Science of the Social Credit Measured in Terms of Human Satisfaction
Christian based service movement warning about threats to rights and freedom irrespective of the label, Science of the Social Credit Measured in Terms of Human Satisfaction

"All that is necessary for the triumph of evil is that good men do nothing"
Edmund Burke

Science of the Social Credit Measured in Terms of Human Satisfaction

Address to the Australian League of Rights
By Michael Lane

Triumph of the Past, October 2002

The following address was delivered at the Australian League of Rights National Weekend in Albury, New South Wales on October 12. An audiotape can be purchased from Melbourne Educational Association Tapes, P.O. Box 248, East Caufield, Vic. 3145, Australia. An earlier version of it was delivered in New Zealand on October 7.

Thank you. My father is a retired Unitarian minister, he's been politically liberal all his life. He marched in the American civil rights movement with Martin Luther King in Selma, Alabama. Subsequent to that we had the Vietnam War, and he was always part of the protest movement. That was the world I grew up in. In the earlier part of that, of course, I was more interested in being a kid. I wasn't interested in it. But as I came into high school and the Vietnam War came along, I still wasn't interested in it. The result of that upbringing1 to me was to make me apolitical, completely apolitical. I had my passions as a young man--chess and poetry. But to watch the TV news about elections and parties, I thought I could see through it, I just couldn't take it seriously. I think what I was looking for (although I didn't know it at the time, I only knew it when I found it later on) was some kind of poetry in politics, some kind of vision instead of this sad, pathetic competition. I think my apoliticalness also came as a result of living in an Empire (again, I wouldn't have put it that way at the time), but living in this huge, sprawling place with very little sense of place inside it. Americans think nothing of picking up and moving thousands of miles just because their job takes them there. So my sense of place was not there, that was something missing in my life.
    Subsequently, I became interested in mysticism, the exploration of the self, Eastern philosophy. I continued apolitical if not completely antisocial until about 1982, when the movie Gandhi came out, and I happened to see it. This movie changed my life (I would have to say), because it gave me that thing I was looking for, that vision of community, a kind of politics that is a reflection of, and an expression of, the self that I was looking for in Eastern mysticism. They were integrated. As a result of watching that movie, I started reading Gandhi. I read the works that Gandhi read, namely, Tolstoy and Ruskin. I began to describe myself as a Tolstoyan. Tolstoy wrote a wonderful book, in fact, about money, in which he uses the example of Fiji to show how the government said you have to pay a tax in money.2 Well, they didn't have any money, so they had to go to work for the administrators to get the money to pay the taxes--how money is violence. That was the way he put it, money is violence. Of course, Douglas takes us beyond that.
    One thing led to another, and I chanced to read Social Credit by C. H. Douglas. Here, I can't say I understood the book, but I immediately sensed a very rare intelligence, and the fact that I couldn't understand it made we want to read it again and again and again, because every time I read it, I saw something new. It was almost like he was teasing me. At that time, as I mentioned last night (this was 1991), I didn't know that there was a living social credit movement. You know, being a Douglasite was like being a Tolstoyan. I thought I was the only one. I was very happy to find you folks. About the same time, as it happens, I found truth where I least expected it and became a Christian. And in 1996 I started Triumph of the Past in order to explore the intellectual pedigree of social credit and enter that dialogue. I say "dialogue" because Douglas, I found, wasn't just a lonely crank, he built on a continuous, living tradition. Some of the other members of that tradition that I want to mention are John Ruskin, the greatest nineteenth-century critic of capitalism (not Marx); William Morris, with his vision of civilization as an art, the building of civilization as an art; Leo XIII--Pope Leo XIII--whose book Rerum Novarum was a great call for justice to workers; the distributism of Hilaire Belloc and G. K. Chesterton; and finally Alfred Orage, who drew all these traditions and more together in his New Age.
    So I entered this dialogue, and if I had to pick one name to link all these different writers together, I think I like Hilaire Belloc's name distributism, which I would define as "the philosophy of the individual quest as against the overriding function." It's very deliberate that I choose the word quest instead of right or something like that, because to me it was very important that it's not a matter of digging your feet in and saying, "These are my rights" but also of having a vision of what rights are for and a creative task, the sense of an adventure, a positive goal.
