Social Credit is Economic Democracy

Since the beginning of MICHAEL, the financial proposals of the Scottish engineer Clifford Hugh Douglas have been known as Social Credit. Unfortunately, since 2020, a citizen scoring system has emerged in Communist China, also called social credit, but it is entirely the opposite of what Douglas and Vers Demain propose. To avoid any confusion, we prefer to use the term Economic Democracy to refer to Douglas's proposals. In the following article, Louis Even explains that money can be compared to a voting right—people "vote" with their money for the products they desire—so one can truly say that this is a form of economic democracy.

by Louis Even

Clifford Hugh Douglas created the doctrine and propositions of Social Credit which were published in his first book on the subject in November 1919, entitled Economic Democracy. It was only at a later date that his philosophy became known as Social Credit. Both terms are compatible with Douglas' economic doctrine. The crux of the principles are that society's credit, i.e. social credit, can be monetized to serve society and its members rather than indebting and impoverishing them. Social Credit would embody democracy in the realm of economics.

Demos, Kratos

The term democracy derives from the Greek words demos, the people and kratos, power. The word democracy conjures the ideas that government is'for the people' and that the people freely choose their leaders, delivering their expectations pertaining to the management of public affairs to those same leaders.

Yet, for a great number of people, democracy signifies civic elections in which representatives are chosen for a given term. For these people, the pinnacle of democracy is achieved when suffrage is universal, or at least when all adults have the right to vote. The evidence they cite is that universal suffrage, in the form of the vote, is proof that 'the people' have representation and evidence of their 'power' is that they direct public policy, by way of articulating their expectations.

We define political democracy to include the vote and obedience to the will of the people by elected representatives. The word democracy can be transposed to the sphere of economics and a perfect fit will be found in Social Credit.

The economic sphere

The economic sphere is made up of both society's needs and the goods required to satisfy those needs. Economic activity is concerned with the production and distribution of products and services in both the private and in the public domain.

In the political sphere, the citizen expresses his will and anticipates results from the government and other public institutions.

In the economic sphere, the consumer expresses his needs to the various sectors of the productive system. He seeks food from the food production sector ; clothes from textile manufacturers ; housing from the building trades, relief from sickness from the health care system, and so on.

The productive system is the sum of all the activities that create goods and services. It is the embodiment of a society's productive capacity.

The consumer secures what he seeks when he has money. We say that money is purchasing power ; it is the power to pay for goods and services.

Productive capacity makes it possible to provide goods. Purchasing power makes it possible to obtain these goods.

Productive capacity without purchasing power

If the productive capacity fails, the capacity to pay is without purpose. Even a gold bullion would not buy a loaf of bread at the North Pole where there is neither bread for sale nor the possibility to grow wheat.

On the other hand, if the capacity to pay does not keep in step with the productive capacity, production will stop and goods will be unsold. This will happen even if society's needs are not met. Families who need goods but lack purchasing power must do without, even when goods are available within a walking distance from their homes, or when they could easily be made available. Needs can be dramatic and extreme but they will not be met unless people can pay to satisfy them.

In this case, human needs no longer determine economic activity. It is the presence or absence of money that dictates all decisions.

This is called a financial dictatorship ; a dictatorship by money.

In economics, as in politics, dictatorship is the opposite of democracy. Economic democracy is absent when the individual cannot obtain the goods which he has a right to expect. Can we say that people are treated democratically when, because they cannot pay, they must go without in the midst of plenty ?

Capacity to pay adjusted to productive capacity

A country which considers itself to be a democracy and yet accepts financial dictatorship has a curious definition of democracy. The tyranny of money bears down heavily in the lives of individuals and families. The money dictatorship weighs on the administration of our public institutions. A government that allows this is hardly a democratic government even if its origin can be traced back to a ballot box. It is, rather, a government in bondage and at the service of a dictatorship.

Under a Social Credit system the capacity to pay would be in accordance with the nation's productive capacity.

