Social Credit

Clifford Hugh Douglas (1879 – 1952) = Major Douglas, is credited as the founder of the social credit movement. He worked as an electrical engineer throughout the British empire. During World War I, he reorganized work at the Royal Aircraft Establishment, a research institution located at Farnborough Airfield in Hampshire, England. There he noticed that the costs of goods produced exceeded that paid in wages, salaries and dividends. This contradicted the prevailing economic theory of David Ricardo (1772 – 1823), that stated that all costs were distributed simultaneously as purchasing power.

The core of his economic argument was that the economic system was organized to maximize profits for those with economic power by creating unnecessary scarcity. One short, but interesting source that comments about this has been written by Janet Martin-Nielsen (1982 – ).

Douglas claimed there were three possible economic policy alternatives:

• 1. To impose a system of thought and action.
• 2. To provide employment.
• 3. To provide goods and services.

Douglas felt most governments aimed at the first two policies. He aimed to satisfy the third. Because of this disparity between the flow of money and stated industry objectives, the delivery of goods and services, he began to apply engineering methods to the economic system.

This led Douglas to distinguished between values, costs and prices. He claimed that economists were obsessed about values. He considered values to be subjective, incapable of being measured objectively. He rejected money as a standard/ measure, of value, but regarded it as a medium of communication whereby consumers could direct the distribution of production.

Wealth is derived from the Old English wela = well-being. Douglas believed that all production should increase personal well-being. Production that does not directly increase personal well-being is waste = economic sabotage. Consumers pay for the costs of production, including waste. This results in wasted work. Douglas believed that this waste was directly linked to confusion about the purpose of an economic system, especially the mistaken belief that it exists to provide employment.

Douglas noted that the long-term consequence of a full-employment policy is a trade war, that typically leads to a real war. That is, full employment leads to excessive capital production (as expressed in the 21st century by extreme/ billionaire wealth). Where this does not use up all of the capital there is an opportunity for military build-up, Military buildup results in violence or an unnecessary accumulation of weapons.

The social credit admonition: He who calls for Full-Employment calls for War! was expressed by John Hargrave (1894 – 1982) leader of the Social Credit Party of Great Britain and Northern Ireland. Hargrave was also a Quaker and a pacifist, but enlisted in the Royal Army Medical Corps, serving in World War I. This experience convinced him that modern civilization had failed, expressed in The Great War Brings It Home (1919), and a call for a character-building and physical training foundation, The Kindred of the Kibbo Kift, in 1920, as a movement for all ages and genders, and a progressive alternative to the Boy Scouts. He was often regarded as a potential replacement as Chief Scout Robert Baden-Powell (1857 – 1941), at least until Baden-Powell expelled Hargrave from the scout movement.

Hargrave wrote The Fighting Programme of the Social Credit Party in 1939, although I rely on a second edition, published in 1941. It listed twelve points: 1. Finance = Establish a Sane Economic System; 2. Government = Make the Will of the People Effective; 3. Work = Abolish Unemployment and Wage Slavery; 4. Defence = Create Effective Defence Forces; 5. Food Supply = Regenerate the Soil; 6. Health = Regenerate the People; 7. Industry = Increase Mechanisation; 8. Building = Demolish the Slums: Build New Towns and Cities; 9. Transport = Reorganise the Transport System; 10. Education = Provide Equal Opportunity for All; 11. Culture = Make Leisure Available to All; 12. Foreign Policy = Abolish War. Through the rest of the book these points are explained in greater detail.

An aside: Hargrave was also a founder of one of the coloured shirt movements that followed the first world war, the Social Credit centrist green shirts. Juan Francisco Fuentes counts 10 green, 8 blue, 4 each black, grey and red, 2 brown, 1 white and 1 orange = 34 groups, of which 25 are right wing, 2 are centre and 7 are left wing. These included: The brownshirts or Sturmabteilung, the original paramilitary wing of the Nazi Party. It played a significant role in Adolf Hitler’s rise to power in the 1920s and 1930s; Hirden, a Quisling/ Nasjonalsamling equivalent in Norway; the blackshirts or squadristi of the Italian Voluntary Militia for National Security, originally the paramilitary wing of the National Fascist Party but, after 1923, an all-volunteer militia in Italy under the fascists.

