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Social credit is a distributive philosophy of
political economy Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are linked. Widely studied phenomena within the discipline are systems such as labour ...
developed by
C. H. Douglas Major Clifford Hugh "C. H." Douglas, MIMechE, MIEE (20 January 1879 – 29 September 1952), was a British engineer and pioneer of the social credit economic reform movement. Education and engineering career C.H. Douglas was born in either Edg ...
. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made them. To combat what he saw as a chronic deficiency of
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
in the economy, Douglas prescribed government intervention in the form of the issuance of debt free money directly to consumers or producers (if they sold their product below cost to consumers) in order to combat such discrepancy. In defence of his ideas, Douglas wrote that "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." 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 ''Ficus'' ( or ) is a genus of about 850 species of woody trees, shrubs, vines, epiphytes and hemiepiphytes in the family Moraceae. Collectively known as fig trees or figs, they are native throughout the tropics with a few species extending int ...
; and none shall make them afraid." In his words, "what we really demand of existence is not that we shall be put into somebody else's
Utopia A utopia ( ) typically describes an imaginary community or society that possesses highly desirable or nearly perfect qualities for its members. It was coined by Sir Thomas More for his 1516 book '' Utopia'', describing a fictional island soc ...
, but we shall be put in a position to construct a Utopia of our own." The idea of social credit attracted considerable interest in the
interwar period In the history of the 20th century, the interwar period lasted from 11 November 1918 to 1 September 1939 (20 years, 9 months, 21 days), the end of the First World War to the beginning of the Second World War. The interwar period was relative ...
, with the
Alberta Social Credit Party Alberta Social Credit was a provincial political party in Alberta, Canada, that was founded on social credit monetary policy put forward by Clifford Hugh Douglas and on conservative Christian social values. The Canadian social credit movement w ...
briefly distributing "prosperity certificates" to the Albertan populace. However, Douglas opposed the distribution of prosperity certificates which were based upon the theories of
Silvio Gesell Johann Silvio Gesell (; 17 March 1862 – 11 March 1930) was a German-Argentine economist, merchant, and the founder of Freiwirtschaft, an economic model for market socialism. In 1900 he founded the magazine ''Geld-und Bodenreform'' (''Monetary ...
. Douglas' theory of social credit has been disputed and rejected by most economists and bankers. Prominent economist
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
references Douglas' ideas in his book '' The General Theory of Employment, Interest and Money,'' but instead poses the principle of effective demand to explain differences in output and consumption.


Economic theory


Factors of production and value

Douglas disagreed with
classical economists Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...
who recognised only three
factors of production In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the rel ...
:
land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isla ...
, labour and
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
. While Douglas did not deny the role of these factors in production, he considered the " cultural inheritance of society" as the primary factor. He defined cultural inheritance as the knowledge, techniques and processes that have accrued to us incrementally from the origins of civilization (i.e.
progress Progress is the movement towards a refined, improved, or otherwise desired state. In the context of progressivism, it refers to the proposition that advancements in technology, science, and social organization have resulted, and by extension w ...
). 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 Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——� ...
,
David Ricardo David Ricardo (18 April 1772 – 11 September 1823) was a British political economist. He was one of the most influential of the classical economists along with Thomas Malthus, Adam Smith and James Mill. Ricardo was also a politician, and a ...
and
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
claimed that labour creates all value. While Douglas did not deny that all costs ultimately relate to labour charges of some sort (past or present), he denied that the present labour of the world creates all wealth. Douglas carefully distinguished between
value Value or values may refer to: Ethics and social * Value (ethics) wherein said concept may be construed as treating actions themselves as abstract objects, associating value to them ** Values (Western philosophy) expands the notion of value beyo ...
,
costs In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in whic ...
and
price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...
s. He claimed that one of the factors resulting in a misdirection of thought in terms of the nature and function of money was economists' near-obsession about values and their relation to prices and incomes. While Douglas recognized "value in use" as a legitimate theory of values, he also considered values as subjective and not capable of being measured in an objective manner. Thus he rejected the idea of the role of money as a standard, or measure, of value. Douglas believed that money should act as a medium of communication by which consumers direct the distribution of production.


Economic sabotage

Closely associated with the concept of cultural inheritance as a factor of production 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 Old English (, ), or Anglo-Saxon, is the earliest recorded form of the English language, spoken in England and southern and eastern Scotland in the early Middle Ages. It was brought to Great Britain by Anglo-Saxon settlers in the mid-5th ...
word , 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 regard 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.


Purpose of an economy

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.


