In February, 2014, our long-time friend, M. Oliver Heydorn, published a 548-page book on the subject of Major Clifford Hugh Douglas’ brilliant economic ideas, entitled Social Credit Economics. This book does a fantastic job of systematically exploring all of Douglas’ work. Dr. Heydorn wrote this to introduce his book:
“In sober truth, there is, in a modern, industrialized economy, no good reason for poverty, or for a policy of full employment (with its consequent lack of leisure), or for inflation, or for alternating cycles of boom and bust, or for economic waste and sabotage, or for inhuman financial pressures, or for personal indebtedness, or for public debts, or for high levels and/or unjustifiable forms of taxation, or for social turmoil, or for cultural decay, or for the forced (economically induced) migration of persons from their native lands, or for environmental degradation, or for international economic and political conflict culminating in that form of collective insanity otherwise known as war, etc., etc.
“If you would like to know why the present financial and economic systems are dysfunctional, how the dysfunction manifests itself, and what can be done to restore a due order, I would encourage you to obtain a copy of the book. It is available on the Create Space website (https://www.createspace.com/4487189) and also via the Amazon website.”
At the beginning of his book, in his acknowledgements, Dr. Heydorn thanks various Social Crediters who helped him with his book: Wallace Klinck and Jim Schroeder of Alberta, the late Victor Bridger of Australia, and Dr. Frances Hutchninson of the United Kingdom, current head of the Social Credit Secretariat. And then Dr. Heydorn wrote:
“Last, but not least, I wish to express my gratitude in a special way to Alain Pilote and the Pilgrims of Saint Michael (Rougemont, Quebec). In early 2002, I received one of their leaflets in the regular mail and, for some reason, decided to take the time to closely read one of Alain’s articles. I was captivated by what I had discovered. Were it not for the Pilgrims’ untiring devotion to the Social Credit cause, I might never have encountered the writings of C.H. Douglas, and this book might never have seen the light of day.”
Here are excerpts from pages 38 to 55 of this book:
by M. Oliver Heydorn
In the first chapter of the first part of Social Credit Economics, it was determined that the true purpose of economic association is twofold: a) to deliver the goods and services which individuals desire, and b) to do this with the least amount of trouble to anyone. Insofar as any economic system fails to achieve the first end to the extent that it is physically possible and desirable, we are confronted with the phenomenon of “poverty in the midst of plenty”, and insofar as any economic system fails to achieve the second end to the extent that it is physically possible and desirable, we encounter the phenomenon of “servility in place of freedom”.
Poverty in the midst of plenty
The expression “poverty in the midst of plenty” describes a paradox that has characterized the economic life of the nations from at least the early years of the 20th century. On the one hand, we live in a world which, thanks to the industrial revolution with its introduction of machines and its harnessing of new sources of energy, can easily supply all of the goods and services that individuals can profitably use (I am speaking in brute physical terms) and yet, at the same time, we live in a world where an enormous real demand for both goods and services is left unsatisfied. The state of penury in the face of actual or potential abundance can assume one of two distant forms.
In developing nations, it is most commonly experienced as a lack of useful production even though the raw materials, the labour, the know-how and the desire to consume are all present or could easily be acquired. (...)
In developed nations, the phenomenon of “poverty in the midst of plenty” manifests itself not so much in a lack of useful production, but in the inability to fully satisfy the needs and desires of consumers because already existing production cannot be effectively distributed. This failure of distribution reacts on the productive system and prevents it from producing still more goods when, from a physical point of view, it would be easy for it to do so.
We have, on the one hand, a situation in which the productive system produces more goods and services than can be distributed and is even capable of producing much more both actually and potentially. On the other hand, there are many people who, though in need or desirous of certain goods and services, are nevertheless forced to do without. This state of affairs is rendered particularly acute in times of economic recession and depression and can be correspondingly eased in times of economic boom, but it is never wholly eradicated. To take just one example, that of the United States, the 2013 Annual Social and Economic Supplement from the United States Census Bureau indicated that in 2012, 15% of the population, or 46.5 million people, were living in poverty, as were 21.8 percent of all children under the age of 18.
Servility in place of freedom
Not only are we physically capable of producing all that we need and indeed much more, we are also capable of achieving the production and distribution of useful goods while not calling on the full capacity of labour. Furthermore, as technology advances, the number of people required to work in the industrial system is continually decreasing. These realities are not duly reflected, however, by the current economic arrangements that govern modern industrial societies. Instead, there is almost universal insistence on the objective of “full employment” as an ideal state of affairs.
