The Rudolf Steiner Archive

Ladies and Gentlemen,

In the opinion of a number of economists, as you are probably aware, it was quite impossible for the World War to last as long as it actually did last. From their knowledge of economic relationships, these economists declared that the economic life, as existing at the time, would not permit such an extensive war to last more than a few months. Yet, as you know, the facts of life refuted this idea. If people thought objectively, this in itself would convince them of the need to revise their science of Economics. For if you took the trouble at this moment to follow up the reasons which some economists, at any rate, adduced for their assertion, you would by no means be able to conclude that they were mere fools. Quite the contrary. You would see that their arguments were not at all bad and carried some conviction. Nevertheless, the reality of life refuted them. The War went on far longer than was theoretically possible. Obviously, therefore, Economic Science did not embrace the reality; the reality turned out quite differently from what Economic Science had supposed.

We can only understand such a thing as this if we see clearly the nature of the evolution of economic life upon the Earth. It consists of a series of successive stages, but one in which the earlier stages continue to exist side by side with the later. Similarly we may say that the lowest organic forms now living are somewhat like the earliest living creatures of Earth-evolution. Thus in a sense the most primitive creatures are still here, existing side by side with the highest creatures which have yet evolved. There is a difference, but there is also a marked resemblance in the forms. So it is in the economic life. The phenomena of primitive phases of economic life are still here today, side by side with those which have attained a higher stage. But in the economic life there is another peculiarity. While in the animal kingdom, for example, the more primitive forms can live literally side by side in space with the more highly evolved, in the economic life the more primitive processes are constantly penetrating into the more highly evolved ones. We might very well compare it with those cases where bacteria penetrate inside higher organisms. Only, in the economic life it is infinitely more complicated. Nevertheless, we can detect certain underlying structures, and from these we can take useful examples which will help us to bring our line of thought to its conclusion.

The more primitive forms of “political economy” must be conceived as private agricultural economies on a large scale. Their magnitude is relative, of course; but we must understand that if the private agricultural economy is self-contained, it includes within it the other members of the social organism. It has its own administration, possibly even its own defence force, its own police, and moreover its own spiritual life. Such a private economy—grown to gigantic proportions, it is true, but still preserving in all essentials the character of a primitive agricultural concern, a gigantic farm—was the so-called kingdom of the Merovingians. It was a “kingdom” in a quite external sense, but it was certainly no State. It was in fact no more that an immense farming estate, comprehending a huge area. The entire social structure of the Merovingian kingdom was really no different from this:—the economic life underlay everything. On it was built an administrative system which accorded with the prevailing ideas of right and justice; and into this was placed a spiritual life—an extraordinarily free one for that time. For, ladies and gentlemen, it is only in more modern times and notably under the influence of “Liberalism” that we have seen the rise of the maximum of unfreedom in the spiritual life. Not until “Liberalism” came did the spiritual life begin to grow more and more unfree; and it reaches the zenith of unfreedom in that embodiment of all political bliss, the Soviet Republic of Russia. Only books approved by the Soviet Government can be sold at all. The Pope does at least content himself with proscribing books; but under the Soviet Government proscription is automatic, inasmuch as no books are printed and published save those which the Government permits.

Now if we trace the further course of evolution, we see how private economies gradually passed over into national economies,¹ which again at a certain time—at the beginning of the modern period—tended to become State-economies.² The way it happens is characteristic. Private economy—initiative in private business—gradually passes over into the hands of government departments, and thus the fiscal administration grows increasingly into industrial organisation. We see the economic passing over into the life of the State; and we see the spiritual life absorbed by the life of the State at the same time. So then we witness the rise of the modern economic and spiritual organism of the State. The State, as such, has grown increasingly powerful. We, as you know, are aware that it will have to be, so to speak, articulated once more in distinct members [wiederum eine gewisse Gliederung erfahren musz] if economic life is to progress.

At the moment, however, we are not concerned with “three-folding.” We observe, as I said, how private economies were gradually joined together. It generally happened on a pretty large scale. Private economies grew into something which could be called economy on a larger scale—national economy; and in this way a new social structure was created. Yet, within the new, the element of private economy was still preserved. The more primitive phase of evolution was still there as an insertion in the new. What is it that arises at this stage in the true sense of national economy? It is a mutual exchange between the several private economies. The exchange is regulated in many different ways. The regulation hovers like a kind of cloud over it all. The exchange, the trade or commerce between so many private economies, is the essential thing that arises with this welding of private economies into a national economy. What is the outcome? We saw yesterday that in the process of economic exchange each of the parties has an advantage, or can have an advantage. The result is, therefore, that the single economies which join together for the sake of mutual exchange (the essential thing in all economic life) profit by so doing. Once more, then, the single economies, the single businesses, gain an advantage by joining together. They profit by it simply because they can now exchange one with another. We can draw up a statement. We can calculate how much the one private economy or business will gain by means of the other private economies with which it is now connected. Each party gains an advantage, and the gain of each and all becomes significant for the entire national economy.

Now at the time when the modern science of Political Economy was founded that particular stage had been reached. National economies had taken shape out of the private economies. This must be borne in mind if we wish to understand the economic ideas of Ricardo or Adam Smith. Only on this foundation can we understand the thoughts which they evolved about “Political Economy,” as they called it. It was this working together of private economies which they actually saw and upon which they based their views. In Adam Smith you can see it again and again—how he thinks from the point of view of private economy or private business and thence draws his conclusions. At the same time he has before him the picture of their joining together into a national economy. Yet even in their ideas about this latter process the older economists retained to a large extent a way of thinking based on private business. Such were the views at which they commonly arrived: they treated national economy on the analogy of private economy. Thus the fertility, the prosperity of a national economy, as they conceived it, lay in this—one national economy would exchange with another, would come into mutual intercourse with another, and would thus derive profit and advantage. The “Mercantilist” school, for example, was based on the advantages arising from such exchange between national economies.

Now already at this early stage, where the single private economies or businesses come together into a large national economy, there is sure to arise a kind of leadership. In effect, the most powerful of the private economies which have merged into a larger complex will naturally assume the leadership; and this would undoubtedly have happened at the transition from the stage of private economy into that of national economy. But it was masked and hidden; it did not come fully to expression, inasmuch as the State undertook the leadership. If this had not happened, one private economy—namely, the most powerful of them all—would naturally have been the leader. So in effect it happened that the single private economies passed imperceptibly into the form, not of national, but of State-economy.

But it was different at the next stage, when in the further course of modern history the mutual exchange between national economies—world-trade, in other words—became more and more comprehensive. Then, indeed, such a leadership emerged quite evidently. It happened, as an absolute matter of course, in the further progress of economic life, that England's national economy became the dominating one. From another point of view I have already drawn your attention to the fact that England evolved directly from trade into industrialism. Let us think what happened while England was acquiring her colonies. She set the standard for currencies. Her colonies, in the manner of private economies, joined together into a larger complex. In the first place this gave rise to those internal advantages which are always the result of mutual exchange. But, not only so: it also gave rise to that powerful economic hegemony which, with the further evolution of world-trade, subsequently exerted a dominant influence on the economic life of the world. While she was gaining her colonies, England set the standard for currencies, because it was precisely through England that gold was forced on those countries which adopted it throughout the world. For, as you may easily compute, in economic intercourse with a rich country having a gold currency, any country which did not possess it would be at a disadvantage. In a word, we may say that under the influence of world-trade England became the leading economic power.

Moreover, while this was going on, it was still possible to develop concepts of national economy in a straight line—with whatever modifications and improvements—from Hume, Adam Smith and Ricardo, and, we may add, Karl Marx—for fundamentally, though he turned their ideas pretty well upside down, Karl Marx only continued along the same lines. The ideas of these economists are only to be understood if we have before us the picture of that economic life, which arose under the dominating influence of England's economic power.

Now with the last third of the nineteenth century, there was a transition from world-trade to world-economy. It is a very remarkable process—this passage from world-trade into world-economy. Definitions are of course inexact, for these transitions tend to take place in successive stages; but if we want a definition we must say: At the stage of world-trade the economic life of the world is characterised by single national economies exchanging with one another. This traffic quickens the whole process of exchange and thus essentially alters prices—alters the whole structure of economic life. But for the rest—in all other respects—the economic life is carried on within the several territories. As against this it may be called “world-economy” when the single economic units not only exchange their products one with another, but when they actually work together industrially: when, for example, half-manufactured products are sent from one country to another, for their manufacture to be continued there. That is a radical example of what I mean by their working together industrially. So long as it is merely a question of raw products, the account will continue to show a condition of pure trade. This cannot yet be described as an actual working-together in the industrial life. But when all factors in human life (in so far as they are affected by economics), that is to say, when all production, all distribution, all consumption—not merely production alone or consumption alone—are fed from the entire world; when all things are intricately interwoven and fed from the entire world—then we have world-economy. And through the rise of this world-economy, certain advantages which existed formerly for the national economies are lost.

Let us look back once more. When private economies join into a national economy, ladies and gentlemen, they gain on the whole; they derive advantages. Every single one derives advantages. But, apart from this, what is it that impels them? It is of course not always conscious insight which impels them thus to join together. Their joining together is, as a rule, not brought about by conscious economic insight, for in most cases the feeling for liberty is too great; the private business man is not as concerned as all that with the piling up of the profits which arise in this way. Economically, these profits certainly arise; but the process is more complicated than that. The fact is that the single private economies or businesses have the same characteristic as every living organism. Namely, their life tends in the course of time to become weaker and weaker. It is a universal law and it applies equally to economic life. An economic life which is not being constantly improved always deteriorates. Thus, as a rule, the merging into larger “wholes” did not take place with the object of making private businesses profitable beyond their original level, but with the object of protecting them from imminent decline.

When once they join together, they gain the corresponding advantage, though of course it varies from one case to another. And we may say that whatever the single economies have lost in course of time is amply made up for by their joining into national economies. Indeed, as a rule, it is more than compensated. Moreover, whatever the national economies have lost in course of time is amply made up for by world-trade and the transition into world-economy. But when world-economy is once achieved, what then? With whom can it exchange? This, in effect, is what has happened. We have seen the economic life of the entire Earth gradually merging into world-economy. And at this point the possibility of reaping further advantages by merger is at an end.

The economists who declared that the World-War could not last as long as in fact it did last were thinking in terms of national economies, and not of world-economy. If world-economy had been national economy, their declarations would have been quite true. But from the very beginning the World-War had the tendency to spread and spread, and by this very fact it had a longer life.

If in the state of world-economy we continue to think in the spirit of national economies, world-economy itself will at a certain point break up. Even if the break-up had not already been precipitated by various dark forces, this would have been the inevitable outcome of men's continuing to think in terms of national economy.

You see how there play into the economic domain circumstances which are quite clearly perceptible, but which cannot in the nature of things be easily taken hold of with figures and statistics. And this will show you, ladies and gentlemen, that it is quite impossible to prolong in a straight line the old economic ideas. We are obliged to admit that a science of Economics is now needed which will express the realities of the immediate present. The economic categories formed about a century ago no longer hold good to-day. What we need is an Economic Science capable of thinking in the spirit of world-economy. Herein you see one of our greatest historical problems.

Observe the leading statesmen of to-day coming together at Versailles, Genoa or the Hague. Science has only provided them with a way of thinking in terms of national economy. Whatever results they arrive at, unless and until they are permeated with world-economic thinking, must lead down-hill. Can they deny that they are tearing the economic life still more to pieces, erecting fresh artificial barriers and thus hindering the transition into a pure world-economy? We see this tendency in the immediate past—the tendency to break the world asunder as far as possible even in the economic life, and at the same time to conceal the tendency under the cloak of political and national pleas. Yet we shall have to pass into a real world-economy and a corresponding Economic Science, or we shall create an economically impossible state of affairs over the Earth. Such a condition of affairs can only continue in being for a time through one part of the Earth stealing advantages at the expense of another by means of differences in currency or the rates of exchange. This is precisely what is happening in economic life at the present moment.

To conceive what world-economics really means, we must see clearly, to begin with, that at the frontiers of the domain of world-economy (if we may use the expression) the conditions will be quite different from those of economic domains bordering on one another. Relatively speaking, world-economy exists today; and therefore, relatively speaking, a Science of World-Economy will have to follow. The domain of world-economy borders on nothing else, and this makes it necessary for us to observe still more precisely those economic processes which emerge within a closed economic domain, independently of its external frontiers. The cardinal problem for modern Economics to solve is the problem of the closed economic domain—a self-contained domain of one giant economy. For today the very smallest question—even the price of breakfast coffee—is influenced by the economic life of the entire Earth. If it is not so, it only means that progress is partial. This state of affairs is actually on the way and our thinking will have to follow suit.

To understand the economic conditions in a closed economic domain, we must see clearly that within the economic domain—in the mutual interplay of production, consumption and commerce (that is, in effect, circulation)—we have on the one hand consumable commodities, some of them relatively lasting, no doubt; while on the other hand we have the thing we call “money.” Now as regards the form of economy to which these things are subject, it makes an essential difference whether we envisage the class of foodstuffs for example (short-lived products) or of clothing (more long-lived) or, let us say, of furniture or houses (more long-lived still). With respect to their use and consumption we have these important differences of duration as between different kinds of economic products. As an instance of a really lasting economic product, we might point once more to the diamond in the Crown of England, or any other crown. Or, again, we might think of the Sistine Madonna. Such things may be to some extent regarded as a kind of product that will keep; we find them especially among works of art. Now in a social organism subject to division of Labour, having therefore an extensive process of circulation, there must be some equivalent of every product. There must be the money-value, representing the price. But a very little observation of the economic realm will convince you that this equivalent between the commodity-value and the money-value is fluctuating. A product is worth so much at one place and so much at another. A product can be worth more if it is worked up in one way, or less if it is worked up in another. Be that as it may, however, in the total economic life you will perceive that, apart from a few exceptional goods of very long duration, we always have to do with goods which pass away in time. They lose their value, and after a certain lapse of time are no longer there.

The one exception, strange to say, in our whole economic life is money. Although it occupies a position of perfect equivalence to the other elements of economic life, money does not wear out. You can get to the root of the matter in this way: If I have £20 worth of potatoes, I must see to it that I get rid of them. I must do something to get rid of them. After a time they are no longer there; they are used up, they are gone. Now if it were in a true relation of equivalence to the goods that are produced, money, too, would have to wear out, like other goods. That is to say, if the body economic contains money which is incapable of being used up—money which does not wear out—we may well be giving money the advantage over goods, which do wear out. This is a most important point and it becomes all the more so when we take the following into account. Think of all that I must do, if—let us say—through my activity and Labour I want to thrive so well that as a result of having a certain amount of potatoes today I shall have double the amount in 15 years' time. And think, on the other hand, how little an individual person has to do if he possesses £20 in money today and wishes to possess double the amount in 15 years' time. He need do nothing at all; he can withdraw his entire labour-power from the social organism and let other people work. All he need do is to lend his money and let other people do the work. Unless he himself in the meantime sees to it that the money is spent, the money need not be used up.

This is the very thing which brings into the body social so much of what is afterwards felt—shall we say—as a social anomaly, as an injustice. Indeed, gigantic changes are brought about in the body social, even economically speaking, by this reshuffling—I will not say of the relationships of property (I will not speak of these) but of the relationships of work and activity. And we may ask: How are these changes related to another factor, by which it is perhaps more easy to apprehend them? For there is still something rather vague about it if I merely describe empirically, as I did just now, this existing discrepancy as between money and the real objects in the economic organism. How can we get a picture-thought of some particular instance?

We can get a picture of it if we consider, to begin with, how absolutely fundamental for the whole economy of a closed domain is the consumption by all the human beings contained in it. This is the very first premiss: the total consumption by all the human beings who live in the economic domain. That is something which is simply there; it is presupposed: the consumption by all the human beings contained in any economic domain.

