Sunday, 28 December 2014 00:47

Social Credit Explained in 7 Points

Written by M. Oliver Heydorn
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As interest in the economics of Social Credit grows, it is important to provide people with accurate and comprehensive summaries of C.H. Douglas' analysis and remedial proposals. In what follows, I will outline in seven points the salient features of the Social Credit approach to economic questions.

1. The economy exists to provide people, as efficiently as possible, with the goods and services that they need to survive and flourish. That is, production exists for the sake of consumption, not for the sake of money-making, employment, satisfying the creative impulse, or ‘moral’ discipline (considered as ends in themselves). It most certainly does not exist for the sake of centralizing wealth and power in the hands of an oligarchic elite.

2. The primary economic problem, that which prevents the economy from fulfilling its true purpose (as outlined in point #1) to the extent that this fulfillment is physically possible, is a structural feature of the conventional financial system: there is a chronic deficiency of consumer purchasing power, or a macro-economic gap between the rate of flow of retail prices and the rate at which incomes are distributed by the corresponding production of consumer goods and services. The established system is inherently unbalanced; Say's law does not hold.

3. This gap has many causes [profit-making (including profits derived from interest charges), the re-investment of savings, deflationary banking policies, and taxation], but is due, in the main, to the way in which real capital (machines and equipment) are financed and the way in which their costs are then accounted under existing conventions. Whenever real capital is manufactured or replaced, the capital costs that are generated exceed the consumer incomes that are simultaneously distributed. The gap is intensified by net savings.

4. The present economic system employs a variety of palliatives in order to compensate for the gap (bankruptcies, forced sales, ‘favourable’ trade balances, etc.), but, in the main, it relies on governments, businesses, and individuals to borrow additional debt-money from the private banking system. By spending money on additional production, whether public or private, that the consumer will not buy or will not pay for in the same period of time, consumer incomes can be augmented without increasing the flow of consumer prices. In the same way, loans to consumers can help to bolster the existing flow of consumer purchasing power. For the most part, we muddle along by filling the gap with debt-money. (N.B. every bank loan creates money ex nihilo in the form of bank credit and every repayment of a bank loan destroys bank credit. The vast majority of the money supply exists in the form of bank credit and most of the bank credit is issued in the form of a repayable debt).

5. The consequences of the conventional palliatives are: the business cycle, constant inflation (mostly cost-push, but also demand-pull), the misdirection of economic resources, economic inefficiency, economic waste and sabotage alongside forced economic growth, an ever-increasing mountain of societal debt that is, in the aggregate, unrepayable, recurring financial crises, heavy and often increasing taxation, wage and debt-slavery, servility, the usurpation of the unearned increment of association by the private banking system, the centralization of economic wealth, privilege, and power in fewer and fewer hands, forced migration, cultural dislocation, unnecessary stresses and strains, social conflict, environmental degradation, and international economic conflict leading to war, etc., etc.

6. The Social Credit solution to the problem of the gap is to have a politically independent organ of the state, a National Credit Office, continually issue, on the basis of the relevant statistics, a sufficient volume of credit so that consumers can purchase the ‘surplus’ of goods and services that are being produced. This credit is to be issued free of debt and in lieu of all of the conventional palliatives that are presently employed in attempting to manage the gap.

In order to accurately reflect the physical reality, a certain volume of this compensatory credit would be used to lower retail prices in accordance with the consumption/production ratio. The true cost of production is consumption. Hence, production should not cost, in financial terms, more than was spent on the consumption that was necessary to bring it into existence. Selling goods below cost to the consumer and making up the difference to the retailer would allow for production to be sold at its ‘Just Price’ – i.e., the price that reflects its real cost.

The remainder of the compensatory credit is to be issued in equal proportions to each citizen, whether he be employed in the formal economy or not. The National Dividend is justified morally by the fact that each citizen is rightly regarded as a shareholder in his economic association and as an heir to society’s cultural heritage. It is the cultural heritage (the inventions and discoveries of past scientists, engineers, organizers, etc.) which makes the greatest factor in modern production, the real capital, possible. And it is the real capital which is primarily responsible for the price-income gap. Therefore, the most appropriate way of filling this gap is to recognize that individuals are the beneficial owners of the real capital and deserve to receive a dividend on its operation. The National Dividend is justified pragmatically by the fact that the economy needs an injection of debt-free credit in order to function in a real or self-liquidating equilibrium and it needs to provide those whose labour is no longer required in the formal economy (on account of technological advances and improved production efficiency) with an income so that they can nevertheless purchase goods and services. A policy of full employment makes absolutely no sense when the efficient production of those goods and services which people can use with profit to themselves does not require, within the context of a modern, industrial economy, the full capacity of the available labour force.

