we are aggravating the difficulty of securing equilibrium to-morrow.”
The criticism that Social Credit policies are inflationary is based upon what economists call the quantity theory of money
Quantity theory of money
In monetary economics, the quantity theory of money is the theory that money supply has a direct, proportional relationship with the price level....
, which states that the quantity of money multiplied by its velocity of circulation equals total purchasing power. Douglas was quite critical of this theory stating, "The velocity of the circulation of money in the ordinary sense of the phrase, is – if I may put it that way – a complete myth. No additional purchasing power at all is created by the velocity of the circulation of money. The rate of transfer from hand-to-hand, as you might say, of goods is increased, of course, by the rate of spending, but no more costs can be canceled by one unit of purchasing power than one unit of cost. Every time a unit of purchasing power passes through the costing system it creates a cost, and when it comes back again to the same costing system by the buying and transfer of the unit of production to the consuming system it may be cancelled, but that process is quite irrespective of what is called the velocity of money, so the categorical answer is that I do not take any account of the velocity of money in that sense." The Alberta Social Credit government published in a committee report what was perceived as an error in regards to this theory: “The fallacy in the theory lies in the incorrect assumption that money 'circulates', whereas it is issued against production, and withdrawn as purchasing power as the goods are bought for consumption."
Other critics argue that if the gap between income and prices exists as Douglas claimed, the economy would have collapsed in short order. They also argue that there are periods of time in which purchasing power is in excess of the price of consumer goods for sale.
Douglas replied to these criticisms in his testimony before the Alberta Agricultural Committee:
"What people who say that forget is that we were piling up debt at that time at the rate of ten millions sterling a day and if it can be shown, and it can be shown, that we are increasing debt continuously by normal operation of the banking system and the financial system at the present time, then that is proof that we are not distributing purchasing power sufficient to buy the goods for sale at that time; otherwise we should not be increasing debt, and that is the situation."
Political theory
C.H. Douglas defined democracy as the “will of the people”, not rule by the majority, suggesting that Social Credit could be implemented by any political party supported by effective public demand. Once implemented to achieve a realistic integration of means and ends, party politics would cease to exist. Traditional ballot boxBallot box
A ballot box is a temporarily sealed container, usually square box though sometimes a tamper resistant bag, with a narrow slot in the top sufficient to accept a ballot paper in an election but which prevents anyone from accessing the votes cast until the close of the voting period...
democracy is incompatible with Social Credit, which assumes the right of individuals to choose freely one thing at a time, and to contract out of unsatisfactory associations. Douglas advocated what he called the “responsible vote”, where anonymity in the voting process would no longer exist. "The individual voter must be made individually responsible, not collectively taxable, for his vote." Douglas believed that party politics should be replaced by a "union of electors" in which the only role of an elected official would be to implement the popular will. Douglas believed that the implemenation of such a system was necessary as otherwise the government would be the tool of international financiers. Douglas also opposed the secret ballot
Secret ballot
The secret ballot is a voting method in which a voter's choices in an election or a referendum are anonymous. The key aim is to ensure the voter records a sincere choice by forestalling attempts to influence the voter by intimidation or bribery. The system is one means of achieving the goal of...
arguing that it led to electoral irresponsibility, calling it a "Jewish" technique used to ensure Barabbas
Barabbas
Barabbas or Jesus Barabbas is a figure in the Christian narrative of the Passion of Jesus, in which he is the insurrectionary whom Pontius Pilate freed at the Passover feast in Jerusalem.The penalty for Barabbas' crime was death by crucifixion, but according to the four canonical gospels and the...
was freed leaving Christ to be crucified.
Douglas considered the constitution an organism, not an organization. In this view, establishing the supremacy
Superior (hierarchy)
In a hierarchy or tree structure of any kind, a superior is an individual or position at a higher level in the hierarchy than another , and thus closer to the apex. It is often used in business terminology to refer to people who are supervisors and in the military to people who are higher in the...
of common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
is essential to ensure protection of individual rights
Individual rights
Group rights are rights held by a group rather than by its members separately, or rights held only by individuals within the specified group; in contrast, individual rights are rights held by individual people regardless of their group membership or lack thereof...
from an all-powerful parliament. Douglas also believed the effectiveness of British government is structurally determined by application of a Christian
Christian
A Christian is a person who adheres to Christianity, an Abrahamic, monotheistic religion based on the life and teachings of Jesus of Nazareth as recorded in the Canonical gospels and the letters of the New Testament...
concept known as Trinitarianism: "In some form or other, sovereignty in the British Isles
British Isles
The British Isles are a group of islands off the northwest coast of continental Europe that include the islands of Great Britain and Ireland and over six thousand smaller isles. There are two sovereign states located on the islands: the United Kingdom of Great Britain and Northern Ireland and...
for the last two thousand years has been Trinitarian. Whether we look on this Trinitarianism under the names of King, Lords and Commons or as Policy, Sanctions and Administration, the Trinity-in-Unity has existed, and our national success has been greatest when the balance (never perfect) has been approached."
Opposing the formation of Social Credit parties, C.H. Douglas believed a group of elected amateurs should never direct a group of competent experts in technical matters. While experts are ultimately responsible for achieving results, the goal of politicians should be to pressure those experts to deliver policy results desired by the populace. According to Douglas, "the proper function of Parliament is to force all activities of a public nature to be carried on so that the individuals who comprise the public may derive the maximum benefit from them. Once the idea is grasped, the criminal absurdity of the party system
Party system
A party system is a concept in comparative political science concerning the system of government by political parties in a democratic country. The idea is that political parties have basic similarities: they control the government, have a stable base of mass popular support, and create internal...
becomes evident."