But there is also another thing which is of fundamental significance; and that is the land as such. Though this was badly misunderstood by the Physiocrats, for example, nevertheless the land is of fundamental significance, in spite of the fact, which has emerged from these lectures, that it must be constantly devalued. Indeed, it is just because of its fundamental significance that it must again and again be devalued. The Physiocrats made the following mistake. They lived in a time when land (as is of course still the case) had capital value. They conceived their ideas under the influence of this fact. They traced the economic relationships, indeed, in a very clear and graphic way. Of all the economists, they were the most rational. And from their standpoint they came to the conclusion that the intrinsic worth of an economic realm lies in the cultivation of the land, i.e., in the production of those goods which actually serve for the nourishment of man. So long as we remain within this field, we must in fact regard the land as the more or less fixed and given foundation of that which constitutes the intrinsic worth of an economic realm. You need only reflect how the workers who work upon the land, who unite with their Labour the Nature-products which subsequently serve for human nourishment, do in effect—so far as food is concerned—feed all the others along with themselves. All others are dependent on them; all others must be nourished by them. The others, it is true, can somehow get the means to pay for it, and pay more or less dearly. But we may think it out in simple terms in order to grasp the essential point. Let us suppose that there is a certain number, A, of eaters. This number A will include all the farm-workers, all the industrial workers, all the investors, all the traders, all the spiritual workers, right up to the freest spiritual life. All these require feeding. There will be another number, B, of those who have nourishment to offer. That is to say, B is the number of those who by their work really provide whatever passes over directly into human nourishment—into that part of the sum-total of economic consumption which represents the food consumed. Now if A is increased to A¹, while B remains constant, B's product will have to be further divided; and unless B can also be increased in its value somehow, people will have to be brought into the country and the yield of the land increased.

In other words, you cannot arbitrarily increase the number of spiritual workers, for example, within a given economic domain, without increasing on the other side the number of those who are responsible for the production of foodstuffs. Alternatively you can increase the fertility of the soil. The latter may, of course, be the achievement of spiritual workers, but in that case it follows that the spiritual workers of a period when the fertility is higher must be wiser; they must have higher faculties than those who went before them. Thus the increased yield of farm-Labour is in a certain sense equivalent to the enhancement of the insight with which we elaborate the products we receive from Nature. This may be done in many different ways. A man may enhance the forestry of a whole country by improving the bird-life of the country. It may be done in countless ways; we are only concerned with the principle.

So long as we are only thinking in terms of national economy, it is clear enough that such things can happen. Into a country endowed with a lesser degree of insight cleverer people may immigrate from another country, and they may then improve the cultivation of the land. Or, on the other hand, if more people move up into the classes which are not actually producing food, fresh workers may be called into the country. All these things actually happen within and across the frontiers of national economies which border upon other national economies.

All that we can think upon this matter may now be expressed in the question: What is to be done if on the side of A consumption is in excess of what B can produce? Whatever we may think at this point in terms of purely national economy, it ceases to be thinkable when world-economy arises, and when the conditions of the world are already in a certain sense disposed as for world-economy. What we have to do, ladies and gentlemen, is to form an idea of the changes entailed by the existence of a self-contained economic domain.

We can study it empirically by observing some small economy wherein exports and imports can be more or less disregarded. After all, there have been such economies. Empirically, we can study the condition within a self-contained economic realm. And we find it true: The foundation is the land. What the land yields is subjected to Labour—elaborated—and thus receives an economic value. Thereafter Labour itself is organised. We come to the class of men who are no longer actual producers of food, who are consumers but not producers so far as food is concerned. Above all, when we come to the spiritual workers, we have consumers and not producers, so far as foodstuffs are concerned. In a self-contained economic realm we must therefore distinguish, with respect to food, a certain number of producers who indeed—if I may say so—are very much aware of the fact that they are the producers; and over against them the consumers.

These things, of course, are relative; the transition is gradual. But if we consider the whole of human life within a self-contained economic realm of this kind, we must bring about what I explained a few days ago: The Capital must not be allowed to become congested. Hence at the place where the spiritual life is most highly evolved in the forming of Capital (this “place” is of course spread out throughout the entire economic realm) the excess of Capital which has been acquired must not be allowed to flow into the land, where it would become dammed up. Provision must be made for the elimination of the excess Capital. The Capital must not be allowed to become congested in the land. That is to say, at an earlier stage in the process, the congestion must be prevented by the free gift, to spiritual institutions, of the excess which has been acquired. Only what I described as a kind of “seed” must be allowed to pass on. It is here that the concept of “free gift” confronts us inevitably; there must be free gifts.

Study any of the self-contained economic realms which have arisen in the course of history, and you will see that the free gift is always there. In all essentials, the spiritual life is dependent on what, in the economic sense of the word, are free gifts, pure and simple.

From the simple case where Charles the Bald, out of what he had to give away, maintained his Court Philosopher (which some may regard as a rather superfluous article of furniture!)—Scotus Erigena—to Peter's Pence whereby the Roman Catholics of all the world give their free gifts to the Church in tiny doses, such gifts are always there. Wheresoever an economic life, no matter how gigantic it may become, represents an economic domain more or less self-contained, you have the transformation of accumulated Capital into gift-Capital for the maintenance of spiritual institutions.

In other words, now that we have inevitably come to a closed economic realm, namely that of the entire world, we should reflect that one thing is inevitable in a truly economic sense: What would otherwise become dammed up in the land must vanish into spiritual institutions. I say once more, it must somehow vanish into the spiritual institutions. It must take effect as a free gift.

For a truly modern Economic Science, we must seek an answer to this question: How (in the sense of economics) must we buy and sell, so that the values, primarily created as food-values within the purely material realm, may vanish within the spiritual domain? That is the great question. I will formulate it once more: What form of payment must we strive for in our economic intercourse, so that that which is created by the elaboration of Nature, where the productive process primarily works for the nutrition of mankind, eventually vanishes in spiritual institutions? This is the great economic question, to the answering of which we shall proceed in the next lecture.

• 1. The German “Volkswirtschaft,” here translated “national economy,” is also the ordinary word for “political economy.” The fact (indicated in the lecture) that the Science of “political economy” owes its form to its origin in the period of national economies is, of course, emphasised by the German word in a way that is not possible in English, though we are reminded of it by the title of Adam Smith's book The Wealth of Nations.—Translators.
• 2. Cf.Lecture I.

Ladies and Gentlemen,

Yesterday we formulated a very important question which came to the fore with the transition from national economy to world-economy. With this transition the question of price begins to acquire a very different significance in the economic life from what it had before. But there are other things to consider before we can gain a conception of the factors which really determine price. For the price—the public price so to speak—which eventually emerges on the market, or in the circulation of goods, is really of far less economic importance than that which lies behind the forming of prices and of which price-formation and price-fluctuation are merely the final results.

Now these factors which precede the forming of price, both on the buying and on the selling side, are connected with the social relationships in the midst of which the buyer and seller stand. It is these relationships which determine whether the buyer will attach a greater or less value to a certain sum of money. I mean value not only in the subjective sense. Economically speaking, the subjective is only important to the extent that it is properly grounded in the objective—i.e., to the extent that it rests on a true judgment of objective processes. But the value of money is very important even in an objective sense. The economic question nowadays cannot be isolated from the social question. Only by observing the interplay of the two can one reach a valid judgment. Thus we must recognise that the social discontent underlying the present social disturbances is connected above all with that which precedes the forming of prices and of which the forming of prices is merely the final result. As I have shown already, even in the payment of wages—i.e., in that price-formation which, under the existing economic system, ultimately finds expression in the rate of wages—we really have an instance of purchase and sale. Thus everything that leads to wage disputes really depends on social relationships in which both the worker and the enterpriser are involved, relationships of which the upshot is that kind of price-formation which constitutes the payment of wages. Accordingly, the first thing to investigate is: How does money itself influence the forming of price? For money itself plays the chief part nowadays both in ordinary purchase and sale, and in the payment of wages, and in all the rest of economic life as well. We must distinguish between that which eventually emerges as price in terms of money, and that which constitutes the essential value of the money in the hand of one man or another—in the hand of the seller or of the buyer. Today, therefore, we must pause for a moment to consider money as such.

In the current treatises on Economics you will find various elegant statements on the nature of money. For instance, you will find a list of the qualities which money must have in order to permit of its use as money. Let us consider critically some of the qualities which are thus enumerated, for this will show you how necessary it is to get away from many of these current ideas of Economics into a rather different way of thinking. For instance, it is said: In the first place money must have a universally recognised value. But the question is: Who is to be the recogniser? When you have said that money must have universally recognised value you have said nothing. You have simply asserted that it ought to have a certain property, but you have not told how it is to get it. The second property enumerated is still more remarkable. It is said, for instance, that money must be small in volume and yet, being rare, in spite of its small volume it must be possible for it to have a high value. For this property makes money especially easy to store up and, if only for this reason, will constitute a fairly strong inducement to the amassing of wealth. If sovereigns were as big as tables it would be far more difficult to hoard them. Lycurgus saw this long ago and introduced a rather more bulky currency as a preventive against excessive enrichment. If sovereigns were as big as tables it would indeed be less comfortable to get rich than it is now. People would notice it more, and so on. The reason therefore appears to be a rather superficial one. The next thing they say is this: Money must be divisible at will. (I have found this statement, too, in one of the text-books on Political Economy). But this again can only be brought about by some act of recognition. Something must first be done to make it so. It is therefore once more a rather empty statement. Then they say: Money must be easy to preserve. Well, this property of being “easy to preserve” will be brought home to us in its full significance in the course of today's lecture.

You see, we must not only be clear on this, that Nature as such only receives an economic value when it enters into the general economic circulation—when it is taken up by Labour—and again, that Labour only receives an economic value through the way it is organised or divided, and finally, that Capital only receives a value through the fact that it is taken over by the Spirit of Man and so worked into the economic process. We must also be clear that money as such receives its value by the free process of circulation. And now we must consider the changes which money undergoes in the course of circulation. The premises are given to us by what we have said already in these lectures.

Speaking of money, the first thing we have to deal with is ordinary purchase-money—the money we use to buy anything which serves us for consumption. But we must also consider what we may call loaned money. This we have seen in a former lecture. The question now is: Bearing in mind its connection with the whole economic process, is loaned money quite the same as purchase-money? If you are considering purchase-money you will have to ask: How does purchase-money come into existence among all the other elements of buying and selling? It comes about by this means: He who makes use of money, in giving his money, has not only given something which effects an immediate exchange, but he has also given something which mediates an exchange. He gives something which inserts itself into the exchange. As I have shown already in these lectures, everything that enters as a mediator into the process of exchange is money. Suppose I am not content with acquiring as many peas as I can eat myself. Suppose I acquire peas with the object of using them—trading with them—in order to obtain some other things which I require. In that case, simply through this mediating function I am already transforming what would otherwise be an article of consumption into money. Spengler makes a very shrewd observation on this point. Spengler exploits his ideas along a general line of thought which is unfruitful, but he often makes very sound observations. He says: At a certain period of Roman History human beings, economically speaking, became money. The slaves became money. So long as I used the slaves for myself—that is to say, if as an Ancient Roman I only acquired as many slaves as I could use in my own household—the slave was, of course, a means of production. But it is different the moment the slave is hired out or lent. At a certain period of the Roman Empire this was the case. People had so great an army of slaves that they were able to lend them out. They could apply them to all manner of profitable purposes by trading with them. When this took place the slaves became money, so that for that time, we may say, human beings became money. This is a perfectly correct observation of Spengler's, from which you can see once more how that which acts as purchase-money gradually emerges out of what is at first only an article of exchange. It follows from this: Whatever we use as money—to be a really useful form of money—must not merely oscillate, like peas, between the function of being consumed and the function of being passed from hand to hand. For this would involve constant fluctuations of value in the process of circulation. We want something which is used for no other purpose than for mediating an exchange; and to this end there must be a certain—albeit only a tacit—agreement among those who use the money. This, then, is an essential point: The money must only be used for an exchange, for a medium; it must not be used for consumption.

But loaned money is something essentially different from this purchase-money. For in the case of purchase-money you have no other foundation on which to estimate its value—nay, you have no other need to estimate its value than this: How much will you get for it? And as to that, time makes no essential difference. For whether you buy a pound of meat today or after a certain lapse of time, you must estimate the pound of meat according to its consumption-value. Your money may in the meantime have acquired a different value in relation to the pound of meat. But for the human being who eats it the value of the pound of meat cannot, properly speaking, change in course of time. This, however, is essential: The given pound of meat can only be eaten during a certain period of time. That is to say, it can only have a value for a certain period of time. For it goes bad. And this is a very pertinent economic fact. Everything that is a genuine object of use or consumption is subject to decay.

Now, when for the purposes of pure exchange we use money as an equivalent, we must admit that, as against articles which decay, money is an unfair competitor. For, in normal circumstances, nowadays, money does not seem to decay. I say advisedly, it does not seem to decay. Here you can see what an unhealthy element is introduced into the economic life when we bring into it different relationships from those which obtain in reality. By our established institutions money has a fixed numerical value under all conditions. No matter how it may otherwise be placed in relation to the social life, money has its face value and is supposed to keep it permanently. But in reality it does not do so. Everything else is honest. Meat after a period, which varies with its quality, begins to smell. Money does not do this, no matter what its quality may be. Money does not openly “smell.” And yet, when we see circumstances bring it about that an article grows cheaper or dearer after a certain time, we are obliged to admit the following. While the article itself, by virtue of its qualities for human life, must retain the same value (for general conditions will ensure its being consumed at the right moment and a new one substituted for it), the same thing is not true of money. Consequently money, as such, as a pure medium of exchange, is an unfair competitor because it does not reveal in any way the fact that it also is really subject to changes. If I have to pay a certain sum of money for a pound of meat today and a different sum of money for a pound of the same meat a fortnight hence, the difference (the increase for example) in the money I must pay cannot be due to the pound of meat. It must therefore be due to the money. It is in fact due to the money. And if the money still bears the same face value, then the money is beginning to tell a lie, for its real value has decreased. If I must give more in exchange for a pound of meat, the value of the money has decreased. That is quite obvious. In this way, by the act of circulating the money, I bring into the process something which is not really there economically. Economically the facts are otherwise. Economically the situation is that money itself, simply through the economic process, undergoes changes.

We must now investigate the occasions upon which money undergoes changes. In addition to exchange-money or purchase-money we have loaned money. Take for instance the loaned money which a man obtains in order to set on foot some enterprise. For him it is not purchase-money; for him it becomes working capital.¹ Now you must see that this working capital, this loaned money, has an essentially different value—an essentially different property. Loaned money is fundamentally different from purchase-money. Except for the fact that it still consists of gold, silver and paper, not many of its original properties are left when purchase-money is transferred to the sphere of loaned money. It acquires its value in quite a different way. The moment loaned money comes into circulation the Spirit of Man seizes it. Human thinking sets to work and it is through this entry of human thinking into the process that loaned money receives its actual value. When a bank-note is lent to a man who is about to undertake some business—at the moment he begins to use it, it would be far more important to write on the note whether the man is a genius or a fool in business. For the value of the loaned money in the whole economic process will henceforth depend upon the way he acts with it.

Lastly we must pass from loaned money to the third kind of money which I mentioned a few days ago. Nowadays as a general rule it is not taken into account and yet it plays the greatest imaginable part in the economic process. In fact, we must now pass on from loaned money to gift-money. Gift-money, fundamentally speaking, is all that is spent on education. This plays an enormous part in the economic life. Gift-money, again, is all that is spent on endowments and the like—all that has the effect of preventing the evil damming up of Capital on the land by Capital investment, which is so ruinous for the economic life. At this point we must say: For the man whose livelihood depends on purchase-money, gift-money simply becomes valueless. It loses its value. Gift-money is the opposite of purchase-money, as we can see from the simple fact that only he who has received the gift can purchase with it; one who has not received the gift cannot purchase with this particular money!

We have therefore three kinds of money, qualitatively different from one another; purchase-money, loaned money and gift-money. Now to comprehend the relation between these three, we must consider economic systems such, for instance, as the private economies which we assumed hypothetically in the last lecture—economies representing a kind of closed domain. There we shall find that after a certain time all that is loaned money passes over into gift-money. Nor can it be any different in the case of that closed economic domain which is “World-Economy.” Loaned money must gradually pass over entirely into gift-money. Loaned money must not be allowed to be dammed back into purchase-money, so as to disturb the latter.

Loaned money, therefore, passes over into gift-money. So it must be in a self-contained economic system. And what does it do in the domain where gift-money is working? It loses its value. Thus we may say, if we take the domain of purchase-money, the money will here represent a certain value. In the domain of “gift” on the other hand, the money has, in respect of all that obtains in the domain of purchase, a negative value. It lets the purchase-value vanish into nothing. Finally, between the two, the transition is brought about through loaned money. The loaned money itself gradually vanishes into gift-money.

