A Genius of Economic Reform
[Reposted from 2018]
CLIFFORD HUGH DOUGLAS (1879-1952) was one of the most important economic thinkers of modern times, and yet his plan for reform known as Social Credit (not to be confused with the Chinese system of the same name) is little known. The British engineer discovered a fundamental problem in industrialized, capitalist economies and he believed modern wars were caused by this “irritant,” which was the inability to provide enough paying jobs and income to citizens, who could thus not afford to buy the products produced. His discovery is as timely today as it was when he was alive — in fact, it is more relevant than while he was alive.

The monopoly of private bankers over the control and distribution of money ultimately strangles economies. Michael Watson explains in a review of a new book on Social Credit by Dr. M. Oliver Heydorn:
This monopoly gradually transfers more and more wealth, privilege and power into fewer and fewer hands by taking advantage of a chronic gap between consumer prices and consumer incomes. The only means for consumers to acquire additional and much needed purchasing power is to borrow money from the private banks, which these same banks also create out of nothing. The aforementioned price and income gap is a recent phenomenon and is the result of the increasing displacement of human labour by technological developments resulting in fewer jobs and thus less money in wages, salaries, and dividends being distributed to consumers. There is therefore a constant need for economic “growth” for the sake of growth to fill this gap and by any means possible. … [T]his is most often being achieved by maintaining imprudently high net immigration flows into the country to provide more consumers and also the selling off resources, production, farmland and property to foreign companies and investors to pay down bank loans and fill the credit gap.
Watson writes:
Families are torn apart by financial woes. Automation is replacing more and more jobs. Average people’s buying power just shrinks by the year and yet few people, if any, seem to know why or how all this is really happening. To further exacerbate this crisis, both parents are being forced to take on work outside the home at the expense of the children who must be placed in the care of commercial day care providers. And this pressure is further intensified by the decreasing availability of stable jobs, thus leading to the spoliation of family life and leisure and the economic and social destitution of men and women. Once upon a time about fifty years ago, a father could provide for the whole of his family with just one income, i.e., without the mother having to work outside the home.
Douglas came to his theory during World War I:
It was while he was reorganising the work of the Royal Aircraft Establishment during World War I that Douglas noticed that the weekly total costs of goods produced was greater than the sums paid to workers for wages, salaries and dividends. This seemed to contradict the theory of classic Ricardian economics, that all costs are distributed simultaneously as purchasing power. (more…)




