Thursday, 21 August 2014 22:12

Why Social Credit is not Socialism

Written by Oliver Heydorn
Rate this item
(0 votes)

One of the chief misapprehensions under which newcomers to the subject often labour is that 'Social Credit' must be some form of socialism because, after all, the phrase encompasses the word ‘social’. So that there may be no confusion, let it be made clear that in spite of the appearance of the word ‘social’ in ‘Social Credit’, Social Credit is not only not socialistic but decidedly anti-socialist.

As I explain in my book Social Credit Economics, the economics of Social Credit rejects the doctrine of class struggle, rejects the collectivization of the means of production, rejects the centrally planned or command economy, rejects the welfare state (with its mechanism of redistributive taxation), and rejects disordered and excessive forms of economic regulation. In what way, then, can Social Credit be classified as socialistic? On the contrary, Social Credit stands for free enterprise (personal initiative, the profit-motive, private property, and free markets) provided that these individualistic elements can be properly co-ordinated so as to effectively serve the common good of all individuals in a society. What Social Credit seeks is: "a society based on the unfettered freedom of the individual to cooperate in a state of affairs in which community of interest and individual interest are merely different aspects of the same thing." [1]

While the concerns that are shared by many socialists are legitimate concerns: poverty, exploitation, gross economic inequalities, environmental degradation, etc., the methods that socialists advocate are, to a greater or lesser extent, ineffective in dealing with these problems. They also tend to engender other problems as the inevitable trade-off: the loss of individual freedom, increased servility, and the centralization of power in overweening government bureaucracies, etc. Social Credit proposes that it is possible, through the type of monetary reform that Douglas had advocated, to deal adequately with the former problems without spawning these other difficulties.


[1] C.H. Douglas, Economic Democracy, 5th ed. (Sudbury, England: Bloomfield Books, 1974), 142-143.

Last modified on Saturday, 10 February 2018 22:58

Leave a comment

Make sure you enter all the required information, indicated by an asterisk (*). HTML code is not allowed.

Latest Articles

  • Social Credit and Democracy: The Problem - Part Three
    Thus far in this series of articles exploring the relationship between Social Credit and democracy, we have seen that conventional ‘democracy’ suffers from a large number of design faults which vitiate it and render it ineffective. That would be bad enough, but Douglas goes one step further and claims that the ineffective mechanisms of conventional ‘democracy’ provide the best possible cover for the operations of a hidden dictatorship. Not only do they provide the best possible cover, but the same mechanisms which are ineffective from the point of view of fulfilling the true purpose of political association can be rendered most effective (by being cleverly manipulated) for the purpose of fulfilling an alternative policy-objective, one that is imposed by an agency that is external to the elected ‘government’.
    Tuesday, 18 September 2018 22:58
  • Financial Credit as a Merit Good
    The debt­-finance system, by generating a chronic insufficiency of purchasing power, thereby requiring increased borrowing (in lieu of large trade surpluses) if economic activity is not to grind to a halt, causes the State ­ with its great, almost unlimited capacity to borrow, thanks to its power to tax (i.e. creditors are eager to lend to it in the knowledge that it will always have a means to pay them back), to expand its role in the economy. Thus, as society finds its purchasing power increasingly insufficient to satisfy its requirements, the State steps in, with its role becoming larger and larger as it fills the growing gap. Caught unawares by these developments, which they were utterly incapable of anticipating, economists scrambled to come up with theories explaining ­ and indeed, justifying ­ such extensive government intervention.
    Wednesday, 29 August 2018 14:16
  • Visualizing the Gap
    The central contention of the Social Credit critique of contemporary economic management (or rather mismanagement) is the existence of a gap between prices and incomes in the operation of any modern economy - i.e. an economy based on debt-finance and multi-stage, mechanized production. This underlying deficiency of purchasing power, makes it impossible to liquidate the costs of production without resorting to increased debt and/or a large trade surplus - since prices cannot fall below costs without putting the continued operation of an enterprise in peril, (unless it can rely on direct or indirect government support). Furthermore, the critique contends that this gap is bound to grow as the economy becomes more sophisticated - i.e. as production involves more and more stages, and use of machinery increases - entailing spiralling debt and increasing trade tensions if the necessary financial remedies are not applied.
    Tuesday, 28 August 2018 13:37