The Forgotten Prophet

Major C.H. Douglas and Social Credit

From time to time, either by recommendation or by happenstance, I stumble upon a writer whose insight into issues I am wrestling with seems almost prophetic in its foresight. It’s happened at least twice on this blog alone — once with Plutarch and once with the late Wolfgang Smith — and it’s been humbling each time.

Now it’s happened again. I recently stumbled upon the work of Major C. H. Douglas, founder of the Social Credit movement. I’m currently reading his corpus, starting with his central work, Economic Democracy.

Economic Democracy was written almost exactly 100 years ago. But apart from its mid-20th Century grammar and style, Douglas could be writing about 2024. The only difference would be that Douglas of 1924 was predicting what was going to happen, while the Douglas of 2024 would be saying “I told you so”.

I would like, in the next few essays, to explore Douglas’s thought with you, in the same manner I’ve previously explored Julius Evola’s, Plutarch’s, Smith’s, and others. Before proceeding, I must offer two caveats.

First, I cannot and do not claim to now be an expert on Douglas’s thought; in fact, the exercise of writing these essays is largely an exercise in seeing how well I understand it at all, as well as an opportunity to acquire fresh insights from those with other knowledge. You will do me no discourtesy to share your own thoughts on him, and to point out any errors in interpretation I have made.

Second, I do not mean for my exploration of Douglas’s thought to necessarily imply endorsement of his solution. I explore a lot of thinkers, including the likes of Marx and Herbert Marcuse. I certainly do not endorse all of their thoughts.

With those caveats proclaimed, let us cautiously proceed.

Most discussions of C. H. Douglas’s thought begin with a description of his policy proposals — price rebates and national dividends. But it is impossible to evaluate Douglas’s proposals without understanding the context in which they were written and the problems they were intended to address.

Accordingly, we will begin our exploration of Douglas’s thought by reviewing the first six chapters of Economic Democracy and presenting some aspects of his thought which I found particularly prophetic.

Douglas laid the groundwork for his theories between the years of 1918 and 1930. These were tumultuous years for England, overlooked today because they fell in between the melodramas of World War I, the Great Depression, and World War II; but they were times which - based on Douglas’s words, at least - were eerily similar to our own.

A Lot of Noticing Going On

The 2020s are characterized by a lot of attention given to topics where previously unthinkable - as they say on X, Elon Musk has begun to “notice” a lot of things. Well, there was, apparently, a lot of “noticing” happening in the 1920s, too.

Douglas explains:

As a result of the conditions produced by the European War, the play of forces, usually only visible to expert observers, has become apparent to many who previously regarded none of these things.

The very efforts made to conceal the existence of springs of action other than those publicly admitted, has riveted the attention of an awakened proletariat as no amount of positive propaganda would have done.

What was it they were noticing?

[A] great factor in the changes which have been taking place during the final years of the epoch just closing is undoubtedly the marshalling of effort in conformity with well-defined principles… [These principles] may be summarized as a claim for the complete subjection of the individual to an objective which is externally imposed on him, which it is not necessary or even desirable that he should understand in full; and the forging of a social, industrial and political organization which will concentrate control of policy while making effective revolt completely impossible, and leaving its originators in possession of supreme power…

…[T]he exaltation of the State into an authority from which there is no appeal (as if the State had a concrete existence apart from which those who operate its functions), the exploitation of " public opinion " manipulated by a Press owned and controlled from the apex of power, are all features of a centralizing policy commended to the individual by a claim that the interest of the community is thereby advanced…

Using the Nietzschean terms that were contemporary at the time, Douglas calls this centralizing trend the “will-to-power.” He notes that this centralization of power has been particularly apparent in capitalist industry:

Because the control of capital has given power, the effect of the operation of the will-to-power has been to accumulate capital in a few groups, possibly composed of large numbers of shareholders, but frequently directed by one man; and this process is quite clearly a stage in the transition from decentralized to centralized power. This centralization of the power of capital and credit is going on before our eyes, both directly in the form of money trusts and bank amalgamations, and indirectly in the confederation of the producing industries representing the capital power of machinery.

