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The National Dividend

C. H. Douglas, founder of Social Credit

1,949 words

When, during World War I, C. H. Douglas was sent to sort out the accounting muddle in an aircraft factory in Farnborough, England he noticed that the factory was generating costs faster than it was distributing incomes. Replicating the process at a hundred other large British firms he found that the total costs were always more than the money distributed in dividends, wages, and salaries.[1]

Douglas became concerned that the men who labored in the factories producing the necessities of life could not always afford to purchase the items they had worked to produce, and his solution was to implement a national dividend to each individual in the country to ensure that he had access to the fruit of his labor. Douglas believed that people should be able to meet the costs of all the goods as and when they come on the market without mortgaging the future.

It struck Douglas as strange that goods remained unsold while people went without. He believed that, “Systems were made for men, and not men for systems, and the interest of man which is self-development, is above all systems, whether theological, political or economic.”[2] Unfortunately, in the sweep of history, the Reformation had changed the system from that of an organic unity to one where “capitalism,” as state-sponsored usury[3] came to be known, could triumph. With the overthrow of the established church there was now no ordering authority but free contractual relationships among individual economic units based on their self-interest which resulted in a lack of concern for one’s fellow man that bordered on the criminal.[4]

The good Protestant that Douglas was, he would be completely unaware that Luther had paved the way for a new era which was dehumanizing by design and not by default when it came to the application of universal principles. The progress that Christendom had made in dealing with the complexity of economic exchange was dealt a double blow by the Italian Renaissance and the German Reformation[5] which led to the abolition of the ancient and stable tally sticks and the introduction of central banks and income tax. We think income tax has been with us forever, but then, how many people realize that for its first 1500 years Christendom was Catholic.

Douglas was not the first to be concerned about the plight of the workers, for two decades earlier the socialists had the short-lived idea of “the Universal Trust in which every Child, Woman and Man shall hold one, and only one, non-transferrable Share of Common Stock, and in which there shall be no preferred stock.”[6] The Left-wing idea of common ownership of the wealth suffered a stillbirth, for outside of W. E. P. French the idea was never mentioned again. C. H. Douglas may or may not have been aware of the socialist idea, but unlike the Universal Trust, his idea of the National Dividend still has traction.

The Rightist idea of a national dividend, or what the Catholics call Distributionism, is one possible solution for the unemployment problems governments are about to face with the dawning of the age of robotics. Perhaps the thought of common ownership was too close to the commons of old where people could graze their animals at leisure before the enclosures began, and the common man was cut off with no means of support. America had a similar experience when the barb wire fence brought an end to the open range and the “wild west.”

E. Michael Jones is a Catholic concerned with the looting of the working class and pointed out in his book Barren Metal that in 1495 the laborer was able to meet all his needs and support his family by working only 50 days a year “whereas now millions are working in an age of marvelous machinery the whole year round, in an effort to maintain themselves and their families just above the line of destitution.”[7] According to Jones, the real origin of capitalism was not 17th-century England but 14th- and 15th-century Italy by decadent Catholics who wanted the unearned joys of collecting usury. The further contribution of Hobbes and Descartes to reduce all natural phenomena to small atoms in constant motion further dehumanized our industrial revolution in farm and factory. The phenomenon of union busting and the downward spiral of wages is hardly new. Ricardo and Lassalle believed that the so-called iron law of wages was that the average wage of labor can never rise above what is necessary for the workers’ bare subsistence, a state to which we seem to be rapidly descending.[8]

The Florentine oligarchs of the 15th century were handicapped because they didn’t understand that low wages led to economic decline.[9] By constantly driving down wages, the oligarchs were inadvertently destroying their ability to create wealth by making it impossible for the workers to reproduce. The family is vital. Without decent remuneration for work, any economy is doomed to fail, which is why the living wage has been referred to as the flywheel of the economy. When the poor are suffering want it indicates that the nation is going into reverse. When the state ignores the well-being of the worker, economic decline follows, and if a worker can’t support his family the machine that turns money into value is switched off.[10] Ruskin lamented, “although England is deafened by the noise of spinning wheels its people have no clothing to wear, and although it is blackened by the coal it mines from the earth, its people die of cold, and although it has sold its soul for profit its people are starving.”[11]

