What is a social credit?
Social loan is an approach to an economy that claims that the strength of society for building wealth lies in cultural heritage and preservation of such. This theory was developed after the First World War Clifford Hugh Douglas, an engineer who turned to the economy after observing the economic patterns in the factory he supervised during the war. His theory proved to be popular in some regions and inspired a number of political parties working on the progress of fiscal policy based on social loan. He also has critics who claim that his conclusions will not withstand strict testing.
In his book on Social Credit, he claimed that in a society where consumers have purchasing power necessary to dictate production by checking what they consume and when, there will be more social equality. He felt that existing economic structures have created a situation where any attempt to increase wages will cause a corresponding price increase. This would lead to a reduction in purchasing power and try to re -increase wages and cyclic development of the eventInstead, which would not eventually create companies.
This theory also suggests that the inheritance of technology and various approaches to production is the most valuable and most important thing. Individual contributions contribute to the sum of the whole and over time the actual production costs should fall. For example, technology has greater efficiency. Although production costs are falling, consumption costs have a tendency to grow and the economy becomes strongly on the basis of loans and loans. For example, consumers must borrow to cover their needs, and their loans are facilitated by increasing the cash offer and distribution of surplus to the financial institutions to be used in borrowing.
The limiting factor of production that Douglas observed during the war was a lot of money available to cover production costs such as buying equipment, adding workers' shifts etc.abilities. According to the theory of social loans, when it focuses on the production of wealth, instead of creating goods for consumption, it can contribute to a gap between wages and prices. Consumers must cover the waste generated by the industry, and this may have cumulative effects over time.
The solution designed by Douglas and its theory of social loans was a discount that reduced the prices for consumers and equalized their purchasing power. He suggested that the goods should be purchased at a full price, with consumers receiving a discount to adjust the costs they pay. This discount would come from funds that are usually used for lending and credit activities. The discount would be determined by determining the actual production costs using the ratio of production and consumption comparison.