    Having found the social credit movement, I observed three things about it. Number 1, the movement so far, all things taken into consideration, had failed. Or it had not yet succeeded, which is the same thing. It had been banging its head against the wall as far as actual, conclusive results are concerned. Number 2, coming from where I was in the United States, the movement not only had not succeeded, but it was entirely forgotten. It was only by the wildest chance--and the fact that I was looking really hard--that I found it at all. I could easily not have found it. Finally, insofar as the movement was known, I noticed, it was very disreputable. Now it's tempting and it's easy to say, well, that's a badge of honor, they don't like us because we're right; but it's kind of a poor consolation just to go on--to be right and nothing else. So it occurred to me that (I was now a social crediter), but it occurred to me to say, well maybe part of this reputation is also our fault. This movement has been on the defensive as a result of being marginalized, especially since the 1930s--has been on the defensive for a long time, and that has to influence the way we address ourselves to the public.
    So why had the movement not succeeded. Well, what had we attempted? We attempted, essentially, to get social credit enacted by law by a national legislature. That's the goal which we were aiming at. Yet when I read Douglas, I see that he has put forth at least three different models of social credit: (1) national social credit, instituted by law; (2) the Draft Mining Scheme, which, if you look at it closely, is social credit (it includes both a dividend and a price discount), but it's social credit for a single industry, coal; (3) Alberta. In Democracy in Alberta3 Douglas clearly said that this province could institute social credit by itself, and he gave some indications how it could go about doing so. In fact, I found that example particularly interesting--social credit at a subnational level.
    Allied with that, connected with that, there came to the forefront of my mind his statement that a railway ticket is a limited form of money. A limited form of money. Now at first glance, you might take that to be simply an illustration. Say, money is a ticket system to claim any and all goods within a credit area. Well, a railway ticket is a claim ticket to any and all goods that a railway company provides. So it's just an illustration to help us understand what money is. But I think we should take it literally, we should take him at his word. Okay, a railway ticket really is money, although of a limited kind. By the same token, postage stamps are money, transit tokens are money, coupons are money, all of those. And they all exist side by side with legal tender money without occasioning any comment, without any perception of conflict, without any perception that the one is undermining the other.
    Douglas also said this, he said, "The present situation is vulnerable to very weak forces. The Housewives face many of them. Narrow your front until you must break through."4 Now where is this narrow front that every housewife faces? It's the money system where it impinges on you there where you are everyday. So it occurred to me--I began to wonder if we don't need to go up to Washington, up to Canberra, to persuade everybody to go along with us before we can institute social credit on some level, but real social credit. Real credit is everywhere. It didn't make sense to me to say that we social crediters have the science of credit, we have the true science to mobilize all real credit, but we don't have the science to mobilize a portion of it. That didn't make sense. So before we come to any particular solution to the problem, that alone convinces me that there's got to be a way to do it. There's got to be a way to mobilize credit on a small scale in order to solve real problems. We can make tickets do on a small scale what we say money is supposed to do on the national scale.
    If you think about--if you think of social credit as about money, and you think of money as the official credit backed by the state, the police-power of the state, then you have to get social credit from the national government, there's no other way. But if you think of social credit as about credit (and credit is everywhere), you have more options.
    So let's go back to basics. Money is just an expression of credit, money is the name brand backed by the police-power of the state. They can monopolize that, but they can't monopolize credit. It's like trying to hold water in your hands. So is it possible, I asked myself, to introduce social credit as a style of creative financing in, say, a business organization, a production entity? If national social credit can make us rich in all good things (which I believe it can), then maybe social credit in, say, transit tokens could at least make us rich in transit, make us rich in rides. Why not?
    A long time ago, when I started Triumph of the Past, I wrote an essay about money called "The King's Word." "The King's Word." Which is appropriate to our general theme for this meeting.5 Money is the king's word. Money is a matter of promises made and kept. It's the word--the word is from the mouth. A coin, a bill is a word stamped on a token, printed on a piece of paper, but essentially the word is from the mouth, the word is a promise. In other words, credit is a matter essentially of publicity. For example (here's a very simple example), A has skills, B has tools that A knows how to use. I am somebody that they both trust. So I observe that A, if he can use the tools, will inevitably create more values than he can use up. What he has in mind naturally pays for itself. I guarantee to the man with the tools that A--that the other fellow--will inevitably create more values than he uses up. Therefore the man with the tools can confidently count on being paid out of the product. If he then advances the tools, that was financing. I financed this operation without any money changing hands.
