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Thursday, 21 August 2014 18:12

Why Social Credit is not Socialism

Written by Oliver Heydorn
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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 17:58

1 comment

  • Comment Link Curmudgeon Thursday, 23 January 2020 12:58 posted by Curmudgeon

    I am a Canadian, and old enough to remember a form of Social Credit in Alberta where it was successful, until the oil companies took over. Unfortunately, it seems Mr. Douglas was stuck on the notion of "socialism" being Marxism. The reality is that many of Marx's contemporaries disagreed with his view. One, Proudhon, referred to Marx as the tapeworm in socialism. Proudhon has been called the father of anarchy.
    As I understand history, socialism came as a reaction to governments dismantling the old craft guild system, while leaving the trade guilds relatively untouched. It allowed finance to take control of the means of production. The basis of socialism was co-operatives, which they saw regaining control of the means of production. The basis of all real wealth is labour, whether that labour is growing and harvesting crops, extracting natural resources, or manufacturing goods from the resources..Douglas was absolutely correct in his analysis of compound interest and the need for financial reform. I find it interesting that while in Canada, he appeared to ignore the successes of certain religious groups, like Hutterites and Mennonites, who were very successful in local economies. Both had "colonies" that were really farming co-ops. The Mennonites also had individual ownership of land and companies, but had as little as possible financial and commercial interactions with "outsiders" forming their own credit unions. Some of those communities continue to thrive for the same core reasons, that as much commerce as possible is done locally to keep money in the community.