The creditary nature of money

Douglas criticized classical economics because many of the theories are 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 , originally and literally meaning "cattle" (related to , meaning "beast"). Today, the productive system and the monetary system are two separate entities. Douglas demonstrated that loans create
deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...
, and presented
mathematical proof A mathematical proof is an inferential argument for a mathematical statement, showing that the stated assumptions logically guarantee the conclusion. The argument may use other previously established statements, such as theorems; but every pr ...
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 (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...
derives from the Latin , 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 In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. The origin of "mediums of exchange" in human societies is ass ...
. 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 The division of labour is the separation of the tasks in any economic system or organisation so that participants may specialise (specialisation). Individuals, organizations, and nations are endowed with, or acquire specialised capabilities, an ...
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 opinion, 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 named 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 In economics, effective demand (ED) 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 ...
' – 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 In economics, scarcity "refers to the basic fact of life that there exists only a finite amount of human and nonhuman resources which the best technical knowledge is capable of using to produce only limited maximum amounts of each economic good. ...
, 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 centralizing 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. According to Douglas, money is merely an abstract representation of the real credit of the community, which is the ability of the community to deliver goods and
services Service may refer to: Activities * Administrative service, a required part of the workload of university faculty * Civil service, the body of employees of a government * Community service, volunteer service for the benefit of a community or a p ...
, 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 be published in the magazine ''New Age'', edited by Alfred Richard Orage, 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 crystallise 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 mould 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 evidence for a proposition is evidence, i.e. what supports or counters this proposition, that is constituted by or accessible to sense experience or experimental procedure. Empirical evidence is of central importance to the sciences and ...
evidence, Douglas claims this
deductive Deductive reasoning is the mental process of drawing deductive inferences. An inference is deductively valid if its conclusion follows logically from its premises, i.e. if it is impossible for the premises to be true and the conclusion to be fals ...
theorem In mathematics, a theorem is a statement that has been proved, or can be proved. The ''proof'' of a theorem is a logical argument that uses the inference rules of a deductive system to establish that the theorem is a logical consequence of t ...
demonstrates that total prices increase faster than total incomes when regarded as a
flow Flow may refer to: Science and technology * Fluid flow, the motion of a gas or liquid * Flow (geomorphology), a type of mass wasting or slope movement in geomorphology * Flow (mathematics), a group action of the real numbers on a set * Flow (psyc ...
. 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 through the bank in a year divided by the average amount of
deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...
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 or Clearinghouse may refer to: Banking and finance * Clearing house (finance) * Automated clearing house * ACH Network, an electronic network for financial transactions in the U.S. * Bankers' clearing house * Cheque clearing * Cle ...
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 The balance of trade, commercial balance, or net exports (sometimes symbolized as NX), is the difference between the monetary value of a nation's exports and imports over a certain time period. Sometimes a distinction is made between a balance ...
, 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 A trade war is an economic conflict often resulting from extreme protectionism in which states raise or create tariffs or other trade barriers against each other in response to trade barriers created by the other party. If tariffs are the ex ...
, 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 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.Peter Barberis, J ...
, led by
John Hargrave John Gordon Hargrave (6 June 1894 – 21 November 1982), (woodcraft name 'White Fox'), was a prominent youth leader in Britain during the 1920s and 1930s, Head Man of the Kibbo Kift, described in his obituary as an 'author, cartoonist, inve ...
. 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 A + B theorem and a cost accounting view of inflation

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 results in increasing 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 decreasing incomes according to this analysis. As the
Phillips Curve The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationship ...
demonstrates, inflation and unemployment are trade-offs, unless prices are reduced from monies derived from outside the productive system. According to Douglas's A+B theorem, the systemic problem of increasing 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 combined with a policy of full employment. 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 sheet In financial accounting, a balance sheet (also known as statement of financial position or statement of financial condition) is a summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business ...
, and calculating
aggregate Aggregate or aggregates may refer to: Computing and mathematics * collection of objects that are bound together by a root entity, otherwise known as an aggregate root. The aggregate root guarantees the consistency of changes being made within the ...
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. : \text = M \cdot \cfrac 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 may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
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. : \text (\$) = \text (\$) \cdot \dfrac 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 decrease 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 Freedom is understood as either having the ability to act or change without constraint or to possess the power and resources to fulfill one's purposes unhindered. Freedom is often associated with liberty and autonomy in the sense of "giving one ...
.


Critics of the A + B theorem and rebuttal

Critics of the theorem, such as J. M. Pullen, Hawtrey and
J. M. Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in m ...
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 In classical economics, Say's law, or the law of markets, is the claim that the production of a product creates demand for another product by providing something of value which can be exchanged for that other product. So, production is the source ...
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 In monetary economics, the quantity theory of money (often abbreviated QTM) is one of the directions of Western economic thought that emerged in the 16th-17th centuries. The QTM states that the general price level of goods and services is directly ...
, 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 box democracy is incompatible with Social Credit, which assumes the right of individuals to choose freely one choice 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 implementation of such a system was necessary as otherwise the government would be controlled by international financiers. Douglas also opposed the
secret ballot The secret ballot, also known as the Australian ballot, is a voting method in which a voter's identity in an election or a referendum is anonymous. This forestalls attempts to influence the voter by intimidation, blackmailing, and potential vo ...
arguing that it resulted in electoral irresponsibility, calling it a "Jewish" technique used to ensure
Barabbas Barabbas (; ) was, according to the New Testament, a prisoner who was chosen over Jesus by the crowd in Jerusalem to be pardoned and released by Roman governor Pontius Pilate at the Passover feast. Biblical account According to all four canoni ...
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 In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omniprese ...
is essential to ensure protection of
individual rights Group rights, also known as collective rights, are rights held by a group '' qua'' a group rather than individually by its members; in contrast, individual rights are rights held by individual people; even if they are group-differentiated, which ...
from an all-powerful parliament. Douglas also believed the effectiveness of
British government ga, Rialtas a Shoilse gd, Riaghaltas a Mhòrachd , image = HM Government logo.svg , image_size = 220px , image2 = Royal Coat of Arms of the United Kingdom (HM Government).svg , image_size2 = 180px , caption = Royal Arms , date_est ...
is determined structurally by application of a Christian concept known as
Trinitarianism The Christian doctrine of the Trinity (, from 'threefold') is the central dogma concerning the nature of God in most Christian churches, which defines one God existing in three coequal, coeternal, consubstantial divine persons: God the ...
: "In some form or other, sovereignty in the
British Isles The British Isles are a group of islands in the North Atlantic Ocean off the north-western coast of continental Europe, consisting of the islands of Great Britain, Ireland, the Isle of Man, the Inner and Outer Hebrides, the Northern Isl ...
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."