There can be no prosperity without decent wages. According to E. Michael Jones, the infallible sign that labor has been rewarded justly is population increase.[12] In early America the population doubled every 25 years, for one benefit creates another. The same impulse to natural growth was found in Canada whose name, curiously, is said to have come from an old Portuguese map which had Ca Nada (nothing here) written over the top end of North America. From 1608 to 1760, immigration to New France consisted of only 10,000 settlers, and thereafter it was almost non-existent. The French-speaking population numbered about 90,000 by the 1770s, and thereafter, until the late 1800s, the population expanded rapidly with women on average having 5.6 surviving children. The increase in population in Lower Canada from 330,000 in 1815 to 890,000 in 1851 “was mainly attributable to the continuing high birth rate within the French-speaking community.[13] By 1950, the Quebec population was almost 4 million. This increase was not a result of immigration, but primarily of the still continuing high fertility rates. It was only in the 1970s that Montreal saw an increasing inflow of non-European immigrants.[14] And yet the government and the “intelligentsia” insist that we are all immigrants.

The thought of “free money” through a national dividend has elevated Douglas to one of the better-known champions of those reduced to depending on a pay packet. However, Catholic writers such as E. Michael Jones and Michael Hoffman have approached the issue from the viewpoint that interest on money drains the system so as to leave most people financially short. Or as Hoffman put it, “we have allowed our world to be rigged by usurers, for usurers, to our destruction.”[15] Richard Kelly Hoskins summed up the problem thus: there is no eleventh match. By that he meant that if after destroying the Tally Sticks we had switched to matches rather than our present currency and had borrowed the very first ten matches at 10% the borrower would soon learn to his detriment that the eleventh match required to pay the interest did not exist and that he would have to borrow to pay the interest.[16] There would never be enough currency to pay off the interest which can only be paid with borrowed money, so essentially economic expansion is required forever or the economy shuts down. With the destruction of the tally sticks and the introduction of the Central Banks Christendom had become what Hobbes termed following Horace, “man being a wolf to man.”[17] The Reformation had dissolved the organic customs that were the real basis for the social order and ushered in anarchy in the wake of which the tyranny of absolutism arose.[18]

Douglas became aware of the ordinary man being crushed under this tyranny, and his solution was a more equitable distribution of newly created wealth under the guise of a National Dividend, but whether even that would work under the demands of the usurious central banks is a moot point. L. D. Byrne wrote that this shortage of buying power also accounted for the widespread poverty in the midst of plenty, of the growing burden of debt, of increasing taxation, and all the features of the present world chaos.[19] Douglas was of the opinion that the just price for an item “must rest on the relationship between production and consumption.”[20]

The dawning of the age of robotics is rapidly changing today’s labor market. While skilled technicians will be required to maintain the machines the unskilled and semi-skilled workers are facing a dismal future. Andy Puzder, CEO of Hardee’s and Carl’s Jr. gave numerous reasons to use machines instead of workers when he said that robots are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex, or race discrimination case.”[21] The savings in litigation alone will encourage employers in this age of the victim to favor robotics.

In 1912, J. P. Morgan declared to the Congressional testimony on “the justification of Wall Street” that all the money and all the banks in Christendom cannot control credit, for money is gold and nothing else. A technical revolution has swept the world since Morgan’s day, and the question is, is it really different this time? Credit cards reign supreme, and a mortgage is nothing but credit. Douglas could not have imagined the technological changes that would take place since his time, but his idea of a national dividend may be a solution to avoid the complete financial desolation of the nontechnical people in an age of high technology. Simple repetitive jobs are being replaced by robots, and a large part of the race will always be suitable only for simple tasks which will no longer be available for them to earn their daily bread. Apart from the lucky few, work is the only way to achieve an income, but with the advent of robotics, cryptocurrency, and self-driving vehicles, the work world is about to undergo a change as dramatic as that of the Reformation, and the National Dividend is one way to keep any newly-created wealth flowing to all consumers upon which even the most automated companies rely for customers — or perhaps the government will just legalize the funny stuff and none of this will be necessary.