History
C.H. Douglas was a civil engineerCivil engineer
A civil engineer is a person who practices civil engineering; the application of planning, designing, constructing, maintaining, and operating infrastructures while protecting the public and environmental health, as well as improving existing infrastructures that have been neglected.Originally, a...
who pursued his higher education at Cambridge University. His early writings appeared most notably in the British intellectual journal The New Age
The New Age
The New Age was a British literary magazine, noted for its wide influence under the editorship of A. R. Orage from 1907 to 1922. It began life in 1894 as a publication of the Christian Socialist movement; but in 1907 as a radical weekly edited by Joseph Clayton, it was struggling...
. The editor of that publication, Alfred Orage
Alfred Richard Orage
Alfred Richard Orage was a British intellectual, now best known for editing the magazine The New Age. While working as a schoolteacher in Leeds, he pursued various interests, including Plato, the Independent Labour Party, and theosophy...
, devoted The New Age and later The New English Weekly to the promulgation of Douglas's ideas until his death on the eve of his BBC
BBC
The British Broadcasting Corporation is a British public service broadcaster. Its headquarters is at Broadcasting House in the City of Westminster, London. It is the largest broadcaster in the world, with about 23,000 staff...
speech on Social Credit, November 5, 1934, in the Poverty in Plenty Series.
Douglas’s first book, Economic Democracy, was published in 1920, shortly after his article The Delusion of Super-Production appeared in 1918 in the English Review. Among Douglas’s other early works were The Control and Distribution of Production, Credit-Power and Democracy, Warning Democracy and The Monopoly of Credit. Of considerable interest is the evidence he presented to the Canadian House of Commons Select Committee on Banking and Commerce in 1923, to the British Parliamentary Macmillan Committee on Finance and Industry
Macmillan Committee
The Macmillan Committee, officially known as the Committee on Finance and Industry, was a committee, composed mostly of economists, formed by the British government after the 1929 stock market crash to determine the root causes of the depressed economy of the United Kingdom...
in 1930, which included exchanges with economist John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, Baron Keynes of Tilton, CB FBA , was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, as well as the economic policies of governments...
, and to the Agricultural Committee of the Alberta Legislature
Legislative Assembly of Alberta
The Legislative Assembly of Alberta is one of two components of the Legislature of Alberta, the other being the Queen, represented by the Lieutenant-Governor of Alberta. The Alberta legislature meets in the Alberta Legislature Building in the provincial capital, Edmonton...
in 1934 during the term of the United Farmers of Alberta
United Farmers of Alberta
The United Farmers of Alberta is an association of Alberta farmers that has served many different roles throughout its history as a lobby group, a political party, and as a farm-supply retail chain. Since 1934 it has primarily been an agricultural supply cooperative headquartered in Calgary...
Government in that Canadian province
Provinces and territories of Canada
The provinces and territories of Canada combine to make up the world's second-largest country by area. There are ten provinces and three territories...
.
The writings of C.H. Douglas spawned a worldwide movement, most prominent in the British Commonwealth, with beachheads in Europe and activities in the United States where Orage, during his sojourn there, promoted Douglas’s ideas. In the United States, the New Democracy group was headed by the American author Gorham Munson
Gorham Munson
Gorham Bockhaven Munson was an American literary critic.Gorham was born in Amityville, New York to Hubert Barney Munson and Carrie Louise Morrow. He received his B.A. degree from Wesleyan University in 1917. He married Elizabeth Hurwitz on April 2, 1921 Brooklyn...
who contributed a major book on Social Credit titled Aladdin’s Lamp: The Wealth of the American People. While Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
had electoral successes with “Social Credit” political parties, the movement in England and Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
was primarily devoted to pressuring existing parties to implement Social Credit. This function was performed especially by Douglas’s Social Credit Secretariat in England and the Commonwealth Leagues of Rights
Australian League of Rights
The Australian League of Rights is a long-lived far right and anti-semitic political organisation in Australia founded by Eric Butler with its basis in the economic theory of Social Credit expounded by C. H. Douglas. It describes itself as upholding the virtues of freedom...
in Australia. Douglas continued writing and contributing to the Secretariat’s journals, initially Social Credit and shortly thereafter The Social Crediter (which continues to be published by the Secretariat) for the remainder of his lifetime, concentrating more on political and philosophical issues in his later years.
Political history
In early years of the movement, Labour PartyLabour Party (UK)
The Labour Party is a centre-left democratic socialist party in the United Kingdom. It surpassed the Liberal Party in general elections during the early 1920s, forming minority governments under Ramsay MacDonald in 1924 and 1929-1931. The party was in a wartime coalition from 1940 to 1945, after...
leadership resisted pressure from Trade union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
ists to implement Social Credit, as hierarchical views of Fabian socialism, economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...
and full employment
Full employment
In macroeconomics, full employment is a condition of the national economy, where all or nearly all persons willing and able to work at the prevailing wages and working conditions are able to do so....
, were incompatible with the National Dividend and abolishment of wage slavery
Wage slavery
Wage slavery refers to a situation where a person's livelihood depends on wages, especially when the dependence is total and immediate. It is a negatively connoted term used to draw an analogy between slavery and wage labor, and to highlight similarities between owning and employing a person...
suggested by Douglas. In an effort to discredit the Social Credit movement, one leading Fabian, Sidney Webb, is said to have declared that he didn’t care whether Douglas was technically correct or not – they simply did not like his policy.