The Social Credit economic system is simply free enterprise (i.e., the private ownership of the means of production, the free market, individual initiative, and functionalist profit-making) plus an honest financial system. It is neither socialist nor capitalist, but is rather distributist in orientation: by means of the dividend every citizen would be guaranteed a minimum claim on the production made possible by the real capital. Social Credit would transform society into a gigantic profit-sharing co-operative.

7. The consequences of a Social Credit monetary reform would be the establishment of absolute economic security for every citizen in place of poverty and the threat of poverty, increasing leisure in place of servility (i.e., freedom from wage-slavery, debt-slavery, and useless, witless, and/or destructive employment), the elimination of society's chronic and unrepayable debt burden and the interest charges that accompany it, the decentralization of economic wealth and power to the individual, the elimination of economic waste and sabotage, continual reductions in prices instead of inflation, much lower taxes, much less government regulation and interference, economic co-operation instead of ruthless competition, social stability, the transformation of civilization based on the unfettering of the creative impulse and the flourishing of both folk culture and high culture, environmental protection, conservation, and repair, and mutually beneficial international trade providing a sound foundation for world peace. Whatever is physically possible and desirable should be financially possible. All that is required is to alter the financial system so that it accurately represents the physical facts and potential of the real economy.

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  • Comment Link Oliver Tuesday, 31 January 2023 17:33 posted by Oliver

    Hi Mr Neifert,

    Thank you for your message and feedback.

    Douglas Social Credit is much more than a stipend programme and indeed I think we would object to the word 'stipend'. It's more the universalization of capitalism by treating every citizen as a shareholder in his economy, on the basis of which he is entitled to receive a dividend whenever the economy as a whole is profitable. That is, whenever the flow of prices exceeds the flow of incomes distributed (because of the recurring price-income gap), the state will monetize the deficiency via the creation of debt-free credit and distribute it directly to citizens via the dividend and indirectly via the discount. Its purpose is to recognise in a very practical way that we are all entitled to a bear minimum in ownership in the economy's productive capacity in the form of dividends and discounts ... eliminating poverty would be a side effect. If there is no gap, i.e., if the economy is not "profitable" in the way indicated, then no dividend is created and paid out.

    The dividend is not "borrowed" by anyone or from anyone. It's issued as a gift by a National Credit Office, a gift that is justified by the existence of what would otherwise be unpurchaseable goods and services (unless the economy can find other ways, as it does, to fill that gap). We are suggesting that a debt-free dividend be issued in lieu of all of those other compensatory measures that are currently in operation (exports over imports, excessive capital production, increases in consumer indebtedness and so forth). Credit would still be created and lent for the purpose of production. It's the supplemental consumer credits (dividend and discount credits) that would be issued without creating any additional debt .... rather they would be created in reference to existing producer debts for which insufficient income had been distributed.

    Money in DSC is based on the potential to create real wealth (the productive capacity of a society) and on the actual flow of real wealth. Real goods and services give the backing to the money that is issued.

    People may indeed require meaningful activity to live and thrive, but this activity need not be paid employment. There is plenty of "work" to do outside the formal economy. More and more, machines, artificial intelligence, etc., are doing the work and there is less and less work that is available for people to do. That's fine so long as we can find a way to give those people who are not needed in the workforce buying power. That's where the dividend comes in. All, rich and poor, would receive it. Those who continue to work in the economy would receive their wages, salaries, etc, as now, on top of their dividends. The decrease in the need to work should be reflected in the financial system as increased leisure - the dividend allows us to recognise and respond to the reality of increasing technological unemployment.

