What with all the research we’ve done with finding out about social credit (including obtaining two of Major Douglas’s most important books, Economic Democracy (1920) and Social Credit (1924, 1933), we still don’t have a snappy definition of what social credit is, but we’ve managed to put together a brief précis of the program.
|Georg Friedrich Knapp|
Douglas’s idea was to supply everyone with consumption income by issuing and distributing new money backed by the general wealth of the nation. The principles involved integrate an understanding of money and credit rooted (like the monetary ideas of Keynes) in the principles of the Currency School, most closely the “chartalism” of Georg Friedrich Knapp that has evolved into “Modern Monetary Theory.”
The idea (if not the explanations and rationale) of social credit is relatively simple. “The people” through the government are the ultimate owner of everything except land. This is justified on the grounds that technology derives from the accumulated heritage of knowledge that belongs to the human race as a whole, not to any particular individual or group.
Thus, the marketable goods and services produced by non-land capital — the fruits of ownership — are construed as the product of the accumulated knowledge of civilization, the common heritage of mankind. Accordingly, the substance of private ownership (enjoyment of the fruits) for non-land capital belongs to everybody. This would be distributed to everyone as a “national dividend” by manipulating the currency, i.e., issuing money backed by the faith and credit of the government, not private sector hard assets as in the Banking School.
The problem, of course, is that Douglas confused principle and application. Yes, anybody can “own” knowledge, and all knowledge “belongs” to the human race as a whole, but the individual or group that owns the application of knowledge is the one or ones that applied it. This is why, for example, you can’t patent or copyright an idea, just a particular application or expression of an idea.
Douglas’s idea also directly contradicts the main principle of georgist socialism, which maintains that human artifacts, as they result from human labor, are the only thing that can be owned. Social credit would allow private title to both land and non-landed (chattel) capital, which Henry George rejected.
|Leo XIII: community of property is the main tenet of socialism.|
Social credit would thereby abolish private property in non-land capital by making individual ownership of the means of production meaningless, an empty shell. The theory would implement “community of goods” (what Pope Leo XIII called “the main tenet of socialism”) by the simple expedient of changing the definition of property (Keynes’s “re-editing the dictionary”) and transferring everything that truly constitutes property in non-land capital, the usufruct, to the community at large.
What makes trying to track all this down was Douglas’s fondness for setting out his idea in extended and complicated sentences that reduce the reader’s ability to grasp easily his intricate explanations of this relatively simple idea. Other writers put forth his ideas and elaborate on them with a relative conciseness, however, that leaves little room for misunderstanding the ideas behind social credit — or for obscuring the system’s flaws.
The main purpose of modern commentators on Douglas’s idea seems to be the construction of a synthesis between Catholic social teaching and social credit. They attempt to demonstrate that social credit and Catholic social teaching are virtually indistinguishable, if not identical.
|What this country needs is a good, five-cent economist.|
In this, all these commentators succeed in doing is to demonstrate in the most graphic manner possible that they do not understand the real and fundamental differences between Catholic social teaching and social credit. They do not understand the institution of private property, which the Church has declared must be regarded as “sacred and inviolable.” Nor do they recognize the fundamental conflict between respect for human dignity, solidarity and subsidiarity, and a society in which the creation and distribution of purchasing power is almost completely in the hands of the government.
That is, private wealth would not be confiscated directly, as would be the case for income from land under georgism, and from all capital under most forms of socialism, but indirectly by emitting irredeemable bills of credit backed by the faith and credit of the government. This is an assumption of State ownership/control, but all the more dangerous for being subtle and indirect.