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Leader Social Credit Party of Canada / Parti Credit Social du Canada (2007-2008)

*Note: I'm not an expert on Social Credit or monetary systems or anything like that (I couldn't even pass grade 11 math :) ... so please bear with' ...

Introduction:
"Social Credit" is an economic theory developed by an English engineer, Major C.H. Douglas (1879-1952), who wrote several books on the subject in the 1920's. The name came from his desire to make the betterment of society (Social) the goal of the monetary system (Credit).

Theory in Brief:
Social Credit is, in brief, the theory that:

The total wages paid to workers is lower than the total cost of production, which means that there will always be insufficient money to pay a realistic, sustainable price for all the goods produced (and all sorts of nasty things ensue). For such a system (like the system we have now) to sustain itself Douglas asserted that a number of things must happen:

People go into debt, by buying on time, or
Governments borrow and increase the National Debt, or
Business borrows more bank credit to finance expansion, or
Businesses sell below cost, and go bankrupt, or
We win a trade war, putting foreigners in debt to us for our surplus of exports, or (if they can't or won't pay)
We have a war, "exporting" goods such as tanks and bombs to the enemy without ever expecting to be paid for them, and
financing this by government borrowing.
If these (quite unpleasant) things don't happen "businesses are forced to lay off workers, unemployment rises, the economy stagnates, taxes go unpaid, Governments cut back services, and we have widespread POVERTY, when physically all of us could be living in PLENTY."

Douglas believed that Social Credit could fix this problem by ensuring that there was always enough money (credits) issued to buy all the goods that could be produced. His solution is outlined in three core demands:

For a "National Credit Office" - to calculate on a statistical basis the amount of credit that should be circulating in the economy.
For a "Just Price" - a price adjustment mechanism to absorb windfall profits in times of inflation, and return them to people in terms of subsidized, lower prices when the cost of goods on the market exceeds the money available to buy them.
For a "National Dividend", to give a basic guaranteed income to all regardless of whether or not they have a job.
For a more in-depth explanation of what "Social Credit" is and why it's needed (I still don't fully understand it) see the bottom of this write-up.

Social Credit, then, is very similar to Communism in their assertion that the capitalist system is not sustainable, and that all people should share in the full fruits of their labours. Social Credit differs, however, in it's insistence on democracy, freedom and personal choice.
As a Political Movement:
Politically, Social Credit would probably not have gone anywhere but for William Aberhart, an evangelical Christian radio-host in great depression era Alberta, Canada. Aberhart believed that the Social Credit theory could pull Alberta (and the world) out of the depression, and so formed the Social Credit Party of Alberta. He used his radio show to expound the virtues of Social Credit to the people and in 1935, winning 56 out of the 63 seats in the legislature, formed the worlds first (and probably only 'true') "SoCred" government.

Aberhart tried to implement Social Credit policies, and at one point even issued monthly $25 dividends to Alberta residents, but all of his measures and attempted measures were declared unconstitutional (the federal government has control over banking under the Canadian constitution) and the party moved away from true Social Credit ideas to become a more run-of-the-mill conservative party.

In Canadian Politics:
The new conservative (non-Social-Credit) Social Credit Party would 'rule' Alberta uninterrupted until 1971, most notably under Aberhart's successor, Ernest C. Manning (father of former Reform Party leader Preston Manning), who won 9 successive elections!

Social Credit (as a conservative party) would also enjoy electrical success in British Columbia, forming many governments in the 50's, 60's, 70's, and 80's, notably under W.A.C. Bennett and later his son William R. Bennett. SoCred's would also win a few seats over the years in Saskatchewan and Manitoba (these two provinces, starting in much the same place as Alberta and BC, would eventually move in the opposite direction under the CCF and later the NDP).

Federally, the Social Credit Party would continue to elect a number of seats from Alberta, and a few from other western provinces. In 1962, under the leadership of RĂ©al Caouette, the SoCred's elected 26 members from Quebec. This group would split from its English Canadian counterparts (then holding only 3 seats) to form the Ralliement des Creditistes.

Social Credit fell out of favour in the 80's and 90's, seeing its political territory gobbled up by Progressive Conservative Party's provincially (the Liberal Party in British Columbia) and the Reform / Canadian Alliance Party federally. Today Social Credit holds no seats in any parliament in Canada and is not a serious contender in any area (although it is still a registered party in Alberta and BC).

In American Politics:
One of the more unusual places where you will find Social Credit theory is in the American "Greenback" movement. Popular among conservative extremists (your average Michigan Militia member for instance) the Greenback movement holds many of the same principles as Social Credit: especially when related to how governments finance spending. To quote a typical Greenback website (http://www.gold-eagle.com/gold_digest_98/hein061698.html):

"Abraham Lincoln... declined to pay the bankers' interest on funds he could create on his own, and printed his famous Greenbacks. He was shot in the head. So, for that matter, was President Kennedy, whose assassination apparently brought to a halt the program, then underway, to reissue United States notes. Bloodshed notwithstanding, wouldn't it be fiscally sound for the U.S. to finance itself directly from the printing press, instead of indirectly, by borrowing? It's called the "social credit" scheme."