    Yes, land, resources, etc. are limited (not necessarily scarce, thought they could become so), but DSC would liberate our capacity to innovate, thereby allowing us to generate more production with less and less waste of energy and materials. It would also allow us to more quickly and easily travel to and colonise/ terraform neighbouring planets because the artificial financial constraints under which we currently live would be broken:

    The existence of moral evil, of sin, cannot be denied, but it is no excuse for not eliminating the dishonesty and injustice that is embedded in the existing financial system. Douglas Social Credit is an application of Christian principles to the financial system, to bring it into alignment with the natural law: We cannot use the fact of sin to justify institutionalized sin. That institutionalized sin only incentivizes vice and makes it harder to be virtuous in any case.

    In order to get a better understanding of Douglas Social Credit, I'd encourage you to view the following 30 animated videos that have recently been produced to introduce Douglas' ideas to a wider public:

  • Comment Link B. K. Neifert Sunday, 29 January 2023 17:43 posted by B. K. Neifert

    So, at the simplest, it's basically a stipend program, that creates a base income for people to get started? I mean, any system that tries to eliminate poverty, I'm skeptical of. I get some of my favorite authors liked this idea. T. S. Eliot, G. K. Chesterton, C. S. Lewis, J. R. R. Tolkien, Ray Bradbury, to name a few. And I have to admit, maybe they understand it better than I do.

    But, from what I'm reading, creating a universal pool of capital for people to borrow from incurs debts. Debts don't exist on paper, they exist as a means of distributing goods and services. So, you're going to have to base your money on something. It can't be based on nothing. As, at some point you're going to run into problems with apportionment. And I think it's pretty well proven that people need labor in order to... well... survive. People can't live without work or occupation. That's been proven.

    Maybe as a means to, in a sense, borrow into the economy this would work. Like, you could borrow money for College Tuition, or a Business Loan, but let's look at the primary problem with this. There's only so much real estate on the planet. So, property, if it's one of the things you can invest in, will naturally rise as more people are born. And you can take all segments of the economy to explain this. And I'm not being Malthusian... I think in that one instant it is pretty noticeable that there is only so much arable land and resources. So, I don't think you've eliminated the problem of Scarcity to begin with.

    It's hard to say, but an economy built on the practice of lending unpayable debt... it's assuming a surplus that did exist when this was becoming popular. But, it likely can't exist in the future. So, the only way to create a surplus, is to have people employed. Which, some of the jobs that people are employed to do, are not really that safe, or glorious. Like, a lumberjack is endangered by the logs, a quarier is endangered by the stones. There's some principles in the Bible that I think---even being derived from Biblical ideas that Christ preached---are forgetting other portions of the Bible. For instance, you cannot eliminate the poor from existing. Why that is is simply a few things, one of them being human corruption. There's sin. In a world without any sin or covetousness, sure... you could possibly almost have it. But, then there's issues with supply and demand.

    I wrote about this sort of idea---it's different in many ways---in my novel The Fifth Angel's Trumpet. And I think one of the things I was cognizant about when writing it, was that the real estate couldn't hold the demand for the increases in population. I knew that from the get go, and was trying to find a way around that situation. The best solution, is simply to give people work. And allow them to do their business. How you get them those resources, I think that's what Social Capital is trying to solve. To have debts without the burden of debt. And that's interesting, but resources aren't created on demand. They're not willed into existence, or come into existence by sheer wishful thinking, as much as we'd like that to be the case. There's real processes that go into every resource, and every product we have. And to have a borrowing process that eliminates the demand for debt---it's going to have to come from some very philanthropic lenders. Let's just say that. There has to be some real capital behind the loans, that allows this to take place.

    So, generally, in a philanthropic world, this could work if the Social Capital were lent by billionaires, but then you're assuming King, and if there's a king in this sort of economy, who generously lends his wealth out to people without expecting anything in return... I just don't know if that's better than simply having the system we have today. Especially with human fallibility. Generally, Governments don't produce wealth. They're not supposed to. They protect their citizens, they build roads and common infrastructure, and they don't make a very good profit. You're basically asking, with this system, for people like Bill Gates and Elon Musk and George Soros to lend their money to people for no interest, just on the sheer benefactory nature of it being right? As I don't see the government turning a profit to where this would be possible. And frankly, I don't want to be beholden to people like that for my loans. Like, banks exist for a reason, and they make money for a reason. They make money off of their interest. It's not ex-nihilo. It's explained pretty well in Fredrick Bastiat's Essays on Political Economy.

