Social credit

from Wikipedia, the free encyclopedia

Social credit is an economic theory that developed into a social movement in the 1920s . The Canadian Social Credit Movement was its most prominent branch, but the ideas had success in several other countries as well. One of these countries was New Zealand , where the Social Credit Political League won two seats in parliament with 20.7% of the vote. In England , the Kindred of Kibbo Kift , a spin-off from the Boy Scout Movement , first became the Green Shirt Movement for Social Credit , which a little later changed its name to the Social Credit Party of Great Britain and Northern Ireland .

The economic theory of social credit was developed by the Scottish engineer Clifford Hugh Douglas . The name Social Credit comes from his desire to achieve social progress through the monetary system (Credit).

Social Credit Theory

The theory of social credit assumes that the amount of money available is insufficient to pay a realistic price, since in the capitalist economic system it is always lower than the total cost of the goods produced. Douglas demonstrated this fundamental flaw using his "A + B theorem", which states that the total price charged for all goods must be at least as large as the sum of A and B, where A stands for all payments, which reach the consumers within a society (e.g. salaries, dividends and bank interest), and B for the expenses that the producer does not pass on to the consumers (this includes e.g. the depreciation costs for buildings and machines). Since the consumers only have the amount of money A available, it is impossible to pay the total price (A + B).

According to Douglas, several things happen to maintain this system:

  • People go into debt by buying on credit .
  • The government takes out loans and increases the national debt .
  • The economy lends money to the banks to finance its expansion.
  • Companies sell below their manufacturing cost and go bankrupt .
  • A state wins a trade war and forces other countries to go into debt through its export surplus .
  • A state wages a “hot” war in which goods such as tanks and bombs are “exported” to enemy territory without expecting payment for them. He finances this through government borrowing.

If these things don't happen, “companies will be forced to lay off workers, unemployment will rise, the economy will stagnate, taxes will not be paid, the government will cut your benefits, and we will experience widespread poverty when we could all actually live in prosperity . "

Douglas believed that social credit could solve this problem by ensuring that enough money (credit) was always spent to buy all the goods produced. Its solution was summarized in three key requirements:

  1. A National Credit Office should use statistics to calculate the amount of credit in society.
  2. A price regulation mechanism should siphon off speculative profits in the event of inflation and repay them to the population in the form of subsidized prices if the total cost of the goods available on the market exceeds the amount of money available.
  3. As a "national dividend", a guaranteed basic income should be paid to all people , regardless of whether they work or not.

Douglas explained that his third request made sense because automation and mechanization would have reduced the number of workers and the length of time needed to manufacture the goods.

Douglas' ideas were very popular during the Great Depression, but were never implemented.

Criticism of Social Credit

Almost all of the critics of social credit point out that it would encourage inflation. Gary North rates the plan to prevent inflation as socialist . He also makes moral arguments, including that God created man to work for his daily needs.

In addition, North makes several practical arguments, all of which concern the rationale for Douglas' plan. First, the existing consumer debt would destroy the theory. Second, the A + B theorem would ignore the fact that all monetary payments ultimately go to individuals. Thirdly, he notes that the system of guaranteed income does not ensure the constant circulation of money either. Finally, North proposes to ban the “fractional money reserve” system without introducing social credit at the same time. He explains that such a system without private cash reserves does not have any of the deficiencies cited by Douglas.

Groups influenced by social credit

Australia

Canada

New Zealand

Great Britain

literature

  • Bob Hesketh: Major Douglas and Alberta Social Credit . ISBN 0802041485
  • Alvin Finkel: The social credit phenomenon in Alberta . Univ. of Toronto Pr., Toronto 1989. ISBN 0-8020-5821-3
  • Stan Persky: Fantasy government: Bill Vander Zalm and the future of social credit . New Star Books, Vancouver 1989. ISBN 0-919573-98-3
  • Frances Hutchinson, Brian Burkitt: The political economy of social credit and guild socialism . Routledge, London 1997. ISBN 0-415-14709-3

Web links

This article is based on the translation of Social credit from Wikipedia in the version dated December 17, 2004.