Sunday, 1 March 2009

Social Credit

Christopher M. Quigley
B.Sc., M.M.I.I. Grad., M.A.

"Banking and credit are too important a business
for citizens and politicians to be ignorant of. Upon its fair and
equitable administration rests the very existence and future of our society".

Every society has its orthodoxy. But there comes a time when the "accepted view" no longer functions. When this occurs it is time for change. The movement of stars told Galileo that the earth centred Universe was wrong. The relative inner stability of two moving trains told Einstein that Newton and Euclid were wrong. The current Sub-Prime credit crisis is an indication that the orthodox concept of banking and credit is wrong.

This is not the first time that the failings of the accepted "credit concept" were identified as being erroneous in an increasingly technologically efficient world. The great depression of 1929 also gave the same signal. However instead of dealing with the cause only the symptoms were addressed. Accordingly, another world war ensued and through "sticking plaster" policy modifications we bungled on for another 80 years. Now, once again, the dormant "error" has become virulent and threatens the whole. The disease within the economic body was diagnosed successfully in the early 1900's and a solution was prescribed but ignored. The same remedy will work today but its successful application requires a "Copernican" change in economic conceptional modalities. The world was not ready then. Is it ready now? The cure is called: "Social Credit".

Due to developments in technology and technique the age old problems of production and scarcity have been all but solved, the issue now is one of distribution. Money creates effective demand and orthodox banking and accounting rules makes money scarce. This state of affairs if allowed to continue will result in:

1. Surplus production due to efficiencies

2. Consequent unemployment and under-employment resulting in effective demand destruction

3. Poverty due to lack of purchasing power

4. Redundant industrial machinery

5. Consequent cut-throat competition

6. Disappearance of industrial profits

7. Consequent business bankruptcy and depression

8. Aggressive competition for foreign markets

9. Consequent international friction and war

In order to prevent the above constantly recurring, as in 1929 and now with the sub-prime crisis, it is necessary to change our orthodox view of economics. WE MUST MOVE FROM AN OUT-DATED MINDSET. This does not require a revolution in society it simply requires a revolution in our consciousness. However the elite who control the ownership of the "orthodox" credit myth will not allow acceptance of this alternative knowledge because to do so will weaken their system of management and domination. However truth is an amazing thing. Slowly but surely, like a seed whose hibernation is over, the practicality and human goodness of the concept of Social Credit is germinating. But it needs aware and dedicated followers to nurture this growth. MONEY MUST NOT BE REGARDED AS A COMMODITY. IT IS IN ESSENCE A MEANS OF DISTRIBUTION OF SOCIAL PRODUCTIVE CAPACITY. AS A RAILWAY TICKET IS TO A TRAIN NETWORK THE DOLLAR BILL IS TO THE ECONOMIC SYSTEM. THE OBJECTIVE IS NOT TO OWN ALL THE TICKETS BUT TO HAVE A RAILWAY SYSTEM THAT SERVES THE FUNCTION OF MOVING PEOPLE AND GOODS. Through our ignorance of banking and credit, politicians have allowed an elite professional group corner the market for "railway tickets" and thus control the "transport network".

For the current economic crisis to be finally resolved the realisation must sink in that BANKING IS NOT SIMPLY AN AVERAGE BUSINESS LIKE ANY OTHER. On the contrary, upon its fair and equitable administration rests the very existence and future of our society. Banking and credit are too important a "business" for citizens and politicians to be ignorant of. To deal with this matter we must, to use the words of President Obama: "up our game" or perish.

The word credit comes from the Latin word "CREDERE", meaning "TO BELIEVE". The essential quality of money, therefore, is the belief that one can get what one wants when one possesses it; THUS MONEY IS A SOCIAL CONTRACT BASED ON TRUST AND MUTUAL BENEFIT. Since credit is a function of money it follows, axiomatically, that CREDIT IS A SOCIAL CONTRACT ALSO. A society cannot allow a particular grouping to have a monopoly on the functioning of this social contract because ultimately this group could end up monopolising all contracts. If you own the contracts you will end up owning society.

The central problem which Social Credit addresses is the negative consequences resulting from the increasing use of capital in manufacture and distribution. This drive towards capital intensification brings efficiency but it decreases the requirement for labour. With the loss, or through the down-grading, of "jobs", the trend is for higher unemployment and/or under-employment. With under-employment there is less purchasing power in the economy thus the true potential capacity of modernity cannot be attained because there is no effective demand, since desire without money is meaningless in our system.

Social Credit strives to solve this spiral of lower employment, lower wages, recession and depression by increasing effective demand in the system by generating societal purchasing power. Purchasing capability is increased through a social dividend and the adjustment of prices. It also proposes that the ownership of credit reside with the society rather than with a monopoly group. Thus excess reserves owned by credit institutions, over a certain minimum to allow their sustained and stable operation, are systematically issued to society. Social Credit believes in banking but does not accept monopoly ownership of credit and legal tender. The objective of such policies are as follows:

1. Money is no longer a commodity controlled by banks

2. Credit is no longer a social contract controlled by banks

3. Boom and bust credit cycles are negated

4. Increased stable purchasing power allows for effective distribution of goods and services.
This stability allows better long term decisions to be made by entrepreneurs about the economy.

5. Increased demand for goods and services boosts an economy centred on smaller community based businesses.

6. Corporatism diminishes

7. Unemployment and under-employment are seen as opportunities for freedom to develop since citizens are able to function in the economic system through receipt of social dividends. Due to a change in the "zeitgeist" time is no longer equated to work in order to obtain legal tender.

8. Speculation diminishes due to the non availability of "commodity" credit and a real economy, rather than a gambling economy, flourishes.

9. Government down-sizes due to the diminished availability of monetised debt.

Many folk have attacked these objectives as idealist or socialist. They are wrong. In fairness these objectives are based more on community than the commune. But that is the point. Social Credit strives to reaffirm the supremacy of human association rather than abstract institutionalism. Capitalism, under our current banking arrangements, and communism /socialism are all "Cesarist" theories of society; they end in monopoly ownership of everything. This monopoly results in the "state" or "core political group" being master of the individual. As a result community dies and corporatism thrives. The philosophy of Social Credit is the exact opposite. It believes in the individual and it aspires to provide the individual with as much freedom as possible. It acknowledges that the STATE SHOULD EXIST TO SERVE THE INDIVIDUAL ; NOT THE OTHER WAY ROUND. Social Credit therefore rejects the dialectic materialism of capitalism/communism/socialism; and accepts grace.

As this sub-prime crises festers and invades the social, economic and political body I hope that more and more like minded people will become focused, educated and aware. There is no more important goal in life than actively participating in the growth and development of one's spirit, one's family, one's community and one's nation. "Banking and credit are too important a business for citizens and politicians to be ignorant of. To deal with this matter we must, to repeat, up our game or perish".


"Economic Democracy"
Major C. H. Douglas
Bloomfield books

"Aladdin's Lamp: The Wealth of the American People"
Gorham Munson
Creative Age Press: New York

New Zealand Government's
Monetary Committee
Notes of Evidence and Correspondence
Wellington, 24th. February 1934