    My only place where I agree with this notion, is that there should be an easier way for people to make it in this world, without having to go into substantial debt. And that's a fact, that it shouldn't be necessary for someone to go into debt in order to make a good life for themselves. And I think that's where I agree with this system, is in that point. It's unethical to force people into attaining a burden of debt just to survive. And as another Bible Verse says, "The wicked nation is the borrower of another" while "The righteous nation is a lender."

  • Comment Link Tuesday, 25 October 2022 21:32 posted by

    Dear Sir You say
    as claimed by others too, e.g. Bank of England "N.B. every bank loan creates money ex nihilo in the form of bank credit and **every repayment of a bank loan destroys bank credit.** The vast majority of the money supply exists in the form of bank credit and most of the bank credit is issued in the form of a repayable debt." I would like to follow up with a little longer reply incuding Response - but first can i say:

    Economists often say this about destroying bank credit money.. Have they thought about it? At least for House price money when real estate is inflated say at resale after 20 years, maybe doubling the price of a house, the money written enters the inflationary system when the seller gets it but could not be found to be cancelled along the way at the end of term (as it is mostly via the seller, in circulation, that is only a book-keeping exercise.

    It is only through house-price pause and lack of transactions that down-turn is engineered, hence the (very expensive) political/media system.

  • Comment Link Oliver Saturday, 11 December 2021 22:15 posted by Oliver

    You're most welcome, Pedro! God bless.

  • Comment Link Pedro Friday, 10 December 2021 20:11 posted by Pedro

    Thanks Oliver!

    You are helping me a lot! Thank you for all the effort in trying to help me better understand social credit.

    God be with you !

  • Comment Link Oliver Thursday, 09 December 2021 22:42 posted by Oliver

    Hi Pedro,

    Thanks for your message! No problem.

    Yes, so cost-push inflation occurs when costs and hence prices are rising relative to incomes and thus each unit of money is able to buy less and less. This causes a demand for wage and salary increases, which then increases prices even further when these added labour costs eventually have to be recuperated from consumers in future periods. What initially causes the cost-push is the demands which debt makes on incomes. Consumers have to cover retailer's debts to banks (via the retailer's lines of credit) which they do when they buy goods and services from the retailer. If the consumer is then pushed to acquire some consumer loans (because of the lack of consumer buying power), in the next economic period he will have to cover not only the usual debts associated with the retailer's revolving lines of credit from his income, but also a portion of his own debts as the consumer loans are scheduled for repayment. Debt is eroding his income from two sources. The bottom line is that we cannot borrow ourselves out of debt (by borrowing more debt-money into existence to help meet production or other debts). The more we try, the more our income is depleted, the more we need wage/salary incomes to compensate for the depleted income, the more prices are inflated, and the more each unit of currency can buy less and less. Inflation, understood as the depreciation of the buying power of each unit of currency, is the result. What used to cost $1.00 now costs $1.50 and so on.

    Regarding #3, the National Credit Authority is the central bank in Social Credit. So if governments borrow from the NCA they are borrowing from the state bank, not from commercial banks. The fees charged would be administrative fees only, i.e., the operating costs of the NCA. No profit involved.

    As a more general point about debt, some of the money to pay interest on commercial debt is created when banks spend money into the economy, i.e., when they pay their employees, buy materials, pay for utilities, etc. It is only the profit-portion of interest that could cause a deficit relative to incomes distributed. In that regard, banks face the same problem as any business. That is, the rate at which businesses generate costs and hence prices exceeds the rate at which they simultaneously distribute incomes.

    Under Social Credit, the only loans which would be made available involving the creation of new money would be production loans. Loans for consumers involving new money creation would be abolished. Thus, any service fee or interest-fee charged would be on a productive loan. I, personally, am in favour of a system where the banker's profit is tied to the profitability of the business such that the banker only makes a profit on the loan if the business is profitable. If this isn't the case, the banker would only be entitled to the costs of his operations. In any case, all costs have to be recovered ultimately from the consumer, as only the consumer can liquidate or put a final end to all costs. Under Social Credit, whatever legitimate costs the banks or businesses are entitled to charge (and these can be regulated under the compensated price system), the consumer would always be credited with sufficient purchasing power to meet them, since incomes and prices are to be maintained in equilibrium.

