Social Credit Theory Later Versions Of Social Credit Theory

Social Credit was originally an economic theory developed by Scottish engineer Major C. H. Douglas. The name Social Credit came from his desire to make the betterment of society (Social) the goal of the monetary system (Credit).

1 Theory

Social Credit theory proposes that because the amount of money available under capitalism is necessarily lower than the total cost of goods produced, there will always be insufficient money to pay a realistic, sustainable price. He demonstrated this fundamental flaw with his A+B theorem, which states that if A is the payments made to all the consumers in the economy (through wages, dividends, and interest paid to banks) and B is the payments made by producers that are not eventually paid out to consumers (such as the overhead cost s of buildings and equipment as they wear out) then the price charged for all goods must be at least A+B — an impossibility since only A is available to spend.

For such a system to sustain itself Douglas asserted that a number of things must happen:

If these things don't happen "businesses are forced to lay off workers, unemployment rises, the economy stagnates, taxes go unpaid, governments cut back services, and we have widespread poverty, when physically all of us could be living in plenty."

Douglas believed that Social Credit could fix this problem by ensuring that there was always enough money (credits) issued to buy all the goods that could be produced. His solution is outlined in three core demands:

The engineer argued that this last demand makes sense now that automation and labor-saving devices have reduced the number of workers we need to produce our goods, and the hours they would have to work.

Douglas' ideas enjoyed great popularity during the depressionThe Great Depression was a global economic slump that began in the United States following Black Thursday, the Wall Street panic of October 1929. On October 24, 1929, share prices on Wall Street collapsed catastrophically, setting off a chain of bankruptc, although not enough to realize his plan.

2 Later Versions of Social Credit Theory

Robert A. HeinleinRobert Anson Heinlein ( July 7, 1907 May 8, 1988) was one of the most influential authors in the science fiction genre. He developed new themes, new techniques and approaches. He became the first science fiction writer to break into major general magazine described a Social Credit economy in his first novel, For Us, the Living (published in 20032003 is a common year starting on Wednesday (link will take you to calendar), and also: The International Year of Freshwater The European Disability Year Summary Perhaps the defining global event of the year 2003 was the Invasion of Iraq launched by the U , but apparently written ca. 1939). (Beyond This Horizon describes a similar system, but in less detail.) The society in the book uses a libertarian method to prevent inflation: the government makes a deal with business owners. Instead of increasing prices, they cut prices, and the government (or the Bank of the United States) pays them the difference after seeing their sales receipts. Like the guaranteed income or heritage checks, this money comes out of the inkwell. The government no longer uses taxation to fund itself. The characters point out that present "fractional reserve" law allows banks to create money (by loaning out many times more money than they have on hand), while in Heinlein's future society only the US government can create US currency. Robert Anton WilsonRobert Anton Wilson or R. born January 18, 1932) is a futurologist, libertarian, and author of the Schrodinger's Cat trilogy ( 1979), a complex spoof of conspiracy theories. He also co-authored (with Robert Shea) the Illuminatus trilogy ( 1975), which hum proposed another form of Social Credit. His plan aims to end "wage slavery", and begins by offering a reward to any worker who designs him-or-herself out of a job. The guaranteed income (or, in the Schrodinger's Cat Trilogy, a lesser reward to all other workers who "lose" their jobs to innovation) would prevent starvation. This income would consist of "trade aids" which would lose numerical value with the passage of time. This official reduction in value would encourage spending and (although Wilson does not state this explicitly) limit price inflation. Elsewhere RAW attributes this strategy to Silvio GesellJean Silvio Gesell ( March 17, 1862 March 11, 1930) was a merchant and finance theoretician. He founded the Freiwirtschaftslehre (doctrine of free economy). In 1906 he wrote his most famous book, The Natural Economic Order''. He was born in Sankt-Vith, Be, who also suggested the government encourage small communities to experiment with alternate economic models. If one of these enclaves seemed especially successful, the country could copy their model in place of Gesell's own plan.

3 Arguments

Many if not all critics of Social Credit have argued that it would cause inflation. Gary NorthGary North is one of the major writers and publishers of the Christian Reconstructionist movement. He is the son-in-law of R. Rushdoony, one of the movement's founders. Christian Reconstructionists are postmillennialists, meaning they believe that Christ (who wrote a book on Social Credit and allowed it to be placed online) addresses Douglas's plan to stop inflation, but calls it socialistic. He also adds moral arguments, such as the claim that GodThis article focuses on the concept of singular, monotheistic God . See deity, gods, or goddesses for details on divine entities in specific religions and mythologies. God is a term referring to the supreme being generally believed to be ruler or creator intends us to work for our survival.

North makes several practical arguments as well (beyond the threat of inflation), all concerning the justification Douglas offered for his plan. First, he states that the fact of consumer debt destroys Douglas's theory. Second, he says the A+B Theorem ignores the fact that all payments go to individuals. Third, he asserts that if the current system causes a break in the flow of purchasing power, so will the guaranteed income payments. Lastly, North proposes that we outlaw fractional reserve banking without instituting Social Credit. He says a 100% reserve free market system would not have any of the flaws Douglas points out.

Heinlein's presentation contains a modified A+B theorem, stressing the argument that all savings remove money from circulation. Wilson does not seem to mention this justification for the plan, stressing instead that the plan (in his view) would end poverty, taxation and wage slavery.

4 See also

Social Credit Party of CanadaThe Social Credit Party of Canada was a political party in Canada. It was the federal wing of the Canadian social credit movement. A Western Protest Movement: 1935-1961 When first formed in 1935, Social Credit took many voters from the Progressive Party o
Social Credit Party (New Zealand)
Ralliement créditiste
Manitoba Social Credit Party
Alberta Social Credit Party
British Columbia Social Credit Party
Prosperity Certificate

Political theories

5 Further Reading

Mondo Politico Library's presentation of Clifford Hugh Douglas' book, Social Credit (full text, formatted for easy on-screen reading)

Major Douglas and Alberta Social Credit by Bob Hesketh BooksEnthsiast.com
http://www.alor.org/Library1.htm Australian League of Rights online library

Guido Giacomo Preparata - Major Douglas in the witness box

The Green Shirts in 1930's England

<Hide>

Home > Social Credit