    By some such business organization, would it be possible to raise pay and lower prices in a place? Conventional finance, we know, says it's impossible to both raise pay and lower prices, because all pay goes into prices. But we are the ones who say we know how to do it. So let's prove it. If we could do that, if we can raise pay and lower prices in a place, what would be the effect on other places? Wouldn't people flock to that place? Wouldn't people buy its goods? Couldn't it give the public a better deal than the public can get anywhere else? Wouldn't other towns, other places be forced to follow suit--at risk of loss of population and decline of real estate?
    If this is possible, it would create a new factor in the movement of which we are all a part. Number 1, it would provide the thing we have never seen yet, a working model of social credit solving real problems. Number 2, it would give us practical experience handling the tool of social credit. We are perhaps a little overconfident in thinking that if ever we get to the national legislature, we'll know what to do. I suggest that if we get to the national legislature, there will be mistakes. If we're going to make mistakes, let's make them at a small level. We need the experience. In addition--it would be an education to us, it would also [number 3] be an education in credit for the public who is watching us; and I believe that if successful, it would generate a tremendous amount of positive publicity. Number 4, we publish reams of literature, but one working example, one successful working example, would support the literature by making people want to read it. They would come to us asking, "Well, how does this work? What's the background behind it? How did you figure this out? What credit science is this?" You would have a base of curiosity to sell literature to. Fifthly, it would be a very powerful second to the national social credit movement.
    I was greatly encouraged in this line of thinking by the discovery of one Charles Ferguson, an American, whom I first read about in a social credit book (some of you may know it) called Aladdin's Lamp, by--the name just slipped my mind.6 So I started reading Charles Ferguson's books. I was reading one called The Great News one day, and I turned a page, and here was a chapter heading, and it said, "The Transplantation of the Social Credit"7 I'll never forget that day, I was just amazed, because up to that point, I had always been told that the term social credit was coined by Alfred Orage in the appendix to Credit-Power and Democracy. That was in 1920, this was five years earlier. Reading Ferguson, I found, however, that he was far more than just the man who coined the term social credit. He was, in philosophy and substance, one of us. I am convinced that Douglas immersed himself in-and mastered-this material before ever he first set his sights on the problem of the relation of cost accounting to civilization.
    Charles Ferguson wore many hats. He began as an Episcopalian priest. He quit that, became an editorial newswriter. He quit that to work for Woodrow Wilson's administration. He was sent by the Commerce Department to Europe to study the relation between government and business and report back on it. In 1923 and 1924 in very obscure publications that I rescued from obscurity, he makes a proposal for something he calls the capital college. What the term means is: capital, a means of production; college, using the arts and sciences to mobilize capital. What he proposed was a business organization utilizing its own credit, the credit of its producers, to bring prosperity to a place. It was not a self-contained unit serving only itself, but it was aggressively aimed to be a great provider to the general public. In fact, its sales to the public were intended as a missionary enterprise, a way of drawing people into this system. He believed he could offer the public better deals than they would get anywhere else and people would flock to it either to work or to buy, or both.
    Ferguson's general premise (and I think we can say also Douglas's general premise) is that production is sabotaged by the money system. Therefore, there is a huge energy of production just waiting to be released. Releasing this huge energy of production does not mean producing more, it doesn't necessarily mean producing more at all. It means working less and living better, using the energy of production to work less, to live well. If you want numbers, Douglas quotes this from H. L. Gantt, who was Charles Ferguson's associate, he said that American industry is five percent efficient. Five percent efficient. Ninety-five percent waste. That means we're working twenty times harder than we have to.
    So how do we go about releasing this huge energy of production? I don't have a blueprint for you, but I have five principles that I think we can use towards designing one (from Ferguson and Douglas). The first principle: several producers should share a common buying-and-selling agent. A buying-and-selling agent is a credit center. This leaves the producers, the hands-on people, free to focus exclusively and entirely on the creative task of supplying human needs. It is an art. It's what they do best. They don't need to be distracted by the marketing, by the financing, by the paperwork. They're artists. Since credit is prestige (as I was speaking about a moment ago), the credit-center must be a center of prestige and publicity. It has to be an entity that has the confidence of the people around it.
