Social Credit Views

Social Credit is the brainchild of Major C. H. Douglas. During World War l, he was asked to sort out some problems at an aircraft factory in Farnborough and came across a discrepancy in their books. The factory generated costs at a much greater rate than it made available incomes to people. Thinking this curious, Douglas investigated a hundred or so British companies to discover that this imbalance was a general feature of modern industry. Wages, salaries and dividends paid to people by a factory, or other productive undertaking, were nearly always only a portion of total prices for goods made available by the same factory. This perplexed him because it guaranteed a quantity of goods that could not be sold, and what was the point of expending energy on making something that couldn’t, for financial reasons, be consumed?

Systems that aim to organise people can be placed into one of two groups; systems that limit peoples' freedoms and those that increase them. The latter philosophy is the foundation of the Social Credit movement conceived by the Anglo-Scottish Engineer Major Clifford Hugh Douglas.

Just last year, the Bank of England openly admitted that the private banks are responsible for creating the bulk of the money supply out of nothing. This is significant, because although the truth about the bank creation of money has been floating around in the public forum for at least the last one hundred years (largely due to the efforts of C.H. Douglas and others), some bankers and economists have denied this reality (while others, like Reginald McKenna, have been quite open about it) [1]. Even today, there are many people, including many politicians, who are blissfully unaware and/or seriously misinformed regarding the origin of our money supply.

At the height of the Great Depression, the founder of the Social Credit movement, Major Clifford Hugh Douglas (1879-1952), described the proposal for a National Dividend in the following terms:

As I tried to show in my recent blog entry on “Social Credit and Usury”, the claim that usury, defined as the charging of interest on loans, is THE problem and that Social Credit means nothing more than “usury-free money” is a serious but all too common misrepresentation of the Social Credit diagnosis and remedial proposals.

The founder of the Social Credit movement, Major Clifford Hugh Douglas (1879-1952), correctly discerned the cause of our perennial economic difficulties and also developed a series of proposals to effectively deal with the  underlying problem.

The modern, industrial economy (and civilization at large) is in dire need of a Copernican-style transformation: society’s financial credit must be subordinated to its real credit. The Social Credit monetary reform provides both the policy and the appropriate mechanisms to make this superior possibility a reality.

     As interest in the economics of Social Credit grows, it is important to provide people with accurate and comprehensive summaries of C.H. Douglas' analysis and remedial proposals. In what follows, I will outline in seven points the salient features of the Social Credit approach to economic questions.

In a blog entry that is well worth reading entitled "What Choice Do We Have?", Charles Hugh Smith discusses the extreme and ever-increasing income inequality that characterizes economic life in the modern world (amongst other closely related issues):

One of the most common misunderstandings where Social Credit is concerned is the notion that the Social Credit diagnosis can be adequately summarized along the following lines: "The problem with the existing financial system is that the banks create money out of nothing in the form of bank credit and then proceed to charge interest on the money that they loan out. Unfortunately, they do not create the money to pay the interest and this leads to a continual build-up of unrepayable debts, etc., etc." This popularized interpretation of Social Credit is erroneous.

Although I disagree profoundly with Walter Russell’s ‘New-Agey’ worldview and spirituality, I think that he was on to something when he claimed that the very essence of the created universe consists in ‘rhythmic balanced interchange’. In a similar vein, I think that the type of changes envisaged by a Social Credit monetary reform (in clear contradistinction to all other monetary reform proposals) may be duly encapsulated in terms of ‘distributive self-liquidating balance’. Let us examine each of these elements in turn and in reverse order.

It seems that more and more people in various countries are starting to take proposals for the introduction of a basic income quite seriously.

The following review of my booklet The Economics of Social Credit and Catholic Social Teaching was recently published by James Reed in Australia:

One of the chief misapprehensions under which newcomers to the subject often labour is that 'Social Credit' must be some form of socialism because, after all, the phrase encompasses the word ‘social’. So that there may be no confusion, let it be made clear that in spite of the appearance of the word ‘social’ in ‘Social Credit’, Social Credit is not only not socialistic but decidedly anti-socialist.

Some time ago, I had the following conversation with a loans officer from a major Canadian bank:

Wally: When you issue these loans to borrowers you create the money out of nothing, don't you?

A few days ago, a friend of mine brought my attention to an article that had been published just recently in Crisis Magazine. The article was entitled “Why Leisure is the Remedy for Sloth”:

One of the key aspects, if not the key aspect, of the Social Credit analysis of financial and hence economic dysfunction has to do with the chronic and underlying deficiency in consumer purchasing power

As this is the inaugural blog entry for 'The Clifford Hugh Douglas Institute for the Study and Promotion of Social Credit’, it seemed fitting to deal upfront with the central question which invariably preoccupies the minds of most newcomers to the subject: what exactly is Social Credit?