Perhaps, ladies and gentlemen, you will say that this is hard to follow. It is. I am only sorry that we cannot go on for months detailing instances where we can see that the facts are as I have stated, with regard to the valuation and devaluation of money. This, however, should really be our task. All that can be said in the present lectures should be taken as a basis for further researches in Economics. In the brief period of a fortnight, only hints and suggestions can be given; but you will find that all the economic statements which have here been made will be transformed by detailed investigation into valuable economic truths—valuable both in science and in practice.

It does actually take place, ladies and gentlemen: In the economic process money undergoes metamorphoses; it acquires different qualities as it becomes loaned money or gift-money. But we mask this fact if we simply let money be money, and use the number inscribed on it as the unit of measurement and so forth. We mask it and the reality takes its revenge—a revenge which reveals itself in fluctuations of price, with which (though they are actual enough in the economic process) our reasoning faculty cannot keep pace. We ought to be able to follow them. If I may say so, we ought not to let money merely flow into circulation and give it freedom to do what it likes. For we thereby do something very peculiar in the economic life. If we require animals for some kind of labour, the first thing we do is to tame them. Think how long a riding-horse has to be tamed before it can be used. Think what would happen if we did not tame our animals, but used them wild, taking no pains to tame them. But we let money circulate quite wildly in the economic process. If and when it chooses to do so—so to speak—we let it acquire the value it has as loaned money or as gift-money. And we do not foresee, when somebody who is an industrialist possesses a money, from whatever source, which has been wrongly transformed from loaned money into gift-money and pays his workmen with it, that the result is quite different from what it would have been if he had paid them, say, out of pure purchase-money.

In effect, the more a man is obliged to pay his workers with pure purchase-money, the less will he be able to give them—that is to say, the cheaper will they have to deliver their products. On the other hand, the more he is able to pay them with money that has already been transformed (i.e., that has already passed into the sphere of loan or gift), the higher wages will he be able to give them. That is to say, the dearer will they be able to bring their products on to the market. The point is to grasp the matter with our reason.

You see, as things are today, the function of money has constantly had to be corrected. Take the case, for example, of a national economy bordering on other national economies. By letting money function in this wild unguided way, without bringing any intelligence into the process, a national economy may easily find itself in a disastrous position with regard to the price of some piece of goods, or something else that is required. So long as the national economy is one among others (and no repressive measures are adopted) the people will simply import the article in question. Their imports will be increased. Things are constantly being corrected in this way. For world-economy, on the other hand, no such correction is possible. We cannot import things from the Moon, If we could import from, or export to, the Moon and Venus and the rest, world-economy would also be like a mere national economy. This is precisely the great question: What becomes of our science of national economy—that is, Political Economy—through the fact that the world is now a single closed economic domain?

And now let us suppose that we really make up our minds to allow money to grow old. Suppose you have a certain piece of money, no matter of what substance it is made, or what is the date inscribed on it. Say it is “1910.” And now you take another piece of money with the date “1915.” The money marked “1915” begins to exist, as money, economically, in that year. And now suppose that by some reasoned treatment it undergoes the process which is undergone by all other exchangeable products, namely, that it loses its value after a certain time. The precise figures I mention are not important; they are merely illustrations. The actual figures required would have to be the subject of infinitely numerous—but perfectly possible—calculations, as we shall presently perceive. Suppose, therefore, for the sake of example, that the piece of money would have lost its value for economic intercourse by the year 1940. It would only have a definite value between 1915 and 1940. For that period it would have, as we shall see directly, a determinable value. If money loses its value in the economic process after twenty-five years, a piece of money bearing the date “1910” will have lost its value in the year 1935. Thus I should assign a peculiar property to the money which I carry about on me; I should assign to it a kind of age. This 1910 money is older; it will die earlier than the other—earlier than the 1915 money. Now you may say: “That is just a scheme.” No, it is nothing of the sort. What I have just explained to you is the actual reality. That is how the economic process actually wills it. The economic process of its own accord makes the money grow old. The fact that it does not appear to grow old—the fact that we still buy things with 1910 money in the year 1940 is only a mask. In doing so we do not really buy with this money; we buy with a fictitious money-value.

If therefore the money in my purse grows old in this way, if its date of origin has a real meaning (and by “growing old” I mean getting nearer and nearer to its death), if this be so, then money, like man and every other living thing, has a certain value impressed upon it by the fact that it is growing older. The money comes to life and a value is impressed upon it. Suppose you have young money, money of the present year—1922 money—this 1922 money will be good purchase-money, needless to say. But now suppose that you are an enterpriser and you ask yourself: “How shall I supply myself with money for my undertaking? Suppose, according to my calculations, my undertaking must be planned for a period of twenty years. Shall I provide myself with old money or with young money?” Then you will say to yourself: “If I take old money, it will have lost its value in five years or in two. Therefore it will not do for me to use old money. If, according to my calculations, I must provide for a long period, I must have young money.” Thus, under the influence of long-period undertakings young money receives its peculiar economic value—a value far greater than that of old money. This economic value really exists—and it is there now. On the other hand, suppose I have to embark on an undertaking which involves calculations covering a period of only three years; in that case I should be a bad economist if I used very young money. For the young money, by virtue of its youth, is the most valuable and accordingly the most expensive. Thus, if I require the money for a shorter period, I shall provide myself with cheaper money. Thus you see, for anyone who has to apply his spirit—his intelligence—to money, the age of the money can begin to play a part, of which he is quite conscious.

Please note, ladies and gentlemen, that this is not a thing which does not exist already. It exists, but in a wild untamed way, which results in mutual disturbance and unhealthy economic conditions. On the other hand, if you tame money, if you really assign to it a certain age, letting young money—as loaned money—be more valuable than old, then you will be impressing the money with its real effective value, the value it possesses through its position in the economic process. This value really only inheres in the money qua loaned money, for even if money is loaned money, yet as purchase-money it still retains its former value. Nor need you consider too carefully whether you ought to provide yourself with other money in addition for what you, as enterpriser, are going to consume. These things will correct themselves of their own accord.

And now remember that free gifts also play a part in the process, wherein they have a very real significance—those gifts of which I have already spoken in various connections. All that we put into the educational system is a gift—notably when it is a question of a really free spiritual life. This, too, is happening already, only people fail to notice it. When you give directly, your intelligence is in the process. As things are now you do give, but the gift is absorbed into the general pool of taxation. It vanishes into a vague economic fog and you do not observe what happens. So the thing runs wild. In the other case, conscious intelligence would come into it. Consider, for a moment, what kind of money you will use where it is a question of free gifts. If you are thinking in a true economic sense, then, where it is a question of free gifts, you will use old money—money that loses its value as soon as possible after the gift is made; provided that the person who takes the benefit of the gift has just enough time to make his purchases with it.

At this point, needless to say, there must be some rejuvenating process. The money, in fact, must have a successor. The important thing is, as you will readily perceive, that things must not be allowed to happen arbitrarily through the general chaos which the Economic State spreads everywhere. The Economic State brings about a hopeless confusion of values by failing to distinguish loaned money, purchase-money and gift-money, though in reality these three are separated all the time. You will readily perceive that if you do not wish to leave the thing to chance—if you wish to bring reason into it—you simply must interpose the necessary associative bodies at the transition points between purchase-money, loaned money, gift-money and the renewal of money. Take the case of one who has money to lend. You will not let him lend it in a senseless way. You will bring him into connection with his Association. The Association will act as a mediator. The Association will provide him with the most sensible way in which to lend, or again, with the most sensible way in which to give. When a gift takes place (and every individual is free to give or not to give) the money, if it has a year-value, as explained above, will not undergo the same process. But the important thing is to bring about sensibly and in accordance with reason the things which happen in any case in the economic process, but behind a mask. The money, when it has served its purpose, must be collected. And then once more, at the beginning of the process of purchase and sale, it must receive its original value. That is to say, it receives its new year-number and passes into the hands of those who are dealing once more with Nature-products, Nature-products which are just beginning to pass into the sphere of Labour. For here it is pure purchase and sale that are going on. This is the associative method of managing things.

The three kinds of money must be treated in different ways. In the first place, gift-money, which is the oldest, must be handed over to an Association which will bring the valueless money back again into the whole economic process, by uniting it with Labour at the point where the Nature-process begins. There can be no economic difficulty in this. What then will be the essential difference from the existing practice? It will be this: In a self-contained economic realm—which, as we saw, is not like a national economy bordering on others, where exports and imports can be carried on—three distinct domains arise, so far as money is concerned:—the domain of loaned money, the domain of purchase-money and the domain of gift-money. And when anything occurs which would otherwise have had to be corrected by export and import from another country, it will be corrected by the three domains. If purchase-money sets up a disturbance, there will be a corresponding flow between the spheres of purchase-money, loaned money or gift-money. These things will adjust themselves of their own accord. Irregularities will undoubtedly arise, and having arisen they must correct themselves. Life cannot go on without irregularities coming in. It is an irregularity when the stomach is full. Accordingly digestion has to follow. In the same way circumstances must continually arise under which, for certain commodities, purchase-money is too cheap or dear—and then the cheap money will flow into the other domain, so that on the other side it becomes dearer again as purchase-money. What would otherwise have been corrected by export and import will now correct itself within the self-contained economy, All that is required is actual human intelligence; this will be brought into the process through the Associations, which will be there observing things with their collective experience and taking the proper corresponding measures.

It is necessary above all to grasp the essential nature of money. People fail to grasp it precisely because it is always there before them without their being able to see what it really is. In the social organism there is no such thing as “money as such,” there are only these three kinds of money. Moreover, each kind of money only becomes what it is at the moment when it is actually entering into the economic process or passing over from one form of economic process to another. In the very process, it is constantly being changed. The point is that we must learn to know money properly, before we can pronounce what part it plays when it becomes an expression of the price of something else. To penetrate the economic process clearly, we must not remain at the surface, merely observing how things appear on the surface. Seen on the surface a 10-franc piece is of course a 10-franc piece today, no matter whether 1910 or 1915 or 1920 is inscribed on it. Outwardly considered it is always the same 10 francs, and of course in ordinary sale and purchase it behaves accordingly. I do not observe that a difference has taken place, till I have less of it—or things have become dearer. But in this very “having less” or “becoming dearer,” there lies inherent what I expounded to you today as the greater or lesser age of the money. To perceive the economic process clearly, we cannot merely speak of cheap or dear money, of cheap or dear commodities. We must find out what money is in its real essence; this must first be recognised and known. For it is with money that we master the economic process nowadays. (We shall show tomorrow how substitutes for money have to be treated in a similar way).

This is the important thing. We must not fight shy of penetrating beneath the surface, into the depths, to see the real underlying facts. We must not speak in economics merely of cheap or dear money in relation to commodities. We must realise that in the living economic process, we have to speak of money being “old” and “young.”

• 1. The literal translation of “Unternehmergeld” would be “enterpriser money.”—Translators' note.

Ladies and Gentlemen,

To understand how the sort of thing we discussed last time can be maintained, we must now turn our attention to certain features in the economic process which also take a part in the determination of economic values and which at the same time show how very difficult it is to value in the economic sense that which comes into the process through the human mind and Spirit. I will give you an example, not exactly fictitious, but put in such a way that its value as an example does not depend on the specific facts on which it is based.

The following may happen. At a given time there lives a great poet, recognised as such during his lifetime and increasingly so after his death. Now one of those who concern themselves with this poet, being perhaps particularly fond of his poetry, may hit upon the following idea. “In the near future,” he says to himself, “they will make more and more of him. I know for certain—at any rate I can afford to take the risk—that in the near future, say within 20 years, they will make still more fuss about him than now. Nay more, following the habits of our time, within 20 years they are sure to set up an institution to collect his manuscripts.” From various things which he has picked up and turned over in his astute head, this man says to himself: “These things are quite sure to happen. Very well, I will begin at once to purchase autograph MSS. of this poet. For they are still very cheap.” And then one day, when he is sitting in the company of others, one of them says: “Personally I am not very keen on speculation: all I desire is to have a reasonable interest on my savings.” Another says: “That is not good enough for me. I am buying shares in such-and-such a mining concern.” He is more of a speculator; he is buying “paper” (industrial shares). But the third, namely our man, says: “I am buying up the best paper on the market. It is very cheap indeed. But I shall not tell you fellows what it is” (for it is part of the venture that he does not give his game away). “The paper I am buying will rise in value more than any other in the near future.” So he buys nothing but autographs of the said poet. And after 20 years he sells them to the archives, or to others who will sell them to the archives in their turn. He sells them for many times the amount he gave. So that he was the biggest speculator of the three!

It is a perfectly real case, only I will not give any further details now. It occurred in fact. And, you perceive, it brought about a very significant reshuffling of economic values. Now what were the factors that contributed to this reshuffling of values? In the first place, simply the prudent exploitation of the fact that the poet's reputation was growing—a growth which in the end found expression in the establishment of archives. But you must add—at any rate as to the reshuffling of values, the bringing of it all into the hands of a single man—the fact that he kept his own counsel about it, did not draw the attention of others to it; nor did they hit on the idea themselves. So he was able to make an enormous profit.

I mention this case only to illustrate how complicated the question can become, how many factors converge in the nature of value and how difficult it is to grasp them all. Thus the question arises: Is it quite impossible to grasp them in one way or another? You may say that for a considerable part of life it will be perfectly possible for men and women of sound intelligence, in the right associations, to estimate the factors, even to the extent of giving them numerical expression. But there will still be many things—things of decisive importance for a true estimate of values—which it will not be possible to grasp with ordinary common sense, unless we look for some fresh aids to understanding.

We saw how Nature, to acquire an economic value, must be transformed by human Labour—must, as it were, be combined with human Labour. There is the Nature-product. In an economic organisation based on division of Labour, the Nature-product has, properly speaking, no value to begin with. Now let us try to find our way into this picture. Values arise by the joining together of the material of Nature, if we may call it so, with human Labour. Thus, if only in a kind of algebraic formula, we may begin to approach the real “function” of value-formation. For instance, we can see at once that it cannot be a question of simply superimposing Labour upon the Nature-element. For the Labour changes the Nature-element. It cannot be a merely additive function. It will be more complicated than this. But we can hold to what we have already said; we see the economic value arise where the Nature-product is first taken over by human Labour.

Obviously the first stage in the process—in the taking-over of the Nature-product by human Labour—is direct work on the land. Therefore, when all is said, we must always look upon the cultivation of the land—in the widest sense of the term—as the starting-point of economic life. This is the condition precedent to the whole of economic life. But how is it when we go over to the other side of the economic process? I need not enlarge on it any more at this stage; it is quite evident from the preceding lectures that even such a thing as the redistribution of values plays a considerable part in the movement of economic values. How shall we find anything comparable in all these different factors? If we regard “Nature times Labour” as the value which comes up from the one side (or, as I said, whatever the right function is); then we must look for something comparable on the other side. We cannot simply compare Nature with the Spirit, for we shall find no point of comparison—least of all by way of purely economic considerations—if only for the reason that a highly subjective element here enters in.

Think of a simple village economy—a self-contained one, if you will. There have actually been such economies—to some extent at any rate—within the experience of man. It will consist, to begin with, in the things produced—we will imagine even the market and the town out of the picture. It will consist in the peasants, the workers on the land, the workers in the different trades (those who clothe the people, for instance, and a few others) but no special proletarians; such a thing will not yet exist, nor need we, on our present lines of thought, turn our attention in that direction. Whatever is relevant to the proletariat will appear in due course. But our village economy will also include the schoolmaster and the parson, or one or two schoolmasters and parsons. They—if it is purely a village economy—will have to live on what the others give them. Whatever develops there, of the free spiritual life, will in the main have to develop among the teachers and the parsons—or possibly a parish clerk will be added. Now we must ask ourselves: How does a proper valuation come about in this simple economic circuit?

There will be very little else of “free spiritual life.” We can scarcely imagine the schoolmaster or the parson blossoming out into a novelist, for if the village economy is a closed one he would not be able to sell very much. A novelist would only be able to earn, in this community, if he were able to instil into the peasants, tailors and cobblers a passion for his novels. In that case no doubt he might be able to call into being quite a little industry. But it would cost a great deal to do that. At any rate we cannot, in the ordinary way, imagine such a thing existing in our little village community. In fact, the “free spiritual life” must await certain conditions. But from the simple fact that there are the parson and the teacher and a parish clerk, we can at any rate conceive how the achievements of these spiritual workers—for they are such, in the economic sense—will come to be valued economically.

