EDITOR'S NOTE - Clifford Hugh Douglas wrote Economic Democracy, in 1920. Today we refer to the system of monetary reform he developed as either Economic Democracy or Douglas Social Credit. The following is from the last chapter of The Answer to Socialism by Colin Barclay-Smith, an Australian journalist and writer. We created the subheadings.
Scrap or Cure Capitalism?
The insecure and unhealthy capitalist world as we know it — in which both the worker and the industrialist are exploited by Finance Capitalism and the governments which do its bidding — has no appeal for me. It is in urgent need of far-reaching reform.
The Communist says "Scrap it. It has no redeeming feature.” This attitude doesn't make sense to me. Such an attitude merely shows a pig-headed refusal to recognise the extraordinary productive progress that the world has made under capitalism. Throw out the dirty water of capitalism, by all means, but don't throw out the baby with the bath water.
Is it not saner counsel to remedy the weaknesses in the present system? I suggest that is the logical, rather than the emotional attitude to the problem of post-war reconstruction.
How easily these remedial measures could be implemented, once the people made up their minds to do so, will be gathered from the financial proposals briefly outlined in the last chapter.
With the foregoing financial basis for the postwar era, this country would be in a strong position to build a really worth-while social order, compared with which the Socialist State or the present Finance-dominated State would be shabby, servile and totally unsatisfying.
The answer to Socialism, therefore, is not Finance Capitalism. Economic Democracy is the answer.
What is Economic Democracy? Economic Democracy is the name given to the basic principles for a social order put forward by that Scottish genius, C. H. Douglas, as long ago as 1919.
It is only now that the world is beginning to recognise their epoch-making virtues. Someday it will pay homage to the man who gave life to them. One thing is certain: had they been adopted, World War No. 2 would never have occurred, and the world would be enjoying the era of prosperity and progress that it is only dreaming about, and hoping for, now.
Economic Democracy principles
The principles of Economic Democracy are as follows:
1.) Parliament to be an instrument of the popular will.
2.) The Central Government to enjoy complete sovereignty over money.
3.) The volume of money to be controlled by a National Credit Authority, working on the principle of a National Balance Sheet (in contrast to the present Budget system of receipts and expenditure).
4.) The National Capital Account to be credited with the cost value of all production, including capital appreciation, and debited with the cost value of all consumption and depreciation, the annual credit balance to be monetised to finance the following policy:
a) The progressive liquidation of the National Debt;
b) The steady reduction of taxation;
c) All public and semi-public works, including State and municipal undertakings;
d) A National Price Discount scheme (as briefly outlined in a previous chapter);
e) All social services on a far more generous scale;
f) A scheme of national dividends to supplement the wage and salary system, and finally replace it altogether as the machine replaces manpower.
Yes, I know that this national dividend idea traverses all our old wage-earning ideas. I know that it runs counter to the age-old Pauline creed that "he that will not work, neither shall he eat.” But the advanced Democracies are rapidly approaching the time when industry simply won't need the full-time services of the vast majority of the working population.
Stuart Chase, the American economist, sums the situation up when he says: “Slowly, reluctantly, even kicking and screaming, western civilisation is being driven to the hereto abhorrent notion that the consumer must be furnished with purchasing power whether he works or not.”
5.) Hours to be progressively reduced as the Leisure State supersedes the Work State.
6.) Personal freedom in security to be the inalienable right of every human being.
Freedom with security
In short, Economic Democracy is a debt-free, tax-free, fear-free economy, with full opportunity for personal development. It is a social order based upon the axiom that the State was made for Man, not Man for the State.
Such a system is the direct opposite of the "propertyless society" envisaged by the intellectual Communist. Economic Democracy, instead of abolishing property, would increase it. Homes for all, labour-saving devices for all, refrigerators and motor cars for every family — not purchased at the price of reduced living standards, not loaded with a nightmare burden of time-payment debt, but purchased on the easiest possible terms — at prices no longer loaded to the plimsoll line with taxation.