It has its counterpart in every sphere of activity : the coalescing of small businesses into larger, of shops into huge stores, of villages into towns, of nations into leagues, and in every case is commended to the reason by the plea of economic necessity and efficiency. But behind this lies always the will-to-power, which operates equally through politics, finance or industry, and always towards centralization.

If this point of view be admitted, it seems perfectly clear that to the individual it will make very little difference what name is given to centralization. Nationalization without decentralized control of policy will quite effectively install the trust magnate of the next generation in the chair of the bureaucrat, with the added advantage to him that he will have no shareholders' meeting.

All of these predictions have, of course come true. We are controlled by a Deep State Uni-party of which business and bureaucracy are merely two different arms. Small business has been, to a great extent, obliterated. Capitalist control has become vested into a tiny cartel of private financial institutions, such as Blackrock, who collectively dominate the economy and the government.

The Elite are Awful, and No One is Coming to Save You

Douglas furthers his diagnosis of the problems of the era with a sharp criticism of the elites of his day:

We may begin our inquiry by noticing that one of the most serious causes of the prevalent dissatisfaction and disquietude is the obvious survival, success and rise to positions of great power, of individuals to whom the term " fittest " could only be applied in the very narrowest sense.

In the sphere of politics it is clear that all settled principle other than the consolidation of power, has been abandoned, and mere expediency has taken its place. The attitude of statesman and officials to the people in whose interests they are supposed to hold office, is one of scarcely veiled antagonism, only tempered by the fear of unpleasant consequences.

A finer criticism of today’s World Economic Forum political elite could not be written! But, unlike today’s populists, Douglas is quite skeptical that any sort of savior is coming to save the day. The only men who rise to power are men fitted to the needs of the system:

Pyramidal organization is a structure designed to concentrate power, and success in such an organization sooner or later becomes a question of the subordination of all other considerations to its attainment and retention.

For this reason the very qualities which make for personal success in central control are those which make it most unlikely that success and the attainment of a position of authority will result in any strong effort to change the operations of the organization in any external interest, and the progress to power of an individual under such conditions must result either in a complete acceptance of the situation as he finds it, or a conscious or unconscious sycophancy quite deadly to the preservation of any originality of thought and action…

Similar forms of organization, no matter how dissimilar their name, favor the emergence of like characteristics, quite irrespective of the ideals of the founders, and it is to the principles underlying the design of the structure, and not to its name or the personalities originally operating it, that we may look for information on its eventual performance…

The more any organization, whether of society as a whole or any of the various aspects of it, approaches this [centralized pyramidal] form the more certain is it that there cannot possibly be any relation between merit and reward. It is, for instance, absurd to assume that there is only one possible head, for each railway company, Government Department, or great industrial undertaking. There is no doubt whatever that the intrigue which is a commonplace in such undertakings has its roots almost entirely in this cause, and contributes in no small degree to their notorious inefficiency…

There is no evasion of this dilemma possible by the introduction of questions of personality: a bad system is still a bad system no matter what changes are made in personnel.

Anyone familiar with the history of Republican politics in the 20th and 21st century United States will acknowledge the truth of this analysis. We keep electing them on with pledges of change, and almost nothing changes.

The Inevitable Economic Problem

Long-term readers will be familiar with my criticism of America’s system of debt money. But I had the benefit of 110 years of economic data and theory when I wrote Running on Empty. Douglas was writing at a time when the Federal Reserve itself wasn’t even 18 years old, and he foresaw the problems that were to come from debt money:

All large scale business is settled on a credit basis. In the case of commodities in general retail demand, the price tends to rise above the cost limit, because the sums distributed in advance of the completion of large works become effective in the retail market, while the large works, when completed, are paid for by an expansion of credit.

This process involves a continuous inflation of currency, arise in prices, and a consequent dilution in purchasing power. The reason that the decrease in the consumer's purchasing power has not been so great as would be suggested by these considerations is, of course, largely due to intrinsic cheapening of processes which would, if not defeated by this dilution of the consumer's purchasing power, have brought down prices faster than they have risen.