What is the requisite condition for these spiritual workers to be able to live in the village at all? It is that the people send their children to school and that they have religious needs. Spiritual needs, therefore, are the fundamental premiss. Failing such needs, even these few spiritual workers could not be there. And we shall have to ask ourselves: How will these spiritual workers economically endue their products—their sermons, for example (even these must be conceived in an economic sense), and their school lessons—with value? How will these things be valued in the whole economic circulation?

This is a fundamental question. We shall only gain an answer to this question, if we begin by imagining quite vividly what the others must be doing. They must be doing physical work. By bodily Labour they call forth economic values. If there were no need for sermons and school lessons, the parsons and teachers would have to do physical work. Everyone would be working with his hands and the spiritual life would drop out of the picture. We should no longer be concerned with the economic valuation of spiritual products. Thus we arrive at the required valuation precisely by observing that parsons and teachers are spared physical Labour. If they are to do their spiritual work, which is desired, they must be relieved from the bodily work. Here you can introduce into the line of thought something capable, at least, of a more general treatment. Suppose for example that there is only need for half as many sermons and school lessons. What will then have to happen? You cannot appoint half a parson and half a teacher. Therefore the parson and the teacher will have to spend part of their time in physical Labour. Therefore the valuation on their side will depend on the amount of physical Labour of which they are relieved. This is the measure for the valuation of their work. One man contributes physical Labour, another saves it and his spiritual achievement has a value corresponding to the amount of physical Labour which he saves himself by virtue of it. Take these two economic fields and think the thing through economically, and you will see that even a sermon must have an economic value, and moreover how it acquires this economic value. It acquires it inasmuch as Labour is saved or spared, whereas on the other side Labour has to be applied.

And now the same thing runs through the entire spiritual life. What does it signify, in the economic sense, if a man paints a picture—paints at it, shall we say, for ten whole years? It signifies that the picture acquires a value for him inasmuch as it will enable him once more to spend ten years painting another picture. He can only do so if he can save himself physical Labour for a period of ten years. Therefore the picture will have to become worth as much as would be made out of other products by physical Labour during ten years. Even if you take such a complex case as I explained at the beginning of this lecture, the same result will emerge. In all cases of spiritual production, if you try to find the concept of value you will arrive at this other concept—the concept of Labour that is saved or spared.

It was the cardinal error of the Marxists that they looked at it all exclusively from the physical side. They said that Capital is to be looked upon as crystallised Labour—as a product with which Labour has been combined. Now if an artist paints a picture, the Spirit he has painted into it during ten years is certainly combined with it, but this could at most be computed by those who believe that Spirit is the inner “work” of the human organism transmuted; which is sheer nonsense. The spiritual cannot be assimilated to the natural in that facile way. If I complete a spiritual product, it is not the point that in some way Labour is stored up in the product. The work stored up in it is economically irrelevant. Qua bodily work it may be very little. Moreover what little there was falls, in any case, under the other heading—that of physical work. What gives value to the product is in truth the Labour which it will save me. Thus on the one side of the economic process the actual doing of work, the bringing of Labour to the product, is the value-creating factor; the product absorbs Labour—as it were, attracts it, While on the other side the product rays out Labour, begets Labour; the value is the original thing which calls the Labour into being.

We have now therefore a means of comparison, namely, Labour on the one side and Labour on the other side, and we are therefore in a position to relate them, for we may say: If the value in the one case equals “Nature times Labour,” in the other we must call it “Spirit minus Labour.”

V = N,L

V = S-L

The direction is exactly opposite. Physical Labour only has meaning inasmuch as the one who wants to contribute it to the economic process actually does it himself. While what is related to the product on the spiritual side is the Labour which one man does for another. It must therefore be entered as a negative in the economic process.

It is a remarkable thing. Study the history of Economics, and you will always find that what is said is right, but only in a limited sphere. There are economists who believe that it is Labour which gives things value—the school of Adam Smith, the school of Marx, for example. But other schools give another definition, which again is right in a certain sphere. According to them, a thing becomes Capital—i.e., a source of value—inasmuch as it saves Labour. Both points of view are true. Only, the one is true of all that is in any way related to Nature, to the soil, the land; while the other is related to the Spirit. Between these two there is a third. For, in effect, neither of the two extremes is ever there in its pure form; they are only there in an approximately absolute sense. After all, even in picking blackberries (which acquires economic value only inasmuch as the workers actually go there and do it)—even here there is some spiritual work. If of two blackberry-pickers one is stupid and makes extra work for himself by picking where they are scarce, while the other finds a place where there are plenty and obtains a better yield for his Labour, the blackberries of the former worker are of less value, relatively speaking; he will not get more money for the same amount of berries. Thus, in effect, neither extreme is ever realised absolutely. Even the gathering of blackberries entails spiritual work (although we might not call it so). The work of using one's wits creates values, just as it did with the collector of autographs; at least it creates values by placing them.

Once more, then, we have Labour in the one direction and in the other, and this alone enables us to compare the economic values. But this comparing is done by the economic process of its own accord. We can at most raise it, in a certain way, into the sphere of conscious intelligence. Indeed, all that I have given in these lectures amounts to this: that we lift certain instinctive processes into consciousness.

As I said just now, we have neither of the two extremes in any absolute sense. For on the other side (V=S-L), however much a painter uses his intelligence he must still do some bodily work if he wishes to create anything of economic value. Even if he exercises clairvoyant power (a thing which you cannot grasp at all in terms of economics), even then he must still do some bodily work. Relying on his genius, it may be, he can afford to be dreadfully lazy; still, now and then he must take up the brush. Some bodily work has to be done even in this case, just as some little force of thought must go even into the picking of blackberries. (Things that take place in real life cannot be grasped merely quantitatively. They have to be grasped while they are actually happening. Therefore we can only grasp them with our concepts, if we realise that the concepts themselves need to be kept in constant movement).

It is between these two extremes that we can perceive more clearly how in the real economic life bodily and spiritual work play into one another, moving to and fro. Just as in some machine, there is a regulated backward and forward movement, so in industry bodily work from the one side and Spiritual work from the other are passing to and fro. It is in this mutual interplay from two directions that we have, as a third, that which plays into the economic process between the other two. We have the case where a man has to do physical Labour, yet by his spiritual power (using his wits) he is saved some of it. This is always actually the case, only it sometimes approximates more to the formula I wrote above (V = N,L) and sometimes more to the formula I wrote below (V = S-L). The latter, in effect, would only be fulfilled in its entirety if there could be among the consumers someone who did nothing but save himself Labour by means of his spiritual faculties. It could only be someone who was born grown-up.

In this way we can look into the economic process from this aspect of valuation, valuing what comes from Nature on the one hand and from the Spirit on the other. And at this point we can say: Where positive and negative work into one another, somehow an intermediate condition will emerge. The positive may predominate. Let us assume this for a moment. In the little village economy it certainly will do so, for in such a community there will be no widespread interest in spiritual work, beyond what is absolutely necessary. But the more life grows complicated (or, as we are apt to say sentimentally, the more “civilisation advances”) the more highly, as may be seen even empirically, spiritual work is valued. That is to say, the more is Labour saved; a negative element comes in as against the positive. I beg you to consider well: by characterising it in this way we are taking hold of a real process. It is not that physical Labour is done on the one side and annulled again on the other; that would be no real progress in the economic sense; it would at most be a process of Nature. All that is done of physical Labour helps to create values. None of it is destroyed. That which counteracts it—the saving of Labour from the other side—counteracts it only in a numerical sense. In a purely numerical sense, it affects the value of physical Labour. For this very reason, we are enabled to express in a real way what actually happens. Physical workers are active, spiritual workers are active, but the achievement in the one case is work which is positively done, while in the other it is a work which in reality signifies a saving of work. Only by this means is an effectual valuation brought about.

If I may put it so, the things are divested of their particularity and it becomes possible to grasp the process in terms of numbers, inasmuch as it is the same thing which emerges on either side and only the valuation is altered. With the advance of civilisation, then, spiritual work increases in importance, and this implies that the bodily work has a less powerful effect on the valuing process. Physical strength is of course applied, and it must be so more and more as we go forward. Even the cultivation of the soil must be made more fruitful as civilisation advances. More work must be done, in a positive sense. The point is that the physical Labour is divested, to some extent, of its value-creating power. Yet this again can only be so if those who perform the physical Labour evince a growing need for that which has to be achieved from the spiritual side. Here, once again, a human factor comes into the economic process. You cannot get round it; indeed, with the advance of spiritual life, this particular human factor makes itself felt as an objective necessity.

It is quite true that, to begin with, when there are only the parson and the teacher, there is not much of spiritual life in our village. But suppose there are two villages. In one village the parson and the teacher are mediocre people: things will go on as they are. In the other village the parson or the teacher, or both of them, are first-rate people. They will be able to stimulate all manner of spiritual interests in the next generation and, in all probability, by the time the next generation arises, some other spiritual worker is brought into the village. Now there are three of them. In this regard the spiritual has a very fertile power, which in its turn works back into economic life.

What, in the last resort, does the process signify? It signifies that precisely Labour, or rather the value-creating power of Labour, which in the purely material phase of economic life has an infinitely great value, is more and more reduced in course of time by that which comes to meet it from the other side. I cannot exactly say it is “devalued”; it is reduced numerically. In the working-together, as between all that is represented by land-work—the tilling of the soil, etc.—and that which is done from the spiritual side, we have a kind of mutual compensation. And a certain compensation is the only right thing.

Now here, again, complex conditions arise. For it may well turn out that in a given place there are too many spiritual producers; i.e., the counteracting Labour-saving power may be too strong. Then the resultant value is negative, and the people cannot all live together except by consuming one another. Thus there is a limit somewhere to this compensation process. For every economic realm there is a certain balance, in the very nature of the case, as between the production from the land on the one side and the spiritual production on the other.

And until this is understood in Economic Science—how the production from the soil, taken in the widest sense, of course, is related to spiritual production—until this problem, which has hitherto hardly been considered, is very seriously dealt with, we shall never get an economic science able to cope with our present needs.

The first thing necessary is that we should begin working on definite data, from which we may convince ourselves in an atmosphere unclouded by prejudice and agitation, how some particular area gets into an unhealthy economic condition, because it contains too many spiritual workers—and again what power of further development of culture and civilisation an area has, where that limit, of which I have just spoken, has not been reached. Progress is only possible within a given area so long as this limit, determined by the necessary compensation, of which I spoke, has not yet been reached. The task then will be to investigate those elements which still survive today from closed economies—such survivals are to be found everywhere, because we are only passing slowly into a world-economy—we must investigate those elements as to which the economy of some area is still closed; we must study the aggregate welfare of those areas in which there are comparatively few poets and painters and sophisticated industrialists, etc., and where there is still much agriculture or other activity connected immediately with the land; and then we shall have to study other areas where the opposite is the case.

From the available data, we must work out empirically such general laws as will emerge for a true theory of balance as between agriculture, or the working of the land in the widest sense, upon the one hand and spiritual work upon the other. This will be necessary. For certain regions, take what we may call the average spiritual workers (do not choose such as would falsify the whole balance) and on the other hand the average physical workers. Balance the one against the other; you will perceive how the one works compensatingly upon the other.

This is a point of cardinal importance for anyone who wishes to contribute to the further progress of Economic Science today. The fact is that this problem, which should really underlie our thinking about price and value, is scarcely anywhere correctly seen as yet. As I said yesterday to a few of those present: In Economics people are always allowing themselves to be misled into a partial instead of a comprehensive way of thinking. There is no doubt that Spengler makes some very shrewd economic observations at the close of the second volume of his Decline of the West. But he ruins these brilliant observations because he does not succeed in translating into terms of present-day economic realities what he perceives historically. He points out very justly how, in the ancient economies, the economic life which comes directly from the soil was predominant; whereas today that economic life predominates which thinks in money—and consists, therefore, properly speaking, in spiritual work. But he fails to see that these two stages of economic life, which he records historically, continue side by side to this day. The one has not replaced the other in history; they stand side by side to this day, as the most primitive abides within the most advanced. Do we not find the amoebae crawling about free in external Nature and do we not find the same thing in our own blood, in the white blood corpuscles? The different historical stages even in Nature live side by side to this day. And so it is in economic life; the most varied conditions co-exist. Sometimes indeed, in the most highly cultivated economic life—if we may call it so—it is precisely the most highly cultivated elements which return to the most primitive. Values created by our living in a most elaborated culture hark back, in a certain sense, to the state of primitive barter. Those who create their savings-of-Labour, as it were, will sometimes barter one of these for another, to satisfy certain needs among themselves. Such things occur. We often find the most primitive functions applied once again to the most highly elaborated products.

I wanted to add this remark to the present lecture, so that tomorrow I may be able to give you, as best I can, some sort of conclusion to these lectures.

Ladies and Gentlemen,

You will have seen that the main object of our present studies was to find concepts, or rather pictures, of the economic life, such as would help us actually to get inside it. In no one of the activities which are now being pursued in the Anthroposophical Movement—and in which I have myself been taking part—is it my opinion that all the existing scientific results should be simply flouted. On the contrary, I am convinced that there is a wide range of very useful results in the existing sciences. Only, the method of treatment, both in Natural Science and in the other branches of knowledge, needs to be developed in some essential respects. Thus, in the main, I have tried to give you pictorial concepts, ideal pictures, to aid you in making proper use of the wide range of valuable material which is already there in Economic Science. For this reason I have given you such pictures as could really live. A living thing, you may be sure, is always many-sided and contains many meanings. Many of you may therefore go away from these lectures with the feeling that various objections can be made to what has been said. In a sense I shall be rather glad if you do have this feeling, provided it is combined with real earnestness and with a genuine scientific spirit. Faced by a living thing, this feeling is indeed inevitable. Life will not endure dogmatic theories; and it is in this sense that you must conceive the ideal pictures I have given to you.

The thought-picture of money growing old or getting used up is a particularly pregnant one. You must relate yourself to such an ideal picture as you would do, let us say, to a growing human being. You have a general feeling that he will prove a very able man in one direction or another. You may have fairly definite ideas of what he will accomplish. But these ideas will very likely turn out to have been mistaken. He may accomplish what he has to do in quite other ways. So too for the concept of money getting used up in course of time, you may find various ways in which this can be brought about. The way I have tried to present is one conceived as little as possible along bureaucratic lines; it results naturally from the economic life itself.

Many objections may no doubt be made. Here is a very easy one: How will it be settled that a given enterpriser puts young money and no other into his business? After a short time it may no longer be recognisable whether the money was young or not, for his business will be going on. In answer to this, you must bear in mind that he does not simply get the money from the sky; he borrows it from someone. Moreover, since you can see from my Threefold Commonwealth that I do not think that interest on money should be abolished, provided the money has real value (on the contrary I believe that up to a point interest is actually necessary in the economic life), you may say: How shall I as an enterpriser get money from those who might lend it to me, if I am only going to pay them interest for an atrociously short time? They will only wish to give me money on the assumption that they will get interest out of my business for as long a time as possible. Thus, you may find that it is not enough simply to let money grow old in the way described. This may lead you on to think out the method in greater detail. For instance, money issued today might be date-stamped, not with the present year but with a future year, in such a way that the value increased up to that year, and after that decreased.

In short, a living thing may realise itself in a variety of ways. By the act of grasping it livingly, you give it the possibility to realise itself in the most varied ways, just as a living human being can use his ability in various ways. This is the essence of a non-dogmatic concept. To make such concepts your own, especially in Economics, is to see how well these things enter into real life. Only on this foundation will you be able to make proper use of what is given in the so-called economic science of today out of quite good but only partial observations.