What does the individual want? What do you and I want?
We want economic security on our own terms. That is to say, security from want or fear. But more important, we want security in freedom. The freedom to enjoy the fruits of a bountiful nature. The freedom to use the production of man's energies and the energies of the power machine.
The freedom to have all the educational facilities we want and of which we are capable of using. The freedom to grow up in health without suffering any malnutrition either from money shortage, over-work or ignorance.
The freedom to do the interesting things we want to do and cultivate our talents to the maximum, so that we may make the greatest contribution to the Society of our generation.
The freedom to marry when we want to, and not when arbitrary economic circumstances dictate or permit. The freedom to raise our families in similar happy and secure circumstances.
And, finally, the freedom to enjoy a rich, full, useful, and happy life in which our better natures will be given full opportunity to express themselves and our personalities to achieve their finest possible flowering.
I suggest that that is the freedom we all want, and you must decide whether its achievement is more probable under a Socialistic bureaucracy or under the system I have briefly outlined as Economic Democracy.
Hugh Walpole, the English writer, who lived for six years in Russia, recently wrote:
"Every great and beautiful thing in the world, art and progress, seemed to me to have been created by the freedom of the individual. I believe it to be by far the most important thing in life.”
Socialism vs Economic Democracy
Just contrast the basic ideologies of Socialism and Economic Democracy:
Socialism is based on the principle that Man should serve the State. Economic Democraco believes that the State should serve Man.
Socialism believes in the regimentation of the individual for State development. Economic Democracy believes in the freedom of the individual for self-development.
Socialism is a scheme for the more equitable sharing of poverty. Economic Democracy makes financially possible a more abundant life for all.
Socialism believes in State ownership and bureaucratic control of industry. Economic Democracy pins its faith to free initiative and personal enterprise, under State control.
Socialism involves the Centralisation of Power in a bureaucratic clique. Economic Democracy insists that power over fundamental policy resides with the electorate.
Socialism would perpetuate the debt, loan and tax system – as Russia has. Economic Democracy would abolish it.
Socialism would destroy personal initiative and individual incentive. Economic Democracy would encourage, but control, them.
Socialism believes in the Work State. Economic Democracy aims at the Leisure State.
Socialism regards the economic problem as one of production. Economic Democracy insists that it is one of consumption.
Socialism preaches the class struggle. Economic Democracy makes possible the brotherhood of man.
Socialism believes in the “dictatorship of the proletariat." Economic Democracy is a state of society in which the people give the orders and Parliament sees that the popular will is carried out.
The Modern State Bleeds the Individual
I cannot share the simple faith of the Socialist that the State is a wise, just, and benevolent institution into whose hands we can entrust our lives, liberties and industries, with perfect confidence as to the outcome.
The history of State activities over the last quarter of a century — in fact, all Governments the world over — shows clearly that they have been pursuing a policy that has made a steady and insidious encroachment upon the liberty and security of the individual.
A brief study of taxation over these years shows that every Government in the world has increased its demands tenfold and more.
Every so-called sovereign State has used its sanctions of power to exact an increasing tax tribute from the people...
The steady increase in taxation — which the mass of the people pay for in increased living costs — has been the major feature of all governmental policies over the last quarter of a century.
Armed with the sanctions of power, governments have extracted taxation to the point of confiscation — and done it in the sacred name of the people!
The Great Issue to Be Resolved
It is daily becoming clearer that the issue about to be resolved in the immediate years following the war is whether Power is to reside in the Individual or the State. The issue is one of Power. Is Power to be used socially or anti-socially? For good or ill?
That is the greatest human issue taking shape on the horizon. The outcome will transcend anything which is now being resolved by the force of arms.
The Socialist backs the State. Economic Democracy puts its money on the Individual.
From now onward we are destined to witness an epic struggle - the growing assertion of Man, the Individual, against all the forces hell-bent upon his subjection and enslavement...