# Workers' Councils

## GA 331a — 15 May 1919, Stuttgart

### Council Organization in the Sense of the Threefold Social Order I

*Second lecture for the members of the Greater Stuttgart Workers' Council Stuttgart*

SOURCE INFORMATION: There is no transcript of this lecture, only a few keywords recorded by Rudolf Steiner in his notebook regarding his lecture concept. The present text is an attempt at reconstruction based on these keywords and should therefore be regarded as incomplete and only partially authentic. The documents used are printed in Appendix I. The text passages taken from them are set in italics in the present text.

Rudolf Steiner: In this day and age, the idea of councils has become widespread here in Germany. It therefore seems necessary to consider how this council system can be properly structured. First of all, the description of individual processes in economic life will be used to show what the necessary steps for creating a realistic and not merely abstract council system might look like.

One burning question for today's economic life, for example, is how the administration and management of raw materials—not only domestic raw materials, but also those imported from abroad—should be regulated. This also includes the problem of energy management. The awarding of public contracts, the entire public economy, the construction of locomotives, trams, the rail network, the telegraph and telephone systems — how can all this be organized appropriately? Another pressing question for Germany is: How can foreign imports be paid for? As a consequence of the war, the following rule applies: part of our finished products must be used to pay war reparations. And the surplus, the remainder from the sale of the remaining finished products, is used to purchase raw materials such as potash, coffee, nitrogen, and aluminum. So we are dealing with a variety of needs.

In order to determine these needs, it is necessary to establish an associative connection between interested consumers. First, we have what we will call area A, which is the transport sector, whose needs must be clarified first. This requires a council that obtains an overview of the existing needs for locomotives, trams, rails, telegraphs, etc. In connection with this, we now come to a second area, area B, which encompasses everything related to energy. And that would be the second task of this council: the management of energy and the supply of energy to the economy. This is related to the third area, the supply of raw materials. Coordinating this area C with the other two economic areas would also be a task for this council, which would have to observe a clear law: the supply for area A can only be as large as what areas C and B can provide in terms of raw materials and energy and what ultimately constitutes their normal income – in contrast to the normal expenditure of area A. This council, i.e., these economic councils, are actually consumer associations, and so their task is also to clarify the demand for semi-finished products by determining the demand for various consumer goods. This is the realistic approach, not rationing. Such associations are also the best guarantee against harmful production, such as unnecessary luxury goods.

The works and transport councils are responsible for operations and distribution. As production associations, the transport councils deal with the proper use of capital, while the works councils deal with the production process. They have to deal with issues such as the different production speeds of different companies and coordinate production output. The work of these councils will make the formation of syndicates and trusts impossible. The works councils in the individual plants will provide evidence of the labor required for production, so that those who can do the work can be placed in the appropriate plant.

Today, after the war, the task is to convert production. During the war, the task was to manufacture war material, which meant that these products were quickly destroyed and annihilated by the destructive forces of war. This conversion to peacetime production may entail the consolidation and closure of businesses. A unilateral increase in production is not the solution to restoring balance to the economy; there must be a balance between production and consumption. Seen in this light, business management must become truly scientific, and it is the task of the works council, in cooperation with consumer cooperatives, to find the right size for businesses. If the introduction of the Taylor system, developed by Taylor, an American “organizational lawyer,” is demanded today, it can only lead to damage in the current economic order. In a different system, applied under different conditions, however, it could certainly have a positive effect.

However, the current discussion focuses more on the question of socializing ownership of the means of production. Most people see this goal as being achieved through the takeover of factories by the state. There are currently three different proposals for replacing private ownership with state ownership, assuming that violent expropriation is ruled out: firstly, purchase with public funds by paying a perpetual annuity to the former owners; secondly, purchase by paying temporary annuities; and thirdly, state participation, whereby the entrepreneur's taxes owed to the state are paid in the form of ownership shares. By transferring ownership of capital to the state, it is believed that the problem of socialization has been solved. However, it is an illusion to believe that this will bring about a real socialization of capital functions.

In the social relationship that arises from the interaction of capital and human labor, three elements must be distinguished: entrepreneurial activity, which must be based on the individual abilities of a person or group of persons; the relationship between the entrepreneur and the worker, which must be a legal relationship; and the production of a thing that acquires commodity value in the cycle of economic life. If the threefold structure is realized, the worker can no longer be a mercenary of capital; he stands in a legal relationship to the entrepreneur, who becomes the work manager. Through the development of his individual abilities as an entrepreneur, he becomes, so to speak, an “organizer of work.” The relationship between the work manager and the worker, who cooperate in the creation of a product, will be based on the determination of each person's share. The entrepreneur, the plant manager, thus assumes the position of a trustee for the capital entrusted to him on behalf of the whole. But the plant manager should not be restricted in his free initiative; he must, however, orient himself to the market and consumer interests. A lively interaction must develop between his business and the organs on the consumer side.

What we need is not state and municipal capitalism—that is not true socialization. The prevailing social injustices cannot be eliminated in this way. Parliamentarianism and bureaucracy, as exemplified in the municipalities, can only destroy economic life.

Only the structuring of the social organism according to the principle of threefolding leads in the direction of true socialization. The differences from conventional ideas of socialization can be characterized as follows:

Firstly, threefolding does not interfere with the economic structure, but merely addresses people's participation in what has been produced. This means, for example, that it will not ruin industries that work for export, because – correctly understood – export consumes; it is actually on the side of consumption. Workers who work for export will have to receive as remuneration for their products as much of the products of other companies as is necessary for their livelihood. And thus, production for export, which satisfies the consumption needs of the workers employed in this sector of the economy, is justified.

Secondly, the threefold structure results in a complete transformation of the previous conditions on three levels: First of all, in the area concerning the establishment and creation of a business. The manager suitable for setting up a particular production enterprise can obtain the necessary means of production with the help of the transport councils, and so can the workers. The capital necessary for setting up a business can be accumulated in advance. The second point to consider is the transfer of a business. A business is not inherited, but transferred to another suitable manager. This manager is connected to the business through his or her skills. Thirdly, the value of goods. A good derives its value from the person who consumes it. The manager receives his share of the equivalent value of the goods produced on the basis of the existing legal relationship, and the workers receive the other share. Today, it is no longer possible to speak of surplus value in the same way as before; the workers have already skimmed off part of it in the form of wage increases. For the most part, surplus value no longer really exists today. Basically, however, it should not serve to increase consumption by individuals, but to support what can provide the social organism with spiritual and material goods. And that is spiritual life. Genuine socialization requires a fundamental rethinking. And above all, socialization must not be confused with fiscalization. What most people imagine socialization to be is, at best, a kind of fiscalization. And when the state ultimately lays its hands on the fruits of labor, this is a form of socialization that achieves nothing. If the question of capital is resolved in the spirit of social threefolding, this means that the intellectual worker is bound to the enterprise—he is, after all, the initiator, the soul of the enterprise—while the manual worker is unbound, free to move about; he can move from one company to another and enter into a new legal relationship with the employer there. Such a regulation is the guarantee for the continued development of economic life.

The nationalization measures introduced in Russia will have serious consequences in this respect. They mean that in the future this country will have to forego its own industry, because it will lack the necessary education and scientific technology. In an economic life structured according to the threefold principle, there will no longer be wage disputes in individual companies. And that means, first of all, that the distribution of the goods produced will take place as follows: The share of goods produced by the individual worker will not be purchased, but converted into vouchers that entitle him to purchase the goods he needs to satisfy his needs on the market. Only if the path of threefold social order is taken can we hope that socialization will take a proper and not a destructive direction.