Social Credit and the Alberta Elections

The Western Socialist
July 1935

Alberta is again nearing an election. It promises to be a stormy, though hardly a momentous, one. Yet the different parties are girding their armor as if in anticipation of the ring of steel.

At the moment of writing there promises to be at least five parties represented in the field. No doubt other parties, and perhaps a number of independents will crop up before nomination date arrives. These parties represent all shades of thought and opinion from the ultra conservative to the deepest red.

The one supreme issue before the electorate is Social Credit. Beside it, all other issues sink into the background. Even the record of the incumbent Government, always a fruitful source of fuel for political fireworks, fades into the shadows before the brilliancy of this latest comet which is making its way through the atmosphere of golden promises. Whether it will be ground to pieces by the abrading forces of cold facts before election day arrives, it is difficult at this moment to predict, but one thing is certain, its glittering rays have kindled a glow of hope in many hearts, on the other hand, it is the despair of those who fear a shake-up in the present political alignment, while at one and the same time it causes a smile and arouses a feeling of disgust among those who know only too well the nebulous character of a comet’s substance.

Social Credit is one of those strange theories which captures the imagination of the distressed. It is evanescent, indefinite, incoherent, contradictory, like the shapes of a dream. For that reason it means as many different things to its adherents. To all, however, it promises prosperity. To the farmer it promises the end of fruitless toil; to the laborer who has been harassed by hunger it guarantees the bare necessities of life; to the salaried folk it offers steady employment and higher salaries; to the whole host of petty bourgeois it means better business and easier collection of bad debts; to all bona fide citizens it offers a sum of non-negotiable certificates each month. It appears almost to be “promise” incarnate. But like a medal it has a reverse side. This side forebodes the defeat of the U. F. A. Government, causing back bencher and cabinet member alike to sleep uneasily. To the politician of the old school, it points with a menacing finger to the handwriting on the wall. Whatever the movement is or is not, it has, in this election at least, the significance of a lighted match in a powder magazine.

The sponsor of this movement is one W. Aberhart, a Calgary teacher. He is also leader of a Bible institute. For a number of years he has been delighting an unseen radio audience every Sunday afternoon by stirring speeches that contained a strange admixture of fiction and fairy tales about the ghosts of the past, and the mysteries of the circulation of commodities. Thus he has had a great opportunity to impress that section of the electorate who are as much influenced by sentiment as by sense, more especially if that sentiment is properly dressed up in religious garb.

Aberhart is not an original thinker on economic subjects. Being a disciple, though some say a renegade disciple, of Major Douglas, he is simply parroting the ideas of his master. Nor is his knowledge of the subject extensive, and his understanding of it is crude, to say the least. Nevertheless, his mind has been captivated by the merits, so called, of the Douglas system. This system purports by a painless process to so manipulate what is called social credit as to do away with all the glaring evils of our economic system, especially that most spectacular of all – starvation amidst plenty. Had M. Aberhart any insight into economic mechanisms at all, he would readily perceive that the Douglas System offers no escape from any of the evils it castigates.

In truth, it is not really a system, but a theory abstracted from the hopes and aspirations, the fears and misgivings, the jealousies and prejudices of the English “middle class”. At the time this theory was formulated, around 1920, this class was groaning from the pain it suffered due to its position between the upper and nether millstones of the social forces. From above the crushing weight of both industrial and financial capitalism bore down on it, from below the irrepressible power of the working class exerted an equal, or perhaps greater force. Major Douglas saw the agony of his people, and his heart bled in sympathy. But like so many other people, he recognized only the force from above. That from below escaped his notice. Moreover, he perceived only one form of that force – financial power. So it appeared to him that financial capitalism was crushing both the petty bourgeois and the working class. It was beyond his power of comprehension to understand that it is the force of capitalism from above that causes the working class to exert pressure from below. Major Douglas, though an engineer, evidently had forgotten the first law of motion.

