"Under the present system of unregulated currency and credit, administered in their own interests by international groups of financiers and super-industrialists, the cost of living in terms of intensity of effort will rise, and the standard of life measured in terms of security, leisure and freedom will fall until the crash comes."The present economic crisis has brought into sharp focus the inherent faults in capitalism and especially the grip that the banking and financial system has on our lives. We all know it is the bank's fault yet since getting into power our present Conservative government has shifted the blame solely onto us: the ordinary people. We are offered only one solution to the crisis of capitalism: more capitalism. Here 'Right' and 'Left' are just alike because they both have the same master. Whether it is austerity and cuts or ever more debt, the result is always financial slavery.
Almost 100 years ago an alternative to this was mapped out by a renegade economist named Major Douglas. His system of Social Credit grew out of the Guild Socialist movement and was first championed by the leading socialist journal of the day. Since then his ideas have been misinterpreted, dismissed and forgotten. There are parallels, however, with the renewed interest in Basic Income schemes but Social Credit is a more advanced albeit more complicated theory. The problem of misinterpretation comes from viewing Social Credit as an addition to the present financial system of exploitation and competition rather than as a completely alternative system rooted in Guild Socialist philosophy. Social Credit will never save capitalism from itself, just as syndicalism and true socialism cannot exist within the present financial system. Its design is to replace capitalism.
The whole economic system is dominated by the banks and, consequently, they dominate the lives and destinies of the people, and dictate the policies of governments. History proves this conclusively. Capitalism functions almost entirely on loans from the banking system. The banks have discretionary powers to call in these loans and overdrafts and can exercise this power with disastrous effects on the whole community. The banks only lend money as a repayable interest-bearing debt and hold rights over the assets of the borrower. In this way the banks maintain complete economic control over our individual and social lives.
Social Credit theory rests on the truth that human beings are capable of all they are presently capable of without and despite of money and the banking system. In fact our energies (or 'real credit' as oppose to 'financial credit') is held back and misdirected by the constraints of finance and the profit motive. Socially useful services are shut down because they don't make anyone rich. We are herded into useless and demeaning jobs that serve no real purpose just as a means to survive. It makes 'economic sense' to import goods that could easily be made here even though this is ecological insanity. Douglas argued that profit is is in fact the right not only of labour but of our shared inheritance of past inventions and the accumulation of technological innovations.
The remedy to the current misery then is that the monopoly of banking credit must be terminated, and the right to issue and control all money and credit be vested in the people as a whole. Savings should not be diverted from their proper function, i.e., purchasing power. Money and credit should be a means of distribution only, and not a commodity to be bought and sold at interest. Provision of purchasing power must be made for those not employed or displaced from industry by labour-saving machinery. We have the right to increased leisure, not increased suffering from technological advancement.
The first step to achieving all this will be the establishment of a People's Credit Authority to take complete control of the money system. This would restore money power to the people and do away with the monopoly of credit by private interests. With increases in national wealth there would be a considerable credit balance in every accounting period, representing the profit of national appreciation of wealth over national depreciation. Credit would be issued against the profit balance to establish an equation between purchasing power and prices and pay a National Dividend to all. Once we have established the control of our national credit, the power to do things would no longer be determined by money conditions. Under Social Credit, "WHAT IS PHYSICALLY POSSIBLE IS FINANCIALLY POSSIBLE."
To implement a Social Credit policy and ensure co-operation, individual Guilds would join the National Guilds League to trade on mutually agreed margins of profit that would be high enough to encourage ample production, but not high enough to permit exploitation. This arrangement would control prices in a more scientific way than the present method of price fixing. This would ensure that the credit issued against the profit balance would not only increase purchasing power, but, at the same time, reduce prices. Supposing the price of an article was £8, and the purchasing power available was £5. The disparity is £3. Credit could be issued to reduce the price by £1.50 and to increase the purchasing power by £1.50. Purchasing power and prices would then be £6.50.
Although Social Credit attracted a great deal of attention from workers, intellectuals and artists in the 1920s and 30s, it was predictably attacked by the capitalists but also by leading figures in the socialist movement. Guild socialism had by this time all but completely lost out to Fabian socialism. Whereas the Guildsmen believed in a socialism from below and administered by the people, the Fabians represented an elite that wished to use capitalist growth economics to redistribute wealth through tax and nationalisation on their own terms 'for the people'. The result, as in Marxism too, is a lack of political freedom and the maintenance of wage slavery. Sadly the British Left has stuck firmly to this false and contradictory strategy ever since.