In 1935 the first “Social Credit”
Social Credit Party of Alberta
The Alberta Social Credit Party is a provincial political party in Alberta, Canada, that was founded on the social credit monetary policy and conservative Christian social values....
government was elected in Alberta
Alberta
Alberta is a province of Canada. It had an estimated population of 3.7 million in 2010 making it the most populous of Canada's three prairie provinces...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
under the leadership of William Aberhart
William Aberhart
William Aberhart , also known as Bible Bill for his outspoken Baptist views, was a Canadian politician and the seventh Premier of Alberta between 1935 and 1943. The Social Credit party believed the reason for the depression was that people did not have enough money to spend, so the government...
. A book by Maurice Colbourne entitled The Meaning of Social Credit convinced Aberhart that the theories of C.H. Douglas were essential for Alberta's recovery from the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
. Aberhart added a heavy dose of fundamentalist Christianity
Fundamentalist Christianity
Christian fundamentalism, also known as Fundamentalist Christianity, or Fundamentalism, arose out of British and American Protestantism in the late 19th century and early 20th century among evangelical Christians...
to Douglas' theories; the Canadian social credit movement
Canadian social credit movement
The Canadian social credit movement was a Canadian political movement originally based on the Social Credit theory of Major C. H. Douglas. Its supporters were colloquially known as Socreds...
, which was largely nurtured in Alberta, thus acquired a strong social conservative
Social conservatism
Social Conservatism is primarily a political, and usually morally influenced, ideology that focuses on the preservation of what are seen as traditional values. Social conservatism is a form of authoritarianism often associated with the position that the federal government should have a greater role...
tint that it retains to this day.
Having counselled the previous United Farmers of Alberta
United Farmers of Alberta
The United Farmers of Alberta is an association of Alberta farmers that has served many different roles throughout its history as a lobby group, a political party, and as a farm-supply retail chain. Since 1934 it has primarily been an agricultural supply cooperative headquartered in Calgary...
provincial government, Douglas became an advisor to Aberhart, but withdrew shortly after due to strategic differences. Aberhart sought orthodox counsel with respect to the Province's finances, and the strained correspondence between them was published by Douglas in his book, The Alberta Experiment.
While the Premier
Premier of Alberta
The Premier of Alberta is the first minister for the Canadian province of Alberta. He or she is the province's head of government and de facto chief executive. The current Premier of Alberta is Alison Redford. She became Premier by winning the Progressive Conservative leadership elections on...
wanted to balance the provincial budget, Douglas argued the whole concept of a "balanced budget
Balanced budget
A balanced budget is when there is neither a budget deficit or a budget surplus – when revenues equal expenditure – particularly by a government. More generally, it refers to when there is no deficit, but possibly a surplus...
" was inconsistent with Social Credit principles. Douglas stated that, under existing rules of financial cost accountancy, balancing all budgets within an economy simultaneously is an arithmetic impossibility. In a letter to Aberhart, Douglas stated:
"This seems to be a suitable occasion on which to emphasise the proposition that a Balanced Budget is quite inconsistent with the use of Social Credit (i.e., Real Credit – the ability to deliver goods and services 'as, when and where required') in the modern world, and is simply a statement in accounting figures that the progress of the country is stationary, i.e., that it consumes exactly what it produces, including capital assetCapital assetThe term capital asset has three unrelated technical definitions, and is also used in a variety of non-technical ways.*In financial economics, it refers to any asset used to make money, as opposed to assets used for personal enjoyment or consumption...
s. The result of the acceptance of this proposition is that all capital appreciationAppreciationIn accounting, appreciation of an asset is an increase in its value. In this sense it is the reverse of depreciation, which measures the fall in value of assets over their normal life-time...
becomes quite automatically the property of those who create and issue of money [i.e., the banking system] and the necessary unbalancing of the Budget is covered by Debts."
Douglas sent two other expert Social Credit technical advisors from the United Kingdom, L. Denis Byrne and George F. Powell. But all attempts to pass Social Credit legislation were ruled ultra vires
Ultra vires
Ultra vires is a Latin phrase meaning literally "beyond the powers", although its standard legal translation and substitute is "beyond power". If an act requires legal authority and it is done with such authority, it is...
by the Supreme Court of Canada
Supreme Court of Canada
The Supreme Court of Canada is the highest court of Canada and is the final court of appeals in the Canadian justice system. The court grants permission to between 40 and 75 litigants each year to appeal decisions rendered by provincial, territorial and federal appellate courts, and its decisions...
and Privy Council
Privy council
A privy council is a body that advises the head of state of a nation, typically, but not always, in the context of a monarchic government. The word "privy" means "private" or "secret"; thus, a privy council was originally a committee of the monarch's closest advisors to give confidential advice on...
in London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
. Based on the monetary theories of Silvio Gesell
Silvio Gesell
Silvio Gesell was a German merchant, theoretical economist, social activist, anarchist and founder of Freiwirtschaft.-Life:...