    I hope this is helpful!

  • Comment Link Pedro Thursday, 09 December 2021 08:27 posted by Pedro

    Hi Oliver,

    The first answer and the first half of the second answer I understood perfectly. Thanks !

    The second half of the second answer was still in doubt. If it's not asking too much, I'd kindly appreciate it if there was another explanation.

    The answer to the third question shook me a little. If in a social credit system banks still had the chance to charge interest from governments then wouldn't that make them indebted? Wouldn't the debt payment become impossible, since the interest for the loan payment was not created?

    Finally, I would like to be sure whether, in a social credit system, the consumer, not the producer, would have to pay interest on non-productive loans.

    Thank you for taking the time to answer the questions. Unfortunately, there is almost no information about social credit in the Portuguese language (my language). Thank you again !

  • Comment Link Oliver Wednesday, 08 December 2021 22:33 posted by Oliver

    Hi Pedro,

    Glad that you are familiar with the animations.

    To answer your questions:

    1. If you mean the fact that the gap between the flow of prices and the flow of consumer incomes tends to get larger over time, this is due to the ever-growing role of real capital and hence of capital costs in production. Since the gap is due, in the main, to capital costs (costs associated with the manufacture, depreciation, and maintenance of real capital), as capital becomes more important than labour over time, the size of the gap must increase as capital costs increase relative to labour costs.

    2. Social Credit recognizes two forms of inflation: cost-push and demand pull. Demand pull or "too much money chasing too few goods" can still happen in a system where the flow of consumer prices is greater than the corresponding flow of consumer incomes via public production or capital expansion. When production not destined to the consumer is engaged in to fill the gap between consumer goods and incomes, this extra production could be so great or large that the compensatory, additional income made available through it could overshoot the gap and cause demand-pull inflation. This is what happens in an economic boom. The price-income gap that Social Credit talks about is an underlying gap between total prices (consumer and capital goods/services) and total incomes that is always present, but whether or not a de facto gap between total consumer prices and total consumer incomes will manifest itself depends on how much capital production is being undertaken at the same time.

    Cost-push inflation is the greater source of inflation and it is due to debt and the necessity of filling the gap with more debt. Debt-servicing charges deplete, directly (via loan repayments) or indirectly (via prices), consumer incomes. Consumers then demand wage and salary increases to maintain the standard of living that they were accustomed to before the added debt destroyed some of their incomes. These wage and salary increases eventually filter into prices, however, as businesses have to recover more money from the public to cover them. At that point we need even more debt to help fill a larger gap and this further intensifies the problem in a vicious circle. This is, from a SC point of view, the main reason that currencies have lost so much of their value over the last hundred years. Cost-push inflation is always operative even when the gap is not overshot with too much money from compensatory activities like excessive capital production.

    3. Under the model I prefer, the government would just borrow directly from the National Credit Authority and pay whatever fee is necessary to cover costs for loans intended for public works or production.

    4 & 5. Usury on loans, in my view, is best defined as using money to make money without contributing something of equivalent value or without incurring a corresponding cost. I believe that this is wrong and that Social Credit would very largely eliminate the opportunity for this type of profiteering just by the nature of the SC reforms.

    I don't believe that usury is best defined as charging an interest on a loan because, at least theoretically, an interest rate could be so low, say 0.1% than it could be less than what a service fee would be and could actually be insufficient for a bank to meet its costs. Whether in the form of service fees or interest, provided they are proportional to the aforementioned factors, something could be charged by someone who made a loan, including, a bank, without there being any usury. For example, banks have to cover costs (labour, materials, energy, equipment, locations, etc.) and to charge the public for that in one form or another is licit. If the bank provided their services for free, the customers would be taking advantage of the bank and that would be a sort of "reverse usury". Under Social Credit, there would always be enough money in consumer pockets to meet these legitimate fees. Furthermore, since all consumer loans involving new money creation would be eliminated under SC and governments could get their loans at cost from the NCA, no profiteering and no usury would even be possible in those instances.

    I have written extensively about the usury issue here:

    We also did a Usury animated video:

    I hope the foregoing is helpful!

  • Comment Link Pedro Wednesday, 08 December 2021 11:25 posted by Pedro

    Hi Oliver,

    these are some doubts, albeit simple, that I still have about this subject:

    1 - What causes the increase in the difference between price and consumer income over time?

