The revival of currency crankism.
In the course of our nearly one hundred years of socialist activity, one
of the ideas that we have had to deal with from time to time has been
currency crankism – the idea that economic and social problems are
caused by some flaw in the monetary system and that what is required to
put things right is not to get rid of the profit system that is
capitalism but mere monetary reform (of one kind or another, depending
on which particular school the currency crank belongs to).
Between the wars the most popular school of currency crankism in Britain
was Social Credit, based on the ideas of Major Douglas (as he was
known). His explanation for the slump – of poverty amidst potential
plenty, of unmet needs alongside idle factories and widespread
unemployment, of piles of unsold goods being destroyed – was simple, not
to say simplistic: it was due to a lack of purchasing power, to people
not having enough money to buy what they needed or to constitute a
market worth catering for. The solution, too, was simplistic: distribute
purchasing power free to people in the form of a “social dividend” paid
by the government.
Douglas believed that banks could “create credit” by the mere stroke of a
pen, but that they deliberately kept money scarce so as to be able to
charge a higher rate of interest. Hence his solution that the banks
should be taken over by the government and their supposed power to
create credit exercised but in the general interest, as “social credit”.
In fact, there is no chronic shortage of purchasing power. Sufficient to
buy the product is generated as wages and profits in the course of
production; slumps are not caused by an absolute shortage of purchasing
power but arise when, because of falling profit prospects, capitalist
firms choose not to spend all their profits on fully renewing or on
expanding production. Nor can banks “create credit”; they are
essentially only financial intermediaries, borrowing money at one rate
of interest from people with cash to spare and lending this at a higher
rate to those needing money to spend or invest, their profits coming
from the difference between the two interest rates.
This being the case, the main result of applying “social credit” would
be roaring inflation. All the other problems of capitalism, including
periodically re-occurring “poverty amidst plenty”, would continue
unabated. They will only end when the means of production are brought
into common ownership and democratic control so that they can be
oriented towards directly satisfying people’s needs – when banks, money
and all the rest of the buying and selling system will have become
redundant.
Normally, lack-of-purchasing power currency crank theories flourish in
times of slump. However, according to an article by Derek Wall, “Social
Credit: The Ecosocialism of Fools”, in the September issue of
Capitalism, Nature, Socialism, the modern-day followers of Major Douglas
are well ensconced in the Green Party:
“Brian Leslie, whose parents were members of the Social Credit
Greenshirts during the 1930s, chairs the Green Party Economics Working
Group. The newsletter, Sustainable Economics, is almost entirely
concerned with social credit and Party economics speaker Molly Scott
Cato advocates monetary reform . . . Frances Hutchinson, a former member
of the Green Party left grouping, the Association of Socialist Greens,
has revived the Douglas Social Credit Secretariat . . . Wilfred Price, a
member of the Greenshirts in the 1930s, joined the Ecology Party (now
the Green Party) in the early 1980s and powerfully spoke for social
credit as a form of green politics.”
Currency cranks find it easy to infiltrate the Green Party because of
the tendency amongst its members and supporters to blame “big banks” and
international financial institutions for ecological problems and the
ravages of capitalist globalisation. The Green Party has, for instance,
lined up alongside the Tories, the UKIP and other reactionaries in the
“defend the pound” camp because it sees the euro as an international (in
the sense of anti-national) currency.
Derek Wall’s article concentrates on the political side of Social Credit
rather than on its economic fallacies (though he recognises these), in
particular on the anti-semitic position it took up between the wars. The
title of his article is taken from August Bebel, a pre-WWI German
Social Democrat, who once quipped that “anti-semitism is the socialism
of the fool”, by which he meant the anti-capitalism of the fool. And it
is, of course, a short step between denouncing “global finance” for
causing problems to blaming “international Jewish bankers” or some other
supposed international conspiracy or cabal. It was a step that Douglas
himself took. Wall quotes him as writing in Social Credit (1933):
“In a remarkable document which received some publicity some years ago,
under the title of ‘The Protocols of the Learned Elders of Zion’, a
Machiavellian scheme for the enslavement of the world was outlined. The
authenticity of this document is a matter of little importance; what is
interesting about it, is the fidelity with which the methods by which
such enslavement might be brought about can be seen reflected in the
facts of everyday experience.”
Wall – a Green Party member who describes himself as an “eco-Marxist” –
recognises that Social Credit doesn’t have to be anti-semitic and that
its supporters in the Green movement (with one exception) are not. His
concern is to warn the Green Party and the anti-globalisation movement
against embracing monetary reform as a quick-fix solution but also of
the dangerous company they risk falling into if they continue down the
road of blaming “global finance” for ruining “national” – and local –
economies.
Author: Adam Buick
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