Political Economy Seminar

GA 341 — 5 August 1922, Dornach

Sixth Seminar Discussion

Question regarding the depreciation of money: Will it gradually lose its value? Also as purchasing power?

Rudolf Steiner: As purchasing power, it has the same value until the end. This question is more a technical one of commerce, a question of how. The gradual erosion of money is not easy to imagine. It would require an extraordinarily bureaucratic apparatus.

I emphasize that I do not want to proceed programmatically, but only to say what is. For my insight is that we cannot create a paradise on earth by economic means. That would not work; instead, we can only create the best possible state of affairs. Now, one has to ask oneself why we have sunk below the best possible state. It is because the individual factors of the national economy cannot assert their true value at one point or another. It is possible today for a person who works in a spiritual way to be paid in a way that is not at all necessary for the national economy as a whole. He is either paid too high or too low. Both occur. But if he is paid too little, he immediately gives rise to an unhealthy change in prices as a result of his low pay. The same applies if he is paid too much. Corrections must be made to this, and it is only a matter of – without taking Foerster's things into consideration – which factors in economic life make this rearrangement, this circulation possible. So a circulation in which the tolerable mutual prices emerge, not only for goods, but also for the intellectual organization, and also for the necessary free intellectual life.

It follows directly from this that money must become old. The only question is how this can be done technically. And you would not be able to gradually wear out the money in any other way than by attaching coupons to the notes that have to be torn off at certain times, and by an official authority. This would result in a very complicated bureaucratic apparatus. But it is really never a matter of bringing about the erosion through such external signs, but rather that the real course of things brings about this value by itself. This happens when you simply give money, all kinds of money, more or less the character of a bill of exchange, that is, I mean the character of a bill of exchange in that there is an expiry date. Of course, this cannot be calculated in abstracto, but only approximately at the outset, assuming a specific moment. Then one must correct until the matter comes to a possible deadline.

Then it would be a matter of finding out what was needed for the global economy, which, after all, was already there for what was basically a very extensive local economy. This is the practice of the jubilee year in the Old Testament. It is something very similar to the aging of money: the remission of all debts. With a radical reduction of all debts, all economically harmful assets or capital also disappear. After all, you probably remember how long it was until a jubilee year – every seventy years. Now this jubilee year, compared to what would be necessary today in terms of the global economy, was determined a priori by simply defining the age of the patriarchs. I can't remember right now whether it is in the Bible, but in any case, the custom was originally to determine the human age because it was correctly calculated: if you take the course of an entire human life, it contains everything that is there in the form of gift capital in youth, then in loan capital and in trading capital, i.e. circulating capital. It was assumed that a person has the right to consume in his youth what he will later earn as a mature person, and then earn a little less when he approaches the end. In those days, this was seen as a kind of borrowing.

Now, you see, that was a priori; it would not look the same in the world economy. The time periods would be considerably longer. But it is also clear that when this gradual depreciation of money occurs, it occurs in mutual transactions themselves, because the initial year would be on the banknote. In real economic circulation, the money will then have a lower purchasing power, but a lower utilization power for all organization: the further it advances, the lower its utilization power. So that it can gradually change into gift money due to the decrease in its utilization power, and that it then changes back into young money, which can simply be reissued on the transition path. This must be brought about only through the associations. Thus labor has its highest value for products that are as close as possible to natural products, even though the worker does not get more than anyone else according to the price formula; but labor then has the highest value there in the national economic process. Only part of it goes to the one who works; the other part goes into the economic process without remainder. They have deprived the individual of the opportunity to enrich himself.

Question: How can money be used differently if it has the same purchasing power as young and old money?

Rudolf Steiner: If you start a business with young money, you are now in a position to invest in that business for a long period of time by putting young money into it; whereas with old money you could not invest in the business for a long period in the same way.

Question not noted.

