Social Credit

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= a proposal for the creation and distribution of money, the philosophy behind it and the movement(s) in favor of it


1. From the Wikipedia:

"Social Credit is an economic philosophy developed by C. H. Douglas (1879–1952), a British engineer, who wrote a book by that name in 1924. Social Credit is described by Douglas as "the policy of a philosophy"; he called his philosophy "practical Christianity". This philosophy is interdisciplinary in nature, encompassing the fields of economics, political science, history, accounting and physics. Assuming the only safe place for power is in many hands, Social Credit is a distributive philosophy, and its policy is to disperse power to individuals. Social Credit philosophy is best summed by Douglas when he said, "Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic."

According to Douglas, the true purpose of production is consumption, and production must serve the genuine, freely expressed interests of consumers. Each citizen is to have a beneficial, not direct, inheritance in the communal capital conferred by complete and dynamic access to the fruits of industry assured by the National Dividend and Compensated Price.[3] Consumers, fully provided with adequate purchasing power, will establish the policy of production through exercise of their monetary vote.[3] In this view, the term economic democracy does not mean worker control of industry.[3] Removing the policy of production from banking institutions, government, and industry, Social Credit envisages an "aristocracy of producers, serving and accredited by a democracy of consumers."

The policy proposals of Social Credit attracted widespread interest in the decades between the world wars of the twentieth century because of their relevance to economic conditions of the time. Douglas called attention to the excess of production capacity over consumer purchasing power, an observation that was also made by John Maynard Keynes in his book, The General Theory of Employment, Interest and Money. While Douglas shared some of Keynes' criticisms of classical economics, his unique remedies were disputed and even rejected by most economists and bankers of the time. Remnants of Social Credit still exist within Social Credit parties throughout the world, but not in the purest form originally advanced by Major C. H. Douglas." (


"let us define the words “social credit”: instead of having money created by the banks at interest – a banking credit, one would have money created without interest by society – a social credit. The Social Credit system aims at nothing but to have money be the exact financial expression of economic realities. So there is no question whatsoever in Social Credit of issuing or printing money anyhow, without limits and in an irresponsible way (as the Financiers would like the population to think). Here is what is actually proposed by the Social Crediters: The Government would appoint a commission of accountants, an independent organism called the “National Credit Office”, that would be charged with setting up an accurate bookkeeping as regards our currency: money would be issued as new goods are made, and be withdrawn from circulation as these goods are consumed. Thus there would be a constant balance between the capacity to produce and the capacity to pay, between prices and purchasing power." (

3. Anthony Migchels:

"Social Credit is a debt free unit printed by the Government, but handed over to the populace, the same amount for every individual, to have them spend it into circulation. It would amount to a basic income. While printed by Government, it clearly does not empower Government but the individual. Such a scheme also would not require heavy handed laws, simply because the populace would have a great incentive to accept this unit: they would get paid to do so!" (


Anthony Migchels:

"Social Credit was developed by Major Clifford Hugh Douglas, who penned a book with the same name in 1924.

Its major breakthrough in terms of economic understanding is the so called ‘Gap’ or the A + B theorem. This refers to the gap between total income and total value of production. The latter being always higher than total income. As a result, society never has enough income to mop up all of its own production. Not only does this lead to depressed economies and to ever mounting debt to compensate for this lacking purchasing power, it also creates a strong incentive for corporations to look for markets elsewhere.

The Gap is a crucial notion. It is undeniably true that there is a structural lack of purchasing power in the economy. This is fundamental part of structural unemployment, for instance. Please see the diagram below the article for quantification of the gap.

Douglas also noted another trend in the economy: automation. He foresaw a time when many people were basically no longer necessary in the production process. These people are called the useless eaters by our masters, but Douglas, being a real human being, understood that production serves consumption and that the economy exists to feed the people, not the other way around.

To solve the problem he came up with an eminently practical and simple solution: let the Government print debt-free money to be spent into circulation by the people. Everybody should get an equal amount of money, whatever their income or asset position. The amount of money to be printed should equal the lack of purchasing power in the economy. If this is done correctly, it could be done with stable prices: the inflation in terms of a growing money supply would serve to buy up production for which there are insufficient funds available and thus would not lead to price pressures.

In this way Social Credit is associated with a Basic Income or National Dividend, both of which, incidentally and surprisingly, were supported by Mont Pelerin Alumni von Hayek and Milton Friedman.

Social Credit gained a lot of attention in the 1930′s, throughout the dominions of the British Empire (the white colonies) and the Axis powers." (

More Information

See also the related movements:

  1. Distributism
  2. Binary Economics

Book: In This Age of Plenty,