One engineer thought workers couldn't afford what they made

The gap Douglas thought a paycheck could not close

Clifford Hugh Douglas, a British engineer who examined industrial costs in the early 20th century, argued that factories could produce more goods than the people who made them could buy. His concern was not simply that an individual worker’s wage might be low. It was that, across the economy, prices embodied costs that did not return to households as wages and salaries at the same time.

Douglas’s argument became known as the A+B theorem. In his accounting, “A” payments went directly to people, such as wages and salaries; “B” payments went to other organizations, such as suppliers, banks, and other businesses. A finished product’s price could reflect both, he said, while household incomes came mainly from A payments. If people had less purchasing power than the total price of goods on offer, businesses would need to rely on borrowing, exports, or future income to sell their output.

Social Credit’s proposed bridge

Douglas’s answer was to treat money as a way to distribute the economy’s productive capacity, not only as a reward for current employment. Under Social Credit, the public would receive a national dividend—a regular payment to individuals—alongside income from work. The dividend was meant to let people buy a share of what the economy could produce even when their paid work did not generate enough income to purchase it all.

He also proposed a “just price”: a price adjustment intended to reduce what consumers paid, with the difference covered through newly issued credit. In this scheme, credit would be tied to real goods and productive capacity rather than simply to a bank loan or a government’s tax revenue.

Why the idea was consequential

The proposal shifted the question from “How can people earn more wages?” to “How should purchasing power be distributed when production depends on many people and institutions?” Douglas’s diagnosis and remedies were contested, but the national-dividend idea made that question concrete: if a society can make goods people need, should access depend entirely on having a job that pays enough to buy them?