Rudolf Steiner: You mean: once I have bought my means of production, then instead of money I have the means of production, and the money that I now give away is then in the hands of someone else. The money that has gone into production must of course remain there. But under certain circumstances this money can be transformed – it would not be transformed if the person concerned can consume it – but what is in it in production is a question of commerce. This will not be very bureaucratic, because the associations can ensure that within the enterprises, which are based on the same principles, nothing but money of a certain age is used. So the money is absorbed into the means of production. The other measure, that the means of production lose their value when they have become means of production, comes to help with this. These two things combine into one. Today you have it the same way, only disguised. The money that is lent for production does not go back, gets stuck in production. It is only held by the fact that the means of production can be sold again. Thus it is continually rejuvenated. But if the means of production cannot be sold, the money remains in its old age. You have to think in real terms, then the question will never arise: how do you make the money keep its age in there? Rather, you will say: that must happen - so the measure must simply be taken! This is an outwardly technical question. Of course, you could say this: there would be a certain possibility that such things would be circumvented by speculation; but speculation would certainly have much less ground in such a community than in one that gives money an indefinitely long value. In reality, money does wear out after all. Otherwise, that Pomeranian countryman could be right who says to himself: How big are the Prussian national debts? I want to invest a small capital in interest and compound interest, and that would be able to cover the Prussian national debt after so and so many years. This could never come about because all those who would be obliged to pay for this sum, which after all needed the appropriate cover, would perish. In some way or other, the guarantors would disappear, and the Prussian state would not get a penny of it for centuries.

So you see that pure money does indeed wear out. It is only a matter of taking these things into reason, which take place in reality and cause damage by not being in reason. That is why I can say: I only look at the real, not at an agitative being-shoulding. Because the things are there! It is a matter of asking: How can we rehabilitate the world economy?

Question: What is the relationship between state and money?

Rudolf Steiner: Through what I described yesterday, a Reichsbank, a state bank, would be impossible. The result would be a banking institution between those who have received gift funds and those who, through work, namely soil work, create new goods in their beginning. This rejuvenation would pass from the state to the economy. And that is what constitutes the further necessity. By passing over to the economy, this measure to make money young again would be linked to other economic measures, not to state measures. And as a result, quite different value relationships would emerge than now under the fiscal element. We would have something that already exists. After all, things are only hidden by the fact that they do not take place in the right place. We would have transferred a fiscal measure into an economic one. The tax authorities would have less opportunity to proceed economically than an economic association.

Question: What would be the nature of a different monetary basis?

Rudolf Steiner: It would be created by the fact that everything that is paper money, a money surrogate, would become very similar. The great differences of today are only caused by arbitrary measures. So the state banknotes and all other types of money surrogates would become much more similar to each other. One would have a unified currency, and it would be fairly unimportant what it was made of, because it takes on a purely nominal character at the end of the process; and by being reduced to its basic elements, it takes on a metallic character, which is what it should have to begin with. Currency would be something that is in a constant state of flux, but it would be fully adapted to the peculiarities of the economic process.

Question: Didn't you once praise the useful means of production as a monetary basis?

Rudolf Steiner: Let us ask ourselves: What determines the value of a particular currency over such a period of time during which this change takes place? It is determined by the available usable means of production. Suppose there is very little usable means of production available; then the thing will have to be converted very quickly. Money will accumulate everywhere, purchasing power will decrease everywhere due to the limited means of production, and so on. But if there are many usable means of production, the circulation will be different, and thus this money will have an increased value. In this way, we get the currency out through the usable means of production.

Question: Would something stable have to be taken as the substance, like gold?

Rudolf Steiner: As far as I can see, the real substance of money would be basically unimportant, so that you could put the year, which would then become the value, on paper as well. I cannot see that it would then be necessary to introduce such a currency as gold. It would only be possible to the extent that specialized economies were formed. But to the extent that a world economy actually exists - it is realized to the extent that the economy emancipates itself - it is possible to make money out of any material. What does money become as a result of what I am saying? Money becomes nothing more than the bookkeeping that runs through the entire economic area. If you wanted to introduce a giant accounting system that is not necessary, you could book all of this back and forth of money quite well in a corresponding place. Then the items would always be in the corresponding places. What actually happens is nothing more than tearing the item out of the relevant place and giving the person the appearance, so that the accounting system migrates. In a fluctuating sense, money is accounting. I cannot see that it should have any other than a decorative value, whether you make it out of this or that.

Objection: Gold would provide a certain standard.