History

C. H. Douglas was a
civil engineer A civil engineer is a person who practices civil engineering – the application of planning, designing, constructing, maintaining, and operating infrastructure while protecting the public and environmental health, as well as improving existing ...
who pursued his higher education at
Cambridge University , mottoeng = Literal: From here, light and sacred draughts. Non literal: From this place, we gain enlightenment and precious knowledge. , established = , other_name = The Chancellor, Masters and Schola ...
. His early writings appeared most notably in the British intellectual journal ''
The New Age ''The New Age'' was a British weekly magazine (1894–1938), inspired by Fabian socialism, and credited as a major influence on literature and the arts during its heyday from 1907 to 1922, when it was edited by Alfred Richard Orage. It publishe ...
''. The editor of that publication, Alfred Orage, devoted the magazines ''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, 5 November 1934, in the ''Poverty in Plenty'' Series. Douglas's first book, ''Economic Democracy'', was published in 1920, soon 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 John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
, and to the Agricultural Committee of the
Alberta Legislature The Legislature of Alberta is the unicameral legislature of the province of Alberta, Canada. The legislature is made of two elements: the Lieutenant Governor of Alberta,. and the Legislative Assembly of Alberta. The legislature has existed s ...
in 1934 during the term of the
United Farmers of Alberta The United Farmers of Alberta (UFA) is an association of Alberta farmers that has served different roles in its 100-year history – as a lobby group, a successful political party, and as a farm-supply retail chain. As a political party, it forme ...
Government in that
Canadian province Within the geographical areas of Canada, the ten provinces and three territories are sub-national administrative divisions under the jurisdiction of the Canadian Constitution. In the 1867 Canadian Confederation, three provinces of British Nor ...
. The writings of C. H. Douglas spawned a worldwide movement, most prominent in the British Commonwealth, with a presence 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 directed by the American author
Gorham Munson Gorham Bockhaven Munson (May 26, 1896 – August 15, 1969) 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 in 1917 from Wesleyan University, wh ...
who contributed a major book on social credit titled ''Aladdin’s Lamp: The Wealth of the American People''. While Canada and
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island coun ...
had electoral successes with "social credit" political parties, the efforts in England and Australia were devoted primarily 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 soon 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 during his later years.


Origins

It was while he was reorganising the work at Farnborough, during World War I, that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid to individuals for
wage A wage is payment made by an employer to an employee for work done in a specific period of time. Some examples of wage payments include compensatory payments such as ''minimum wage'', '' prevailing wage'', and ''yearly bonuses,'' and remune ...
s,
salaries A salary is a form of periodic payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour or other unit is paid separately, rather than on a periodic basis. F ...
and
dividend A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-i ...
s. This seemed to contradict the theory of classic Ricardian economics, that all costs are distributed simultaneously as
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
. Troubled by the seeming difference between the way money flowed and the objectives of industry ("delivery of goods and services", in his opinion), Douglas decided to apply
engineering Engineering is the use of scientific principles to design and build machines, structures, and other items, including bridges, tunnels, roads, vehicles, and buildings. The discipline of engineering encompasses a broad range of more speciali ...
methods to the economic system. Douglas collected data from more than a hundred large British businesses and found that in nearly every case, except that of companies becoming
bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor ...
, the sums paid out in salaries, wages and dividends were always less than the total costs of goods and services produced each week:
consumer A consumer is a person or a group who intends to order, or uses purchased goods, products, or services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or business activities. ...
s did not have enough income to buy back what they had made. He published his observations and conclusions in an article in the magazine ''
The English Review ''The English Review'' was an English-language literary magazine published in London from 1908 to 1937. At its peak, the journal published some of the leading writers of its day. History The magazine was started by 1908 by Ford Madox Hueffer (la ...
'', where he suggested: "That we are living under a system of accountancy which renders the delivery of the nation's goods and services to itself a technical impossibility." He later formalized this observation in his A+B theorem. Douglas proposed to eliminate this difference between total prices and total incomes by augmenting consumers'
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
through a National Dividend and a Compensated Price Mechanism. According to Douglas, the true purpose of production is
consumption Consumption may refer to: *Resource consumption *Tuberculosis, an infectious disease, historically * Consumption (ecology), receipt of energy by consuming other organisms * Consumption (economics), the purchasing of newly produced goods for curren ...
, and production must serve the genuine, freely expressed interests of consumers. In order to accomplish this objective, he believed that each citizen should have a beneficial, not direct, inheritance in the communal
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
conferred by complete access to consumer goods assured by the National Dividend and Compensated Price. Douglas thought that consumers, fully provided with adequate
purchasing power Purchasing power is the amount of goods and services that can be purchased with a unit of currency. For example, if one had taken one unit of currency to a store in the 1950s, it would have been possible to buy a greater number of items than would ...
, will establish the policy of production through exercise of their monetary vote. In this view, the term
economic democracy Economic democracy is a socioeconomic philosophy that proposes to shift decision-making power from corporate managers and corporate shareholders to a larger group of public stakeholders that includes workers, customers, suppliers, neighbou ...
does not mean
worker control Workers' control is 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, distributists and Christian ...
of industry, but democratic control of credit. Removing the policy of production from banking institutions, government, and industry, social credit envisages an "
aristocracy Aristocracy (, ) is a form of government that places strength in the hands of a small, privileged ruling class, the aristocrats. The term derives from the el, αριστοκρατία (), meaning 'rule of the best'. At the time of the word' ...
of producers, serving and
accredited Accreditation is the independent, third-party evaluation of a conformity assessment body (such as certification body, inspection body or laboratory) against recognised standards, conveying formal demonstration of its impartiality and competence to ...
by a democracy of consumers".


Political history

During early years of the philosophy, the management of the
British Labour Party The Labour Party is a political party in the United Kingdom that has been described as an alliance of social democrats, democratic socialists and trade unionists. The Labour Party sits on the centre-left of the political spectrum. In all ...
resisted pressure from some trade unionists to implement social credit, as hierarchical views of
Fabian socialism The Fabian Society is a British socialist organisation whose purpose is to advance the principles of social democracy and democratic socialism via gradualist and reformist effort in democracies, rather than by revolutionary overthrow. The Fab ...
, economic growth and
full employment Full employment is a situation in which there is no cyclical or deficient-demand unemployment. Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may remain. F ...
, were incompatible with the National Dividend and abolition of
wage slavery Wage slavery or slave wages refers to a person's dependence on wages (or a salary) for their livelihood, especially when wages are low, treatment and conditions are poor, and there are few chances of upward mobility. The term is often us ...
suggested by Douglas. In an effort to discredit the social credit movement, one leading Fabian,
Sidney Webb Sidney James Webb, 1st Baron Passfield, (13 July 1859 – 13 October 1947) was a British socialist, economist and reformer, who co-founded the London School of Economics. He was an early member of the Fabian Society in 1884, joining, like Ge ...
, is said to have declared that he did not care whether Douglas was technically correct or not – he simply did not like his policy.


