Book Review:

4: Understanding the Financial System

Social Credit Rediscovered

Frances Hutchinson – John Carpenter, 2010

This book covers a wide range of issues: of work, debt and usury, and theories of economics. Its theme is the development and spread after the First World War of the ideas of Maj. CH Douglas which became known as Social Credit, developed initially in debate with AR Orage, the editor of the influential literary and political weekly of the time, the New Age. Part of it was reproduced in the last issue of this newsletter, and a further part follows this review.

Between the two World Wars, Maj. CH Douglas' ideas were widely debated and led to radio broadcasts and talking tours with huge audiences, university studies, and local study groups, as well as a range of books by him and many others. In the Canadian local elections in 1936 it led to a landslide victory for the newly-created Social Credit party in Alberta, but the bills it introduced to carry out its mandate were disallowed by the Canadian government.

From the start, conventionally educated economists and politicians and their supporters sought to oppose these ideas, since they challenged their own preconceptions, many offering their own false interpretation of Douglas' arguments, in order to then demolish this version. Implications of 'anti-Semitism' were another favourite theme; but the severe economic problems of the period still encouraged the huge growth of support.

Early on, Douglas argued that the conventional aim of continuous 'economic growth' would lead inevitably to destruction of the resources we depend on to live, and that the development of mechanisation should be freeing mankind from the need for long hours of 'full employment'; we needed instead the distribution of 'the wages of the machine' in the form of unconditional 'National Dividends'. He identified the banks' 'debt-money' creation as the fundamental cause of 'poverty in the midst of plenty' and the international 'struggle for markets' to export 'surpluses' which were un-sellable within the nation, despite widespread need.

As he predicted, if not reformed, the current system would lead inevitably to WW2. When this catastrophe occurred, it miraculously 'cured' the 'problem' of 'unemployment', and strengthened the power of the Money Masters over politicians, educators and public media, so that ever since, the subjects Douglas covered have been excluded from public debate – until the recent, ongoing 'credit crunch'!

(About this, a personal recollection: Having been brought up by parents much involved in the Social Credit movement, I was very interested to hear on the lunchtime BBC news shortly after WW2 the report of the first post-war Canadian elections, in which British Columbia had elected its first Social Credit government with a landslide huge majority. This announcement was followed by a few sentences describing its aims. I then listened to the 6pm and 9pm news broadcasts, only to find no mention even of the election!!)

Frances has researched this history thoroughly, together with its origin in Guild Socialism, and the related ideas of Thorstein Veblen and its importance today. The last issue of 'SustEc' carried a large extract from it with comment by William Krehm, and I include his follow-on article in this issue; however, I heartily recommend a reading of the whole book!

Brian Leslie