Rudolf Steiner: That cannot be the case, and if it is the case, it is evident in this bookkeeping itself. The essential thing is that all monetary transactions are transferred to bookkeeping. Instead of transferring an item from the assets side to the liabilities side, you transfer the money.

Objection: It should not be gold because the devaluation could be avoided by withholding the gold at the end.

Rudolf Steiner: If there is a buyer for the gold. That would have to be the case, that is, the purchase would have to be advantageous. Then you would have to do the unnecessary calculation on top of everything else. Yes, that wouldn't help you at all. If, for example, you made a piece of jewelry out of it, you would be able to cheat with it.

These things must be considered for the purpose of economics itself. If you consider these things together, you will be able to evaluate what is currently only done on the basis of partial observation and inadequate speculation in the treatment of economics. There are always inadequate methods and insufficient observations.

Question: Which capital arose first in economic terms, commercial capital or industrial capital?

Rudolf Steiner: First, of course, commercial capital, historically, and in fact, trade itself is the very first work of exchange that has to be done. If you go back to primitive village conditions today, you have relatively little industrial capital. The village craftsmen do not earn proportionately more than the farmer. On the other hand, the people who trade earn something. This enables them to borrow. And then it goes further. Because capital does not arise if it is not usable. In fact, industrial capital arises only in third place. This is so much connected with habits that rational reasons cannot be found.

Question: Should Switzerland go to the national economy or the world economy? - Is there not a tendency in many countries to go back to the national economy?

Rudolf Steiner: You said that Switzerland had moved too early into the world economy because it had been shown that it had not done well? You cannot say that because Switzerland was unable to test the world economy in a natural way. What you now call the “goodwill” of neighboring countries has been brought about in an unnatural way by the war. If it had been able to continue to develop as it had until 1914, it would not have suffered to that extent, but would have continued to develop. Of course, the same damage would have occurred, which gradually became apparent at the time and which meant that one would have had to sail peacefully into the associative. As things stand now, it must be said, very little depends on Switzerland. For now we are dealing in the world with the tendency towards a world economy, but with its continuous disruption by the political intentions of the national economies, which have coincided with national aspirations. What is disrupting the world economy today is political intentions. Politics has begun to want to reduce everything back to the national economy. We cannot use Switzerland as an illustration here, because it is politically too powerless. Every now and then Switzerland is allowed to have a say when it is known that it will say what is wanted – Switzerland also says what is wanted.

So Switzerland cannot be held up as an example, but America, which is decidedly leading to an economic design and to an inhibition of the world economic design - it could also be that it would be very difficult to overcome this tendency of America towards an economic design. On the other hand, in a country organized like England today, which basically has only a pseudo-national economy and in reality a world economy, the tendency towards a world economy could develop. Because here you have England, over there India, South Africa, Australia, and so on. What is economically connected is basically spread all over the world. Thus England does not have the economy of the whole world at the same time, but it has the economic needs that are necessary throughout the world, which it must synthesize into something that must qualitatively take on the spirit of the world economy. That is what must necessarily lead to the world economy in the course of economic development. And in time, North American politics will have to submit to it as well; for the economy will simply make its very powerful demands on the hard heads of the people, and they will have to submit to the world economy. England could not make any progress if it continued to work in the merely economic sense. So you have to look for the real antagonism between England and America. Switzerland is not at all decisive.

Question: I cannot imagine how the stone in the crown of England could be explained in terms of its value only by human labor, not by its rarity.

Rudolf Steiner: The point is that economic values arise only when human labor or the human spirit is expended. This is the only way that economic values arise in the context of the division of labor. If you are now required to declare the value of this stone in the Crown of England, you must say to yourself: If it is possible to extract values from the ongoing economic process that the individual appropriates, then the value that has been generated can indeed be retained by the person in question. So if anyone wants to keep a million under our current circumstances, they can. He can accumulate the million. Then, for all I care, he can put this million in his stocking. He can now replace this putting-in-the-stocking with the other action of artificially attaching to some product, which is rare, the same value as to his money – and letting it pass into circulation. Then, by attaching this value to the thing purely conventionally and merely by his fiat, by his spiritual organization, he has attached this value to this object that he particularly likes. It is what has happened, merely under the influence; one cannot perhaps call it spiritual deeds, but spiritual measures are taken. The concept of rarity dissolves economically into the economic concept of spirit.

