Monday, 27 August 2012

An alternative economics

I gratefully receive a consistently thought-provoking journal called The Social Creditor, brilliantly edited by Frances Hutchinson. It makes me think, but I never manage to come to a conclusion because I feel I don't yet understand the issues well enough. Of course, I recognize the common concerns of the Social Credit movement of C.H. Douglas (d. 1952) and the Distributists (expressed in, for example, Hilaire Belloc's The Servile State). Novelist Eimar O'Duffy puts it satirically like this:
"Suppose a party of people were wrecked on a desert island, what do you think would be the first thing they’d do? Obviously they would look around for a man with money to employ them in gathering fruit. If there were no capitalist among them, or if he didn’t see his way to make a profit out of the business, they would all remain unemployed and starve to death, no matter how fertile the island might be.
     "If therefore we want to have plenty of employment, we must give every possible incentive to entrepreneurs – encouraging them to get as much of our money from us as they can, so that they can spend it on employing us to make more for them.” (Asses in Clover, Jon Carpenter Publishing, 2003, pp. 246-7.)
An introductory article on Social Credit is available here. According to this,
"Douglas observed, as a matter of fact and not mere opinion, that finance flows into the economic system as bank-created debt. Firms use the debt-created finance to pay their costs of production. The wages, salaries and dividends paid out by firms form incomes to households. With their incomes, households can purchase the stream of goods and services coming onto the market. As the modern economic system has developed, it has created a massive bureaucracy. Behind that bureaucracy, obscured by the very complexity of the system, financial speculation, profiteering, marketing, advertising and a whole range of growth-driven economic activities are making human existence increasingly precarious."
Hard to argue with that, but can we really shift, as he proposed, from a debt-driven economy to a credit-based one?

For more discussion of the nature of finance and money see D.C. Schindler's philosophical analysis linked here, and Philip Goodchild on The Theology of Money.


  1. William Cobbett was an early exponent of the economic philosophy which became known under the title ‘social credit’ a century later. For an excellent introduction to this mode of economic thought see Chesterton’s biography of Cobbett. And I can heartily recommend Cobbett’s "A History of the Protestant Reformation in England and Ireland". The latter is the most refreshing, common sense approach to economic history I have ever read. See current issue of "The Social Crediter", on

  2. Indeed - Cobbett is important, and he came up in our recent Summer School looking at the influences on Chesterton and Distributism, though it would have been good to devote more time to him.