At all events, he raised the cry: The financial institutions is the Bastille we must storm . . . and his cry reverberated in every petty bourgeois heart. Them, too, he claimed to have made a most extraordinary discovery: The banks were creating money . . . credit . . . purchasing power out of the sheerest nothing by a mere scratch of the pen. This certainly is exerting power over wealth, equal to anything the genii of Aladdin’s lamp could do. But this power is in the hands of the banks and used for their special benefit, but transfer it to the Government and, clothed with this power, it can issue certificates, based on the national wealth, entitling all citizens to a share of the goods so abundantly produced in this age of plenty. Thus, the working class will get a greater portion of the wealth it produces, and the petty bourgeois will get a greater portion too, but what is more, though this is not explicitly stated, the small business man will be enabled to get a half nelson on his arch enemy . . . the financial institutions.

Such is the Douglas line of reasoning, and thus, too, is Mr. Aberhart’s. It is very human and very sentimental. It pretends to bespeak the woes of the most downtrodden creature . . . the common man. But most of all it represents the sufferings and the ideals of the small business man as those of the great mass of humanity. Therefore, it is as elusive and false as it is reactionary.

Accordingly, the theories on which the idea of social credit is based contain all the fallacies of current economic thought. It is perhaps not too much to say that these theories are the quintessence of Vulgar Economy. At all events, one could hardly be more vulgar in his economic ideas than Mr. Aberhart is, as exemplified in his radio addresses. Of the fundamental principles of economy that underlie the capitalist system, he does not disclose that he comprehends an inkling. The nature of a commodity, the subtleties involved in the exchange and circulation of commodities, the social relations this circulation sets up, the antagonism of commodities in the process of exchange, value, surplus value, the function of money as a measure of value and the standard of price, are all apparently as much a mystery to him as the Immaculate Conception.

Indeed, Mr Aberhart’s economic ideas seem to be centred around two concepts only – money and price. They may have some abstruse relation to each other and yet they may not. It is a matter which is not exactly clear.

Money! What is money? Money is a ticket that enables one to buy goods with, just as a railway ticket enables one to ride on the train. The more tickets one has in one’s pockets, the more he can buy. These tickets are, therefore, merely media of circulation, purchasing power. They may be made of anything from iron to pieces of broken glass. The material is of no consequence. What is of consequence, though, is the quantity of money in circulation. Aberhart’s reasoning in this connection is somewhat as follows: Since money is tickets with which to buy goods, there should be as many tickets issued as there are goods to buy. The mortal sin of the Banks is that they refuse to issue enough money, or credit, to enable the “common man” to procure the necessities of life. Therefore, the power to issue money and credit based on social wealth must be taken over by a social credit government. It would almost appear as if Mr. Aberhart’s mortal sin is wishful thinking.

According to Aberhart, then, money has, apparently, no hidden relation to commodities. It is a ticket only, a means by which a commodity is transferred from one person to another. It is a something, just as a ball is to a child – something round. It is not gold, or the substance in which commodities ideally express the amount of labor time embodied in them, as Marx has defined money.

Price is a moral concept. Hence there is a “just price” and, by logical deduction, an “unjust price”. Mr. Aberhart, being a Christian gentleman, is the champion of the just price. This price is said to be a ratio of goods consumed to goods produced, multiplied by a co-efficient. Why this should give more of a just price than any other method of determining the exchange of commodities, in a system that demands numerous compensations, in order to check and balance the chaos resulting from the circulation of commodities, is more than the writer can understand.

Anyhow, Mr. Aberhart proposes to establish a “just price”, which appeals to the moral sense and has a ringing sound, for which reason it is very acceptable to the great multitude. The supreme virtue of this price is that it will put an end to the robbery of the consumer, for according to the social crediter, it is at the point of consumption that the people are robbed, not only the wage worker but every one that breathes. People have to pay too much for the things they buy. We are in the throes of a depression because prices have been too high, thereby diminishing purchasing power.

This is an altogether different idea of price than that given by Marx or by the whole school of classical economy. Marx says that price is “the money name of the quantity of social labor realized in a commodity”, and “a commodity expresses its value ideally in price”. Again, price is at one and the same time “the exponent of the magnitude of value of a commodity and the exponent of the commodity’s exchange rate with money”. But this is all too abstruse and involved for the social crediter. His idea is much simpler and plainer. The idea Marx had of price may have been true enough in an age of scarcity, but in an age of plenty it is out of date. The social credit theorists seem to forget that the capitalist system remains, in all essentials, the same as it was when Marx rummaged the shelves of the British Museum.

