Social credit is a distributive philosophy of political economy developed in the 1920s and 1930s by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made them. To combat what he saw as a chronic deficiency of purchasing power in the economy, Douglas prescribed government intervention in the form of the issuance of debt-free money directly to consumers or producers (if they sold their product below cost to consumers) in order to combat such discrepancy.
(From the wiki page)
previous (possibly incorrect) ChatGPT summary
Social Credit is an economic theory by C.H. Douglas that aims to fix a fundamental problem: the total cost of producing goods and services is always greater than the money people have to buy them. To solve this, Social Credit proposes a National Dividend, a regular payment given to all citizens to boost their purchasing power, and a Compensated Price Mechanism, which reduces prices so consumers can afford more while producers still make a profit. The idea is to ensure that the economy works for everyone by closing the gap between what people earn and what they need to spend, without relying on debt or heavy government control.
Stumbled onto this randomly and I find it interesting and rarely talked about. It almost seems like a capitalistic approach to communism which I had no idea existed. The oddest thing about it to me is that most parties advocating for it were highly religious and right wing. On the surface, it seems fairly progressive and left leaning to me though.
What are your thoughts?
Cost to manufacture is not more than wages, but cost to purchase a good is always more than the total cost of labour needed to produce it, so long as profit exists.
The money isn’t free so much as redistributed from taxation elsewhere, think of it as the same as subsidising industry except only to the workers of that industry (instead giving it to owners and expecting the savings to trickle downwards). You could also consider it an income tax rebate with more fine-grained control of who gets it.
It doesn’t seem particularly ground-breaking of a concept; I see the value in investing money into necessary but unprofitable industry though my concern is that if you subsidise wages of a business with a profit incentive, management may lower wages to compensate.