Understanding the Financial System:
Social Credit Rediscovered. by Frances Hutchinson,
Jon Carpenter, 2010,
ISBN: 978-1906067090
This book was of great
interest to me, as I was introduced to its subject matter in my
childhood in the 1930s, by my parents, who were active campaigners
for Social Credit, and I attended the last few meetings, after WW2,
of the Social Credit Party, with its leader, John Hargrave. I read
Douglas's main books and those of some other advocates of SC, such as
C Marshal Hattersley's This Age of Plenty, in my youth. The
post-war corporate wiping from history of the ideas and movement for
SC was illustrated to me when, in 1952, I heard on the lunchtime BBC
radio news, of the landslide victory for it in British Columbia in
the Canadian elections. This was accompanied by a few sentences about
the aims of SC; but in that evening, in the 6 o'clock and nine
o'clock news, not even the fact of the election result was mentioned!
My parents met as
Esperantists, and were advocates of libertarian education,
introducing me to the ideas of AS Neil, practised at his Summerhill
School. Thus I absorbed in my childhood ideas of the unity of
mankind, as well as of the distinction between the real. economy
and the financial one, which dominates and shapes the real.
I was aware that
conventional economics confuses physical and financial capital, and
that the potential abundance due to the application of technology to
production was turned to waste by the grossly unequal distribution of
the results of the 'common cultural inheritance' and the 'increment
of association'. These are the concepts CH Douglas introduced as
justifying Social Credit's advocacy of 'National Dividends — or
Basic Incomes — lack of which makes wage-slaves and/or debt-slaves
of almost everyone.
In all of this time, I
found no suggestion that SC, or the wider movement for monetary
reform, was in any way anti-Semitic — in fact, some of the closest
colleagues of my parents in their campaigning were Jewish!
Thus I am, perhaps,
biased in favour of the theme of this book, which is exposing both
the history of the widespread and rapidly growing support for SC,
despite the hostility to it in the public media, in the period
between the World Wars, and the distortion of history to discredit it
and to minimize attention to it, since WW2, with virtually complete
elimination of its ideas from the teaching of economics — and the
use of accusations of anti-semitism to stop any discussion of the
issue.
While I had
foreknowledge of much of the book's contents, I found this
considerably expanded by the detail it contains. It contains many
extracts from material both for and against SC, and lengthy
discussion of its
origins and related ideas, from Guild Socialism, the writings of
Thorstein Veblen, and Rudolph Steiner's conception of the Threefold
Commonwealth — the three related spheres of society: cultural,
political and economic. In all, it shows how tragic was the failure
to introduce reform of the system of money creation and distribution
in the 1930s.
Douglas argued that the
aims of everlasting economic growth and 'full employment' despite the
growing use of machinery to replace human labour, were unrealistic
and unsustainable. He predicted as early as 1920 that, if the
creation of money remained in the power of private banks and
distribution of purchasing power through National Dividends was not
instituted, with adequate money issued into existence to end 'poverty
in the midst of plenty', then worldwide depression would result, and
lead inevitably to WW2. National Dividends would introduce 'economic
democracy' and establish the 'sovereignty of the individual'.
Douglas noted that
while money was in desperately short supply in peacetime, it was
created as freely as required in time of war.
He did not propose any
detailed way to change the way money should be created, but argued
that it should be for public benefit, not private profit. Subsequent
experience amply confirms his
views. 'He who pays
the piper calls the tune'. The banks are the 'piper', and they 'call
the tune' of all other institutions, including governments.
It was clear to me in
the early 1960s, when Prime Minister Harold Macmillan proclaimed that
'we've never had it so good', just how much better we could have 'had
it', but for the distortions of the 'economy' due to the dominance of
'debt-money'; we could have had leisure, and far less waste of
materials and effort.
Although the most
senior economists of the day debated with Douglas, both in print and
on public platforms, none found any genuine flaws in Douglas's
analysis of the true relationship between the material economy and
the financial system. Since the financial system was man-made,
Douglas argued it could be studied and reformed to suit the wishes of
the people. In his view, if given a choice, the people would prefer a
secure sufficiency rather than everlasting growth and uncertainty.
This is a book which
should be widely distributed and studied. It carries an extensive
bibliography and lists of references for each chapter. It exposes the
disastrous domination of the real, productive economy by the
financial interests, and their power over the institutions of
government, education, commerce, and public media. The recent
near-collapse of the financial system under the growing weight of
unredeemable debt — which threatens worse to come — should help
to open people's eyes to the need for reform, along the lines
outlined so long ago. Read the book, and then use the internet to
join and spread debate on this vital issue.
Brian Leslie (Editor)
Sustainable Economics 2010.
COMMENT: These three
reviews (see last two entries on this blog) number among many review
of my published works. In my opinion they are readable and highly
suitable for group discussion - with or without the books to hand.