, William Aberhart issued a currency substitute known as prosperity certificates. But these scrip
Scrip
Scrip is an American term for any substitute for currency which is not legal tender and is often a form of credit. Scrips were created as company payment of employees and also as a means of payment in times where regular money is unavailable, such as remote coal towns, military bases, ships on long...
s actually depreciated in value the longer they were held, and Douglas openly criticized the idea:
"Gesell's theory was that the trouble with the world was that people saved money so that what you had to do was to make them spend it faster. Disappearing money is the heaviest form of continuous taxation ever devised. The theory behind this idea of Gesell's was that what is required is to stimulate trade—that you have to get people frantically buying goods—a perfectly sound idea so long as the objective of life is merely trading."
Under Ernest Manning
Ernest Manning
Ernest Charles Manning, , a Canadian politician, was the eighth Premier of Alberta between 1943 and 1968 for the Social Credit Party of Alberta. He served longer than any premier in the province's history, and was the second longest serving provincial premier in Canadian history...
, who succeeded Aberhart after his untimely death, the Alberta Social Credit Party gradually departed from its origins and became popularly identified as a right wing
Right-wing politics
In politics, Right, right-wing and rightist generally refer to support for a hierarchical society justified on the basis of an appeal to natural law or tradition. To varying degrees, the Right rejects the egalitarian objectives of left-wing politics, claiming that the imposition of equality is...
populist
Populism
Populism can be defined as an ideology, political philosophy, or type of discourse. Generally, a common theme compares "the people" against "the elite", and urges social and political system changes. It can also be defined as a rhetorical style employed by members of various political or social...
movement. In the Secretariat’s journal, An Act for the Better Management of the Credit of Alberta, Douglas published a critical analysis of the Social Credit movement in Alberta, in which he said, "The Manning administration is no more a Social Credit administration than the British government is Labour". Manning accused Douglas and his followers of anti-Semitism, and went about purging all of the so called "Douglasites" from the Party. The British Columbia Social Credit Party
British Columbia Social Credit Party
The British Columbia Social Credit Party, whose members are known as Socreds, was the governing political party of British Columbia, Canada, for more than 30 years between the 1952 provincial election and the 1991 election...
won power in 1952 in the province to Alberta's west, but had little in common with Douglas or his theories.
Social Credit Parties also enjoyed some national electoral success in Canada. The Social Credit Party of Canada
Social Credit Party of Canada
The Social Credit Party of Canada was a conservative-populist political party in Canada that promoted social credit theories of monetary reform...
was founded with support from Western Canada, and eventually built another base of support in Quebec
Quebec
Quebec or is a province in east-central Canada. It is the only Canadian province with a predominantly French-speaking population and the only one whose sole official language is French at the provincial level....
. Social Credit also did well at the national level in New Zealand
Social Credit Party (New Zealand)
The New Zealand Social Credit Party was a political party which served as the country's "third party" from the 1950s through into the 1980s. The party held a number of seats in the New Zealand Parliament, although never more than two at a time...
, where it was the country's third party for almost 30 years.
Philosophy
Douglas described Social Credit as "the policy of a philosophy", and warned against viewing it solely as a scheme for monetary reform. He coined this philosophy "practical Christianity" – the central issue of which is the IncarnationIncarnation (Christianity)
The Incarnation in traditional Christianity is the belief that Jesus Christ the second person of the Trinity, also known as God the Son or the Logos , "became flesh" by being conceived in the womb of a woman, the Virgin Mary, also known as the Theotokos .The Incarnation is a fundamental theological...
. Douglas believed there was a Canon
Biblical canon
A biblical canon, or canon of scripture, is a list of books considered to be authoritative as scripture by a particular religious community. The term itself was first coined by Christians, but the idea is found in Jewish sources. The internal wording of the text can also be specified, for example...
which ran through the universe, and Jesus Christ was the Incarnation of this Canon. However, he also believed Christianity remained ineffective so long as it remained transcendental. Religion, which derives from the Latin word religare (to “bind back”), was intended to be a binding back to reality. Social Credit is concerned with the incarnation of Christian principles in our organic affairs. Specifically, it is concerned with the principles of association and how to maximize the increments of association which redound to satisfaction of the individual in society – while minimizing any decrements of association.
The goal of Social Credit is to maximize immanent
Immanence
Immanence refers to philosophical and metaphysical theories of divine presence, in which the divine is seen to be manifested in or encompassing of the material world. It is often contrasted with theories of transcendence, in which the divine is seen to be outside the material world...
sovereignty
Sovereignty
Sovereignty is the quality of having supreme, independent authority over a geographic area, such as a territory. It can be found in a power to rule and make law that rests on a political fact for which no purely legal explanation can be provided...
. Social Credit is consonant with the Christian doctrine of Salvation
Salvation
Within religion salvation is the phenomenon of being saved from the undesirable condition of bondage or suffering experienced by the psyche or soul that has arisen as a result of unskillful or immoral actions generically referred to as sins. Salvation may also be called "deliverance" or...
through unearned Grace
Divine grace
In Christian theology, grace is God’s gift of God’s self to humankind. It is understood by Christians to be a spontaneous gift from God to man - "generous, free and totally unexpected and undeserved" - that takes the form of divine favour, love and clemency. It is an attribute of God that is most...
, and is therefore incompatible with any variant of the doctrine of salvation through works. Works need not be of Purity in intent or of desirable consequence and in themselves alone are as "filthy rags". For instance, the present system makes destructive, obscenely wasteful wars a virtual certainty—which provides lots of "work" for everyone. Social Credit has been called the Third Alternative to the futile Left-Right Duality
Left-Right politics
The left–right political spectrum is a common way of classifying political positions, political ideologies, or political parties along a one-dimensional political spectrum. The perspective of Left vs. Right is a binary interpretation of complex questions...