Take for example what is said of Price. You will be told that the conditions determining price-levels are the following, so far as the seller is concerned: his relative need for money, the value of the money, the costs of production which he has to meet and the competition among buyers. But if you analyse these concepts you will always find that, though you can think about them rightly enough, you cannot enter with them into the realities of life. For you would first have to ask yourself: Is it an economically healthy state of affairs if it so happens that a particular enterpriser is in need of money at a particular time and thereby, in accordance with his private need for money, prices rise or fall in a particular direction? Can the utility-value [Gebrauchswert] of money, if we may call it so, work in a healthy way at all? Both things can work in a healthy and in an unhealthy way. Or again, speaking of costs of production, it may be desirable for the attainment of a healthy price not to think how the price will come out if costs of production are looked upon as something absolute, but on the contrary to think how the costs of production for a given article might have to be reduced so that it has a healthy price when it comes on to the market. In other words, you need to have concepts which really begin at the beginning. You cannot let a living man begin his life at the age of 25, nor should you let your concepts, which are to enter into real life, begin at any arbitrary point. You should not let your economic concepts begin, for example, with the competitive relation between buyers or between sellers. For the question is: May it not be, under certain conditions, the fundamental error of our economic life that an excessive competition should exist at all, as between sellers or between buyers? These are matters of principle, which must be taken very much in earnest.

Quite apart from whether one or other of you may agree with particular parts of our exposition, the endeavour has been throughout to make our concepts living. If they are living, then, in the event, they will show of their own accord how they need to be modified. What matters is that we should be brought on to the path of these living concepts. Thus, we can say: If we have money that is used up, i.e., grows old, then, inasmuch as money comes into circulation and figures as purchase-money, loaned money and gift-money, the peculiar qualities of money will bring it about in the natural course—if they are allowed to function in a purely economic and unhampered way—that the demand for young money will arise at one place and the demand for old money at another.

I ought, of course, to be able to go on elaborating these things for many weeks, and then you would see how well they fit in with a sound economy. Wherever an illness arises in the body economic, you would see that it is just by the observation of these things that it can be healed.

What is it that really emerges when we think, in this way, that in money in circulation we have a kind of reflection of that element of use and wear which in fact is present throughout the whole range of consumable goods—and even spiritual services are consumable goods for the economic life? In a money which wears out we have a parallel process to goods, commodities, real values, which also wear out. What have we, in effect, if we perceive this parallelism—we can extend it over the entire world-economy—between the real value and the token value? Truly we may describe it essentially as a kind of book-keeping system for the whole world-economy. It is the world's book-keeping. When some item is transferred or delivered, this simply signifies the entry of an item in another place. In actual practice the thing is done by passing money and commodities from hand to hand. The principle is fundamentally the same whether we contrive to record the items in their proper places in an immense book-keeping system embracing the whole world-economy, and so direct things simply by transferring credits, or whether we write out a chit and give it to the person concerned, so that the thing is done in external action. In the circulation of money we have in effect the world's book-keeping. And this is, as everyone can really see for himself, what should be aimed at. For in this way we give back to money the only quality which it can properly have—that of being the external medium of exchange. Look into the depths of economic life, and you will see: Money can be nothing else than this. It is the medium of exchange of services or things done. For in reality men live by the things actually done, not by the tokens thereof.

It is quite true that money can create a false impression of things done, and with the rise of a kind of middleman's trade in money, the whole economic life can thus be falsified. But this kind of falsification, this counterfeiting, is only possible when we do not give money its true character.

It is important for us to see, as I emphasised in the last lecture, that different kinds of services must be judged in different ways with respect to the values circulating through the economic life. As we showed yesterday, that which is gained from Nature to begin with, and on which Labour is expended, corresponds to the picture: “Labour united with an object of Nature.” In a certain sense, we can begin the economic process at this point. Here, we may say, the value is created by the Labour which I unite with a particular product of Nature. But in the economic process there is also the contrary stream, which comes into play the moment there are spiritual services. As soon as spiritual services come into play, another formula of valuation, if I may call it so, has to be introduced, namely: “A spiritual service is worth the amount of Labour which it saves to the person who contributes it.” Take for example the artist who paints a picture and thereby provides a value, a value for which real interest is felt (otherwise it would not be a value). If the production of the picture and the existence of the artist are to be economically healthy, the artist must value it in this way: It must save him the amount of Labour required to satisfy his own needs during the time which it will take him to produce a new picture in like manner. Thus, in the economic process spiritual services ox products come to meet those which are mainly based on the elaboration of Nature, i.e., on manual Labour, upon, say, means of production. On the one side we must have Labour uniting itself with the means of production, while on the other side Labour must be saved or spared. Thus there arises the economic circuit with its two opposing streams, which must compensate each other in a healthy way.

The great question is: How shall they compensate each other? In the first place we need only bear in mind the universal bookkeeping of our world-economy. It is here that we should find the items on either side which must somehow be mutually balanced. And this would be the source of Price. But the point is that the items in this universal book-keeping must mean something. An item—A—which I insert, will correspond to what we may describe as “Labour united with Nature,” or another item—B—will correspond to “so much Labour is saved by this service.” Every such item must have concrete meaning. But it can only have a meaning if it represents something which is comparable, or which is at least made comparable by the economic system. We cannot simply ask: How many nuts is a potato worth? We cannot ask a question like that without more ado. First we must say: “Nut” signifies a Nature-product united with human Labour: “Potato” signifies a Nature-product united with human Labour. And then we can ask how the two values are to be equated. The problem is to find something which will enable us to assess economic values one against the other. It becomes still more difficult if you take, say, a literary essay. The essay, too, must be, economically, worth the amount of physical Labour upon some means of production which is saved by it, minus the very small amount of physical work spent on the actual writing. At any rate you can see that it is not altogether easy to work out how these things are to be equated or assessed as against each other. Nevertheless, by taking hold of the economic process from another angle, we shall find means of reaching such an assessment. For on the one hand we have the physical Labour spent on the means of production, including Nature herself. At a given time it is quite a definite amount of Labour. I mean that at a given time a definite amount of Labour is needed, shall we say, to produce wheat over a given area, say x square metres of land, taking “production” as ending in the moment when the wheat is in the merchant's hands, or at some other given point. Once more then, a definite amount of Labour is needed to produce wheat. It is a given magnitude, which under certain conditions can actually be ascertained. Properly regarded, all human economic service or achievement—of whatsoever kind—eventually takes us back to Nature. There is no other possibility. The farmer works upon Nature directly. One who provides, shall we say, clothing, works not directly upon Nature, but ultimately his work goes back to Nature. His Labour will contain an element of “Labour saved” to the extent that he applies Spirit or intelligence to it. Nevertheless even his work has its connection with Nature. Everything, right up to the most complicated of spiritual services, eventually goes back to Nature—to Labour that is expended upon the means of production. Think it through clearly and you will see that everything in economic life can be traced back in the long run to bodily work upon Nature. The process begins from Nature; values are created there by the application of Labour; and it is these values—taken to some definite point still as close to Nature as possible—which have to be distributed over the whole of a “closed” economic domain.

Go back to the hypothetical case I took yesterday—the closed village economy, In such a self-contained village economy you have the manual workers, but I assumed that the only spiritual workers were the parson and the schoolmaster and possibly the parish clerk. It is a very simple economy! Most of the people are doing bodily work, bodily work upon the soil; only, they have to do in addition enough bodily work to provide for the needs—food, clothing, etc.—of school-master, parson and clerk. It will be additional, for the schoolmaster, the parson and the parish clerk do not do their work upon Nature for themselves. Say that the village economy consists of 30 peasants plus the three—what shall we call them?—“worthies.” These three supply their spiritual services. They need the spared Labour of the rest. Suppose that every one of the 30 peasants gives to these three, or to each one of them, a token, a ticket, on which is written so much, say x, of wheat—that is, wheat elaborated to a certain point. Another member of the community might give a ticket on which something else was entered, something comparable to wheat for purposes of consumption. These things can be ascertained. The schoolmaster, the parson and the clerk will collect these tickets. Instead of going out into the fields to fetch their wheat and rye and beef for themselves, they will hand over their tickets to those concerned, who in their turn will do the necessary Labour in addition to their own and will give them the product in exchange. That is a process which cannot help developing of its own accord. It cannot possibly be otherwise, nor does it make any difference if it occurs to some bright individual to introduce metallic coin instead of tickets. It amounts to this: Some kind of tokens must be devised, based on the stored-up material Labour—Labour expended on means of production, Labour invested in economic values. And these tickets must be handed over to those who need them, so that they can save themselves the Labour.

Hence you will see that no kind of money can in reality be any other than an expressions of the sum-total of means of production available in a given region—means of production including in the very first place the land itself—reduced to the form in which it can be most suitably expressed. This will relate the economic process to something which we can at least take hold of. It is not possible to bring about an economic paradise anywhere on earth. Let those believe it is, who invent Utopias without reference to reality. It is so easy to say that an economy should be thus and thus. But, ladies and gentlemen, an economy—including that economy of the entire Earth which we can call “world-economy”—cannot be absolutely determined, but only relatively so. Suppose that in a closed economic region we have an area, say Ar, of land. Now supposing all the people in this area are doing everything which it is possible for human beings to do, then a different amount will be available for consumption if B million people live in this area of land, than will be the case if the population is B¹ million.

Thus in effect it depends on the ratio of population to the area of land, and on how much a given population can get out of the given area, for it is from the land that everything ultimately comes. Take now the hypothetical case: An economic area has a population of, say, 35 millions—the number does not matter. What holds true, here, of a self-contained economic territory, is true also of the world-economy. Assume 35 million inhabitants at a given time; and that the problem is to bring these 35 million people economically into an economically just relation. (I may not be putting it quite clearly and precisely, but you will soon see what I mean). What would you have to do if you wished such a condition to prevail among these 35 million as would bring about feasible prices? The moment you begin to lead over the economic life of the region into a healthy condition, you would have to give each one of them an amount of land corresponding to one 35-millionth of the entire area available for production, adjusted according to fertility and ease of cultivation. Suppose that every child were to receive such an area of land at birth, to be worked by him in perpetuity. The prices which would thus arise would be feasible prices for such an area, for things would then have their natural exchange values.

Now the curious hypothesis which I have here put forward is nothing else than the reality. The economic process actually does this of its own accord, Of course you will not believe that I mean what I am now saying in any other than a figurative sense. Yet these are the actual conditions. You can imagine the entire area distributed among the people concerned, remembering that they will also have to elaborate, in the proper way, such products as become detached from the soil. You can imagine the entire area divided up among the population, and it is in fact this which gives to each individual thing its exchange value. Indeed it might well be that if in some place you were to note down the actual exchange values, you would find a very close approximation. But if you now compare this with ordinary present-day conditions, you will find the price of one thing far above and the price of another far below that level. Still, if you like to suppose a Utopia somewhere, populated solely by newborn children (looked after by angels to begin with), to each of whom you have given his piece of land, then, when they are able to begin work, you will have produced conditions under which the natural exchange values will arise. And if after a time prices are different, it can only mean that one has taken something away from another, It is this kind of thing which produces the various social discontents; men dimly feel that here something works into the process which does not correspond to the real prices at all.

Yet if the economic life becomes permeated with a way of thinking such as we have here adopted, the actual measures we shall take will bring about the result I have stated. It all depends on that. We shall find that our currency, representing, as it were, the day-to-day book-keeping of world-economy, will have to be inscribed, let us say: “Wheat producible over a given number of acres,” and this will then be equated to other things. The different products of the soil are the easiest things to equate. So you see where it is we must start from—our figures must mean something. It simply leads away from reality if money has inscribed on it: “So much gold.” It leads towards reality if it has inscribed on it: “This represents so much Labour upon such and such a product of Nature.” For we shall then have this result: Say there is written on the money “x wheat,” all money will be stamped “x of wheat, y of wheat, z of wheat.” The real origin of the whole economic life will then be made evident. Our currency will be referred to the usable means of production upon which bodily work is done—the means of production of the given economic region. This is the only sound basis of currency—the sum-total of the usable means of production.

One who can look into the realities with open mind will see, as he looks, that this is so. It may be objected that no one value can be precisely equated to another. But to a great extent this can be done. For since in this method of valuation everything is ultimately valued through consumption, the values of different kinds of services do not differ so very much from one another. However spiritual a worker I may be, I need so much saved Labour every year—namely, as much as I require to maintain myself as a human being. Moreover, by this means it will be evident how and to what extent a spiritual worker needs something in addition, beyond what a manual labourer needs. And when the thing has become as transparent as this, it will be acknowledged because it is transparent. Even today—though they become increasingly rare—conditions do exist in selfcontained economies under which the spiritual workers receive all that they need; where the others give it them gladly, without even writing it down on slips of paper beforehand. In saying this, I do not wish to reduce an economic to a sentimental argument. I say it simply because this, too, is part of the realities of economics and because in an economic system you are after all always dealing with human beings.

Above all, you will attain in this way to a relationship between the members of an economic whole which will be really visible to all. Each one in every moment will then have his connection with Nature, even in the money. It is just this which makes our present-day relations so unsound; they have become so far remote from Nature—the connection with Nature is no longer there. If we can bring it about (and it is only a question of evolving the necessary technique in the associative life) that we really have the Nature-value recorded on our paper-money in place of the indefinable gold value, then we shall see directly—in every-day business and intercourse—how much a given spiritual service is worth. For I shall know, when I paint a picture, that for me to have painted this picture so many workers on the land, for example, have to work for so many months or years on wheat or oats, etc. Think how transparent the economic process would become. The ordinary way of putting it today would be to call it the substitution of a Nature-currency for a gold-currency. Yes, and that is just what we need. For by this means true economic conditions will be brought about.

Once again I have placed a picture before you. I have to speak in these pictures, for they give the reality. What people generally have in their heads in economic intercourse today is not reality. He alone has the reality who in receiving a piece of money of a certain magnitude in exchange for something, knows that it signifies so much work upon the land. We must, of course, include in our calculations the work that is done on other means of production. These will, however, be equivalent to Nature. For the moment they are finished, and thus leave the realm of commodities altogether, they are devalued inasmuch as it is no longer possible to buy or sell them. They thus becomes equivalent to the means of production which we have in Nature directly. It is therefore only a continuation of the part which Nature already plays in the economic process, when we say that means of production should be dealt with in this way. Moreover, it is only in this way that we can have a clear idea of Nature herself, considered as means of production. The concepts of land which you will generally find in Economics are always open to objection, unless you conceive of “means of production” in the way I attempted in my Threefold Commonwealth. You need only consider this: Even a given region of Nature may have to be worked upon to some extent before it is available as “land”—before it is fit for cultivation. Up to the moment when Nature—or a given part of Nature—has been cleared and can be handed over for use, during this period also, some Labour must be expended on it. In other words, by the time this Labour has been done, even a piece of land may justly be reckoned a commodity, an economic value, in the sense that it is a piece of Nature combined with human Labour.

Only by formulating the ideas in the way we have done will you get the concept “means of production” clear and transparent, and you will then be able to work it out in the most varied spheres. You will perceive, when for example an author writes an article, that the main value of it, economically speaking, consists in the Labour saved; from which you would only have to deduct the minute amount of bodily work which the actual writing entails. Your concepts will be capable of differentiation in manifold directions so that you stand with them in very life, inasmuch as you are forming them out of life itself. And then, if for example you are concerned with some question of prices, you will no longer be content merely to trace it back to the immediate costs of production; you will have to trace it back to the primal phase of all production. You will have to see what are the conditions of price-formation right from the primal phases of all production. It is only then that you will be able to trace them rightly up to any given point in the economic process.

In this way, ladies and gentlemen, perhaps I may have been able to give you an idea which will at least guide you on your way towards the cardinal question of Economics—namely, that of prices. For to engage in economic activity at all is to bring about the exchange of products among human beings, and this exchange lives itself out in the forming of prices. It is the forming of prices that matters, and in this respect you do not have to go back to anything vague or indefinite, For you can always follow things back to the fundamental relationship of value which is brought about by the very fact of work upon the land, namely the proportion of the population to the available area of cultivation. In this relation you will find that which originally underlies the formation of values. In effect, all the Labour that can be done must come from the given population and, on the other hand, all that this Labour can unite with must come from the given land. Everyone needs what this Labour brings about and, as to those who can save themselves the Labour on account of their spiritual services, the others must perform it for them in addition to their own. Thus we arrive at the actual basis of economic life.

Looking at things in this way, we shall admit that even in our present highly complicated economic life, that which was universal in the most primitive conditions—where the simple exchange of goods, shall we say, was the essential thing—still plays its part. The difference is that we are no longer able to see the connection clearly everywhere. But we shall have it before us always, when the connection with Nature is expressed in our currency notes. Whatever we may do, the connection with Nature is always there. Do not let us forget it! It is reality. Once more, speaking pictorially, let me say: While I am giving my shilling quite thoughtlessly for this or that, there is always a little demon who writes on it how much Labour, actually done upon Nature, it corresponds to; for this alone is the reality. Here, too, if we would get at the reality, we cannot stop short at the outer surface.