There are thus two processes at work; an intrinsic cheapening of the product by better methods, and an artificial decrease in purchasing power due to what is in effect the charging of the cost of all waste and inefficiency to the consumer. And it is clear that under this system the greater the volume of production the larger will be the absolute value of the waste which the consumer has to pay for, whether he will or no, because as the bank credits are created at the instance of the manufacturer, and repaid out of prices, each article produced dilutes, by the ratio of its book price to all the credits outstanding, the absolute purchasing power of the money held by any individual.

That, in turn, has led to an ever-rising cost of living:

The ever-rising cost of living has brought home to large numbers of the salaried classes problems which had previously affected only the wage-earner. It is realized that " labor-saving" machinery has only enabled the worker to do more work; and that the ever-increasing complexity of production, paralleled by the rising price of the necessaries of life, is a sieve through which out and for ever outgo all ideas, scruples and principles which would hamper the individual in the scramble for an increasingly precarious existence.

But the problem is not just one of declining real incomes, but also one of increasing concentration of wealth in the hands of the financial class:

For reasons which will be evident in considering the costing of production at a later stage of our inquiry, the book value of the world's stocks is always greater than the apparent financial ability to liquidate them, because these book values already include mobilized credits; the creation of subsidiary financial media, in the form of further bank credits, becomes necessary, and results in the piling up of a system of figures which the accountant calls capital, but which are in fact merely a function of prices. The effect of this is, of course, to decrease progressively the purchasing power of money, or, in other words, to concentrate the lien on the services of others, which money gives, in the hands of those whose rate of increase is most rapid.

Intrinsic improvements in manufacturing methods operate to delay this concentration in respect of industry, but the process is logically inevitable, and, as we see, is proceeding with ever-increasing rapidity ; and we may fairly conclude that the profitmaking system as a whole, and as now operated, is inherently centralizing in character.

Obviously, all of the trends Douglas discerned proceeded exactly as he had expected. The purchasing power of our money has capitalized; wealth has concentrated into the hands of a tiny financial oligarchy; and debt has skyrocketed.

It would be easy to read Douglas in light of Marx. But Douglas is not, however, a critic of capitalism per se, only of its then-current implementation:

That from the misuse of the power of capital many of the more glaring defects of society proceed is certain, but in claiming that in itself the private administration of industry is the whole source of these evils, the Socialist is almost certainly claiming too much, confounding the symptom with the disease…

The private administration of capital has had a credit as well as a debit side to its account; without private enterprise backed by capital, scientific progress, and the possibilities of material betterment based on it, would never have achieved the rapid development of the past hundred years.

So what is to be done? Douglas believes that the West was faced with quite a dilemma.

We are, therefore, faced with an apparent dilemma, a world-wide movement towards centralized control, backed by strong arguments as to the increased efficiency and consequent economic necessity of organization of this character…

A powerful minority of the community, determined to maintain its position relative to the majority, assures the world that there is no alternative between a pyramid of power based on toil of ever-increasing monotony, and some form of famine and disaster; while a growing and ever more dissatisfied majority strives to throw off the hypnotic influence of training and to grapple with the fallacy which it feels must exist somewhere…

The whole policy of Governments and industrialists alike in respect of this conflict of interest has been one of grudging compromise, partly as the result of the natural tendency of humanity to " laissez faire " methods and partly no doubt from a settled conviction that nothing but compromise was possible ; that the existing order is based on natural law, and is not amenable to any radical modification, and that all critics are either cranks and dreamers, or else are solely actuated by a desire for the sweets of office.

The ruling powers of his day, then, where the equivalent of our neo-liberals, and asserted, Thatcher-like, that “there is no alternative.” But, then as now, there were plenty of people offering alternatives.

Unfortunately, most of them were communists, fascists, or socialists. The 1920s was a time when communist, fascist, and socialist states were the rising powers of the world. The threat of proletarian revolution was everywhere, and the specter of the Soviet Union hung over Europe. The highest hopes of mankind were foolishly pinned on Marxism.