Now, whenever an economic system requires the subordination of the time and energy of an individual to the goals of the group to a greater extent that can be justified by the physical potentialities of production, the superfluous employment must be regarded as servile labour. Instead of enjoying the release from the economic necessity to work, in the form of leisure, artificial “make-work” is imposed on the individual since this is typically the only way he can obtain the money required to look after his necessities.
It must be recognized that even if an economic system manages to deliver a reasonable quantity and quality of desired goods and services to consumers, such a system must still be regarded as a failure if it fails to achieve this production with the least amount of trouble to everyone concerned:
“The root problem of civilisation—not the only problem, but that which has to be disposed of before any other—is the problem of the provision of bed, board and clothes, and this affects the ordinary man in terms of effort. If he has to work hard and long hours to obtain a precarious existence, then for him civilisation fails.”
While more work than is physically necessary is often demanded of the employed members of the population (particularly in “developed” countries), the members of the labour force for whom neither necessary nor artificial “make-work” can be provided are also forced into a position of servility. In order to meet their needs, these unlucky persons must either rely on the availability of welfare or unemployment insurance programmes, which typically impose all sorts of silly restrictions on the individual (while simultaneously subjecting them to the understandable irritation of the employed who are forced to pay for these measures), or else they are left to beg or turn to a life of crime.
Of the two phenomena, “servility in place of freedom” is, at least from certain points of view, much worse than “poverty in the midst of plenty”. While “poverty in the midst of plenty” cannot exist without servility, it is certainly possible for servility to exist without poverty:
“The abolition of poverty in the midst of plenty, important as that is, is not the core of the problem. It is conceivable that people might be provided for as well-fed slaves.”
With respect to this latter point, it must be remembered that “the primary characteristic of the slave is not bad treatment. It is that he is without any say in his own policy.”
Not only is it possible for servility to exist without poverty, it is a reality for millions upon millions of people. The trade-off with which most individuals in developed countries are faced involves escaping from the clutches of poverty only in exchange for adopting a position of economic servility. As Douglas noted, this trade-off is not an intrinsic feature of economic life in an industrialized society, but a state of affairs which is externally imposed by man-made economic systems. (...)
All conventional economic systems fail to adequately fulfill the true purpose of economic association
Which of the conventional economic systems has abolished poverty in the midst of plenty? Granted, some of them have been more successful than others, but which of them has managed to completely abolish the spectacle of poverty when, in the modern world, it is perfectly practicable, from a realistic or physical assessment of our economic potential, to do so? Which of them has abolished servility and liberated the power of individual initiative to the extent that this is physically feasible?
Neither Laissez-Faire Capitalism, nor Marxist Socialism, nor any variation on theme of the “Mixed Economy” delivers the goods and services as, when, and where required (i.e., to the extent desired by the bulk of individual consumers) when this delivery could easily be effected in physical terms, and even with regard to the goods and services which they do deliver, they do not deliver them with the least amount of trouble that could be readily justified by the physical conditions. In all cases, unhampered reality does not determine the conditions under which an individual may live; instead, the authority of an incongruent system dictates “the terms on which the existence of the individual can continue.” To the extent that they do not render what is physically possible and desirable an economic reality, to that same extent each and every conventional system fails.
The undying search for a feasible alternative to the available economic options is further confirmation of the breakdown of the conventional spectrum. If people were satisfied with the results possible under any one of the conventional economic systems, they would cease searching. Since they are not satisfied, the search continues. Socialism first arose as a practical alternative because people were dissatisfied with capitalism, but it too has often collapsed because of its own failure to deliver the desired results.
At this point an objection may be raised: If all of the conventional systems fail to do away with the twin paradoxes of economic failure by fully liberating the inherent physical potential of the economy, and the conventional economic spectrum is therefore bankrupt, shouldn’t we conclude that “there is no other alternative” and that some version of the “Mixed Economy”, while not perfect, is nevertheless “the best we can do”?
Taken as an absolute claim, the idea that the conventional spectrum exhausts the range of possibility is actually false; there is an alternative system of ownership that the conventional spectrum does not take into account. It may be true that some form of the “Mixed Economy” is “the best that we can do” under current conventions, but, since what is physically possible can and should be economically possible, it is reasonable to expect that we could do much better if those conventions were suitably altered. Thanks to the development of industrial technologies in combination with the bounty of the natural world, physical abundance has replaced physical scarcity and hence we need a “New Economics”, i.e., one based on the facts of abundance, to replace the “Old Economics”, i.e., one based on conditions of scarcity which no longer exist or, at any rate, need not exist. Such an object lesson in authentic progress is the promise of Social Credit economics.