.
Although Douglas defined Social Credit as a philosophy with Christian roots, he did not envision a Christian theocracy
Theocracy
Theocracy is a form of organization in which the official policy is to be governed by immediate divine guidance or by officials who are regarded as divinely guided, or simply pursuant to the doctrine of a particular religious sect or religion....
. Douglas did not believe that religion should be thrust upon anyone through force of law or external compulsion. Practical Christian society is Trinitarian in structure, based upon a constitution where the constitution is an organism changing in relation to our knowledge of the nature of the universe. "The progress of human society is best measured by the extent of its creative ability. Imbued with a number of natural gifts, notably reason, memory, understanding and free will, man has learned gradually to master the secrets of nature, and to build for himself a world wherein lie the potentialities of peace, security, liberty and abundance." Douglas said that Social Crediters want to build a new civilization based upon absolute economic security for the individual—where “...they shall sit every man under his vine and under his fig tree; and none shall make them afraid.” In keeping with this goal, Douglas was opposed to all forms of taxation on real property. This set Social Credit at variance from the land-taxing recommendations of Henry George
Henry George
Henry George was an American writer, politician and political economist, who was the most influential proponent of the land value tax, also known as the "single tax" on land...
.
Social Credit society recognizes the fact that the relationship between man and God is unique. In this view, it is essential to allow man the greatest possible freedom in order to pursue this relationship. Douglas defined freedom as the ability to choose and refuse one thing at a time, and to contract out of unsatisfactory associations. If people are given the economic security and leisure achievable in the context of a Social Credit dispensation, Douglas believed most would end their service to mammon
Mammon
Mammon is a term, derived from the Christian Bible, used to describe material wealth or greed, most often personified as a deity, and sometimes included in the seven princes of Hell.-Etymology:...
and use their free time pursuing spiritual, intellectual, or cultural goals leading to self-development. Douglas opposed what he termed "the pyramid of power". Totalitarianism
Totalitarianism
Totalitarianism is a political system where the state recognizes no limits to its authority and strives to regulate every aspect of public and private life wherever feasible...
reflects this pyramid and is the antithesis of Social Credit. It turns the government into an end instead of a means, and the individual into a means instead of an end — Demon est deus inversus — “the devil is God upside down.” Social Credit is designed to give the individual the maximum freedom allowable given the need for association in economic, political and social matters. Social Credit elevates the importance of the individual and holds that all institutions exist to serve the individual – that the State exists to serve its citizens, not that individuals exist to serve the State.
Douglas emphasized that all policy derives from its respective philosophy and that “... Society is primarily metaphysical
Metaphysics
Metaphysics is a branch of philosophy concerned with explaining the fundamental nature of being and the world, although the term is not easily defined. Traditionally, metaphysics attempts to answer two basic questions in the broadest possible terms:...
, and must have regard to the organic relationships of its prototype.”
Social Credit rejects dialectical materialistic
Dialectical materialism
Dialectical materialism is a strand of Marxism synthesizing Hegel's dialectics. The idea was originally invented by Moses Hess and it was later developed by Karl Marx and Friedrich Engels...
philosophy. "The tendency to argue from the particular to the general is a special case of the sequence from materialism to collectivism. If the universe is reduced to molecules, ultimately we can dispense with a catalogue and a dictionary; all things are the same thing, and all words are just sounds — molecules in motion."
Douglas divided philosophy into two schools of thought that he labeled the "classical school" and the "modern school", which are broadly represented by philosophies of Aristotle
Aristotle
Aristotle was a Greek philosopher and polymath, a student of Plato and teacher of Alexander the Great. His writings cover many subjects, including physics, metaphysics, poetry, theater, music, logic, rhetoric, linguistics, politics, government, ethics, biology, and zoology...
and Francis Bacon
Francis Bacon
Francis Bacon, 1st Viscount St Albans, KC was an English philosopher, statesman, scientist, lawyer, jurist, author and pioneer of the scientific method. He served both as Attorney General and Lord Chancellor of England...
respectively. Douglas was critical of both schools of thought, but believed that "the truth lies in appreciation of the fact that neither conception is useful without the other".
Relationship to anti-Semitism
Social Crediters, and Douglas himself, have been criticized for spreading anti-semitism. Douglas was critical of "international Jewry"Jewish population
Jewish population refers to the number of Jews in the world. Precise figures are difficult to calculate because the definition of "Who is a Jew" is a source of controversy.-Total population:...
, especially in his later writings. He asserted that some Jews controlled many of major banks and were involved in an international conspiracy to centralize the power of finance. Some people have claimed that Douglas was anti-Semitic because he was quite critical of Jewish philosophy. In his book entitled Social Credit, he wrote that, “It is not too much to say that one of the root ideas through which Christianity comes into conflict with the conceptions of the Old Testament and the ideals of the pre-Christians era, is in respect of this dethronement of abstractionism.”
Douglas was opposed to abstractionist philosophies, because he believed these philosophies inevitably led to the elevation of abstraction
Abstraction
Abstraction is a process by which higher concepts are derived from the usage and classification of literal concepts, first principles, or other methods....
s, such as state, over individuals. He also believed that what he called Jewish abstractionist thought tended to lead them to communist
Communism
Communism is a social, political and economic ideology that aims at the establishment of a classless, moneyless, revolutionary and stateless socialist society structured upon common ownership of the means of production...
ideals and the emphasis of the group over the individual. John L. Finlay, in his book, Social Credit: The English Origins, wrote, “Anti-Semitism of the Douglas kind, if it can be called anti-Semitism at all, may be fantastic, may be dangerous even, in that it may be twisted into a dreadful form, but it is not itself vicious nor evil.”