Aberhart administration

In 1935, the world's first
Social Credit Social credit is a distributive philosophy of political economy developed by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made them. To combat what he ...
government was elected in
Alberta Alberta ( ) is one of the thirteen provinces and territories of Canada. It is part of Western Canada and is one of the three prairie provinces. Alberta is bordered by British Columbia to the west, Saskatchewan to the east, the Northwest T ...
, Canada led by
William Aberhart William Aberhart (December 30, 1878 – May 23, 1943), also known as "Bible Bill" for his outspoken Baptist views, was a Canadian politician and the seventh premier of Alberta from 1935 to his death in 1943. He was the founder and first leader ...
. A book by Maurice Colbourne, entitled ''The Meaning of Social Credit'', had convinced Aberhart that the theories of Major Douglas would facilitate for Alberta's recovery from the
Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...
. Aberhart added a heavy dose of
fundamentalist Christianity Christian fundamentalism, also known as fundamental Christianity or fundamentalist Christianity, is a religious movement emphasizing biblical literalism. In its modern form, it began in the late 19th and early 20th centuries among British and ...
to Douglas' theories, and the
Canadian social credit movement The Canadian social credit movement is a political movement originally based on the Social Credit theory of Major C. H. Douglas. Its supporters were colloquially known as Socreds in English and créditistes in French. It gained popularity and its ...
, which was largely nurtured in Alberta, thus acquired a strong
social conservative Social conservatism is a political philosophy and variety of conservatism which places emphasis on traditional power structures over social pluralism. Social conservatives organize in favor of duty, traditional values and social instituti ...
influence. However, some historians believe that neither Aberhart nor his supported understood the works of Douglas, and simply rallied around Aberhart's charisma. Douglas was consulted by the 1921–1935
United Farmers of Alberta The United Farmers of Alberta (UFA) is an association of Alberta farmers that has served different roles in its 100-year history – as a lobby group, a successful political party, and as a farm-supply retail chain. As a political party, it forme ...
provincial government in Alberta, but the UFA saw only difficulties in trying to bring in Social Credit. Douglas became an advisor to Aberhart, but withdrew after a short time and never visited Alberta after 1935 due to strategic differences. Aberhart sought orthodox counsel with respect to the Province's finances, and the correspondence between them was published by Douglas in his book, ''The Alberta Experiment''. While Aberhart, the
Premier Premier is a title for the head of government in central governments, state governments and local governments of some countries. A second in command to a premier is designated as a deputy premier. A premier will normally be a head of governm ...
, wanted to balance the provincial budget, Douglas argued the concept of a "
balanced budget A balanced budget (particularly that of a government) is a budget in which revenues are equal to expenditures. Thus, neither a budget deficit nor a budget surplus exists (the accounts "balance"). More generally, it is a budget that has no 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:
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 asset A capital asset is defined as property of any kind held by an assessee, whether connected with their business or profession or not connected with their business or profession. It includes all kinds of property, movable or immovable, tangible or i ...
s. The result of the acceptance of this proposition is that all
capital appreciation Capital appreciation is an increase in the price or value of assets. It may refer to appreciation of company stocks or bonds held by an investor, an increase in land valuation, or other upward revaluation of fixed assets. Capital appreciation m ...
becomes quite automatically the property of those who create and issue of money .e., the banking systemand the necessary unbalancing of the Budget is covered by Debts.
Douglas sent two social credit technical advisors from the United Kingdom, L. Denis Byrne and George F. Powell, to Alberta. But early attempts to pass social credit legislation were ruled by the
Supreme Court of Canada The Supreme Court of Canada (SCC; french: Cour suprême du Canada, CSC) is the Supreme court, highest court in the Court system of Canada, judicial system of Canada. It comprises List of Justices of the Supreme Court of Canada, nine justices, wh ...
and/or the
Privy Council A privy council is a body that advises the head of state of a state, 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 mo ...
in London. Drawing on the monetary theories of
Silvio Gesell Johann Silvio Gesell (; 17 March 1862 – 11 March 1930) was a German-Argentine economist, merchant, and the founder of Freiwirtschaft, an economic model for market socialism. In 1900 he founded the magazine ''Geld-und Bodenreform'' (''Monetary ...
, William Aberhart issued a currency substitute known as prosperity certificates. These
scrip A scrip (or ''chit'' in India) is any substitute for legal tender. It is often a form of credit. Scrips have been created and used for a variety of reasons, including exploitive payment of employees under truck systems; or for use in local co ...
s intentionally 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.
They did provide spending power to many impoverished Albertans in the time they were in circulation. Aberhart did bring in a measure of social credit, with the establishment of a government-owned banking system, the
Alberta Treasury Branches ATB Financial is a financial institution and Crown corporation wholly owned by the province of Alberta, the only province in Canada with such a financial institution under its exclusive ownership. Originally established as Alberta Treasury B ...
, still in operation today and now among the very few government-owned banks in North America that serve the public. (See for comparison the Bank of North Dakota.) In 1938, Aberhart's Alberta Social Credit Party had 41,000 paid members, forming a broad coalition ranging from those who believed in Douglas' monetary policies to moderate
socialists Socialism is a left-wing economic philosophy and movement encompassing a range of economic systems characterized by the dominance of social ownership of the means of production as opposed to private ownership. As a term, it describes the econ ...
. The latter group helped influence the party to form alliances with the
Co-operative Commonwealth Federation The Co-operative Commonwealth Federation (CCF; french: Fédération du Commonwealth Coopératif, FCC); from 1955 the Social Democratic Party of Canada (''french: Parti social démocratique du Canada''), was a federal democratic socialistThe follo ...
and various
communist Communism (from Latin la, communis, lit=common, universal, label=none) is a far-left sociopolitical, philosophical, and economic ideology and current within the socialist movement whose goal is the establishment of a communist society, ...
groups in various local and provincial elections. However, as it became apparent that the party was failing to deliver on its promises to control prices and distribute social dividends, the party's membership fell rapidly, totaling just 3,500 by 1942.


