REVIEW
(Radical Economics: Spring 2006)
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The Political Economy of Social Credit & Guild Socialism |
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| Focusing on guild socialism and social credit, this work examines the origins of the key ideas, gives an overview of the main theories and documents their subsequent history. |
WHY DO WE HAVE TO WORK SO MUCH?
A new book looks back at the history of social credit – the economic ‘heresy’ of the 1920s and 1930s. Is it time we took another look? asks Emma Dawnay
INCREASING productivity means we produce more for every hour we work. Ten years ago we only, on average, produced 80 per cent of what we can produce today for every hour worked. This means that if you were happy with your lifestyle in 1995, you could work 20 per cent fewer hours today - that means three-day weekends for `full time' employees - and still enjoy the same lifestyle.
Many of us would be happy with this - and it would certainly be better for the environment - but we find it just isn't financially feasible. What went wrong?
Our need for money - to pay the rent or the mortgage and all those unavoidable expenses in life - seems to mean working a five-day week for most of us. This paradox - that we should be able to consume the same and take 'productivity gains' as more free time, but in practice it isn't possible due to lack of money - was noticed more than 80 years ago by Major Clifford Hugh Douglas who founded the Social Credit movement.
His theory is that the way money flows in the economy necessarily drives growth in production, even when this is not desired, and he proposed an alternative monetary system to get around this problem.
In the 1920s and 1930s, what is now `orthodox' economics was still up for grabs, and Douglas' ideas had a large following - filling stadiums with supporters to hear him on his visits to Canada and Australia.
His solution, always a little vague, involved a ban on the creation of money by banks, and its issue via a basic income to every individual instead.
Unfortunately the more mainstream economists of the time did not have the tools to analyse the way money flows worked, and they made the simplifying assumption that the problem could be analysed statistically.
It is hardly surprising, therefore, that they failed to find a link between the financial system and undesired economic growth. After the Second World War, the economy boomed and today's orthodox view of economics took hold whilst Douglas' ideas withered.
Now, most mainstream economists have never heard of Major Douglas or social credit. Modelling money flows in the economy - and the effects of this on our lives, such as having to work as long as we do despite productivity gains - is not a subject in economics.
This is amazing. Economists are said to envy physicists as their science is mathematical, and here is a whole area of economics that could be mathematically modelled but is rarely touched upon. There is no excuse as there was in Douglas' time: today we could easily do this with the computational tools we have.
It may be that the insights of Douglas could help us develop a socially just and sustainable society. Please could some economists start doing some heavy-duty modelling to test out these ideas and help us find a financial system that doesn't lead to ever-more consumption and ever-more use of the planet's non-renewable resources?
And quickly! We know we would be happier with more time spent with friends and family right now, and we know we are destroying the planet. Time is running out!
• The Political Economy of Social Credit and Guild Socialism, by Frances Hutchinson and Brian Burkitt, origianally publised by Routledge (1997).