    2 - How can there be inflation if the total amount of money is less than the total price? Shouldn't inflation only happen when we have a lot of money in relation to a few products?

    3 - In a social credit system, would the State continue to pay interest to banks for public works or production financing?

    4 - Is the interest charged on the borrowed amount (instead of on the profit obtained from the loan) usury? Does social credit allow usury?

    Thank you if you answer!

  • Comment Link Pedro Tuesday, 07 December 2021 09:57 posted by Pedro

    Thanks Oliver.

    I already knew about the animation channel. Very good. Although I'm not an English speaker yet, I see it sometimes.


  • Comment Link Oliver Monday, 06 December 2021 17:26 posted by Oliver

    Hi Pedro,

    You're welcome! No worries at all. Please feel free to pose as many questions as you like. Have you seen our professionally animated video series exploring Douglas Social Credit? Here is the youtube link:

  • Comment Link Pedro Monday, 06 December 2021 10:42 posted by Pedro

    Hi Oliver,

    I didn't know that this idea regarding funding was a unique thought of Louis Evan. However, the doubt still remains.

    Still, thanks for answering my two questions.

    I'll still bring more questions (if it won't bother you). Once again, thanks for your attention.

  • Comment Link Oliver Sunday, 05 December 2021 18:26 posted by Oliver

    Hi Pedro,

    I have the impression that the idea of retailers being financed with interest-free loans and not having the buyer pay the retailer's profit, etc., is Louis Even's own adaptation, or his attempt, to make Douglas' proposals his own. I don't believe that Douglas ever made these types of stipulations. Douglas provided basic principles which might be applied in a number of different ways. The important thing is that whatever adaptations might be required in practice are only introduced because they help the system to work better.

    What is clear is that both the banks and the retailers have to be compensated in some way via service fees and profits for their activities. So long as the public have enough purchasing power in their hands to cover these and the charges themselves are regulated by some rational set of principles, there shouldn't be a problem. I hope this helps!

  • Comment Link Pedro Saturday, 04 December 2021 20:19 posted by Pedro


    In another article about the financing of production in a social credit system, the author of the article explains the possibility of charging profits by producers and interest by banks at the beginning of production.

    However, the charging of profits by retailers or interest rate by banks to retailers is prohibited. The author says:

    "if interest was charged on the final retail price, this interest would become the property of the commercial bank when the loan was paid back by the retailer. Therefore, part of the Credit would not go back to its source when the goods were consumed".

    "the retailer’s profit must not be included in the price paid by the buyer. If his profit was to be included in the retail price, this portion of the retail price would belong to him and would not be returned to the Central Bank to cancel out the Cash Credits."

    However, I do not understand how the interest that the bank charged the producer at the beginning of the production process can return to its origins. I ask the same question regarding the profit charged by the producer.

    At the beginning of the production process, wouldn't profits and interest be owned by the retailer and the bank? I will thank you very much if you answer me. Hugs.

  • Comment Link Oliver Sunday, 09 May 2021 18:21 posted by Oliver

    Hi Michael,

    Those are some good questions and observations. Douglas suggested that if there is some danger of gaming or other forms of manipulation, retailers who wished to benefit from the compensated price discount would have to agree to a negotiated percentage of profit on turnover that is determined to be equitable for the industry in question. There is no limit there on aggregate profits, but, in order to increase profit, retailers would have to supply more. This is explained in one of the latest DSC animated videos:

  • Comment Link Michael Kean Sunday, 18 April 2021 21:46 posted by Michael Kean

    Thanks Oliver,
    If supplier1 gets a sale at $100 after NCA discount and supplier2 gets a sale at $102 after discount for the same product, will the NCA pay the discounts in both cases whatever they are, or will it only pay a maximum of the lowest discount requested? I see an issue here if supplier1 requests a profit of $5 (total $105) and supplier2 requests a profit of $6 (total $108), ignoring all other cost not passed on in wages, etc. Why should the NCA pay more than a $5 profit ceiling? Alternatively, why wouldn't supplier1 collude with supplier2 and both ask for profit of $10 (typical prisoners' dilemma/game theory issue)? The customer doesn't seem to get a lookin here. That is, the capitalist supply/demand curve seems to translate to a cost/demand curve with a profit ceiling or profit gaming under Social Credit. Please clarify. Thanks again, Michael.

