# Political Economy Seminar

## GA 341 — 2 August 1922, Dornach

### Third Seminar Discussion

> Note: The concept of recognition is again put forward for discussion and again characterized by Rudolf Steiner as unsuitable for economics.

Rudolf Steiner: The concept of recognition leads into economic philosophy, not actually into economics as such. Furthermore, our aim must be to find such views in economics that can be carried through, if possible, by always changing themselves, through the whole of economic life. With the concept of recognition, you will hardly be able to cover all economic elements without greatly expanding this concept. You can always do that with concepts. Let me give an example: How would the concept that was formed yesterday be shaped if we were dealing with the fact that a completely unknown Rembrandt was found somewhere in a floor drain, if it were a matter of estimating the economic value of this Rembrandt, of which one can speak with certainty. I do not mean how it would be done at all, but how it would be with the concept of recognition.

> Note: The representative of the concept of recognition blames the “political” for bringing about recognition of anti-social processes - for example, undeserved economic gains.

Rudolf Steiner: If we have the opportunity to implement the threefold social order properly in reality, then the concept of the “political” as you have developed it no longer applies. For the political is essentially given in the legal, so that the political would then be completely absent from the economic, and one could not bring about a “recognition” through some kind of political behavior.

But the question remains: what then is the “political”? The political is actually an extremely secondary, highly derived concept. From a purely economic point of view, there is no reason to be political. In the example you gave, with the entrepreneur who expects 200,000 marks and then, if he gives 80,000 to the workers, takes in 500,000 due to brisk business, there is no need to drift into the political. Let's assume the following: With the extra money that has been generated, the entrepreneur can openly stand before the entire workforce and say: I expected to generate two hundred thousand marks. But three hundred thousand marks more have been generated. We have founded the business under these conditions, that two hundred thousand are worked out. These three hundred thousand have been worked out more. I find it more correct for these and those reasons for the totality of the economic organism in which we stand, to found a school, for example, with these three hundred thousand marks, than to distribute it to you. Do you agree? - There you have a form in which the economic process remains the same, but you do not need to take any political factor into account.

In world history, the political is a secondary product. This is based solely on the fact that the primitive, perhaps highly unsympathetic but completely honest power relations have gradually taken the form of war among people. It cannot be said that war is the continuation of politics only by other means, but politics is modern war transferred into the spiritual. For this war is based on deceiving the opponent, on creating situations that deceive him. Every stratagem in war, everything that is not a direct open attack, is based on deceiving the opponent. And the general will ascribe to himself all the greater credit the better he succeeds in deceiving the enemy. This, transferred to the spiritual, is politics. You will find exactly the same categories in politics.

When talking about politics, one would like to say: We should strive to overcome politics in everything, even in politics. For we only have real politics when everything that takes place in the political sphere takes place in legal forms. But then we have the constitutional state.

> Question regarding the tailor example.

Rudolf Steiner: The only reason for this deception is that the quota that is formed by a single suit is an extraordinarily small one and it would therefore take a very long time before this small quota is visible in the tailor's balance sheet in such a way that he would actually perceive it as a loss. The point is that the division of labor makes products de facto cheaper. If you work for a community under the influence of the division of labor, your own products also cost you less than if you worked for yourself. That is precisely what makes the division of labor so cheapening. If you break it at a certain point, you make the item in question more expensive, which you have prepared yourself. Of course, a single quota for a single suit that a tailor makes for himself would not make much of a difference. On the other hand, it would be noticeable if all tailors did it.

With a more extensive division of labor, no one will prepare anything for themselves anymore, except in agriculture. If a tailor actually makes his own suit and he wants to draw up a completely correct balance sheet for himself, then he would simply have to include his own suit in this balance sheet at a higher price than the market price. So he has to set his expenses higher than the market price. It does not matter so much whether he actually buys the suit or not.

It is, of course, a self-evident prerequisite that it is not other tailors from whom one buys the clothes, but that they are traders. The price of a suit from a trader is cheaper – otherwise the division into production and trade would make no sense – than the price could be if the tailors in question worked without traders. So the tailor has to set the price a little higher when he works without a dealer, because the dealer simply brings it to market cheaper than the tailors themselves could sell it. At most, you can still make the objection – which might be justified under certain circumstances – that you say: the significantly cheaper price of the goods sold without the dealer would be that the tailor, if he had to get the goods from the dealer, would then have to factor in his travel costs. You would find that by including the trade, these ways actually come cheaper. By simply comparing the producer and dealer prices, you can never find out whether the suit is more expensive or cheaper.

> Question: The price of one suit should put pressure on the other suits. Why would the other suits become more expensive?

Rudolf Steiner: It exerts a downward pressure on prices in that it removes one suit from the sum of all suits that traders deal in, and that it deprives traders of the opportunity to make a profit on this suit, so that they have to demand a higher profit on the other suits. What the traders demand as a higher profit causes prices to rise among the traders, but among tailors it exerts a downward pressure on prices.

