| Subject: | Re: [socialcredit] Fw: Article on Social Credit | | Date: | Tuesday, August 16, 2005 04:31:16 (-0700) | | From: | William B. Ryan <w_b_ryan @.....com>
|
| In reply to: | Message 2483 (written by Joe Thomson) |
Nevertheless, Payne's observation that
"Most economists agree Douglas's ideas were flawed,
since money set aside to purchase equipment, buildings
or other capital improvements - was really just
another firm's 'A.'"
is factually correct. Most economists do in fact
assert that. That was always the argument against the
theorem. Our brief is with the economists not the
historians.
I've appended Payne's text below for those who have
trouble opening the PDF document.
-
--- Joe Thomson <thomsonhiyu@shaw.ca> wrote:
Thanks for forwarding that article to me, and to the
List, Wally.
The likelihood of any response correcting the author
of the article's gross mis-representation of 'A+B',
(and other, less important, historical facts), ever
being printed in the "Edmonton Journal" (a CanWest
Global controlled paper) is, in my opinion, extremely
remote.
If anyone does care to try, and actually does manage
to get a correction published, please let me know and
forward it to me.
It would be interesting to know how much of an
"arm's-length relationship" there is between the group
that funds "Historica", and those 'historians' who
write its material.
Joe
-----------------------------------
-------------------------------------
F_A_I_R U_S_E C_L_A_I_M_E_D
Edmonton Journal
Friday, August 12, 2005
Social Credit departed from normal political pattern
Douglas and Aberhart forged movement from complex
economic model
MICHAEL PAYNE
CanWest News Service
Most political revolutions are based on rousing ideas
- "Workers of the world Unite" or "liberty, Equality,
Fraternity" - but Alberta was transformed in 1935 by a
rather abstract economic argument, the "A plus B
theorem," proposed by a Scottish engineer and economic
theorist, Major C. H. Douglas.
The collapse of the stock market in 1929 began a vast
international economic catastrophe that included
Canada.
Western Canada, including Alberta, was dealt a double
blow. Drought conditions, combined with the
international economic crisis, meant agriculture was
hit by depressed prices and low yields. When farm
families stopped consuming and left the land, urban
suppliers were hurt too. By 1933 in Edmonton and
Calgary nearly one in six people found themselves on
social assistance.
The United Farmers of Alberta government had no answer
to the growing crisis. While its rank-and-file
supporters became more disaffected, the party's
leadership cut spending and offered minimal relief.
The political scandal of Premier John Brownlee's
alleged affair with Vivian MacMillan, which reached
the courts in 1934, simply underlined how badly out of
touch the UFA government was.
Some Albertans were attracted to leftwing movements,
but for reasons historians still debate, parties such
as the Co-operative Commonwealth Party, or CCF, and
its successor the New Democratic Party, had more
success in Saskatchewan, Manitoba, and even British
Columbia.
In Alberta, voters were swept away by a populist, but
right-wing, movement based on the ideas of Major
Douglas.
Douglas argued poverty was caused by the financial
system and the current system could never work because
of the "A plus B theorem." According to Douglas, "A"
represented the value of all wages, salaries, and
dividends paid out by companies, while "B" represented
the amount of money companies had to set aside for
capital investments. Prices of goods had to cover the
costs of "A plus B," but consumers only had the total
value of "A" to spend. As a result, there was a
constant shortfall between the value of goods produced
and the value of what could be consumed. To prevent
this, governments needed to create new money to cover
the shortfall or "B" in his theorem. Boosting the
money supply would encourage consumption and keep the
economy in balance. According to Douglas, it was banks
and other large financial institutions that prevented
this from happening.
Most economists agree Douglas's ideas were flawed,
since money set aside to purchase equipment, buildings
or other capital improvements - was really just
another firm's "A." However, his distrust of banks and
his belief governments should stimulate consumption by
helping consumers to purchase more struck a responsive
chord in depression-ridden Alberta.
The success of Social Credit ideas in Alberta is
directly attributable to William Aberhart, a
charismatic Calgary school principal and lay preacher.
Aberhart's deep religious convictions led to his
nickname among detractors, "Bible Bill," but they also
gave him a remarkable sense of conviction and mission.
He began a hugely successful radio ministry in 1925
that eventually reached an audience of about 300,000.
In 1932, he discovered Major Douglas and soon his
evangelical sermons also incorporated Douglas's
economic ideas.
Aberhart's message was Alberta should pay a "social
dividend," or "credit," of $25 a month to every adult,
and a smaller figure to every child in the province.
Despite attempts to paint his economic ideas as
ridiculous, thousands of Albertans joined "social
credit" clubs, and in 1935 Aberhart decided to convert
these clubs into a full-fledged political party. In
the subsequent election, Social Credit captured 56 of
63 seats in the legislature.
However, Aberhart found putting Social Credit theory
into practice a tougher task than winning an election.
The idea of a "social dividend" was particularly
problematic. Opponents called the idea "funny money,"
and Aberhart was forced to admit his government had to
straighten out the province's finances before it could
act on such an important, and potentially costly,
proposal.
Enabling legislation for the dividend program was
passed in 1936, and Albertans were asked to sign up
for future benefits - and incidentally to promise to
"co-operate most heartily" with the government. About
70 per cent of the adult population did just that, but
when no action was taken to implement the scheme some
Social Credit MLAs began to agitate for Aberhart's
resignation. By 1937 the new government was in crisis,
and Aberhart and his cabinet barely survived by
painting the press, banks, business and the federal
government as the real opposition to Social Credit
ideas.
After this crisis, the Social Credit party in Alberta
remade itself as essentially a small "c" conservative
party with a strongly populist program. Many
historians believe the growing influence of Ernest
Manning as Aberhart's chief lieutenant and later
premier in his own right reflects the evolution of the
party away from its radical roots.
Certainly by the next election in 1940, little
remained of Major Douglas, "funny money" and the ''A
plus B theorem" in government policy.
-
Michael Payne is the Head of Research and
Publications, Historic Sites and Cultural Facilities
Branch, Alberta Community Development, and author of
The Fur Trade in Canada: an Illustrated History.
He is also the co-editor of Alberta's centennial
history: Alberta Formed-Alberta Transformed.
-
To learn more about William Aberhart, consult The
Canadian Encyclopedia, published online by Historica
at
http://www.thecanadianencyclopedia.com .
-
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