The country's productive capacity would no longer be constricted by a lack of money. The capacity to pay would be adjusted to the productive capacity. Needs would be met because purchasing power would be congruent with productive capacity.

We would no longer see people's needs unmet while goods are available. The productive capacity would no longer be subjected to the capacity to pay. The capacity to pay would be adjusted upwards to meet the productive capacity.

This defines true economic democracy. The consumer would have the goods and services he has the right to expect to conduct a normal life to the extent of the nation's productive capacity.

Economic suffrage

Economic democracy would be universal and extend to all citizens of every age and in every situation. Economic suffrage, exercised on a daily basis by all citizens, would thus be more universal than political suffrage.

Economic suffrage would be exercised through the medium of a true 'economic ballot', the dollar bill. These ballots would not be used to choose political representatives but to choose products.

Each dollar is a ballot allowing the bearer to 'vote' for $1 of products or services of their choosing. The greater the number of economic ballots means a greater variety, quantity and quality of products can be selected by the 'voter'.

In order to achieve universal economic suffrage, each person, in his role as a consumer, must own sufficient ballots to allow him to 'vote' for the goods of his choice.

Social Credit achieves this by giving a basic income to each individual irrespective of criteria such as age, sex, occupation, skin color, or religious and political beliefs.

This basic income allows each person to draw upon the productive capacity of a nation to a degree sufficient to meet basic needs. It is unacceptable that any citizen should want for the necessities of life in a country where an overabundance of production is possible.

In the vocabulary of Social Credit, the eligibility for this basic income, or social Dividend, is the sole condition that one be a citizen of the nation or province, depending on whether the issuing jurisdiction is national or provincial. The Dividend is the true instrument of universal economic freedom.

Money earned as salaries, fees, profits or industrial dividends are also economic ballots but they are contingent. Salaries are tied to paid work. However, not everyone can be employed, including children, the disabled and elderly, homemakers and former workers displaced by automation.

Social Credit is the most advanced form of economic democracy and the universal Dividend is the only economic ballot that is truly democratic.

Social Credit takes nothing away from private initiative or free enterprise. The economic ballot demands results — goods must meet needs. It does not interfere with the methods of production and acknowledges the efficiency of today's methods. However, the current system of finance hinders efficiency and utility. If money, or economic ballots, were in the hands of consumers then goods would freely meet the needs of the population. Distribution would be as efficient as is production. This is ideal for both producers and consumers.

It is a mistake to blame private enterprise for a problem that originates in the financial system. The financier's status, not the producer's, must be revised. Instead of seeking to change the production system we must change the financial system. Finance should be made social for the simple reason that money is, by nature, a social instrument but money traffickers have corrupted the current monetary system.

Social Credit would replace the present financial dictatorship with a true economic democracy in which the consumer, who is the reason why production exists, would be the true master of what is produced. Producers would determine the methods of production and diligently respond to the wishes of consumers.

Consider how economic democracy would surpass political democracy in its scope and impact.

Economic ballots vs. political ballots

We have established a contrast between political democracy and economic democracy. Next, we will compare the efficiency of the economic ballots of Social Credit and political ballots.

First there is the issue of frequency of use. A citizen uses a political ballot only at election time. The purpose of this ballot is to express a preference between candidates who wish to become the people's representatives for the following term. Between elections, if the citizens do not obtain what they expect from the government, there is no recourse. Citizens can complain but might still be betrayed or misled by politicians who were elected to represent their interests.

The consumer with economic ballots 'votes' continuously since purchases for goods and services are made frequently. Essential goods and services are regularly exchanged at the retailer's counter with 'ballots' by 'voters'.  

The main difference between political ballots and economic ballots resides in their efficiency. When an 'X' is marked beside the name of the candidate of one's choice the voter may not have their preferred candidate represent them in government. On election night, some will not have their preferred candidate prevail. When Peter is elected then Paul is not. If Peter wins then Paul's voters will not be represented in the next government by their choice of candidate.

The economic vote, however, always prevails. Both my neighbour and I will obtain what we want even when both of us have chosen very different products.