Well, it has not been possible, ladies and gentlemen, within this fortnight to give you more than a few stimulating suggestions to guide you on your way. Nevertheless, as I well know, these are the suggestions which need to be developed in every possible direction. And I know that the most important thing of all is that you should perceive how, compared with the usual ideas, the ideal pictures we have here evolved do represent something living.

If you have absorbed that which is living in these ideal pictures, you will not have spent these fourteen days here in vain. For it is this that weighs on one so heavily. Great issues are impending. Human beings are in need of free and clear insight into the essentials, for the healing of so many ills of our civilisation. There is much talk of what should be done, but there is little will, alas, to dive down into realities and to draw forth from there the word which tells what should be done. We have gradually departed from the sphere of Truth, and from the real life of Rights—Rights that spring forth from the very nature of man—and from that which must unfold in man if he is to be of value to his fellows—namely the genuine Practice of life. Out of the word of Truth we have slid into the empty phrase out of the sense of Right into mere convention; out of a practical hold on life into dead routine. We shall not escape from the threefold untruth of phrase, convention and routine till we develop the will to go down into the facts and to see how things are shaped in their own real nature. But if we do so, then, precisely as persons who approach the matter as students, we shall be met with understanding. There are so many agitatory phrases in the world today, doing appalling harm just because there are so few men with an earnest will to go into realities.

For this very reason, ladies and gentlemen, it gave me deep satisfaction to see you here, prepared to work with me during this fortnight, thinking through the realm of Economic Science. I thank you heartily. I may express this thanks, for I believe I see how important it is—how very much those whose position in life today is that of students of Economics can contribute to the healing of our civilisation and to the reconstruction of our human life.

We must endeavour to make Economic Science not a mere theory; it must be our aim that it should prove itself of real economic value, so that the Labour we are being saved can be put to good use by those who relieve us of it, for the benefit and progress of mankind. I believe that in resolving to come here you were thus mindful of the task of the economist; and I hope that this has been confirmed in you by what we have attained, however inadequately, through our united work. Let us look forward to an opportunity of working at these things again another time.

The following answers to questions (on the Tailor Example) given by Dr. Steiner at the “Seminar” which accompanied this course of lectures may be helpful to the reader:—

Q. X brings up for discussion the problem of the tailor. (Lecture IV.)

A. The illusion arises because the effect in relation to the single suit is extraordinarily small and therefore it needs a long time for this small effect to become visible in the tailor's accounts and for the loss to be really felt. Products become cheaper through division of labour. When you work, under division of labour, for a community your own products will also become cheaper than they would be if you were to work for yourself. This is due simply to the cheapening effect of the division of labour. If you interrupt it at a certain point, then you will make the article concerned, which you have made for yourself, more expensive. Now the single effect in relation to a single suit would naturally be small, but it would be marked if all tailors were to make their own suits. When a tailor, who makes his own suits, comes to make up proper accounts, he ought to price his own suits higher than the market price. He must reckon his expenses higher. Naturally, the supposition is that the suits should be bought, not from other tailors, but from the dealers in clothes, the clothiers. The price of a suit at the clothiers is cheaper than it would be if tailors worked without clothiers—otherwise the division of labour and merchanting would have no sense. Therefore the tailor ought to price a suit a little higher if he does without the merchant, because the merchant brings the single suit on to the market more cheaply than the tailor could bring it into use...

Q. Does the tailor depress the price of other suits of clothes by that one suit?

A. He depresses the price of suits by withdrawing one suit from the total number of suits with which the clothiers are dealing. He deprives the clothiers of the opportunity of making a profit on this suit. Therefore the clothiers must demand a higher profit on the other suits. This demand of the clothiers for a higher profit brings about a rise in clothiers' prices, but it means a drop in tailors' prices.

Q. Suppose there are considerably more clothiers than are economically justified?

A. In what I have said there is the presumption that exactly as many clothiers exist as are economically justified. We have to do not with progression in a straight line, but in a direction towards a maximum and a minimum. There is an optimum number of clothiers which will give the best commercial results. Anything over or below it would work uneconomically.

Q. Can the number be ascertained?

A. When you have rational management, then you will have a determinate number of clothiers, as of producers ...

List of relevant literature, published or distributed by Rudolf Steiner Press unless otherwise stated:

BY RUDOLF STEINER

The Threefold Social Order
The Social Future
The Inner Aspect of the Social Question
Anthroposophy and the Social question
Education as a Social Problem

BY FOLKERT WILKEN

The Liberation of Work (Routledge R Kegan Paul)

All Rudolf Steiner's work in the sphere of practical human affairs is founded upon knowledge of Man as a being of body, soul and spirit.

In The Threefold Commonwealth, his fundamental work in the field of social life, published in 1919, Dr. Steiner shows that man has a threefold relationship to the social order. He has the task of developing his own soul and spirit, his individuality; he has the right and the obligation to live in peace with his fellow-men; and he needs certain material things for his bodily and spiritual life. The true form of social order is, therefore, one which “orders” aright these three relationships in social life. The spiritual requires freedom for its full development; the man-to-man relationships call for laws which embody simply what is fair and just, and before which all members of the community have equal rights and obligations; the economic life needs full scope for individual ability together with the impulse of brotherly trust working through an organisation of “economic associations.” In such associations the practical experience of all those persons engaged in the economic life could flow together with a force capable of applying a practical Economic Science to the new problems created by the transition (partial as yet) from national economies to World-Economy.

In 1922, Dr. Steiner, in response to a request from students of Economics, gave, in the fourteen lectures contained in this book, advice for the formation of an Economic Science which would enable mankind to master the complicated facts of world-economics. In these lectures he shows that the economic process is an organic one in constant movement and that it can be known in its reality only by a method of thinking which immerses itself in the phenomenon and creates living mobile pictures of all its changing phases. The lectures themselves manifest a new way of economic thinking and demonstrate the method by which the economic life can be mastered by the human spirit in association. It is, the author says, the task of the economic scientist to make this contribution “to the healing of our civilisation and to the reconstruction of our human life.”

Because the subject is dealt with in this fundamental way, no previous knowledge of Economics is necessary for an understanding. What is needed on the part of the reader is the goodwill to apply an activity of thinking free from pre-conception and bias. The method of presentation allows the reader to think for himself and stimulates him to do so. The diagrams, which have had to be printed in their completed form, were, in fact, built up in the course of the lecture, and the student who actually does this for himself in the course of his reading will gain a fuller understanding of them.

Economic problems are but a part of the social problem of how people can live together in such harmonious relationships that each may have scope for the exercise of individual capacities while uniting with others to satisfy the spiritual and bodily needs of the whole community. Dr. Steiner, therefore, so treats the problems of Economics that what belongs to the economic and what to the legal and spiritual members of the threefold social organism is clearly seen.

The advice for the solving of social problems which the author gives in these lectures, and in his other social works, takes the form of general ideas which can be acted upon in freedom under changing conditions of time and space. Readers who experience from these works a moral stimulus to their social aims may wish to seek in his Philosophy of Spiritual Activity enlightenment upon the way in which general ideas can be translated into free human deeds.

T. G. J.

A. O. B.

It was at the end of the Great War, when the modern world was waking from one of its greatest follies, that Rudolf Steiner actively sought to bring social balance and humane reasoning to a world distraught.

He gave it a new method of education as a firm foundation for the process of recovery and with it the fundamental remedy for a sick social order—the separation and co-ordination of the three-fold order existing in the spiritual-cultural life, the political life of rights and the economic life. The remedy is logical, practical and humane.

Many years before this, he had started his public career with a book called The Philosophy of Spiritual Activity—the last two words of this title being his own rendering of the word Freiheit (freedom); and upon this his life and work are mainly based.

But in the post-war Anarchy, mankind has been too much occupied with national and party passion, and the pursuit of pleasure, to desire to understand “Freedom,” and now the forces of dictatorship and dogma are arrayed against liberty, peace and brotherly trust.

Nevertheless a number of students have been working steadily on the lines of Dr. Steiner's thought, and at last it has been possible to produce in English this translation of a course of lectures, which answers so many questions and suggests the path upon which all adequate solution of modern economic problems can be found. For these lectures take no rigid, dogmatic form; they yield a treasure of living conceptions which, having life in them, are capable of growing along with the economic phenomena themselves. They should therefore interest all those readers who long to be creative in their thinking, rather than accept as adequate a merely contemplative economic theory.

The translators have not departed from the form in which the lectures were given, well knowing the distinction which Rudolf Steiner made between the written and the spoken word. Hence these lectures are not to be considered as essays. After conscientious study and with knowledge of the subject the small Committee entrusted with the task have produced a translation, the merits of which must be gratefully acknowledged. Their work will stand in this country as a foundation for study of this important subject.

By way of introduction to the book I am glad to submit a foreword from two members of the Committee of Translation. As the reading of these lectures may stimulate a desire to work further on the lines of Rudolf Steiner's thought, I feel it necessary to add that lectures on this subject are given and a study-group conducted in the English Section of the General Anthroposophical Society, of which notices may be obtained from 54 Bloomsbury Street, W.C. 1.

Other works by the author are specified in the advertisements at the end of the book.

The Editor

Question: The Key Points appear to be logically self-contained, but the criterion of whether something is realistic or not cannot be found in them.

Rudolf Steiner: It would be particularly good if the friends would speak out more clearly on this point. You must bear in mind that political economy as such is actually a very young form of thinking, hardly a few centuries old, and that in the realm of economic life, everything up to the great utopians has actually taken place more or less instinctively. Nevertheless, these instinctive impulses that people had were something that became reality.

To gain a more precise understanding, consider the following. Today, people often say: What we can think about the economy actually arises from economic class antagonisms, but also from the economic mode of operation, and so on. I don't even want to look at the most extreme view, as Marx and his followers advocate. Even economics teachers who lean more towards the middle-class view speak of the fact that everything actually arises from the economic fundamentals as if by automatic necessity. Nevertheless, when people discuss the individual concrete things, it is the case that the concrete institutions that have come into being to produce today's economic life are nothing other than the results of medieval thinking itself, certainly in connection with the various realities. But just consider what form was given to the Roman concept of property, which was a purely legal category, and what was created economically through this concept. It can be seen that these things were not treated scientifically, but that the legal categories, which were already conceived economically as legal, had a formative effect. Now the mercantilists and so on have come, who were not creative people, who were theoretical people. For example, it may be said that the advisers of Emperor Justinian, who created the Code of the Corpus Juris, were much more creative people than the later teachers of political economy. These people actually created not only a Justinian Code in our present sense, but in the further course of medieval development we see the opposing impulses developing precisely on the basis of what was laid down in this Justinian legislation.

And so we have come to the new era, to people whose thinking is no longer creative in an economic sense, but only contemplative. This contemplation really begins with Ricardo. Take, for example, the law of diminishing returns. This is a law that is just right, but absolutely not in line with reality. For practice will continually show that, if all the factors that Ricardo took into account are taken into account, what he called the law of diminishing returns will indeed follow, but the moment more intensive cultivation techniques are introduced, this law is thwarted. It does not hold true in reality.

Take something else, something more trivial. Take Lassalle's “iron wage law”. I must confess that I feel it is a certain scientific carelessness that one still finds stated that this law has been “overcome”, because things do not prove true. The fact of the matter is this: from Lassalle's way of thinking and from the view that labor can be paid for, nothing more correct can follow than this iron wage law. It is so logically strict that one can say: If one thinks as Lassalle had to think, it is absolutely correct that no one has an interest in giving the worker more wages than are just necessary to enable him to make a living. He will not give him more, of course. But if he gives him less, the worker will wither away, and the one who pays the wages must atone for this. It is basically impossible to get by without theoretically admitting the iron wage law. Even within the proletariat itself, people say: the iron wage law is wrong, because it is not right that in recent decades wages have been maintained at a certain minimum, which would also be their maximum. Yes, but why is Lassalle's iron wage law wrong? If the conditions under which he formulated it had continued – I mean the conditions from 1860 to 1870 – if the economy had continued to be run under the purely liberalistic view, the iron wage law would have become reality with absolute correctness. This did not happen. A reversal of the liberalist economy took place and today the iron wage law is constantly being amended by making state laws that effect a correction of reality that would have emerged from the law.

So you see, a law can be right and yet not in line with reality. I don't know of anyone who was a greater thinker than Lassalle. He was just very one-sided. He was a very consistent thinker.

When you are confronted with a law of nature, you can see it. When you are confronted with a social law, you can also see it, but it is only valid as a certain current, and you can correct it. Insofar as our economy is based purely on free competition – and there is still a lot that is based only on free competition – the iron wage law is valid. But because it would be valid under these conditions, there must be corrections with social legislation, with a certain working hours and so on. If you give entrepreneurs a completely free hand, the iron wage law applies. Therefore, there can be no purely deductive method in economics. The inductive method is of no help at all. It has followed Zyjo Brentano. We can only observe the economic facts – she says – and then gradually ascend to the law. – Yes, we don't come to any creative thinking at all. This is the so-called newer political economy, which calls itself scientific. It actually just wants to be inductive. But you won't get anywhere with it.

In economics, you absolutely need a characterizing method that seeks to gain the concepts by starting from different points, holding them together, and allowing them to culminate in concepts. This gives you a specific concept. Since you can never see the full range of facts, but only have a certain amount of experience, it will probably be one-sided in a sense. Now go through the phenomena again with the concept and try to verify it. You will see that this is actually a modification. In this way, by characterizing, you arrive at a concept that you modify by verifying, and you then arrive at an economic view. You must work towards views.

I would now like to work out such a conception in the lectures of the National Economy Course by showing you what always intervenes in the formation of prices. The method in economics is a highly uncomfortable method because in reality it amounts to the fact that one must compose the concepts out of an infinite number of factors. They must work towards economic imaginations! Only with these can you make progress. When you have them and they come into contact with something, they modify themselves, whereas it is not easy to modify a fixed concept.

You know what is known as Gresham's Law: good money is chased away by bad. If bad, under-value money, money minted at below its face value, is in circulation somewhere, it drives out money with good fineness, and that then migrates to other countries. This law is also an inductive law, it is purely an empirical law. But this law is such that one must also say: It is valid only as long as one is unable to secure the significance of money. The moment you are able, through entrepreneurial spirit, to secure the right of money, it would be modified. It would not die out completely. There is no economic law that is not valid up to a certain point; but they are all modified. That is why we need the characterizing method. In natural science, we have the inductive method, which at most comes up to deductions. But in general, deductions are much less important in natural science than one might think. Only induction is of real significance here.

Then you have pure deductions, which are found in jurisprudence, for example. If you want to proceed inductively, you introduce something into jurisprudence that destroys it. If you introduce the psychological method into jurisprudence, you dissolve jurisprudence. In that case, every human being must be declared innocent. Perhaps these methods can be introduced into reality, but then they will lead to the undermining of the legal concept that exists. So it may well be justified, but it is no longer jurisprudence.

In economics, you cannot get by with deduction and induction. You could only get by with deduction if it were possible to give general rules to which reality itself would yield the cases. I will mention only those who want to proceed purely deductively, albeit with a main induction at the beginning. Oppenheimer, for example, puts a main induction of history at the top with his settlement cooperatives and deduces an entire social order from it. Well, many years ago, Oppenheimer was already the settlement man and said: Now that I have got the capital, we will establish the modern cultural colony! – I replied: Doctor, we will talk about it when it has been destroyed. It had to fail because it is impossible, within the general economy, to establish a small area that would enjoy its advantages through something else, so that it would be a parasite within the whole economic body. Such enterprises are always parasites. Until they have eaten enough from the others, they remain - but then they perish.

Thus, in economics, you can only characterize by thinking your way into the phenomena. This also arises from the cause, because in economics, one must continually work into the future on the basis of the past. And as one works into the future, human individualities with their abilities come into play, so that basically, in economics, one can do nothing but stand on the quivive. If one intervenes in practice, then one must be prepared to continually modify one's concepts. One is not dealing with substance that can be plastically formed, but with living human beings. And that is what makes political economy a special kind of science, because it must be imbued with reality.