Now, Douglas did agree with the Marxists in their criticism of the alienating nature of work under the capitalist system:

During the period of transition between individual ownership and company or trust management, and under the stress of competition for markets, it became of vital importance to cut down the selling price of commodities, not so much intrinsically as in comparison with competitors ; and as a means to this end, standardization and quantity-production in large factories are of the utmost importance, carrying with them specialization of processes, the substitution, wherever possible, of automatic and semiautomatic machinery for skilled workmanship, and the incorporation of the worker into a machine-like system of which every part is expected to function as systematically as a detail of the machine which he may operate. The objective has, to a considerable extent, been attained…

By the separation of large classes into mere agents of a function, it has been possible to obtain the more or less complete co-operation of large numbers of individuals in aims of which they were completely ignorant, and of which had they been able to appreciate them in their entirety, they would have completely disapproved, while at the same time Education and Ecclesiasticism have combined to foster the idea, that so long as the orders of a superior were obeyed, no responsibility rested on the individual.

it is quite unquestionable that the whole process of centralizing power and policy and alleged responsibility in the brains of a few men whose deliberations are not open to discussion; whose interests, largely financial, are quite clearly in many respects opposed to those of the individuals they control, and whose critics can be victimized; is without a single redeeming feature, and is rendered inherently vicious by the conditions which operate during the selective process. When it is further considered that these positions of power fall to men whose very habit of mind, however kindly and broad in view it may be and often is in other directions, must quite inevitably force them to consider the individual as mere material for a policy cannon-fodder whether of politics or industry the gravity of the issue should be apparent

Unlike his contemporaries, however, Douglas was not seduced by socialism. He saw the problems long before virtually anyone else:

The danger which at the moment threatens individual liberty far more than any extension of individual enterprise is the Servile State; the erection of an irresistible and impersonal organization through which the ambition of able men, animated consciously or unconsciously by the lust of domination, may operate to the enslavement of their fellows. Under such a system the ordinary citizen might, and probably would, be far worse off than under private enterprise freed from the domination of finance and regulated in the light of modern thought.

Nationalization of all the means of livelihood, without the provision of much more effective safeguards than have so far been publicly evolved, leaves the individual without any appeal from its only possible employer and so substitutes a worse, because more powerful, tyranny for that which it would destroy.

Let Them Play Games

For me, the most unexpected, yet accurate, prophesy that Douglas made was that games would become the chief outlet for men alienated from their work:

A significant feature of the inadequacy of the economic structure is the increase of voluntary unpaid effort and the large amount of energy devoted to games. There is absolutely no concrete difference between work and play unless it be in favor of the former no one would contend that it is inherently more interesting or pleasurable, to endeavor to place a small ball in an inadequate hole with inappropriate instruments, than to assist in the construction of a Quebec Bridge, or the harnessing of Niagara. But for one object men will travel long distances at their own expense, while for the other they require payment and considerable incentive to remain at work.

The whole difference is, of course, psychological; in the one case there is absolute freedom of choice, not of conditions, but as to whether those conditions are acceptable ; there is some voice in control, and there is an avoidance of monotony by the comparatively short period of the game, followed by occupation of an entirely different order. But the efficiency of the performance as compared with the efficiency of the average factory worker is simply incomparable any factory which could induce for six months the united and enthusiastic concentration of, say, an amateur football team would produce quite astonishing results.

The same could be said of the enthusiasm of a Warhammer 40K miniatures painter, an MMORPG raiding guild, a videogame modding team, and so on.

Such was the insight of Major C. H. Douglas that in 1920 he predicted the rise of the Gen Z Incel of today: unwilling to work for the machine, unable to earn enough to be independent, and expending all of his energy and effort in the pursuit of games with an enthusiasm and efficiency that beggars workplace productivity.

The Rewards of Prophecy

For a time, it seemed that Douglas’s insights might change the world. His writings reached the apex of their influence in the year 1935, when the Alberta Social Credit Party took power in the Canadian province of Alberta with the intent to promulgate Douglas’s social credit theories to aid the province in recovery.