In her book, Social Discredit: Anti-Semitism, Social Credit and the Jewish Response, Janine Stingel claims, “Douglas's economic and political doctrines were wholly dependent on an anti-Semitic conspiracy theory." John L. Finlay disagrees with Stingel's assertion and argues that, "It must also be noted that while Douglas was critical of some aspects of Jewish thought, Douglas did not seek to discriminate against Jews as a people or race. It was never suggested that the National Dividend be withheld from them."
Australia
- Australian League of RightsAustralian League of RightsThe Australian League of Rights is a long-lived far right and anti-semitic political organisation in Australia founded by Eric Butler with its basis in the economic theory of Social Credit expounded by C. H. Douglas. It describes itself as upholding the virtues of freedom...
- Douglas Credit PartyDouglas Credit PartyThe Douglas Credit Party was an Australian political party based around the social credit theory of monetary reform, first set out by C. H. Douglas. It gained its strongest result in Queensland in 1935, when it gained 7.02% of first preferences. The party's strongest federal result was at the 1934...
- Bleeding in Debt' website, Social Credit
Canada
Federal political parties:- Social Credit Party of CanadaSocial Credit Party of CanadaThe Social Credit Party of Canada was a conservative-populist political party in Canada that promoted social credit theories of monetary reform...
/Canadian social credit movementCanadian social credit movementThe Canadian social credit movement was a Canadian political movement originally based on the Social Credit theory of Major C. H. Douglas. Its supporters were colloquially known as Socreds... - Ralliement créditisteRalliement créditisteHistorically in Quebec, Canada, there was a number of political parties that were part of the Canadian social credit movement. There were various parties at different times with different names at the provincial level, all broadly following the social credit philosophy; at various times they had...
- Abolitionist Party of CanadaAbolitionist Party of CanadaThe Abolitionist Party of Canada was a Canadian political party founded by perennial candidate John C. Turmel. The party ran on a platform of: monetary reform, including the abolition of interest rates and the income tax, the use of the local employment trading system of banking, and introducing a...
/Christian Credit PartyChristian Credit PartyThe Christian Credit Party was a short-lived Canadian political party founded in 1982 by perennial candidate and social credit activist, John C... - Canadian Action PartyCanadian Action PartyThe Canadian Action Party is a Canadian federal political party founded in 1997. It promotes Canadian nationalism, monetary and electoral reform, and opposes neoliberal globalization and free trade agreements.- Background :The Canadian Action Party was founded by Paul T...
(active) - Global Party of Canada
Provincial political parties:
- Alberta Social Credit Party (active)
- British Columbia Social Credit PartyBritish Columbia Social Credit PartyThe British Columbia Social Credit Party, whose members are known as Socreds, was the governing political party of British Columbia, Canada, for more than 30 years between the 1952 provincial election and the 1991 election...
(active) - Manitoba Social Credit PartyManitoba Social Credit PartyThe Manitoba Social Credit Party was a political party in the Canadian province of Manitoba. In its early years, it espoused the monetary reform theories of social credit....
- Social Credit Party of OntarioSocial Credit Party of OntarioThe Social Credit Party of Ontario was a minor political party at the provincial level in the Canadian province of Ontario from the 1940s to the early 1970s. The party never won any seats in the Legislative Assembly of Ontario...
- Ralliement créditiste du QuébecRalliement créditiste du QuébecThe Ralliement créditiste du Québec was a provincial political party in Quebec, Canada that operated from 1970 to 1978. It promoted social credit theories of monetary reform, and acted as an outlet for the expression of rural...
- Social Credit Party of SaskatchewanSocial Credit Party of SaskatchewanThe Social Credit Party of Saskatchewan was a political party in the Canadian province of Saskatchewan that promoted social credit economic theories from the mid-1930s to the mid-1970s....
Organizations:
- Pilgrims of Saint MichaelPilgrims of Saint MichaelThe Pilgrims of St. Michael is a Roman Catholic organization in Canada that promotes social credit economic theories in Canada and other countries.The Pilgims of St...
- Committee on Monetary and Economic ReformCommittee on Monetary and Economic ReformThe Committee on Monetary and Economic Reform is an international publishing and education centre based in Toronto, Canada.Its mandate is to study the destabilization that its members believe current economic and monetary policies have caused, and are causing, for the citizens of Canada and other...
- See also: Prosperity CertificateProsperity certificateIn 1936, the Alberta Social Credit Party-led government of the Province of Alberta, Canada, introduced prosperity certificates in an attempt to alleviate the effects of the Great Depression...
New Zealand
- Country PartyCountry Party (New Zealand)The Country Party of New Zealand was a political party which based itself around rural voters. It was represented in Parliament from 1928 to 1938. Its policies were a mixture of rural advocacy and social credit theory....
- Democratic Labour PartyDemocratic Labour Party (New Zealand)The Democratic Labour Party was a left-wing political party in New Zealand in the 1940s. It was a splinter from the larger Labour Party, and was led by the prominent socialist John A. Lee.-Party history:...