    Number 2, the credit-center facilitates producers' getting tools and equipment on advance, with payment to come out of the product (as I described a moment ago). That chimes in exactly with the famous Douglas statement, "Anything that is desirable and physically possible can be made financially possible." It's something that naturally pays for itself. It's an example of financing without money.
    Number 3, price is simply a distribution mechanism and nothing else. It has nothing to do with past costs, it should be completely severed from accumulating costs in the past. Past labor is water under the bridge, it's already been paid. Should there be a disaster, and there's no product at all to pay out, then nothing is owed. Should there be a windfall, and there's abundance to pay out, nothing is held back. And the history of technology, I assure you, is a history of windfalls. In other words, today's product is always shared out today. That addresses the A+B Theorem, and that makes this capital college social credit.
    The way in which today's product is shared out today is [number 4] by paying a percentage of the proceeds, rather than a wage. And a percentage of the proceeds is coming close to what we would call a dividend, even though in Ferguson's case it's tied to work (we can remedy that). Douglas said, of course, "The dividend shall progressively displace the wage and salary." Ferguson has the idea that you can do that at once by paying no wages at all, paying everybody a percentage of the proceeds. So you would not have your owners on the one side taking all the risk, your workers on the other side selling their labor and thereafter having no more claim to the matter. Everybody takes a risk, everybody is together in the same adventure. That alone, the morale engendered by that, would be an important contribution to the high energy of production that we're trying to achieve.
    Fifth and finally, we don't need everyone employed. Therefore, we can extend the dividend to something that would be a community. We've started with a production--with a business of some kind, but if now you start paying a percentage to family members of workers, to retired workers, even to people who live, say, within a certain geographical radius of the business (anyone who lives within a quarter mile, what have you)-if you do that, you redefine the business itself as a community, and I believe that also will dramatically increase the energy of production.
    Those who are not in the active workforce but are being paid will not be idle, they will just be free. They will contribute in a thousand ways that we can't even begin to imagine. The purpose of machinery, of technology is not to leave us to twiddle our thumbs. It is to take the pain and drudgery out of the work and leave us the creative part. You can begin to see that Douglas's national dividend is for the sake of consumption, but it's also an investment in an entirely new kind of production as a use of leisure. It's a transmutation from an old production system into a new production system based on leisure. First let's see what free people will do, and then we will see what still needs doing (the things that people don't want to do), and those are the things for which we need to give an incentive. In other words, the wage system induces people to act against their own inclinations, that's its purpose. That makes life expensive. The dividend system invests in people's natural inclinations. This makes life less expensive. This is the most efficient way for society to go to work.
    So let me sum up these five points: number 1, shared buying-and-selling agent; number 2, financing without money; number 3, sharing out today's product today; number 4, paying a percentage of net earnings; number 5, extending the dividend to a community.
    As a strategy in our movement, a business organization along these lines would be an example of minding your own business with a vengeance. The energetic pursuit of your own business, in this case, through utilizing the science of credit, would be the most effective act of war. It would be, I believe, creative, challenging, hopeful, and fun. Compared to battering on the doors of the national legislature, it's a fairly modest goal. As a modest goal, I believe examples of it could multiply like cockroaches. And being so prolific-I was talking to Jeremy Lee at breakfast this morning and he used the expression--critical mass, I believe it was. You reach a certain critical mass. How do you reach that mass? We're trying to do it by persuading large numbers of people. I'm suggesting, if you have a capital college here, and another one over here, and another one over here, and another one over here, successfully operating, pretty soon you'll achieve your critical mass. In that way-I don't want to leave out Washington and Canberra altogether, but there will come a time when they will come to us. We won't have to go battering on their door, because they'll come to us. When social credit is everywhere, we'll let them save face. They can come down and put their seal on it. One successful experiment of this kind would save us reams of paper, it would save us hours of argument, because it would be an irrefutable argument in and of itself.
So what do you think? Is this possible or not? Can we put our heads together and build a credit system from the ground up?