> Question: The question now is whether this price pressure makes up less than the trade route brings him in price increases.

Rudolf Steiner: You will not find that anywhere. Try to solve the problem. This is a task that can be posed directly: to what extent does trade reduce the price compared to the seller's own sale? This posed directly as a dissertation task would be important. You would see: if fifty tailors make their way and have to calculate these ways, it actually costs more than if the traders make the ways.

> Objection: You say of the suit that the tailor keeps for himself: When it goes through the shop, it becomes cheaper. Now, in the case of the suit that he keeps for himself, the entire expense of the shop, of arranging the transaction, is saved.

Rudolf Steiner: That would make a difference if trade did not reduce prices. But since trade reduces prices, it does not matter that the suit stays at home.

> Note: Let us say the cost price is one hundred marks. When trade is added, the suit costs one hundred and twenty marks. The dealer reduces the price to one hundred and ten. If the tailor does not bring his own suit into circulation, he saves the ten marks.

Rudolf Steiner: But in this case, you have to look at the overall balance sheet that arises from traders and tailors as something very real economically. You would have to examine how this individual item appears in the overall balance sheet. You can't find it by just comparing the individual balance sheet items. You have to see it in the overall picture. Then you would see: because economic division of labor means a fructification of labor, if I go back to an earlier state in a perfectly economically divided labor, I harm myself with the others. One is so interwoven with them that by going back to an earlier stage one also harms oneself. The deception arises from the fact that it is difficult to grasp the terribly small quota. But I only need to set up the progression: if you think that all tailors make their own suits and that they would now form an association, then what would have to be entered differently in the balance sheet as a joint item would mean something.

> Note: in the ready-to-wear industry, this is already more apparent.

Rudolf Steiner: That is absolutely certain. Of course, we then have to examine the underlying causes. It will be a terribly small item if it is only a matter of the division of labor between the producer and the dealer. On the other hand, the item becomes very, very considerable if there is a further division of labor, if the tailor otherwise no longer makes whole suits at all, but only parts of them. Then, if he wants to make a suit for himself, it will cost him much more than if he buys it somewhere. I said that it is a radical example that is only significant in terms of principle. But what later emerges with a further division of labor also applies at the very beginning of the division of labor.

> Question: Why can't this be applied to agriculture?

Rudolf Steiner: I did not say that. I said: It is becoming less and less the case that people produce for themselves, with the exception of agriculture, where it is obvious that the farmer provides for himself. In agriculture, where so many corrections are made to the general economic process anyway, it really does not matter that much whether the farmer takes his cabbage from his own land or buys it. If, however, in the sense of the threefold order, there were a real economic relationship between agriculture and non-agriculture, then it would also be relevant for agriculture. The fact of the matter is, however, that basically all kinds of underground transfers take place and as a result the relationship between industry and agriculture in terms of prices is completely undermined. This will be discussed in the next few days. But if we were to examine the overall balance of an economic area by balancing agriculture and industry against each other, it would emerge that, under current conditions, substantial amounts flow from agriculture into industry, simply through underground channels. But if, under the associative system, there were just as many or at least approximately as many workers in one sector as prices would allow, then we would have a very different distribution of urban and rural areas. We underestimate what it would mean if the associative being were to be realized. That is why it is not very easy to answer the question: why is the “Coming Day” not an association? Simply because it is not powerful enough to have a certain influence on the economic process. For that, the association must first reach a certain size. What does the “Kommende Tag” want to do today between employers and workers that is much different from what usually happens? That would only be possible in one case - I once said this at a company meeting - namely if all the workers of the “Kommende Tag” decided to leave the trade unions. Then you would have the beginning of a movement that, as such, would gradually get the ball rolling from the other side, the workers. But as long as the workers simply take part in the strikes in exactly the same way as the other workers, it is quite impossible to talk to the workers in the ideal way.

Above all, the associative nature of the human being would cause a whole series of factories to migrate from the city to the countryside, and similar things would arise as a necessary consequence of the associative nature of the human being. It is not for nothing that we have villages and village economies. In the primitive economy, the village economy is the only economic form. Then it moves on to the markets. These terms are much more correct in economic terms than one might think. As long as the market is there and villages around it, the market, even if it is based on the principle of supply and demand, means something that is much less economically harmful – if there are no scoundrels, which is a personal matter – than when the city economy is added. This radically changes the entire relationship between producers and consumers. Then we no longer have villages that regulate their market by themselves, but we have opened the floodgates to all the possibilities that arise when the relationship between consumers and producers is no longer clear, when it becomes mixed. And that is the case when people live together in cities.

The relationship between producers and consumers cannot be overseen other than by forming associations. But then the conditions that arose under the hive change. For the associative being is something that not only organizes, but also economizes. It would arise under the associative being that from each individual link - on which the interaction of the three links of the social organism is based - the health of the other arises at the same time.