Later activities

Under
Ernest Manning Ernest Charles Manning, (September 20, 1908 – February 19, 1996), 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 other premier in Alberta's histor ...
, who succeeded Aberhart after his death in 1943, the
Alberta Social Credit Party Alberta Social Credit was a provincial political party in Alberta, Canada, that was founded on social credit monetary policy put forward by Clifford Hugh Douglas and on conservative Christian social values. The Canadian social credit movement w ...
saw a major revival, with a post-war economic boom and high oil revenues helping the party retain power for a quarter of a century. However, the party soon departed from its origins and became popularly identified as a
right wing Right-wing politics describes the range of Ideology#Political ideologies, political ideologies that view certain social orders and Social stratification, hierarchies as inevitable, natural, normal, or desirable, typically supporting this pos ...
populist Populism refers to a range of political stances that emphasize the idea of "the people" and often juxtapose this group against " the elite". It is frequently associated with anti-establishment and anti-political sentiment. The term develop ...
party, focusing much of its efforts on combatting Alberta's unions, and implementing a
red scare A Red Scare is the promotion of a widespread fear of a potential rise of communism, anarchism or other leftist ideologies by a society or state. The term is most often used to refer to two periods in the history of the United States which ar ...
. 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 Antisemitism (also spelled anti-semitism or anti-Semitism) is hostility to, prejudice towards, or discrimination against Jews. A person who holds such positions is called an antisemite. Antisemitism is considered to be a form of racism. Antis ...
, and purged "Douglasites" from the Alberta government. The
British Columbia Social Credit Party The British Columbia Social Credit Party, whose members are known as Socreds, was the governing provincial political party of British Columbia, Canada, for all but three years between the 1952 provincial election and the 1991 election. For fou ...
won power in 1952 in the province to Alberta's west, but had little in common with Social Credit bank reform, Major Douglas or his theories. Social credit parties also enjoyed some electoral success at the federal level in Canada. The
Social Credit Party of Canada The Social Credit Party of Canada (french: Parti Crédit social du Canada), colloquially known as the Socreds, was a populist political party in Canada that promoted social credit theories of monetary reform. It was the federal wing of the Canadi ...
was initiated mostly by Albertans, and eventually created another base of support in
Quebec Quebec ( ; )According to the Canadian government, ''Québec'' (with the acute accent) is the official name in Canadian French and ''Quebec'' (without the accent) is the province's official name in Canadian English is one of the thirte ...
. Social Credit also did well nationally in
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 smaller islands. It is the sixth-largest island coun ...
, 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 considering it solely as a scheme for monetary reform. He called this philosophy "practical Christianity" and stated that its central issue is the
Incarnation Incarnation literally means ''embodied in flesh'' or ''taking on flesh''. It refers to the conception and the embodiment of a deity or spirit in some earthly form or the appearance of a god as a human. If capitalized, it is the union of divinit ...
. Douglas believed that there was a
Canon Canon or Canons may refer to: Arts and entertainment * Canon (fiction), the conceptual material accepted as official in a fictional universe by its fan base * Literary canon, an accepted body of works considered as high culture ** Western ca ...
which permeated the universe, and
Jesus Christ Jesus, likely from he, יֵשׁוּעַ, translit=Yēšūaʿ, label= Hebrew/ Aramaic ( AD 30 or 33), also referred to as Jesus Christ or Jesus of Nazareth (among other names and titles), was a first-century Jewish preacher and relig ...
was the Incarnation of this Canon. However, he also believed that Christianity remained ineffective so long as it remained transcendental. Religion, which derives from the Latin word (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 The doctrine or theory of immanence holds that the divine encompasses or is manifested in the material world. It is held by some philosophical and metaphysical theories of divine presence. Immanence is usually applied in monotheistic, panthe ...
sovereignty Sovereignty is the defining authority within individual consciousness, social construct, or territory. Sovereignty entails hierarchy within the state, as well as external autonomy for states. In any state, sovereignty is assigned to the perso ...
. Social credit is consonant with the Christian doctrine of
salvation Salvation (from Latin: ''salvatio'', from ''salva'', 'safe, saved') is the state of being saved or protected from harm or a dire situation. In religion and theology, ''salvation'' generally refers to the deliverance of the soul from sin and its ...
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 much "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 origins, he did not envision a Christian
theocracy Theocracy is a form of government in which one or more deities are recognized as supreme ruling authorities, giving divine guidance to human intermediaries who manage the government's daily affairs. Etymology The word theocracy originates fr ...
. Douglas did not believe that religion should be mandated by 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 ''Ficus'' ( or ) is a genus of about 850 species of woody trees, shrubs, vines, epiphytes and hemiepiphytes in the family Moraceae. Collectively known as fig trees or figs, they are native throughout the tropics with a few species extending int ...
; 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 (September 2, 1839 – October 29, 1897) was an American political economist and journalist. His writing was immensely popular in 19th-century America and sparked several reform movements of the Progressive Era. He inspired the eco ...
. 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 choice at a time, and to contract out of unsatisfactory associations. Douglas believed that if people were given the economic security and leisure achievable in the context of a social credit dispensation, most would end their service to Mammon and use their free time to pursue spiritual, intellectual or cultural goals resulting in self-development. Douglas opposed what he termed "the pyramid of power".
Totalitarianism Totalitarianism is a form of government and a political system that prohibits all opposition parties, outlaws individual and group opposition to the state and its claims, and exercises an extremely high if not complete degree of control and regu ...
represents 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 – – "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 is the branch of philosophy that studies the fundamental nature of reality, the first principles of being, identity and change, space and time, causality, necessity, and possibility. It includes questions about the nature of conscio ...
, and must have regard to the organic relationships of its prototype."C.H. Douglas letter to L.D. Byrne, 28 March 1940 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 termed the "classical school" and the "modern school", which are broadly represented by philosophies of
Aristotle Aristotle (; grc-gre, Ἀριστοτέλης ''Aristotélēs'', ; 384–322 BC) was a Greek philosopher and polymath during the Classical period in Ancient Greece. Taught by Plato, he was the founder of the Peripatetic school of ...
and
Francis Bacon Francis Bacon, 1st Viscount St Alban (; 22 January 1561 – 9 April 1626), also known as Lord Verulam, was an English philosopher and statesman who served as Attorney General and Lord Chancellor of England. Bacon led the advancement of both ...
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".