Further Comments

"Every engineer must in fact bow the knee to the accountant," complains Thomas Robertson:

The point of pressure on all processes is that of cost. The need for quality, for the satisfaction of craftsmanship, for perfection, for the very best, and the ability to create and use devices and methods still further to liberate men from bondage to nature, count as little or nothing. . . . There are various inventions . . . whose patents have been carefully and expensively bought up only to be pigeonholed so that certain industrial concerns could continue to be profitable.8

Here is the "huge energy of production" just waiting to be released. Here is an opportunity to generate huge service-income by serving human needs better than anyone else. These are the sort of people we want to entice to our enterprise, teams of people who already know a thousand things they could do if only someone would back them. The capital college backs them.
    To the five principles enunciated above, three may be added. Number 6 is low price, high volume of sales. The objective, as H. L. Gantt puts it, is to "produce an article for which there is a large demand, and sell it for a price which most people can afford to pay."9 If you construct a rectangle in which unit-profit is the height and quantity sold the length, total profit is represented by the area of the rectangle (length times height). The rectangle with the greatest area, Gantt shows, is the long, low one, that is, the lowest possible price and highest volume of sales.10 In such a structure, moreover, an incremental increase in height obtained by increased production efficiency results in a tremendous increase in the area of the rectangle. This was the secret of the Model-T's success.
    Number 7 is that each and every production-unit has its separate account with the college. Each has had the required raw materials and equipment advanced to it thanks to the backing of the college. When the product of any production-unit is marketed, those capital charges, shop-wear, and a shop-rent (if the shop is owned by the college) will come off the top, and what remains will be divided as follows: 10% to the college administrators, 80% to the production-units in cash, and 10% to investment in the college in the name of individual workers..
    Number 8 is that the college actively seeks investments in land, maintains residential properties, and pays investors dividends out of its rentals:

Any owner of real estate or fixed capital may transfer his title to the college and receive in return capital stock of the corporation. The issues of this stock are uninflated. They represent substantial land-values acquired in perpetuity, to be administered as the physical estate of the college--furnishing the basis of its credit. . . . The capital stock of the college draws as dividends the total annual rental-revenue of its real estate. . . . The principle of the college's operation [i.e., principles 1-7] is such that this rental-revenue accruing to those who have turned their real estate holdings into the college's capital stock, will so greatly exceed the rental-income they could otherwise obtain, that the physical estate of the college will rapidly expand.11