  • Comment Link Oliver Thursday, 15 April 2021 21:03 posted by Oliver

    Hi Michael Kean, we have to make a distinction between what is sometimes referred to as the national or societal profit in Douglas Social Credit, i.e., the total surplus of goods and services as represented via prices vs. the income made available through the normal paths of distribution (wages, salaries, and dividends) to purchase them on the one hand, and private profit, the profit of companies, entrepreneurs, etc., on the other.

    Under Douglas Social Credit people who work would retain wages and salaries and, if they successfully give people what they want, companies and scientists, inventors, developers, etc., are free to make a profit, as much profit as the turnover of their goods and services can justify. The incentive to work and to innovate remains.

  • Comment Link Michael Kean Saturday, 10 April 2021 01:04 posted by Michael Kean


    "To respond to just one of your questions, under SC, people who work in the formal economy would still retain their wages and salaries and those who own businesses would still be able to make a monetary profit (which would be wholly dependent on giving consumers what they independently want) in addition to their National Dividend payments."

    Just wanting to understand how this profit is determined/limited and distributed nationally, and the profit-sharing relationship between the inventor that provides the intellectual property and the owners / shareholders of the business that brings the IP to market. Thanks.

  • Comment Link Michael Kean Friday, 09 April 2021 21:01 posted by Michael Kean

    "It is the cultural heritage (the inventions and discoveries of past scientists, engineers, organizers, etc.) which makes the greatest factor in modern production, the real capital, possible."
    What about current scientist, engineers, organizers, etc.? If production is fully consumed, the Just Price is the cost of production. Where is the incentive for current IP creators to make a profit from their labor-saving contributions? Are they just paid a fixed wage or salary (part of cost of production) or do they compete with the citizenry for a higher portion of the National Dividend? If so, how?

  • Comment Link Adrian Newell Friday, 10 July 2020 09:38 posted by Adrian Newell

    I know very little about SCT, this is the second time I have looked at it. I just wonder if in part, only in part, it is compatable with MMT. Compatable to the extent that money creation can be done in the Financial System. Not of course that it goes along the whole path that SC does. Becasue in MMT the money is not distributed evenly to the people and also its not linked to the level of production.

  • Comment Link Victor C Friday, 26 January 2018 01:08 posted by Victor C

    a very good summary. production exist because of consumption. Social credit is based on the time tested principles of the gospel. "work" was the effect of sin.(Genesis 3:19) removing sin and its consequences, ie greed, etc. will eliminate "work", eliminate the need, etc visit as we embark a new system, as we say come holy spirit and renew the face of the earth...

  • Comment Link mhikl Friday, 26 January 2018 01:06 posted by mhikl

    What messed up fonts when I try to copy any pages for study from and Clifford Hugh Douglas institute.
    Terrible. I have to reformat them to plain text and then back again to be able to use them

  • Comment Link  august vermassen Friday, 26 January 2018 01:04 posted by august vermassen

    Very hard to get one's head around.

    Graphics might be a great aid to make it more understandable.

    A picture is still worth a thousand words.

  • Comment Link Liam Friday, 26 January 2018 01:03 posted by Liam

    @Darrell: In my book "Economic Cures They Don't Want You to Know About" (see for synopsis) you will find a very practical set of answers to all of these questions and much more. In short though, the economy and businesses would work pretty much exactly like they do today. The only real difference is that the shortage of money would be eliminated so that all people and businesses would share the plenty of our land of plenty and mechanisms are suggested to prevent future generations from being hoodwinked by tomorrow's parasite sociopaths.

  • Comment Link Oliver Heydorn Friday, 26 January 2018 01:03 posted by Oliver Heydorn

    Hi, Darrell,

    I agree that there is much work of a more practical or empirical nature which must be done in support of the Social Credit case. I think, however, that you will find that most of the questions you list here are answered in my 548 paged book Social Credit Economics. To respond to just one of your questions, under SC, people who work in the formal economy would still retain their wages and salaries and those who own businesses would still be able to make a monetary profit (which would be wholly dependent on giving consumers what they independently want) in addition to their National Dividend payments.