Much of the world entered a depression in 1929. In Canada, the Alberta Social Credit party was founded in 1934, in the middle of this depression. In the 1935 provincial election it won a majority government, remaining in power until 1971. It was initially led by Bible Bill, William Aberhart (1878 – 1943). Aberhart added a layer of evangelical Christianity to the economic mix. For this, and other reasons, Douglas was not impressed with this party’s interpretation of the principles outlined, and especially disliked the inclusion of economic content from Johann Silvio Gesell (1862 – 1930) a German-Argentine economist, and founder of Freiwirtschaft, an economic model for market socialism. Alberta Social Credit issued Prosperity Certificates = funny money, based on Silvio Gesell’s ideas.

In 1935, Hargrave started to work for the Alberta Social Credit party. It lasted one year. He returned to Britain in 1936.

After Aberhart’s death in 1943, Earnest Manning (1908 – 1996) took over party leadership. Manning was regarded as Aberhart’s religious protege and closest political associate. However, the party became increasingly socially and fiscally conservative, mainly due to Manning’s pragmatism. Manning was premier of Alberta from 1943 to 1968. As Wikipedia explains: Under Manning, Alberta became a virtual one-party province. He led Social Credit to an incredible seven consecutive election victories between 1944 and 1967, usually with more than 50% of the popular vote, and only once had to face more than 10 opposition MLAs.

The province of British Columbia, immediately to the west of Alberta, also formed Social Credit organizations in the early 1930s. This did not result in political influence, until the early 1950s, when the party formed governments between 1952 and 1991, except for the years 1972 to 1975, when the British Columbia New Democratic Party governed. Unlike Alberta, the emergence and continued popularity of Social Credit had nothing to do with depression relief. Rather it stemmed from a revolt against corruption involving a Liberal – Conservative coalition.

Leader of the party from 1952 to 1972 was W.A.C./ Cece/ Wacky Bennett (1900 – 1979), followed by his son Bill Bennett (1932 – 2015), who was premier from 1975 to 1986. The downfall of the party had its roots in the election of Bill Vander Zalm (1934 – ) as party leader.

Perhaps the most interesting aspect of Social Credit in British Columbia is its attempt to ride two horses simultaneously. It is both a free enterprise party, but also responsible for purchasing BC Electric and Blackball Ferries to form the backbone of BC Hydro and BC Ferries, respectively. Both are crown = government owned, corporations.

My interest in Social Credit stems from living in British Columbia from 1948 to 1980, where a Social Credit government was in power, for most of those years. I think one of the reasons for its popularity, was its investment in highways. These are especially important in mountainous areas of the world.

I particularly remember Phil Gaglardi (1913 – 1995), a Pentacostal minister from Kamloops, and minister of highways for most of my formative years. The provincial highways construction signs always ended with Sorry for the inconvenience and his name and title. His nickname, Flying Phil, came from his tendency to speed while driving and accrue speeding tickets. He was also noted for encouraging the provincial government to buy a Lear Jet, for use by ministers.

Social Credit no longer exists in Canada as a political party, and its economic philosophy is no longer regarded as important.

Currently, my interests in economic philosophy relate to alternative forms of economics that are better for the planet and living human beings, especially. When Trish and I first moved to Norway in 1980, it felt like a poorer society. That feeling did not last long, as oil infused the country with wealth. Some of the differences we noted were shorter working hours and longer holidays as well as (more) affordable houses. I am not happy with all of the changes made in the intervening forty plus years. In more recent years, the EV transition has been notable.

To understand how societies can transform themselves economically, I recommend the following books, in chronological order: Ha-Joon Chang, 23 Things They Don’t Tell You About Capitalism (2010); Richard Wilkinson & Kate Pickett, The Spirit Level (2011); Mariana Muzzucato, The Entrepreneurial State (2013); Thomas Piketty, Capitial in the 21st Century (2016); Kate Raworth, Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist (2017); Mariana Muzzucato, The Mission Economy (2021); Thomas Piketty, Brief History of Equality (2022); Ingrid Robeyns, Limitarianism (2024).

Publication of this weblog post has been postponed from 2023-03-18 at 12:00 to 2024-03-23 at 12:00.