Theoretically, you will easily be able to see this. You will say: It is then extremely inconvenient to work in economics. But I do not even want to accept that. Under certain circumstances, as long as you still stand on the point of view that you want to write dissertations, for example, you can gain a great deal by following the relevant literature of recent times on some subject and by comparing the individual views. Particularly in economics, there are the most incredible definitions. So just try to compile the definitions of capital from the various economics textbooks or even larger treatises! Try to put them in a row, eight or ten of them! One comes to mind right now: “Capital is the sum of the produced means of production.” I have to say, I don't understand why the adjective is there. The opposite: unproduced means of production – you could also think of something under that, for example, nature, so the soil, and that is what the person in question will mean. But then, of course, he is unable to somehow justify how the soil can be capitalized after all. It is capitalized after all. So there is actually no way out, and that is based on the fact that one has such concepts, one must seek them out and must try to somehow enrich them. The concepts are all too narrow.

If you think that the realistic will be difficult for you in these considerations, I would like to say: the realistic could actually be easy! You say that the “key points” are logically self-contained. They are not, neither the “key points” nor the other things! I must emphasize that I did not want to be purely economic, but social and economic. This, of course, conditions the whole style and attitude of these writings, so that they cannot be judged purely economically. At the most, only individual essays in the three-folding writings can be judged in this way. But I certainly do not find them logically self-contained, because I was careful enough to give only guidelines and examples or, in fact, only illustrations. I wanted to create an awareness of what can be achieved by someone managing a means of production only for as long as they can be present; then it must be handed over to someone who can manage it themselves. I can well imagine that what is to be achieved in this way could be achieved in a different way. I just wanted to give guidelines. I wanted to show that a way out can be found if this threefold structure is properly implemented, if spiritual life as such is actually liberated, if the legal system is placed on a democratic basis, and if economic life is based on the factual and technical, which can be represented in the associations. And I am convinced that in the economic sphere, the right thing will happen.

I say that the people who are in the association will find the right thing. I want to count on people, and that is the realistic thing to do. A treatise on the “concept of work” would have to be written in such a way that you really find the concept of work in the economic sense. This concept must be freed of everything about work that does not create value, and not just economic value. So that must be eliminated first. Of course, this only leads to one characteristic. And it is this characterizing method that is important. Of course, this must be said methodologically.

Question: To what extent is inspiration necessary for economic knowledge?

Rudolf Steiner: What is meant is that this inspiration, if one takes the matter seriously, is actually not that extraordinarily difficult. It is not a matter of finding supersensible facts, but of making inspiration effective in the economic field, so that it cannot be particularly difficult.

The way in which labor is limited would require me to show that a person can perform work without it having economic value. That is a truism. A person can exert himself terribly with talking, and yet no real economic value comes of it. Then I would show how labor, even when it begins to have an economic significance, is modified in its value. Let us assume that someone is a woodchopper and performs a labor that actually creates value, and someone is a cotton agent, has nothing to do with woodchopping, but gets nervous just from his work, so that every summer he spends a fortnight chopping wood in the mountains. Here the matter becomes more complicated, because the agent will certainly be able to utilize the chopped wood, and he will receive something for it. But you must not evaluate what he receives in the same way as you evaluate the woodcutter's work. You must assume that if he does not chop wood for 14 days in summer, he can work far less as an agent in winter. In this case, you have to consider the support he receives from this work. The economic value of the wood chopped by the cotton agent is the same as the value of the wood chopped by the woodchopper; but the economic effect of his work, which falls back on his activity, is now essentially different.

If the value of the agent's chopping wood lies in the fact that it has an effect on his agency, then I have to investigate whether it is also true where someone stands on a treadwheel and climbs from one step to another, thereby making himself thinner. This is an effort for him, but there is no effect on the national economy. It is true, but I have to distinguish here whether the person in question is a rentier or an entrepreneur. The latter becomes more efficient as an economic value creator.

You have to gradually work out the matter in a characterizing way and then, if you go on and on and on, you get a direct value of the work and an indirect, reflective value of the work. In this way you arrive at a characteristic of the concept of labor. With this you can go back again to the ordinary woodchopper and compare what the woodchopping of the cotton agent means in the economic process with that of the professional woodchopper. In this way you can go from one level to another and you have to look everywhere to see how the concept works. That is what I call realistic. They have to show how the work is realized in the most diverse areas of life. Like Goethe with the concept of the primal plant: he of course drew a diagram, but meant a continually changing one. Economic concepts must be subjected to constant metamorphoses in life. That is what I mean.

Of course, you won't have much luck with such concepts. Teachers today do not accept this; they want a definition. But I have not found that the concept of work has been clearly defined in economics. One should characterize it, not constantly speak negatively about it. In economic debates, for example, I have found that work cannot be decisive for the price because it varies among individuals according to their personal strength. Negative instances can be found. But the positive is missing, that one advances to characterizing work in such a way that it actually loses its original substantial character and gets its value from other positions in which it is placed. When one begins to characterize in this way, then the substance is lost; in the end one gets something that plays entirely within the economic structure.

Labor is the economic element that originally arises from real human effort, but which flows into the economic process and thereby acquires the most diverse economic value in the most diverse directions. One should speak of the processes that lead to the evaluation of labor in the most diverse directions.

Inspiration is based on the fact that one comes up with how to progress from one to the other. It depends a little on the spirit that one finds just the right examples.

Question: Isn't a generic term necessary after all? Even with the characterizing method, isn't there a need to place emphasis on the causes by which the observed effects came about?

Rudolf Steiner: As far as the matter of effects is concerned, I agree that one must return to the causes. But just as in certain fields of nature it is the case that one finds the causes only by starting from the effects, so it is even more the case in the field of economics that knowledge of the causes is of no help if it is not gained from the effects. For example, the tremendous effects of a war economy are there. If one did not know them as effects, one would not evaluate the cause at all. It is therefore important to acquire a certain sense of the quality of the effects in order to be able to ascend to the causes. Certainly, in practice one will have to ascend to the causes. But that is what economics is based on for the practical. You learn to evaluate the effects, and by seeing the aberrations of the effects, you come to know the causes and then improve the causes. It is of little use to just get to know the causes. You have to get to the causes in such a way that you can say: I know them by starting from the effects. - An insight of such tremendous significance as the language center in the left hemisphere is, is only recognized from the effects: lost language - left hemisphere paralyzed. You first recognize the effect. Then you are led to examine the matter at all. So this recursive method is necessary.

Question: I cannot look at everything from an economic point of view that has to do with art and religion or even sport. Some of it can be viewed from an economic point of view, but not the whole?

Rudolf Steiner: I drive through an area and find extraordinarily artistic buildings in this area - I am, of course, describing an utopia. This is not just an artistic view. These artistic buildings are only possible on the basis of a very specific economic situation. If I drive through an area where there are a great many art buildings, I will immediately get an idea of how it is managed. If, on the other hand, I drive through an area where even so-called beautiful buildings are tasteless, I will get an idea of the economic situation of the area in question. And if I find only utilitarian buildings, I will get an idea of the economic situation of the area in question. Where I find artistic buildings, I can conclude that higher wages are paid there than where I find no artistic buildings. I cannot imagine that anything could be considered uneconomical. Everything, even the most exalted things, must be considered economically. If an angel were to descend to earth today, he would either have to appear in a dream, in which case he would change nothing; but as soon as he appears to people while they are awake, he would intervene in economic life. He cannot do otherwise.

Objection: I admit that it can be viewed from an economic point of view – but only if you want to! But it can also be viewed from other points of view.

Rudolf Steiner: You are entering a circle. All that can be said is that it is necessary to base the consideration on the economic point of view for the time being. This has only a heuristic value, a value of research and investigation. But if you want to find an exhaustive, realistic political economy, you will not be able to avoid characterizing the economic effects from all sides. You have to characterize what influence it has on the economic life of an area, whether it has a hundred excellent painters or only ten. Otherwise it is hard to imagine that economic life can be encompassed. Otherwise I would not have insisted so strongly on this emphasis. Precisely by emphasizing it, you always end up with definitions that basically do not apply in some area, or that have to be stretched to breaking point. It is actually impossible to define the income that a person should have by pointing out, for example, that he is entitled to “what he produces himself”. There is even this definition: someone is entitled to what he produces himself. It seems quite nice to make such a definition. In a certain field it is correct. But the sewer cleaner could not do much with it. The point is that in economics one should not single out one phenomenon from the sum total of phenomena, but should go through the whole sum. One must be aware: I start thinking economically because I can help those who cannot do so. But one must also be aware that economic thinking must claim to be quite total, to be a very comprehensive kind of thinking. It is much easier to think in legal terms. Most economists think in very legal terms.

Question: Opinions on what is “normal” in economics are so divergent that it is impossible to know what is normal?

Rudolf Steiner: I have no desire to compete with these notions of “normal” and “abnormal”. There is a saying: there is only one health and countless illnesses. - I do not recognize that. Every person is healthy in their own way. People come and say: There is a heart patient who has this and that little defect, which should be cured. - I have often said: Leave the little defect to the person. — A doctor brought me a patient who had injured his nasal bone so badly that he now has a narrowed nasal passage and gets so little air. The doctor said, “That needs an operation, it's a terribly simple operation.” I said, “Don't do the operation!” He has a lung that is so constructed that he is not allowed to get more air; it is fortunate for him that he has a narrowed nasal passage. So he can live another ten years. If he had a normal nose, he would certainly be dead in three years. So I don't attach much importance to 'normal' and 'abnormal'. I only understand the most trivial things by them. I very often say: a normal citizen. Then people will understand what I mean.

The question is asked about the value of statistics.

Rudolf Steiner: It is true that statistics can be of great help. But the statistical method is applied externally today. Someone compiles a statistic about the increase in house values in a certain area and then about those in another area, and puts them side by side. But that is not good. It only becomes reliable when the processes themselves are examined. Then we shall know how to evaluate such a figure. For there may come a time when a series of figures is special simply because an extraordinary event has occurred in the series. ...

Question: Does inspiration also occur when collecting numbers?

Rudolf Steiner: Inspiration also occurs in that when you have a series, a second series, a third, then you find out - now again through the spirit - which facts, if you look at them qualitatively, are modified in the first series by corresponding facts, say in the third series. As a result, certain numerical values may cancel each other out. In the historical method, I call this the symptomatological consideration. One must have the possibility to evaluate the facts and, if necessary, to weigh the contradictory facts correctly against each other.

Economics in particular is sometimes practiced in an extremely unobjective way. One has the feeling that statistics are handled in such a way that, for example, the balance sheets of the finance ministers of the various countries are drawn up from a party-political point of view. Where one wants to prove a certain party line, the numerical data is actually used, which can just as easily prove another. There is no use other than to be impartial in one's soul. Something elementary and original comes into consideration. In all the science that deals with the human being - yes, even if you want to list a science that leads you to learn how to treat animals, to tame them - your concepts must prove to be modifiable. And this is even more true in economics. That is where inspiration comes in. You have to have that. Don't hold it against me if I say it dryly.

I am convinced that many more of today's students would have this inspiration – for it is not something that floats terribly in nebulous mystical heights – if it were not actually expelled from them at school, even at grammar school and secondary school. We have the task today, when we are at university, to remember what was driven out of us at grammar school in order to enter into a living practice of science. Today it is practiced terribly dead. It happened to me in a foreign country that I spoke with a number of economics lecturers. They said: When we want to visit our colleagues in Germany, they say: Yes, come, but not to my lecture, visit me at home! - Today one really needs an unbiased insight into these things. ... This economics has particularly declined recently. It is really all connected with the fact that people have lost this creativity of the spiritual. Today, people really have to be pushed in the face if they are to believe a fact.

Now you can read articles in the newspapers about the spiritual blockade in Germany. Of course, it has been there for a long time. If we want to deliver the magazine 'Das Goetheanum' to Germany today, we have to deliver it at a cost price of eighteen marks per copy! Think of the technical and medical journals! They are impossible to obtain. Think of the consequences for culture! This is also an economic issue. Germany is under an intellectual blockade. ... The withdrawal of these journals is directly what should lead to the dumbing down in Germany. ... In Germany it has an economic character, in Russia it has already taken on a state character, you can no longer read anything that is not sold by the Soviet government itself. People become a pure copy of the Soviet system. At best, you can smuggle a book here or there.

Question: Is it not useful when observing the economic effects not to start primarily from the statistics, but from the observation of the facts that are available?

Rudolf Steiner: This approach is needed even when consulting statistics. Statistics only enable us to prove things in figures. It is clear that if you come to Vienna now, you only need to walk the streets and gain experience. You only need to look at the apartments your acquaintances lived in ten years ago and those they live in now. And so on, piece by piece. You can make such observations of the most terrible kind. You can see for yourself that an entire middle class has been wiped out, which basically only lives – yes, because it has not yet died. It does not live economically, because if you see what it lives on, it is terrible. You will start from there, but the number can still be extremely important to you as proof.

You have to have a certain “nose” for it; because if you can prove things in figures, the numbers will in turn take you a little further. For example, the devaluation of the crown in Austria: it is indeed laughable how little the crown means today, but not any old value can be reduced without something being taken away from others. If you now look at the victims of the currency, they can be found among those whose pensions and similar income have been devalued. Here you can follow the calculation, and the strange thing is that the calculation could no longer be right for Austria today, let alone for Russia. Austria should have the right to devalue the crown even further, since everything has already been exhausted, and yet it does not explain the state bank default. Of course, this can only be achieved by the blockade that has been brought about in some way. The moment you lift this blockade, people will have to take very different measures. ...

Question: Can the state, as long as there is wealth, seize this wealth by increasing the money supply?

Rudolf Steiner: The state can certainly survive by increasing the money supply, but when the point is reached that the rent has been used up, if it is not artificially maintained, it could actually no longer survive economically, even if it continues to produce banknotes, because the further production of banknotes would lead to a doubling of the rent, which would lead to an increase into infinity. The state must increasingly shut itself off.

Question: Does the state not live off the economic capital itself, which is invested in the enterprises?

Rudolf Steiner: Yes, but off what is a pension in it.

Question: Yes, I mean, it sucks out the capital. The capital decreases?

Rudolf Steiner: To the extent that capital takes on the character of a pension. Because when the state absorbs it, it takes on that character. The state can certainly live, but it can no longer do economic work. That is no longer economics. It can only live off what has already been earned; it only draws on the old. It lives dead off the pension. In Austria, the point should have been reached long ago where the pension is dead. In Germany, it is still a long way off. It certainly could not go on in Austria if certain laws of compulsion did not exist, for example with regard to rent. They actually pay nothing – I think about twenty-five cents for a three-room apartment. The only way things can be maintained is by having certain things for free. In Germany, it is also the case that you may only pay a tenth for your apartment. It is only because of such things that things can be maintained in a certain social class that can afford to pay up to that point. In Austria, a certain social class has deteriorated to such an extent that it can no longer even pay the twenty-five cents. People who had an income, let's say, of three thousand crowns could live on it under certain circumstances; today that is a little over an English shilling. No, you can't live on that!

Today, economic phenomena are so terrible that people might start to take notice and realize that we should actually study the economic laws in such a way that it would help in a practical way. This attempt failed in 1919; but at that time the amount of foreign currency was not as high as it is today.

We could address the question: What does economic thinking mean? - Then: How do you arrive at a concept of work in an economic sense? - And then it would be good if someone were to continue to discuss the terms that I have already used in their own sense, quite freely. It would also be good if someone tried to work out the concept of entrepreneurial capital: what pure entrepreneurial capital is. If you want to characterize entrepreneurial capital in terms of its concept, you have to contrast it precisely with mere bond capital.

Walter Birkigt: Work in the economic sense would be human activity in terms of its economic efficiency. In the field of physics, we know exactly that physical work is determined by its mechanical effect. Is every economically useful service already work? No – value can only come into being through the consumer in the final analysis. If work is done that acquires real value in an economic context, then it can be spoken of as economic work.

Rudolf Steiner: I would just like to make a small suggestion by asking Mr. Birkigt how he would react if, let us say, these arguments were discussed and the question arose: If I in some way combine the work within the economic organism or process with the physical recording of the work, what would happen if one now looks more closely at the concept of physical work? – Certainly, everything you have said is correct, but when the physicist draws up a formula for his work, he will introduce the concept of mass. This is because physical work, an energy, is a function of mass and velocity. You will easily find an analogy for the latter in the economic process. But the strange thing about the physical formula for physical work is precisely that the concept of mass is introduced, which can be determined physically by weight. So in the physical concept of work we have “weight”, which we can only replace by “mass” and “speed”. Now the question would arise as to whether it is necessary, if we stick to your analogy, to introduce something like the concept of mass or the concept of weight into the economic approach. If we were to do that, we would have to seek out precisely that in the economic process which would correspond to mass. So I think this question could be raised in the discussion.