Criticism for antisemitism

Social crediters and Douglas have been criticized for spreading
antisemitism Antisemitism (also spelled anti-semitism or anti-Semitism) is hostility to, prejudice towards, or discrimination against Jews. A person who holds such positions is called an antisemite. Antisemitism is considered to be a form of racism. Antis ...
. Douglas was critical of "international Jewry", especially in his later writings. He asserted that such Jews controlled many of the major banks and were involved in an international conspiracy to centralize the power of finance. Some people have claimed that Douglas was antisemitic because he was quite critical of pre-Christian philosophy. In his book ''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 The Old Testament (often abbreviated OT) is the first division of the Christian biblical canon, which is based primarily upon the 24 books of the Hebrew Bible or Tanakh, a collection of ancient religious Hebrew writings by the Israelites. The ...
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 that these philosophies inevitably resulted in the elevation of abstractions, such as the state, and
legal fiction A legal fiction is a fact assumed or created by courts, which is then used in order to help reach a decision or to apply a legal rule. The concept is used almost exclusively in common law jurisdictions, particularly in England and Wales. Deve ...
s, such as
corporate personhood Corporate personhood or juridical personality is the legal notion that a juridical person such as a corporation, separately from its associated human beings (like owners, managers, or employees), has at least some of the legal rights and respons ...
, over the individual. He also believed that what Jews considered as abstractionist thought tended to encourage them to endorse communist ideals and an emphasis on
collectives A collective is a group of entities that share or are motivated by at least one common issue or interest, or work together to achieve a common objective. Collectives can differ from cooperatives in that they are not necessarily focused upon an ...
over individuals. Historian 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 his 1972 book, ''Social Credit: The English Origins'', Finlay 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."


Groups influenced by social credit


Australia

*
Australian League of Rights The Australian League of Rights is a far-right and antisemitic political organisation in Australia. It was founded in Adelaide, South Australia, by Eric Butler in 1946, and organised nationally in 1960. It inspired groups like the Canadian Le ...
* Douglas Credit Party


Canada

Federal political parties *
Social Credit Party of Canada The Social Credit Party of Canada (french: Parti Crédit social du Canada), colloquially known as the Socreds, was a populist political party in Canada that promoted social credit theories of monetary reform. It was the federal wing of the Canadi ...
/
Canadian social credit movement The Canadian social credit movement is a political movement originally based on the Social Credit theory of Major C. H. Douglas. Its supporters were colloquially known as Socreds in English and créditistes in French. It gained popularity and its ...
* ''
Ralliement créditiste Historically in Quebec, Canada, there were 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 ...
'' *
Abolitionist Party of Canada The Abolitionist Party of Canada was a Canadian political party founded by perennial candidate John 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 employm ...
/
Christian Credit Party The Christian Credit Party was a short-lived Canadian political party founded in 1982 by perennial candidate and social credit activist, John Turmel who has, at various times, been involved in the Social Credit Party of Canada, the Green Party of Ca ...
*
Canadian Action Party The Canadian Action Party (CAP) (french: Parti action canadienne, PAC) was a Canadian federal political party founded in 1997 and deregistered on 31 March 2017. The party stood for Canadian nationalism, monetary and electoral reform, and oppose ...
* Global Party of Canada *
Canada Party The Canada Party was a short-lived political party in Canada that nominated 56 candidates in the 1993 Canadian federal election, 1993 federal election and one candidate in a 1996 by-election. It was unable to win any seats. The party was populis ...
*
New Democracy New Democracy, or the New Democratic Revolution, is a concept based on Mao Zedong's Bloc of Four Social Classes theory in post-revolutionary China which argued originally that democracy in China would take a path that was decisively distinc ...
Provincial political parties *
Alberta Social Credit Party Alberta Social Credit was a provincial political party in Alberta, Canada, that was founded on social credit monetary policy put forward by Clifford Hugh Douglas and on conservative Christian social values. The Canadian social credit movement w ...
* Pro-Life Alberta Political Association (active) *
British Columbia Social Credit Party The British Columbia Social Credit Party, whose members are known as Socreds, was the governing provincial political party of British Columbia, Canada, for all but three years between the 1952 provincial election and the 1991 election. For fou ...
*
Manitoba Social Credit Party The Manitoba Social Credit Party (originally the Manitoba Social Credit League) was a political party in the Canadian province of Manitoba. In its early years, it espoused the monetary reform theories of social credit. It was formed in the 1935� ...
* Social Credit Party of New Brunswick *
Social Credit Party of Ontario The Social Credit Party of Ontario (SCPO) (also known as the Ontario Social Credit League, Social Credit Association of Ontario and the Union of Electors) was a minor political party at the provincial level in the Canadian province of Ontario from ...
*
Pauper Party of Ontario The Pauper Party of Ontario (french: Parti Pauvre de l’Ontario) is a libertarian- populist political party in the Canadian province of Ontario based on the principles of social credit. Registered in 2011, the party is led by perennial candida ...
(active) *
Ralliement créditiste du Québec The ''Ralliement créditiste du Québec'' was a provincial political party in Quebec, Canada that operated from 1970 to 1978 (the party was also known as the ''Parti créditiste'' from September to December 1973, contesting the 1973 provincial el ...
*
Les Démocrates Les Démocrates (in English: The Democrats) was a provincial political party in Quebec, Canada, founded by former Ralliement créditiste du Québec leader Camil Samson and former Progressive Conservative Party of Canada federal cabinet minister Pi ...
* Parti crédit social uni *
Social Credit Party of Saskatchewan The Social Credit Party of Saskatchewan (originally known as the Social Credit League 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 Michael The Pilgrims of St. Michael (the "white berets") is a Roman Catholic organization in Canada that promotes social credit economic theories in Canada and other countries. Description The Pilgrims of St. Michael were founded in Canada in 1939 ...
*
Committee on Monetary and Economic Reform The Committee on Monetary and Economic Reform (COMER) is an economics-oriented publishing and education centre based in Toronto, Ontario, Canada. Organization COMER was co-founded by William Krehm and John Hotson in the 1980s as a think tank out ...
* See also:
Prosperity Certificate In 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. Premier William Aberhart's government had won power in ...