  • Comment Link Darrell Friday, 26 January 2018 01:02 posted by Darrell

    This is a good summary - for those who have spent some time digesting the basic principles of Social Credit philosophy and understanding the mechanism of distribution. What is lacking here - and in every instance where SC is "explained" - are practical, real-world examples of the implementation of SC priniciples and what it would do/how it would change the day-to-day business exchange to which we are all familiar. For example, while the National Distribution would ensure that no one goes without the basic necessities of life, could one still amass monetary wealth (whether or not this is necessary) through employment or owing and operating a business? How would our currency relate to other currencies and could one exchange currencies to travel to other countries? Would the wage scales that we are used to, based on education, job position, industry, remain the way they are today? Would commodities that are denominated in world curerncies be provided to Canadians at cost rather than at world prices?
    These are the sort of questions that never get answered when any SC experts set out to explain SC. I think that if one wants to create a grass roots revolution to bring about change to a SC-based economy, there needs to be a lot of focus put on practical examples of SC in action in order to grow support.

  • Comment Link abc Friday, 26 January 2018 01:01 posted by abc

    I agree this is not enough simplification. As a test, you can show it your mother/neighbour and see how much they understand. IMHO, this needs to be drastically simplified for an average person to understand. Way too complicated.

  • Comment Link ezra Friday, 26 January 2018 01:00 posted by ezra

    What do you think of T. Thoren's work THE TRUTH IN MONEY....interest free fiat money


  • Comment Link  Ted Reznowski Friday, 26 January 2018 00:59 posted by Ted Reznowski

    Thanks for a great summary. It is certainly difficult, but needed more than ever, to have summaries that can explain to people, what Social Credit is and how it would affect their every day life. I've always thought that it was one of SC weaknesses, as there are really no good, modern summaries, or even courses (book, audio, film), that can be easily distributed and understood. Maybe others, who think they have the talent and knowledge, will put it to good use in creating teaching materials.

  • Comment Link  B. Mitchell Friday, 26 January 2018 00:58 posted by B. Mitchell

    Unfortunately not well expressed at all. Got boring and nearly incomprehensible for most folk by the end of point 2. Switched off didn't read the rest. The points could have been simplified and been far more illucidating for folk who are not already accountants or economists. The other ordinary folk are those that need to be reached and have something easily understood to read. The current system has avidly avoided and indeed suppressed the Social Credit philosophy and discredited political parties that have stood on SC principles. Most unfortunate, but the Zionist/Jewish banking system with their corporate enterprises, their military / terrorist and political puppets are actively protecting or extending their strangle-hold on everything. Their greed, control and NWO schemes for self gratification take total priority.

  • Comment Link Jean-Nil Chabot Friday, 26 January 2018 00:57 posted by Jean-Nil Chabot

    "Social Credit Explained in 7 Points is a summary well made. Summaries are for awakening interest. They raise questions which need to be answered. Money was not invented in its finished and perfect form, rather, it has been in evolution since its beginning and as long as it was attuned to man's social nature it has allowed human creativity to accomplish great things. The real nature of money (or credit) is social. Its capacity to serve the common good is immense. Unfortunately, some have usurped that capacity and made it a powerful instrument to serve their own selfish interests or ideology. They have used the power of money to dictate to governments and enslave the nations. Under their control, money has become a travesty of its true nature; it has become Mammon, an enemy of the common good. Being false, it is necessarily irrational which causes it to partially collapse periodically and will certainly do so completely in the end. Douglas has proposed a truly rational monetary system as a substitute for the false one that has been in place for too long - Social Credit will bring rationality to the whole of the economy. Understanding Social Credit demands reflection and the capacity to think a new monetary paradigm. Douglas brought it to light during the Great Depression, and it is still valid today, but it will have to implant itself in a different economic world. For instance Social Crediters might want to consider how electronic money could be integrated into Social Credit policy. To grasp the doctrine of Social Credit is to know money as the social means of making the fruits of progress available to all people. Social Credit would open the door to a better world."

  • Comment Link Francois Friday, 26 January 2018 00:57 posted by Francois

    Thank you for putting it to words. How do we go about changing the "system"???

  • Comment Link Steve Friday, 26 January 2018 00:56 posted by Steve

    Excellent summary. Integrates the philosophy and policies in a coherent fashion.

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