Notes

[1] C. H. Douglas, The Tragedy of Human Effort, 2nd ed. (Sudbury, England: Bloomfield Books, 1978), p. 14.

[2] C. H. Douglas, Economic Democracy, 5th ed. (Epsom, England: Bloomfield Publishers, 1974.), p. 29.

[3] E. Michael Jones, Barren Metal (South Bend, Indiana: Fidelity Press, 2014), p. 490.

[4] Ibid., p. 22.

[5] Ibid., p. 348.

[6] W. E. P. French, We-ism (New York: Wilshire Book Company, 1907), p. 10.

[7] Douglas, The Tragedy of Human Effort, p. 1.

[8] Jones, Barren Metal, p. 1095.

[9] Ibid., p. 60.

[10] Ibid., p. 66.

[11] Ibid., p. 1219.

[12] Ibid., p. 768.

[13] http://www.eurocanadian.ca/2016/04/canada-was-not-created-by-immigrants-of-diverse-race-statistics.html Ricardo Duchesne.

[14] http://www.eurocanadian.ca/2016/04/canada-was-not-created-by-immigrants-of-diverse-race-statistics.html Ricardo Duchesne.

[15] Michael Hoffman, Usury in Christendom (Coeur d’Alene, Idaho: Independent History and Research, 2013), p. 231.

[16] Richard Kelly Hoskins, War Cycles/Peace Cycles (Lynchburg, Virginia: The Virginia Publishing Co., 1985), p. 10.

[17] Hoffman, Usury in Christendom, p. 159.

[18] Jones, Barren Metal, p. 780.

[19] L. D. Byrne, The Nature of Social Credit (Edmonton, Alberta: The Social Credit Board), p. 9.

[20] C. H. Douglas, The New and the Old Economics (London: K.R.P. Publications), p.24.

[21] https://www.moneyandmarkets.com/robots-are-coming-85316?utm_source=MAM&em=wolfemu%40telus.net&utm_campaign=MAM3739a&campid=103533&utm_medium=email

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7 Comments

  1. Peter Quint
    Posted November 2, 2017 at 8:15 am | Permalink

    ‘Cause it’s a bittersweet symphony, this life
    Try to make ends meet
    Try to find some money then you die
    I’ll take you down the only road I’ve ever been down
    You know the one that takes you to the places
    where all the things meet yeah

  2. Proofreader
    Posted November 2, 2017 at 12:32 am | Permalink

    “The Rightist idea of a national dividend, or what the Catholics call Distributionism, is one possible solution for the unemployment problems governments are about to face with the dawning of the age of robotics.” There’s an error here: Social Credit isn’t the same thing as Distributionism, or Distributism, although they can be regarded as compatible with each other, and were so regarded by some proponents of Social Credit and Distributionism in their heyday. (I think the last matter might be briefly addressed in Jay P. Corrin’s book, G. K. Chesterton and Hilaire Belloc: The Battle Against Modernity [Athens: Ohio University Press, 1981], of which I have photocopies somewhere.) In short, Social Credit is concerned with finance, Distributism is concerned with property.

  3. nineofclubs
    Posted November 1, 2017 at 2:43 pm | Permalink

    An excellent article dealing with three important and related topics.