Ireland

*
Irish Monetary Reform Association The Irish Monetary Reform Association (also known as the Monetary Reform Party) was a minor Irish political party that existed from the 1940s to the 1960s. It can be seen as the most successful of a wave of minor far-right parties in 1940s Irela ...
* Social Credit Party (Ireland)


New Zealand

* Country Party * Democratic Labour Party *
New Zealand Democratic Party for Social Credit The New Zealand Social Credit Party (sometimes called "Socred") is 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 House of Representatives, ...
(active) *
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. History It was founded by former Social Credit leader John O'Brien. O'Brien was conside ...
* Real Democracy Movement *
Social Credit Party (New Zealand) The New Zealand Social Credit Party (sometimes called "Socred") is 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 House of Representatives, ...
* New Zealand Social Credit Association (Inc)br>


Solomon Islands

*
Solomon Islands Social Credit Party The Solomon Islands Social Credit Party ("Socreds") is a political party in the Solomon Islands that espouses social credit theories of monetary reform. It is led by Prime Minister Manasseh Sogavare, previously leader of the People's Progressive ...
(active)


United Kingdom

* Douglas Social Credit Secretariat *
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.Peter Barberis, J ...
* Populist Alliance (active)


Literary figures

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 C. M. Grieve,
Charlie Chaplin Sir Charles Spencer Chaplin Jr. (16 April 188925 December 1977) was an English comic actor, filmmaker, and composer who rose to fame in the era of silent film. He became a worldwide icon through his screen persona, the Tramp, and is conside ...
,
William Carlos Williams William Carlos Williams (September 17, 1883 – March 4, 1963) was an American poet, writer, and physician closely associated with modernism and imagism. In addition to his writing, Williams had a long career as a physician practicing both pedia ...
,
Ezra Pound Ezra Weston Loomis Pound (30 October 1885 – 1 November 1972) was an expatriate American poet and critic, a major figure in the early modernist poetry movement, and a Fascism, fascist collaborator in Italy during World War II. His works ...
, J. R. R. Tolkien,
C. S. Lewis Clive Staples Lewis (29 November 1898 – 22 November 1963) was a British writer and Anglican lay theologian. He held academic positions in English literature at both Oxford University (Magdalen College, 1925–1954) and Cambridge Univer ...
, T. S. Eliot,
Flannery O'Connor Mary Flannery O'Connor (March 25, 1925August 3, 1964) was an American novelist, short story writer and essayist. She wrote two novels and 31 short stories, as well as a number of reviews and commentaries. She was a Southern literature, Southe ...
, Fulton Sheen,
Dorothy Day Dorothy Day (November 8, 1897 – November 29, 1980) was an American journalist, social activist and anarchist who, after a bohemian youth, became a Catholic without abandoning her social and anarchist activism. She was perhaps the best-known ...
,
Thomas Merton Thomas Merton (January 31, 1915 – December 10, 1968) was an American Trappist monk, writer, theologian, mystic, poet, social activist and scholar of comparative religion. On May 26, 1949, he was ordained to the Catholic priesthood and g ...
,
Herbert Read Sir Herbert Edward Read, (; 4 December 1893 – 12 June 1968) was an English art historian, poet, literary critic and philosopher, best known for numerous books on art, which included influential volumes on the role of art in education. Read ...
,
George Orwell Eric Arthur Blair (25 June 1903 – 21 January 1950), better known by his pen name George Orwell, was an English novelist, essayist, journalist, and critic. His work is characterised by lucid prose, social criticism, opposition to totalit ...
,
Aldous Huxley Aldous Leonard Huxley (26 July 1894 – 22 November 1963) was an English writer and philosopher. He wrote nearly 50 books, both novels and non-fiction works, as well as wide-ranging essays, narratives, and poems. Born into the prominent Huxle ...
,
Ray Bradbury Ray Douglas Bradbury (; August 22, 1920June 5, 2012) was an American author and screenwriter. One of the most celebrated 20th-century American writers, he worked in a variety of modes, including fantasy, science fiction, horror, mystery, and ...
,
Denis Ireland Denis Liddell Ireland (29 July 1894 – 23 September 1974) was an Irish essayist and political activist. A northern Protestant, after service in the First World War he embraced the cause of Irish independence. He also advanced the social credit id ...
,
Storm Jameson Margaret Ethel Storm Jameson (8 January 1891 – 30 September 1986) was an English journalist and author, known for her novels and reviews and for her work as President of English PEN between 1938 and 1944. Life and career Jameson was born in ...
, Eimar O'Duffy,
Sybil Thorndike Dame Agnes Sybil Thorndike, Lady Casson (24 October 18829 June 1976) was an English actress whose stage career lasted from 1904 to 1969. Trained in her youth as a concert pianist, Thorndike turned to the stage when a medical problem with her ...
,
Bonamy Dobrée Bonamy Dobrée (2 February 1891 – 3 September 1974), British academic, was Professor of English Literature at the University of Leeds from 1936 to 1955. Dobrée declared himself a Channel Islander, and was rather proud that both his Bona ...
,
Eric de Maré Eric de Maré (1910 – 2002) was a British photographer and author, described as one of the greatest British architectural photographers. Biography Eric de Maré was born in London on the 10 September 1910, the second son of Swedish paren ...
and the American publisher
James Laughlin James Laughlin (October 30, 1914 – November 12, 1997) was an American poet and literary book publisher who founded New Directions Publishing. Early life He was born in Pittsburgh, the son of Henry Hughart and Marjory Rea Laughlin. Laughlin ...
.
Hilaire Belloc Joseph Hilaire Pierre René Belloc (, ; 27 July 187016 July 1953) was a Franco-English writer and historian of the early twentieth century. Belloc was also an orator, poet, sailor, satirist, writer of letters, soldier, and political activist. ...
and G. K. 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 Anson Heinlein (; July 7, 1907 – May 8, 1988) was an American science fiction author, aeronautical engineer, and naval officer. Sometimes called the "dean of science fiction writers", he was among the first to emphasize scientific accu ...
described a social credit economy in his 2003 posthumously published first novel written in 1938, '' For Us, The Living: A Comedy of Customs'', and his 1942 novel ''
Beyond This Horizon ''Beyond This Horizon'' is a science fiction novel by American writer Robert A. Heinlein. It was originally published as a two-part serial in ''Astounding Science Fiction'' (April, May 1942, under the pseudonym Anson MacDonald) and then as a sin ...
'' 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 1979 ''
Schrödinger's Cat Trilogy The ''Schrödinger's Cat Trilogy'' is a trilogy of novels by American writer Robert Anton Wilson consisting of ''The Universe Next Door'' (1979), ''The Trick Top Hat'' (1980), and ''The Homing Pigeons'' (1981), each illustrating a different int ...
'',
Robert Anton Wilson Robert Anton Wilson (born Robert Edward Wilson; January 18, 1932 – January 11, 2007) was an American author, futurist, psychologist, and self-described agnostic mystic. Recognized within Discordianism as an Episkopos, pope and saint, Wilso ...
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 finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distin ...
(in order to mollify the banking industry) and which eventually expire (to prevent inflation and hoarding). 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 Guild socialism is a political movement advocating workers' control of industry through the medium of trade-related guilds "in an implied contractual relationship with the public". It originated in the United Kingdom and was at its most influent ...
''.