- New Zealand Democratic PartyNew Zealand Democratic PartyThe New Zealand Democratic Party for Social Credit is a small leftist political party in New Zealand. It is based around the ideas of Social Credit, an economic theory which also attracted some degree of support in Canada and Australia...
(active) - New Democratic Party (New Zealand)New Democratic Party (New Zealand)The New Democratic Party of New Zealand was a small political party established in 1972. It was a splinter group from the better-known Social Credit Party, having been founded by former Social Credit leader John O'Brien. O'Brien was considered a powerful and energetic orator, but had a...
- Real Democracy Movement
- Social Credit Party (New Zealand)Social Credit Party (New Zealand)The New Zealand Social Credit Party was a political party which served as the country's "third party" from the 1950s through into the 1980s. The party held a number of seats in the New Zealand Parliament, although never more than two at a time...
- New Zealand Social Credit Association (Inc)http://www.nzsocialcredit.blogspot.com
United Kingdom
- Douglas Social Credit Secretariat
- Social Credit Party of Great Britain and Northern IrelandSocial Credit Party of Great Britain and Northern IrelandThe Social Credit Party of Great Britain and Northern Ireland was a political party in the United Kingdom. It grew out of the Kibbo Kift, which was established in 1920 as a more craft-based alternative for youth to the Boy Scouts....
Literary figures in Social Credit
As lack of finance has been a constant impediment to the development of the arts and literature, the concept of economic democracy through Social Credit had immediate appeal in literary circles. Names associated with Social Credit include Charlie ChaplinCharlie Chaplin
Sir Charles Spencer "Charlie" Chaplin, KBE was an English comic actor, film director and composer best known for his work during the silent film era. He became the most famous film star in the world before the end of World War I...
, William Carlos Williams
William Carlos Williams
William Carlos Williams was an American poet closely associated with modernism and Imagism. He was also a pediatrician and general practitioner of medicine, having graduated from the University of Pennsylvania...
, Ezra Pound
Ezra Pound
Ezra Weston Loomis Pound was an American expatriate poet and critic and a major figure in the early modernist movement in poetry...
, T. S. Eliot
T. S. Eliot
Thomas Stearns "T. S." Eliot OM was a playwright, literary critic, and arguably the most important English-language poet of the 20th century. Although he was born an American he moved to the United Kingdom in 1914 and was naturalised as a British subject in 1927 at age 39.The poem that made his...
, Herbert Read
Herbert Read
Sir Herbert Edward Read, DSO, MC was an English anarchist, poet, and critic of literature and art. He was one of the earliest English writers to take notice of existentialism, and was strongly influenced by proto-existentialist thinker Max Stirner....
, Aldous Huxley
Aldous Huxley
Aldous Leonard Huxley was an English writer and one of the most prominent members of the famous Huxley family. Best known for his novels including Brave New World and a wide-ranging output of essays, Huxley also edited the magazine Oxford Poetry, and published short stories, poetry, travel...
, Storm Jameson
Storm Jameson
Margaret Storm Jameson was an English writer, known for her 45 novels, and criticism.She was born in Whitby, Yorkshire, and studied at the University of Leeds. She moved to London, where she earned an MA from King's College London in 1914 and then went on to teach before becoming a full-time writer...
, Eimar O’Duffy, Sybil Thorndyke, Bonamy Dobrée
Bonamy Dobrée
Bonamy Dobrée , British academic, was Professor of English Literature at the University of Leeds from 1936 to 1955....
, Eric de Maré
Eric de Maré
Eric de Maré was a British photographer and author, described as one of the greatest British architectural photographers.de Maré was born in London on the 10 September 1910, of Swedish parents, Bror and Ingrid de Maré. He was educated at St Paul’s School in London before becoming a student of the...
and the American publisher James Laughlin
James Laughlin
James Laughlin was an American poet and literary book publisher who founded New Directions Publishers.- Biography :He was born in Pittsburgh, Pennsylvania, the son of Henry Hughart and Marjory Rea Laughlin...
. Hilaire Belloc
Hilaire Belloc
Joseph Hilaire Pierre René Belloc was an Anglo-French writer and historian who became a naturalised British subject in 1902. He was one of the most prolific writers in England during the early twentieth century. He was known as a writer, orator, poet, satirist, man of letters and political activist...
and GK Chesterton espoused similar ideas. In 1933 Eimar O’Duffy published Asses in Clover, a science fiction fantasy exploration of Social Credit themes. His Social Credit economics book Life and Money: Being a Critical Examination of the Principles and Practice of Orthodox Economics with A Practical Scheme to End the Muddle it has made of our Civilisation, was endorsed by Douglas.
Robert A. Heinlein
Robert A. Heinlein
Robert Anson Heinlein was an American science fiction writer. Often called the "dean of science fiction writers", he was one of the most influential and controversial authors of the genre. He set a standard for science and engineering plausibility and helped to raise the genre's standards of...
described a Social Credit economy in his posthumously-published first novel, For Us, The Living: A Comedy of Customs
For Us, The Living: A Comedy of Customs
For Us, The Living: A Comedy of Customs is a science fiction novel by Robert A. Heinlein, written in 1938 but published for the first time in 2003...
, and his Beyond This Horizon
Beyond This Horizon
Beyond This Horizon is a science fiction novel by Robert A. Heinlein. It was originally published as a two-part serial in Astounding Science Fiction and then eventually as a single volume by Fantasy Press in 1948.-Overview:The novel depicts a world where genetic selection for increased health,...
describes a similar system in less detail. In Heinlein's future society, government is not funded by taxation. Instead, government controls the currency and prevents inflation by providing a price rebate to participating business and a guaranteed income to every citizen.