Unfortunately, the party’s initial efforts came to naught when they were ruled illegal by the Supreme Court of Canada. The party thereafter changed course, and under the leadership of Ernest Manning, the ASCP largely became a right-wing populist party with significant power for the next 30 years.

Perhaps frustrated with the stillbirth of his ideas, Douglas gave a scathing critique of the Manning administration, in the 1947 article “Social Credit in Alberta" written for the newsletter The Social Crediter.

The Manning administration responded by accusing C. H. Douglas and his movement of antisemitism, and this charge has lingered ever since. According to Citizendium’s entry on social credit:

The anti-semitic rhetoric of some Social Credit activists greatly troubled Canada's Jewish community; in the late 1940s Premier Ernest Manning belatedly purged the anti-semites.

And according to Wikipedia’s entry on social credit:

Manning accused Douglas and his followers of antisemitism and purged ‘Douglasites’ from the Alberta government.

Wikipedia goes on to dryly observe:

Social crediters and Douglas have been criticized for spreading antisemitism. Douglas was critical of "international Jewry", especially in his later writings. He asserted that such Jews controlled many of the major banks and were involved in an international conspiracy to centralize the power of finance. Some people^[who?] have claimed that Douglas was antisemitic because he was quite critical of pre-Christian philosophy.

No source is given as to who “some people” are, but a recent article in Vice does offer a source:

The Social Credit Party, which ruled the province from 1935 to 1971, was founded on the economic principles of C.H. Douglas, who scholar Janine Stingel described as believing in “an international, Jewish financial conspiracy controlled the world’s economies and governments.”

Those interested in Ms. Stingel’s critique can find it in “Beyond the Purge: Reviewing the Social Credit Movement’s Legacy of Intolerance”, in Canadian Ethnic Studies Vol 31, Issue 2 (1999). Her article is paywalled, so I myself haven’t read it.

In my own (now copious) reading of Major Douglas’s work, I haven’t encountered any evidence that he was an antisemite. Even if I did, I’m not sure it would be relevant to assessing his work, as that would be to embrace the genetic fallacy of rejecting ideas on the basis of their source.

In fact, I tend to perceive ad hominem attacks against a writer as evidence that the writer’s ideas were deemed important — important enough that the engines of propaganda are being deployed against him. I quote my own article “In a World of Lies, How Do You Know What to Believe?” where I wrote:

Whichever interlocutor in a debate resorts to ad hominem first is probably the propagandist. For instance, imagine the following exchange:

1. A parapsychologist authors a study demonstrating that conscious attention of observers can have a small but detectible effect on random number generators.

2. A skeptical critic authors an essay rebutting the parapsychologist’s study asserting certain experimental flaws and errors.

3. The parapsychologist writes a response to the skeptic explaining that the perceived errors are not significant to the study’s results.

4. The skeptic goes on YouTube and calls the parapsychologist a woo-woo moonbat.

In this case, the skeptic is probably the propagandist. He’s not a propagandist because he disagrees, but because he resorted to ad hominem.

This heuristic is by far the most valuable tool for spotting propaganda. Anytime you encounter an issue where one side makes dialectical arguments and the other side… adds ad hominem attacks, you have very probably encountered propaganda.

In any case, whether they suffered due to honest critique of bigotry or propagandistic ad hominem, C. H. Douglas’s ideas have largely been abandoned and forgotten.

This is a fate common to many ideas developed in the tumultuous era of 1918 - 1945. The mid and late 20th century was a battlefield between neo-liberal capitalism and Marxist-Leninist communism. Alternative models for society, such as Georgism, Distributism, Douglas Social Credit, and Traditionalism, were largely left unexplored.

A century of history has made it quite clear where the options selected in the 20th century are steering the 21st; it seems a good time to take a second look at those other options, particularly when they were promulgated with such foresight as to what would come.

If my own glacial pace of reading and analysis is too slow for you, you can start reading C. H. Douglas’s work yourself today for free. It’s all available at the Douglas Internet Archive of the Clifford Hugh Douglas Institute.