Rental-revenue includes the shop-rent already mentioned (if applicable) plus residential rentals. Property taxes, insurance, residential deterioration, and any mortgage-charges come out of it first. In a 1930 elaboration, Ferguson suggests that the college award long-term leases to the highest bidders willing to comply with the terms of the college.
    This is a dual credit-system. Is it social credit? The college specializes in a few products and achieves an efficiency far surpassing the norm. Therefore, the bulk of its production will be commercial, not for direct use. Nevertheless, the 10-80-10 distribution rule is first and foremost a distribution of claims to the actual product. Such claims would be represented by unique tickets or tokens issued by the college. Such tickets or tokens would be issued only to the extent that individuals requested. All the rest of the product would be sold on behalf of the individual and the cash distributed accordingly.
    Since individuals have a right to claim 100% of the product, internal "prices" and "purchasing-power" (i.e., product and claims to product) are exactly the same. And even if the individual orders his entire share to be sold on his behalf, the fact that it is his share and his decision and he gets all the proceeds means that he did claim it first. Internally, then, this is a social credit commonwealth.
    The only qualification to the 100% is that capital charges must come off the top and cannot be distributed to individuals. A social credit country has this same limitation, namely, less than 100% of income from exports can be distributed because the charge for imported capital has to come off the top first. Just like the capital college, a social credit country is a dual credit-system: it uses one kind of credit (national) for internal distribution and another kind (bills-of-exchange) for foreign trade.
    To prove that the capital college is social credit, see what happens if production is cheapened at some point. If it creates an unadjusted lag between prices and purchasing-power, then this is not social credit. Suppose an improvement of method saves everyone a half-hour a week. Everyone goes home early, and the product is distributed 10-80-10 as before. Or suppose an improvement increases production by so much per week with no increased input. Then the larger product is distributed 10-80-10 as before. Internally, no lag between product and claims to product can arise. Therefore, this is social credit.
    In fact, the small scale of the capital college provides an opportunity that national social credit lacks. At the national level, it would be an imposition--and would therefore be difficult--to get everyone paid by percentage. It is easier to retain the wage system and then adjust the discrepancy by means of the national dividend and compensated price. Whereas, on the smaller scale, it is possible to abolish the wage system and prevent the discrepancy from arising in the first place.
    Thus, we could make the model look more like social credit by (1) paying fixed wages and (2) incorporating multiple stages of production, each stage buying from the previous one. In that case, the moment an improvement of method saved everyone a half-hour, that week's internal pay would be down, but that week's internal prices would stay the same. There would therefore be a lag, and the college would bridge it from both ends with a price discount and a dividend. Similarly if an improvement increased production. However, such a model seems to me to have no advantages over the percentage system and to be more cumbersome.
    The capital college is not a local exchange trading system. The latter (as the name indicates) facilitates exchange, or trade, between local producers producing in exactly the same way as before. It is merely a way of keeping wealth circulating locally. The capital college, on the other hand, is an aggressive credit system to turn a locality into a powerhouse. It mobilizes credit in order to produce with surpassing efficiency and set a new standard for the world. Its whole philosophy is different: rather than aiming at retaining wealth, its aim--its mission--is to become a great provider to as many people as possible. Yet that doesn't mean people will have to work harder. On the contrary, with a powerhouse at their disposal, their duties will become lighter and lighter.


1. It would have been the same if he had been a conservative.
2. The book is What Then Must We Do?
3. I meant The Alberta Experiment.
4. Quoted from memory. The actual quote reads, "It means narrowing your front until you must break through. There are hundreds of spots in the present position which are vulnerable to quite weak forces. The Housewives face many of them."
5. The theme was the Queen's Jubilee.
6. Gorham Munson.
7. Actually "Transplacement of the Centre of Social Credit."
8. Human Ecology, pp. 243f., 250.
9. Industrial Leadership (New Haven: Yale University Press, 1916), p. 111.
10. Ibid., diagram facing p. 112 and accompanying text p. 113f.; cf. Ferguson's American News articles, Triumph of the Past, December 2002, p. 4, col. 3f. and p. 6, col. 3.
11. The Technarchy and the Capital College, p. 10f.