    C.H Douglas’ ideas about the creation of money, referred to as Social Credit, were indeed a conceptual leap forward in their day. Most people in Douglas’ time did not understand how money is created (and destroyed) and – regrettably – little has changed. The British money reform group, Positive Money, recently surveyed UK MP’s and found that fewer than 20% understand where money comes from. Douglas understood the creation of money but, in my opinion, misdiagnosed how to fix the problems associated with the system as it is. My issues with Social Credit, national dividends, universal basic incomes and the like are twofold. Firstly, on a moral level, I find it hard to accept that the state should provide an income for people who are able bodied and capable of contributing to society, but don’t. I’m happy to pay a wage to mothers and others who contribute and who the current market system won’t support, but not to idle wasters. Further, it seems counterproductive to pay a wage to those who are already earning good incomes. It sounds like a guaranteed recipe for inflation. That said, your points about increasing automation and its effect on employment are completely valid. The Australian economist Bill Mitchell has done some good work on using Modern Monetary Theory (MMT) to underpin a job guarantee program that would deliver full employment – and not be inflationary. A similar proposal (called National Credit) was put forward 30 years ago by the Australian nationalist, Allan R Jones (see the booklet ‘Beyond Economic Treadmill’ if you can get a copy). So while Social Credit correctly identifies a problem with the way money is created and spent into circulation right now, it’s worth thinking through it’s prescriptions for fixing the problem and looking at more recent alternatives, I think.

    A related (but not the same) issue is the role of interest in the economy. Some writers confuse money creation with the interest question because our current system creates about 97% of all new money as interest bearing debt. Speak this truth to a roomful of ‘normies’ and watch the visceral denial kick in. A number of writers have questioned whether interest – especially on loans created by a book keeping exercise – is necessary or beneficial to an economy. Anthony Migchell, Ellen Brown and the 1930’s German writer Gottfried Feder are all worth reading in this regard. Interest and money creation are – currently – related questions because of the way our money systems work, but it would be theoretically possible (and very disappointing) to take away the private banks power to create new money and have an independent authority create money, but still as interest bearing loans to the state.

    The third related issue is that of ownership. Marx famously wanted the ownership of the means of production to sit with the state. Distributists such as Chesterton supported the concept of private property and enterprise, but wanted it distributed as widely as possible. The ownership question is – again – related to money creation and interest, but it is a separate issue. We could potentially improve the way we create money, and limit interest to loans of ‘real’ money (savings of hard earned income), but do nothing to change the global corporate ownership of the means of production. That would suck, of course, but it could be done.

    Nationalists need to think through alternatives to the current economic quagmire that we find ourselves in. The issues of ownership, money creation and interest are ripe for the picking, given that the globalists (in both their left and right paint jobs) deny there’s anything wrong with the status quo.

    Your article is an important contribution to this thinking.

    .

    • Posted November 1, 2017 at 3:14 pm | Permalink

      ‘Most people in Douglas’ time did not understand how money is created (and destroyed) and – regrettably – little has changed.’

      The points you raise are good, but I’d question the above assumption. Douglas toured NZ and Australia and the banking issue resulted in the election of the First Labour Government in NZ. John a lee, a Labour stalwart noted for his advocacy on banking reform, wrote that the question was being discussed everywhere and by everyone. SC was also burgeoning in Canada, where it got elected to the Alberta province. In the USA there was Coughlin’s movement.

      What has changed today is that few know about these subjects, or are interested, whereas in the 1930s, many knew and books like Coogan’s The Money Creators and A N Field’s Truth About the Slump, were best-sellers. In the recent general election in NZ the Social Credit party, around for decades, got hardly any votes.

      • nineofclubs
        Posted November 1, 2017 at 11:07 pm | Permalink

        Thanks for your response. You may well be correct; it may be that understanding of the money creation process has actually declined.

        A sad fact, given our current surfeit of information.

  4. Brian Thorn
    Posted November 1, 2017 at 8:05 am | Permalink

    A fascinating article! It shows that traditional rightists should oppose open borders, globalism and capitalism as well as socialism and welfare statism. I am always amazed that Douglas is not better know in rightist circles. Thanks for this piece.

  5. Proofreader
    Posted November 1, 2017 at 2:23 am | Permalink

    “The same impulse to natural growth was found in Canada whose name, curiously, is said to have come from an old Portuguese map which had Ca Nada (nothing here) written over the top end of North America.” Perhaps contemporary maps of North America should feature the words “Here be monsters” around Washington, New York, and Hollywood.

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