See also

*
Basic income Universal basic income (UBI) is a social welfare proposal in which all citizens of a given population regularly receive an unconditional transfer payment, that is, without a means test or need to work. It would be received independently of ...
*
Citizen's dividend Citizen's dividend is a proposed policy based upon the Georgist principle that the natural world is the common property of all people. It is proposed that all citizens receive regular payments ( dividends) from revenue raised by leasing or taxin ...
*
Distributism Distributism is an economic theory asserting that the world's productive assets should be widely owned rather than concentrated. Developed in the late 19th and early 20th centuries, distributism was based upon Catholic social teaching prin ...
*
Monetary reform Monetary reform is any movement or theory that proposes a system of supplying money and financing the economy that is different from the current system. Monetary reformers may advocate any of the following, among other proposals: * A return t ...
*
Social democracy Social democracy is a political, social, and economic philosophy within socialism that supports political and economic democracy. As a policy regime, it is described by academics as advocating economic and social interventions to promote s ...
*
Social dividend The social dividend is the return on the capital assets and natural resources owned by society in a socialist economy. The concept notably appears as a key characteristic of market socialism, where it takes the form of a dividend payment to eac ...
*
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'' is measured at one specific time, and represents a quantity ...
*
Surplus value In Marxian economics, surplus value is the difference between the amount raised through a sale of a product and the amount it cost to the owner of that product to manufacture it: i.e. the amount raised through sale of the product minus the cos ...
*
Welfare state A welfare state is a form of government in which the state (or a well-established network of social institutions) protects and promotes the economic and social well-being of its citizens, based upon the principles of equal opportunity, equita ...


Notes


Further reading

* ''Economic Democracy'', by
C. H. Douglas Major Clifford Hugh "C. H." Douglas, MIMechE, MIEE (20 January 1879 – 29 September 1952), was a British engineer and pioneer of the social credit economic reform movement. Education and engineering career C.H. Douglas was born in either Edg ...
(1920) new edition: December 1974; Bloomfield Books; * ''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,


Fiction and poetry

* '' For Us, The Living: A Comedy of Customs'', by
Robert A. Heinlein Robert Anson Heinlein (; July 7, 1907 – May 8, 1988) was an American science fiction author, aeronautical engineer, and naval officer. Sometimes called the "dean of science fiction writers", he was among the first to emphasize scientific accu ...
* ''
Beyond This Horizon ''Beyond This Horizon'' is a science fiction novel by American writer Robert A. Heinlein. It was originally published as a two-part serial in ''Astounding Science Fiction'' (April, May 1942, under the pseudonym Anson MacDonald) and then as a sin ...
'', by
Robert A. Heinlein Robert Anson Heinlein (; July 7, 1907 – May 8, 1988) was an American science fiction author, aeronautical engineer, and naval officer. Sometimes called the "dean of science fiction writers", he was among the first to emphasize scientific accu ...
* '' The Cantos'', by
Ezra Pound Ezra Weston Loomis Pound (30 October 1885 – 1 November 1972) was an expatriate American poet and critic, a major figure in the early modernist poetry movement, and a Fascism, fascist collaborator in Italy during World War II. His works ...


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 book "The Monopoly of Credit"

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

Hilderic Cousens, "A New Policy for Labour; an essay on the relevance of credit control" at American Libraries

Bryan Monahan, "Introduction to Social Credit"

M. Gordon-Cumming, "Money in Industry"


– online library
The Green Shirt Movement for Social Credit Social Credit Party of Great Britain archives

Social Credit School of Studies

Social Credit Secretariat

Social Credit Website

Clifford Hugh Douglas Institute

Catalogue of the social credit publications collection
held at the
Modern Records Centre, University of Warwick The Modern Records Centre (MRC) is the specialist archive service of the University of Warwick in Coventry, England, located adjacent to the Central Campus Library. It was established in October 1973 and holds the world's largest archive collecti ...
{{Authority control Schools of economic thought Monetary economics Political philosophy