In his novel The Trick Top Hat, part of his Schrödinger's Cat Trilogy
Schrödinger's Cat trilogy
The Schrödinger's Cat Trilogy is a trilogy of novels by Robert Anton Wilson consisting of The Universe Next Door, The Trick Top Hat, and The Homing Pigeons, each illustrating a different interpretation of quantum physics...
, Robert Anton Wilson
Robert Anton Wilson
Robert Anton Wilson , known to friends as "Bob", was an American author and polymath who became at various times a novelist, philosopher, psychologist, essayist, editor, playwright, poet, futurist, civil libertarian and self-described agnostic mystic...
described the implementation by the President of an alternate future United States of an altered form of Social Credit, in which the government issues a National Dividend to all citizens in the form of "trade aids," which can be spent like money but which cannot be lent at interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
(in order to mollify the banking industry) and which eventually expire (to prevent inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
and hoarding).
More recently, Richard C. Cook
Richard C. Cook
Richard C. Cook is a former U.S. federal government analyst, who was instrumental in exposing White House cover-ups regarding the Space Shuttle Challenger disaster of 1986. As a witness to the incident and a participant in the subsequent investigations, Cook provided key documents to The New York...
, an analyst for the U.S. Civil Service Commission
United States Civil Service Commission
The United States Civil Service Commission a three man commission was created by the Pendleton Civil Service Reform Act, which was passed into law on January 16, 1883...
, Food and Drug Administration
Food and Drug Administration
The Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...
, NASA
NASA
The National Aeronautics and Space Administration is the agency of the United States government that is responsible for the nation's civilian space program and for aeronautics and aerospace research...
, the U.S. Treasury Department
United States Department of the Treasury
The Department of the Treasury is an executive department and the treasury of the United States federal government. It was established by an Act of Congress in 1789 to manage government revenue...
, and author of the books Challenger Revealed and We Hold These Truths, has written several articles relating to Social Credit and monetary reform
Monetary reform
Monetary reform describes any movement or theory that proposes a different system of supplying money and financing the economy from the current system.Monetary reformers may advocate any of the following, among other proposals:...
at Global Research, an independent research and media group of writers, scholars, journalists and activists. Frances Hutchinson, Chairperson of the Social Credit Secretariat, has co-authored, with Brian Burkitt, a book entitled The Political Economy of Social Credit and Guild Socialism.
Further reading
- Economic Democracy, by C. H. DouglasC. H. DouglasMajor C. H. Douglas MIMechE, MIEE, , was a British engineer and pioneer of the Social Credit economic reform movement.-Education and engineering career:...
(1920) new edition: December 1974; Bloomfield Books; ISBN 0904656063 - Major Douglas: The Policy of Philosophy, by John W. Hughes, Edmonton, Brightest Pebble Publishing Company, 2004; first published in Great Britain by Wedderspoon Associates, 2002
- Major Douglas and Alberta Social Credit, by Bob Hesketh, ISBN 0-8020-4148-5
Fiction and poetry
- For Us, The Living: A Comedy of CustomsFor Us, The Living: A Comedy of CustomsFor Us, The Living: A Comedy of Customs is a science fiction novel by Robert A. Heinlein, written in 1938 but published for the first time in 2003...
, by Robert A. HeinleinRobert A. HeinleinRobert Anson Heinlein was an American science fiction writer. Often called the "dean of science fiction writers", he was one of the most influential and controversial authors of the genre. He set a standard for science and engineering plausibility and helped to raise the genre's standards of... - Beyond This HorizonBeyond This HorizonBeyond This Horizon is a science fiction novel by Robert A. Heinlein. It was originally published as a two-part serial in Astounding Science Fiction and then eventually as a single volume by Fantasy Press in 1948.-Overview:The novel depicts a world where genetic selection for increased health,...
, by Robert A. HeinleinRobert A. HeinleinRobert Anson Heinlein was an American science fiction writer. Often called the "dean of science fiction writers", he was one of the most influential and controversial authors of the genre. He set a standard for science and engineering plausibility and helped to raise the genre's standards of... - The CantosThe CantosThe Cantos by Ezra Pound is a long, incomplete poem in 120 sections, each of which is a canto. Most of it was written between 1915 and 1962, although much of the early work was abandoned and the early cantos, as finally published, date from 1922 onwards. It is a book-length work, widely considered...
, by Ezra PoundEzra PoundEzra Weston Loomis Pound was an American expatriate poet and critic and a major figure in the early modernist movement in poetry...
External links
- C.H. Douglas's book Economic Democracy at American Libraries
- C.H. Douglas's book Credit-Power and Democracy at American Libraries
- C.H. Douglas's book The Control and Distribution of Production at American Libraries
- C.H. Douglas's work "The Douglas Theory, A Reply to Mr. J.A. Hobson" at American Libraries
- C.H. Douglas's work, "These Present Discontents" at American Libraries
- Clifford Hugh Douglas' book, Social Credit
- Hilderic Cousens, "A New Policy for Labour; an essay on the relevance of credit control" at American Libraries
- Social-Credit.com
- DouglasSocialCredit.com—Social Credit Secretariat
- Australian League of Rights—online library
- The Green Shirt Movement for Social Credit
- Social Credit School of Studies
- Social Credit Email group
- Social Credit New Zealand School of Studies
- Social Credit Blog