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.
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| 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.
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| 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.
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| 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.
#30#