Objections are raised against the threefold order: It is said to be impossible to carry out the separation of the three limbs. The task of the threefold order could be not so much to build up as to separate negatively where harmful influences of the three areas on each other exist, and to leave the work at that. Especially with regard to the limitations of the three areas, one could not imagine anything. Economic life would be limited to what is called technology.

Rudolf Steiner: The thinking of the people who make this objection is not sufficiently developed. This is the main problem: our present-day educational institutions do not develop thinking enough. People can only form concepts that they store neatly next to each other. But the same thing happens in the human threefolded organism. If you take the optic nerve, it belongs to the nervous-sensory system; but it could not exist, of course, if it were not nourished, especially during sleep, by the nutritional system, by the metabolic system, if, that is, nutritional processes did not take place in it and if the inhaled air did not continually pass through the spinal canal into the optic nerve and a circulatory process did not also take place there. So that in the human organism something belongs mainly to the sensory nervous system or to the nutritional or rhythmic system.

The same applies to the social organism. It is necessary that the other two systems play a part in the economic organism. But in spite of all this, it remains true that essentially the sensory-nervous system is located in the head, and that head nutrition and head breathing are effected by another instance. It is precisely by creating these three instances that this interaction will exist in the right sense. I have always objected to the use of the word 'trinity'. The question is: how should the three elements, which are present in any case, relate to each other in a natural way so that they can work on each other accordingly? The spiritual organism will essentially be based on freedom. But of course the economic life will also have to have an effect on the spiritual organism, otherwise the professors would have nothing to eat. But this will have just the right effect if it comes from a different source, so that it becomes necessary to develop an economic organism in one direction and a spiritual organism in another direction, and then the state-judicial “organism”. Objections are raised only by those who imagine this threefold division as a division. It is well known that this has happened quite a bit. I found one commentator saying that he had given lectures on the three parliaments in the social organism. Anyone who imagines it this way imagines an impossibility, because there can only be a parliament in the state, not in the free spiritual life. There can only be the individual individuality, which creates a network of self-evident authority. In the economic sphere, there can only be associations. In parliament, all the functions will converge, and the right measures will be taken between the individual links of the social organism.

Question: In the tenth lecture, the pursuit of profit was compared to mass in the physical sense. Can the analogy be extended to allow work to be a function between commerce and the pursuit of profit?

Rudolf Steiner: According to the physical energy formula, (e = \frac{m \cdot v^2}{2}). In a similar way, economic energy would be formulated: the possible profits, which would be multiplied by a function of the speed of circulation: (e = g \cdot f) (circulation). The pursuit of profit must be multiplied by the speed of circulation, and then you get the figure for the work. This applies to the individual product. If you have a certain profit on it and you multiply it by the speed of turnover, you will have the amount of work. This amount of work is zero if you need to multiply the profit by zero, that is, if you sell immediately: (0 = g \cdot 0).

Question: Does the value of the stone in the Crown of England correspond to the tension between it and the need for luxury?

Rudolf Steiner: You explain the matter just like this, only through a different course of events: For the tension that arises through consumption is always the tension between the processing of natural products and the value that labor acquires through the spiritual organization. With something like the stone in the Crown of England, one cannot really speak of its value in a one-sided way. I beg you: what is it actually worth? It is only of value in a very specific economic order, and one that is permeated by a certain spirituality, through opinion, that is, through the spirit. It cannot be said that it has “this value” in itself, but only that it is worth something through the opinion attached to it. If, by buying it for what the seller asks for it, one were to put the seller in a position to have worked as much as he can get through what he receives, then something like an avalanche would have created an entire organization of labor. Just as in physics you need not take into account anything other than the mutual relationships when you allow a small snowball to form an avalanche – then you do not need to change the formula – so in the same way you do not need to change the formula in the economic consideration by the mere fact that such special circumstances arise under which, purely externally viewed, facts are created like this, that a rare product is equivalent to a huge amount of work. This is only possible in the context of the national economy.