In short, the Greenbackers' contend that the government does not have the right or the need to borrow money, and should finance its spending by just printing it (this, conveniently enough, would mean that these people wouldn't have to pay taxes anymore :)

Social Credit Theory In-Depth:
This a far more in-depth look at Douglas's analysis of the monetary system, what was wrong with it, and why "Social Credit" was necessary, copied from http://fn2.freenet.edmonton.ab.ca/~martinh/wisc.htm

Douglas's analysis of the problems of the modern economy runs along the following lines:

The major source of money in a modern economy is not the notes of the Bank of Canada, or the coins from the Royal Mint, but credit loaned to borrowers by the banking system. Banks issue credit - "promises to pay" - over and above the actual amount of gold, coin or government issued paper money in their vaults. When they do this, the number of dollars increases by the extra "dollars in the bank" created by the loan.
Every time they make a loan, therefore, banks actually increase the money supply of the nation.
Business pays money to consumers through wages, salaries and dividends. Consumers pay this money back to business in the prices of products placed on the market for sale. In every pay period this process is repeated. We are dealing with a series of comparatively short periods of time. People do not sit on large amounts of cash for very long - the money they receive is quickly either spent or invested.
In turning out products for sale, a business spends money in two directions:
(A) to pay wages to the persons directly employed by it, including dividends to its shareholders and interest to the bank, and
(B) to pay for the overhead cost of buildings, machinery and equipment used in manufacture as it wears out, including paying back the capital borrowed to finance these in the first place.
Modern methods of production increasingly depend on machinery rather than labour as a way to turn out their product in the cheapest and most efficient way. Consequently, more and more labour nowadays is spent on making capital goods and machinery ahead of time, and less and less is spent at the same time as the product reaches the market. During any pay period, therefore, there is less and less balance between how much income is being received by those able to spend it, and the prices of what is offered for sale on the market, which business needs to recover its costs.
When people are paid to make capital assets and machinery with wages that come from a bank loan rather than from their personal savings, an increased amount of money becomes available to buy a supply of consumer goods that has not increased at all. "Too much money chases too few goods", and prices rise. We have Inflation.
After the new capital assets and machinery have been installed, the manufacturer has to try to get back the cost of his machinery through prices, in order to repay his bank loan. When this happens, we have "Too little money" to pay realistic prices for the goods being marketed for sale. People are receiving "A" on each payday, and businessmen are charging prices of "A plus B". That price can't be paid UNLESS -
People go into debt, by buying on time, or
Governments borrow and increase the National Debt, or
Business borrows more bank credit to finance expansion, or
Businesses sell below cost, and go bankrupt, or
We win a trade war, putting foreigners in debt to us for our surplus of exports, or (if they can't or won't pay)
We have a war, "exporting" goods such as tanks and bombs to the enemy without ever expecting to be paid for them, and financing this by government borrowing.
"A factory or other productive organization has, besides its economic function as a producer of goods, a financial aspect - it may be regarded on the one hand a a device for the distribution of purchasing power to individuals, through the media of wages, salaries and dividends, and on the other hand as a manufactory of prices - financial values. From this standpoint its payment may be divided into two groups.
Group A. - All payments made to individuals (wages, salaries and dividends).
Group B. - All payments made to other organizations (raw materials, bank charges, and other external costs).
"Now the rate of flow of purchasing power to individuals is represented by A, but since all payments go into prices, the rate of flow of prices cannot be less than A plus B. Since A will not purchase A plus B, a proportion of the product at least equivalent to B must be distributed by a form of purchasing power which is not comprised in the description grouped under A."
(C.H.Douglas, The Monopoly of Credit, 1951 Edition p.140)
If none of the above things is done, businesses are forced to lay off workers, unemployment rises, the economy stagnates, taxes go unpaid, Governments cut back services, and we have widespread POVERTY, when physically all of us could be living in PLENTY. People become restive and demoralized, not realizing that their failure is not necessarily the result of their idleness or lack of skill, but rather of the way "the system" operates.
"No economic training is necessary to assess the meaning of the existing situation. On the one hand we have an enormous and increasing capacity to produce the goods and services which are the primary objective of civilization and which probably form the material basis on which alone a cultural superstructure can be reared. On the other hand we have an immense population not only unable to obtain from the shops, which are so anxious to sell, those goods which they are unable to buy, but are, by the miscalled unemployment problem, prevented from producing still further goods. Ordinary common sense alone seems to be required to recognize that only one thing stands between this practically unlimited capacity to produce, and what is in fact a definitely limited capacity to consume, and that is the money system, the bottleneck which separates production and consumption".
(Douglas, "The Monopoly of Credit (1951 edition) pp 87,88).