Objection: The problem of the essence of work involves recognition on the part of the buyer. The entrepreneur presupposes this idea of recognition. The fact that the purchase of any goods comes about is recognition.

Rudolf Steiner: Since your concept of recognition is not entirely in the economic field, but more in the philosophical field, it is necessary - so that you can somehow justify that this concept has an economic value - that you give it an economic significance. Because in the recognition as such - when the housewife, for example, first sees that she can use something well - there is hardly more than a judgment. The economic aspect only begins when she can now buy it. It could very well be that the thing is excellent, but for economic reasons, because it is too expensive, it cannot be bought. So mere recognition may be a philosophical category. But it would only become an economic category if it were able to place itself in economic life. And that is why the concept of economic action would clarify.

Question: What is the relationship between the verification of an economic act and recognition?

Rudolf Steiner: “Recognition” as such can hardly be an economic category. This may be because recognition must be subjective. Of course, something subjective already plays a role in economic categories. But then one must show the way in which it becomes objective. Suppose, for example, that two housewives have completely different recognitions of a thing, and for the sake of argument this can lead to a yes to an economic success and a no to an economic failure. The economic aspect would be found where the reasons lead to success in one case and to failure in the other, because recognition can only be a philosophical concept. Of course, recognition can slip down into the [private] economic sphere, but then it must also slip over into the national economy.

Remark from a participant: By economic action, I understand an anticipation of the physical expression of a verification, presenting itself as an initiative.

Rudolf Steiner: We are perhaps dealing here with something quite different from what might have emerged from the discussion. We want to move here in economic thinking. This formula does not prove to me that you have entered into economic thinking with this matter. The formula is, of course, worthy of all recognition, but it is actually more the formula of an economic philosophy that strives, even in a somewhat scholastic way, to find the concept of economic action in order to metaphysically justify economic action before the entire world order. If that is what you are aiming at, then you may take this path; then it will be very interesting to talk about it. But if you ask yourself whether it is not important today, for example, that a number of people, who are now the people of today, bring something out of thinking into the economic sphere that could help economic life, then it is not easy to see what could actually be gained by such a formulation.

Of course, it could be gained that people learn to think better, but we are faced with the necessity to make the national economy as such really fruitful. In science and medicine, after all, it does not depend very much on whether one has a methodology. There this is actually more of a technique in the treatment of methods, research instruments and so on, but the methodology itself has no extraordinary value. In economics, it certainly has an extremely high value, because what we think about things has to be put into practice in economics. Otherwise it is just what Brentano pursues in his way: purely empirical. It does not become practical. Today we need an economic way of thinking that can be put into practice. And that is why it would be extremely interesting to go through the definition word for word. But it is more in the realm of economic-philosophical thinking than of economic thinking.

Mr. Birkigt's discussions were aimed at extracting the concepts of work in such a way that someone who wanted to clarify in an association how one or the other work is to be evaluated can benefit from it. That was your tendency, and that should be our tendency today, if we were stuck inside an association, be it as any kind of worker, so that we would somehow have a basis for evaluating things in their economic process.

Note: economic work is any human activity that directly or indirectly produces value.

Rudolf Steiner: I think that if we want to develop a practical economic way of thinking, we will have to take something else into account. Let us take a scientific analogy to clarify this: the overall process in the human organism is not at all understandable if we only look at ascending processes, processes that run in one direction. You only get a real understanding of the total process when you also look at the catabolic processes. For example, we have catabolic processes in the bones and nervous system; we have catabolic processes in the blood as well as distinct anabolic processes. We can even say that we have anabolic processes in the human organism, starting with lymph formation, through lymph formation to the generation of venous blood. Then we have the processes associated with breathing. These are processes that represent a kind of unstable equilibrium between anabolic and catabolic processes. And the processes that take place in the nerves and bones are distinctly catabolic. Devolutions as opposed to evolutions! We only gain a real understanding when we organize our concepts in such a way that we understand the liver process, for example, as a combination of anabolic and catabolic processes. Someone may come along and may have a mere theoretical interest, who then also subsumes the catabolic processes under the anabolic processes. He says: Physically, the human being develops to a certain degree through anabolic processes. Then he begins to build up spiritually, that is, differently. Now, then we come from one sphere into the other and retain only the abstract web of concepts and thereby learn to understand nothing. We learn to understand the effectiveness of the spirit in the human organism only when we know that the spirit begins to work when there are no anabolic processes; when we know that there is no anabolism in the brain, but catabolism, and that it is only in the catabolism that the spirit asserts itself. Then I have a kind of comprehension through which I enter into reality. If I hold on to a conceptual direction in the abstract, step by step, purely dialectically and logically, then I do not arrive at any practical understanding.

Thus it is necessary in economics to take into account not only the formation of value, but also its devaluation; that one also speaks, to a certain extent, of real destruction. I have done that. Consumption is where it begins, but there is still a mental process in which devaluation also takes place.

They said that when I tear down a house, it also has value. Because at this point, the demolition of the house means that something productive is being created for someone. Certainly, you can see it that way if you stick to the abstract development of concepts. But in practice, it has a meaning where I compose the economic process out of the creation and devaluation of value. And then it must be clear, of course, that work is important not only for the production of values, but also for the destruction of values. Without going into this, I cannot get an adequate concept of work. If work were not also there for destruction, it would not be possible to do any economic activity at all. You have to bring this into your concept.

I believe that it will be of great importance, even in the near future, to recognize what is to happen economically in the direction of value creation and value destruction. Because if values arise that are not destroyed in the appropriate way, even though they are there to be destroyed, this also disturbs the economic process. The process is disturbed by overproduction. The process is disturbed simply by the fact that, figuratively speaking, there is too much in the stomach of the economic system.

Question: Must we not understand the concept of work in such a way that work is an activity that comes into consideration for a closed economic organism?

Rudolf Steiner: What comes into consideration here is that things are taken up as realities. Undoubtedly, the process of creating too much shielding can be a destructive one; but in terms of work performance, it is a constructive process under all circumstances, as long as we remain at work. On the other hand, the destructive process of destroying screens is not opposed to this. Under certain circumstances, destruction is not achieved by what you would define as work. But in any case, one cannot call the process of creating too many screens a destructive process if one wants to think about the matter in terms of work.

We must be aware that in the economic view we are to characterize, that is, we should try to get a concept by defining it from different sides in order to gain a truly descriptive judgment. We have no use for an abstract definition. A concept of work has been established: work is human activity in terms of its economic efficiency, in short, economic activity of man. But how does such a definition of work in the economic sense differ from the definition of work in the physical sense? In such an economic definition, we have nothing real in it. When the physicist defines physical work by means of a formula, by means of a function, and in it has the mass and the speed, then you have something real in it; because the mass can be weighed. If the physicist wants to define the speed, he draws up a definition. The definition serves only as a means of communication. The physicist is fully aware that he is only pointing to what is to be considered. For only he has a concept of speed who knows it from observation. What he defines is the measure of speed. And so the physicist will never believe that he is giving any real explanation when he gives this explanation. But he is of the opinion - whether rightly or wrongly, I will not investigate - that he is giving a real explanation when he explains labor as a function of mass and speed. In doing so, he is getting at a real explanation.

When I do this in economic life, it is because I am approaching the story at the right point. So, for example, if I give my explanation of value at a certain point in such a way that value is produced, value arises, value is a function of labor and a natural object, a natural being, or of mind and nature, then you have labor in the change that is taking place there. This is, of course, a qualitative change, whereas the moving body undergoes a change of location. What the physicist has as a measure is the real substance of nature. However, I am basing a definition that does indeed meet the requirements of such a real definition in physics. I am not doing anything special for economics when I try to define labor in itself. Above all, I must realize that labor as such only becomes an economic category when I bring it into function with the natural product. When you make such definitions, you get into a way of looking at things that is actually quite striking later on. For example, you know that during the reign of classical physics, the physicist always defined labor as a function of mass and speed. In contrast to modern conceptions of ions and electron processes, this working definition completely loses its meaning, because the concept of mass is dropped. We are only dealing with acceleration. In this way, the physical process emancipates itself from what is ponderably present as mass in it, just as capital emancipates itself from the nature it works on in my book and enters into a function of its own.

So you enter a realm that actually justifies itself from all sides. That is the peculiarity of realistic thinking: you think more than you have in definitions. I would like to point out that nowhere, when I speak of economics, do I try to grasp a concept where it cannot be grasped. I cannot grasp “mass” in physics either, but only its function. “Mass is the quantity of matter”, that is also only a word definition! Nor do I want to see the terms nature, labor and capital defined one after the other as economically significant, but rather to be grasped where the realities are: not nature, but nature that has been worked; not labor, but organized labor; not capital, but capital directed by the human spirit, set in motion, set in motion in the economy. I believe that touching things where they are is necessary in economics today!

Question not noted.

Rudolf Steiner: I would just like to point out that the distinction between mental and manual work is not really justified. If one wanted to try to define the thing mental work and the thing manual work, one could not really find anything other than a slow transition from one pole to the other, but no real contrast. Physiologically, there is no real contradiction either. That things have been viewed incorrectly can be seen from the fact that people have always been mistaken about the recuperative effect of gymnastics. Today we know that gymnastics does not represent the recuperation that was attributed to it in the past. The student does not work more through so-called mental work than through gymnastics, which lasts the same amount of time. Of course, it is always a matter of thinking about things in a fruitful economic way.

Question about the relationship between economic and biological thinking.

Rudolf Steiner: The economic entities are, in their reality, as they once were, already very much analogous to the biological entities. You can verify this very well if you try to determine the economic value of a job, for example, a printer's job. Let us assume that a poet fancies himself to be an extraordinarily great poet and manages to get his poetry printed, whether through patronage or financial support or something similar. And now the paper workers, the typesetters, a whole range of people are working on the realization of this volume of poetry, who, according to the Marxist concept, are doing decidedly productive work. But let's assume that not a single copy is sold, but that they are all pulped. Then you would have the same real effect as if they had not been made at all. Basically, you have expended labor completely uselessly in this case. Now, however, you would first have to examine whether this is seven-eighths stupid, as the Marxists say, or whether it does not have a meaning after all. And then you will notice that the biological point of view offers a certain analogy. You can say: In biology I can observe the whole being from beginning to end and have it before me, whereas in economics I only have to do with tendencies and the like. But now I ask you whether you have more than tendencies in the whole of nature, when you consider that not all herring eggs become herrings, but that countless herring eggs, compared to those that become herrings, are simply destroyed? However, the question arises as to whether these destroyed eggs mean nothing at all for the whole process of nature, or whether they only take a different direction in the whole biological process. That is the case. There could be no herrings and many other sea creatures if so many herring eggs did not simply perish. Now, you are still not on the basis of a real observation when you say: Well, eggs are perishing there - and so on. You are still obliged to say: I have an evolution in front of me. The egg has come into being and perishes through something. The whole herring also came into being and perishes through something. The processes only take on different directions, and the herring merely continues the tendency of the egg. Nowhere can you somehow say that the herring has a greater right to cease to exist than the egg. And now you have an analogy with perishing labor, with perishing economic entities.

You can come up with countless analogies between economic and biological thinking. This is only not noticed because we have neither a proper biological nor a proper economic thinking. If biology were to begin to develop a real thinking, it would become very similar to economic thinking. You need the same abilities to do real biology as you need to do real economics.

Question: What is the justification for printed poetry that is then trampled on again, compared to herring eggs?

Rudolf Steiner: The matter may be as follows. If the people who are employed were not kept busy, these people would naturally have to find something to do elsewhere. And if they had to find something to do elsewhere, then under certain circumstances not enough would be derived from human activity. Human activity, like herring eggs, must also be diverted under certain circumstances, and this diversion also has an economic effect. It is easy to say that sleeping is rest, and living is activity. From a certain point of view, however, sleep is much more necessary for life than waking. It is the same with this activity. Of course, you can say: I want to use it in a more useful way; but it is questionable whether it is more useful when it comes to umbrellas that are produced too much. First of all, these are stopgaps, albeit in an inappropriate economic process, to eliminate work that would have a disruptive effect. The matter would turn out differently if one were to think in a healthy economic way. If one were to think in a healthy economic way, one would have to expend a colossal amount of cleverness - but here we go beyond the usual economic consideration - in order to utilize the surplus working hours that arise for those people who cannot work for themselves. So, it is actually the case that if one were to think in a healthy economic way, something would immediately arise that you would probably welcome with joy. But people cannot imagine that it would be necessary to teach those who are unable to work for themselves, who are unable to occupy their time, what it means to save time. For it would hardly be necessary for a person who works eight or nine hours today to work more than three or four hours longer. If people thought in terms of economics in a sensible way, they would need to work much less than they do now. And then the time saved would simply correspond to the time it takes for the herring eggs to hatch. Now people waste so much on work that has to be done again anyway.

Note: When one speaks of biological thinking, one has a certain limited object of perception about which one thinks. When thinking economically, one has to designate through thinking what one is thinking about economically.

Rudolf Steiner: You only have a limited object of perception in biology to a certain extent. You do not have this with world structures that are observed under a microscope, for example, or where you observe individual phenomena as emerging from a larger context. You can say that you have a manageable object in a drop of blood. But the moment you look at it under the microscope, you see more – five to six hundred red blood cells in one cubic millimeter, and they are all active. This is certainly visible to the eye through the microscope, but it looks damn similar to what you see when you look at a limited economic process somewhere. Imagine you are standing in front of a stall at the fair and see how the stall-keeper is standing there, how his wares are lying; there are the customers, he hands over the goods, they put down the money, ... if you now imagine, you manage to be such a giant - how you can think of all this as something very dense and cohesive, then there is no real difference. I can understand the economics of a limited area just as relatively. If I look at the booth owner with everything that goes with it, it is only relatively different from, say, when the British sell opium in China and I look at everything that goes with it. I can't find why you don't have an object.

Question: I just don't know where political economy begins and ends.

Rudolf Steiner: We also don't know where biology begins. It is another thing to ride the comparison to death. I just mean: What makes it possible to understand the nature of living things, the same in the conception makes it possible to understand economics. Only one thing is necessary. What you say may apply: when you look at a natural object, the object comes to you, whereas in economics the subject must come to the object to some extent. In economics, you have to have what I called spiritus yesterday. So biologists can really have very little spiritus and only work with the methods. But to think economically, you will need some spiritus.

Question: It seems to me that the economic process has come about without thinking in economic terms; that thinking must first become economic. Whether the economy is healthy or unhealthy is irrelevant. In this respect, I will be able to speak of an object in economics in the same way as in natural science.

Rudolf Steiner: Mr. G. is right: the difference is that in economics it is necessary to start from a certain subjective grasp of what is happening in the world. But in economics this subjectivity is in turn easier than in biology. In biology, you are always on the outside, of course, as a human being – since you are not a cockchafer when you study it – and you have to stand on the outside, whereas you are only on the outside to a much lesser degree when you look at something economically. You can still muster enough humanity to understand the worker well, to understand the entrepreneur as well. That is the general human element, and it replaces what is external observation in biology. In this respect, Mr. G. is right. But on the other hand, I believe that Goethe, for example, gave such a good definition of the dark side of the concept of trade because he did indeed go very far in his biological approach. Thus, Goethe sometimes expresses remarkably apt economic views. This has something to do with his morphological-biological approach. In biology, nature plays the role of someone who pushes you when you don't have the spirit yourself. In economics, you have to apply the spirit yourself.

Objection: There are theorists who say that there is no such thing as a national economy because there is no economy. Spann expresses this.

Rudolf Steiner: He is much admired and is considered a special luminary in Vienna by very clever people. I have not studied him enough to have too much of an opinion about him, but what very clever people say about him has not particularly convinced me. But it would only be a clever dialectic to say that there is no economy. There are also people who say that there is no life, only mechanism.

We should now look at specific aspects. Someone should try to show more specifically where economic processes of exploitation and devaluation are necessary.

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.