Over longer periods of time, but still not too long ago, it would become apparent that in cities, administrative officials and centralized schools, and so on, would essentially be together, that is, essentially spiritual life and legal life, while economic life and legal life would be decentralized together. So the coexistence would also be spatially divided, but not in such a way that one would now have three completely different links, but so that the cities would essentially represent a confusion of spiritual life with a more centralized, a larger horizontal administration. And smaller administrations in the circle of economic enterprises would be more decentralized. This would require that the traffic conditions would be much more effective than before. These are not so far advanced only because one does not need traffic for production when the producers are scattered around the cities.

It is not at all easy, my dear audience, to talk about threefolding because there is so much intuition involved. If you describe to someone today what is happening, they will say: Prove it to me! No one can prove to me, even theoretically, that he will be hungry tomorrow. Nevertheless, from experience we know that he will be hungry tomorrow. And so, with correct economic thinking, correct economic foresight also arises. You must see that as something real, what is meant here by actual economic thinking, that one begins to develop such thinking that is really productive itself. Otherwise, I could ask you: what economic value does economics have? - A merely contemplative one has a very different economic value - it is essentially a consumer - than a real one; it is essentially a producer.

> Question: Tailors lower the price of their product when they supply themselves by dividing the work. Does this also apply to a button or another sub-product?

Rudolf Steiner: As a boy, I lived in a village where there was a shoemaker – Binder was his name. He rejected any exchange between himself and his customers that he did not take care of himself. He brought every single pair of boots he made to me, my father, my mother, himself. What does the whole pair of boots consist of? In this case, it consists of the tubes — the tubes were so long —, of what is at the top, of the instep, of the sole and of the cobbler's work, which he had to do for us. All of this belongs to the pair of boots. It makes no difference whether you speak of the tube or the sole or the cobbler's process. The division of labor first occurred when the part that made up the process was removed. This is most radical in the case of the tailor, because it is not so easy to see what is involved. When I put on the boots, I knew that I was walking on the path the cobbler had made!

> Question: If I make the button myself, will I also be expressing the price?

Rudolf Steiner: In that case you will also, under certain circumstances, lose the most; because you cannot use it at all!

> Interjection: I would like to assume that I need it.

Rudolf Steiner: Then the question arises as to why you need the product. If you change it in such a way – it can be a small or a large change – that it acquires a reality value, then perhaps you will lose nothing.

> Remark: I need it for consumption, that is, for destruction.

Rudolf Steiner: In agriculture, other adjustments occur. If the division of labor were carried out, it would also apply there. But you will hardly have the opportunity to utilize what has been produced under the division of labor if you retain it, in such a way that it produces a reduction in costs.

A loaf of bread is still very close to agriculture. Nevertheless, we have had a rather disastrous experience with this loaf of bread. We induced a member of our society, with quite good intentions – it was before the war – to produce hygienic and otherwise good bread. And this bread was then only given to our members; others did not take it. The bread became so expensive that it simply could not be sold.

> Note: That was high-quality bread.

Rudolf Steiner: If the price difference had only been justified by the quality, then it could have been justified. But the price difference was much greater, only partly due to the fact that the general production was subject to the principle of a more extensive division of labor than that of our member. And he produced in such a way that he did not distribute his production among as many people as the others; so he produced much more expensively.

> Question: What about fashion pieces?

Rudolf Steiner: But here we are now in the aesthetic field, no longer in the economic field. I did not want to touch on the question of whether it might not be extraordinarily good if the division of labor were avoided in certain fields. I am even opposed to the division of labor being carried out in all areas, but not for economic reasons, but for reasons of taste. I find it even horrible when the division of labor is carried out down to the last detail, for example, in human clothing. But here we have to say: we must of course assert the free spiritual life, which would naturally cost us something at first. It would make some things more expensive, but there would be a balance, even though some products that are not included in the division of labor become more expensive. Please do not misunderstand me as wanting to be a fanatic. ...

> Question: What if there are significantly more traders than are economically justified?

Rudolf Steiner: What I have said is based on the premise that there are just as many traders as are economically justified. We are not dealing with a straightforward progression, but with a maximum-minimum direction. At a certain point in the number of traders, we have the most favorable influence of the merchant class. Below and above that, it is unfavorable.

> Question: Is the number determinable?

Rudolf Steiner: If there is any rational economic activity at all, then the number of traders can be determined, as can the number of producers. Today, you have the principle of rational economic activity nowhere. People do not consider how an enormous amount of unnecessary work is done. Just think of the printing press. If you were to spare all this unnecessary work, then you would get an approximation to the natural numbers everywhere. Sparing unnecessary work already provides a reduction of the natural numbers of the people employed in a sector. Today, the fact is that the merchant class actually consumes more than the producers themselves. At least for Germany.

There must be a certain number of traders for each article. But you will also have to bear in mind that sometimes even the merchant class is masked. It is replaced by something else, by the most diverse things. Just think how much of the merchant class, for example, can be replaced by setting up large bazaars. This creates a completely different economic category.