Nevertheless, the social crediters have established a new school of economy whose ideas are all modern and up-to-date. From this new school we learn that it is not labor-power alone that gives value to a commodity. Part of it is given by a consumer when he makes a purchase. Again, in the process of production the machine is paid a wage as well as is the worker. Surplus value is not produced by a worker through creating values of a greater magnitude than what he receives, as wages, for his labor-power, but it is created by all humanity of the past ages through the inventions that have been handed down to us. This mysterious increment is not surplus value, but a social heritage. It manifests itself not in interest, profit and rent, but in the price spread. Hence it is paid for by the consumer, and not created by the worker.

It strikes one that a distinguishing characteristic of the new economy is its deification of the consumer. For it maintains that it is, in the final analysis, the consumer that gives value to the commodity. Coal, for instance, mined in Africa has no value because there are no consumers to use it. These modern thinkers do not seem to realize that the value embodied in a commodity is realized through a sale. No sale, no value disembodied. That should cause no confusion. Even at the depth of the depression, when goods on the shelves were plentiful and buyers were few, there were no goods given away, except under threat. Commodities still bore the price mark, and hard cash had to be handed over the counter to get them. Depressions seem to turn these thinkers topsy-turvy. They appear to them as something fateful, foreboding, abnormal. But they are nothing of the kind. A depression is one phase of the normal functioning of the capitalist system. On the contrary, did no depression occur then there would be an abnormality in the functioning of the system. From this it would appear that the deification of the consumer cannot effect our temporal salvation.

There is, in connection with the dictum that consumers create values, a minor point to which the writer wishes to call attention. It may have escaped the notice of the up-to-date thinkers. Behind this dictum, obscured from view, there lurks a bit of a devil of an idea. It is this: if consumers create values, then, as all are consumers, the social parasite creates value as much as does the worker; hence he does not live off the fruits of others’ labor and he is, therefore, the good, respectable citizen that we know him to be. This is, of course, only a minor point, and perhaps it should not have been mentioned.

The new school of economics is also, apparently, inclined to be deceived by outward appearances. This is especially evident when dealing with the money system, at the feet of which is laid the blame for all our present troubles. Money, it explains, causes commodities to circulate, but herein it is certainly deceived by appearances. In reality, the movement of money is simply the reflex of the circulation of commodities. Money only realizes the prices of commodities. Given the velocity of money, among other things, the quantity of money required in a community is just the amount sufficient to realize the prices of the goods to be exchanged. More than this the system cannot and will not absorb. For money, in the sphere of circulation is an effect not a cause. Hence, there is nothing seriously wrong with money, as such. Consequently, to increase the quantity of money will not put more goods into the hands of the people. Such an increase, in place of causing a greater quantity of commodities to circulate, can only have the effect of cluttering up the machinery of exchange. To advance as an argument for such an increase that many people are suffering because they have not the money with which to buy the necessities of life is not an argument for the relief of distress, but a begging of the whole question. For we are living under the dispensation of the law of commodities, and not under a dispensation which supplies necessities to each according to his needs.

Aberhart and his followers are deeply moved because many are starving amidst plenty. It is a condition the reason for which baffles them. They can see easily enough that the products of labor are not properly distributed. That does not require much cudgeling of the brain. But they do not have sufficient insight into the capitalist system to be able to understand that this condition arises from the fundamental contradiction of the system. This fundamental contradiction is that goods are socially produced, but individually appropriated by the private owners of the means of wealth production. Aberhart may, perhaps, have some sort of notion of social production and what social conditions inevitably result therefrom, for he speaks of a fund for goods from which “citizens” should draw the necessities of life. But at the same time private ownership of the socially used means of production is, to him, sacrosanct. The profit system, modified so that the owners of industry obtain a “commission” in place of a profit, must be maintained at all costs. Hence, he wants to retain the capitalist system, but at the time escape the inequalities and distress which it produces. So when he speaks of changing the system, what he has in mind is an indefinite idea of correcting some of its faults. In a sum, he wants both to eat the cake and to keep it. It does not stagger Mr. Aberhart to attempt the impossible.

C. M. Christiansen