The basic economic problem: Finance artificially limits the economic Social Credit
If all of the conventional economic systems fail to adequately facilitate the fulfillment of the true purpose of economic association (to the extent that this is physically possible), the following question naturally arises: Why do they fail? (...)
As a means of general principle, how well a thing fulfills its purpose is contingent, inter alia, on the nature and extent of the power which is available for the realization of that purpose. In the case of associations, Douglas referred to this power as “the social credit”. Given that the fundamental purposes of co-operative production is to optimize the conditions of consumption, the economic social credit may be defined as “the power of human beings in economic association to produce the intended results of goods and services in sufficient quality and quantity (as determined by individual choice) with the least amount of trouble to everyone”.
One of the greatest contributions of Social Credit to the field of economics is the discovery that the social credit of contemporary economic associations (regardless of the specific conventional economic system that they have adopted) is artificially limited to a large extent by the nature of the standard financial system which grounds and interpenetrates all of them:
“Unrestrained by the financial system, the resources of modern production would be sufficient to provide for the material desires of the whole population of the world at the expense of a small and decreasing amount of labour.”
The financial system fails to successfully unite, in the best possible manner, the real demands of consumers for goods and services and of workers for leisure with the real capacity to satisfy those demands. The flow of money which it produces and employs, on account of the conventional rules under which it produces and employs that flow, “fails to function as effective demand to the general satisfaction…” This results in the paradoxes of “poverty in the midst of plenty” and of “servility in place of freedom”.
As a matter of fact, the restraining effect that the financial system exerts on the actualization of our physical economic potential is so intense and pervasive that its dysfunctional nature constitutes the chief cause underlying economic problems worldwide, together with their accompanying personal, social, political, cultural, and environmental catastrophes. It also serves as the principal exacerbating influence behind many of those problems of which it is not the direct cause.
This is the very heart of the Social Credit economic diagnosis, and as such it bears repeating: in the modern world, the de facto power of human beings to produce the intended results of economic association is usefully inadequate to meet the demands and expectations that are placed upon it primarily because of finance. Our economies are not good; i.e., they do not fulfill the true purpose of economic association as well as they might, because of the financial system. On the basis of this assessment, a number of important implications follow:
1) Contemporary economic difficulties are not due to problems with production per se, nor is there a lack of real demand. Holding money in abeyance for the moment, it has already been established that there is more than enough raw material, energy, technology, labour, and know-how available to produce all the goods and services which people might profitably enjoy. (...)
2) Contemporary economic difficulties are also not the result of the supposed inherent wickedness of human beings per se (although it is true that wickedness can and often does prevent those who are in a position to modify the financial system from doing so). It is not the alleged greed, or laziness, or envy, or pride of the average human being which thwarts our economic potential. The call for a change of heart or metanoia, though it may be advisable in other spheres, is entirely incapable in and of itself (with the exception previously noted) of improving our economic conditions to any considerable extent. A community composed of saints would be equally incapable of escaping economic travails to any great extent so long as the current financial system determined the parameters within which their economic activity must occur. Holiness is no substitute for faulty financial structures.
3) Finally, just as contemporary economic difficulties are not due to problems of production per se, they are also not due per se to that system of administration that can maximize the rate of production which is independently desired by the consumer, i.e., free and private enterprise. The institution of the free market combined with the widespread private ownership and management of the means of production is not intrinsically faulty. (...)
Having identified the financial system as the main cause behind our economic difficulties, we can already disregard the standard series of putative “solutions” which are incessantly put forward. As a result of (1), it is clear that the economic difficulties of developed nations cannot be adequately dealt with by ever-increasing and indiscriminate economic “growth”: more production, larger exports, and harder work, as advocated by neo-liberal capitalists. Since the problem does not lie with production, more production will not solve anything on a permanent basis and would, in fact, only tend to aggravate those difficulties in the future.
In view of (2), it is equally evident that the solution does not lie in greater dialogue, or more frequent public philanthropic campaigns, or the mass rallies championed by the sentimental social activist. Finally, in light of (3), it follows that the solution to economic problems cannot be found in state or communal ownership of the means of production, in a planned economy, or in redistributive and/or “progressive” taxation as the socialist claims. None of these remedies addresses the core of the problem, which has to do with the structural nature of the financial system.
M. Oliver Heydorn