Capital and
Credit
By RUDOLF STEINER
FROM various points of
view the opinion has been expressed that all questions concerning
money are so complicated as to be well-nigh impossible to grasp in
clear and transparent thought. One might mention, in this connection,
the book on
Money and Credit,
by Hartley Withers, the great
English authority on Finance. A similar view can be maintained with
regard to many questions of modern social life. At the same time, we
should consider the consequences that must follow if men allow their
social dealings to be guided by impulses that have their root in
indefinite thoughts — or at any rate in thoughts that are very
hard to define. For such thoughts do not merely signify a lack of
insight, a confusion in theoretic knowledge, they are potent forces
in life. Their vague character lives on in the institutions that
arise under their influence, and these in turn result in social
conditions making life impossible.
The conditions under which
men are living in modern civilisation arise from such chaotic
impulses of thought. This fact will have to be acknowledged if a
healthy insight into “the social question” is to be
attained. We first become aware of the social question when our eyes
are opened to the straits in which men are finding themselves.
But there is far too little inclination to follow out objectively the
path that leads, from a mere perception of these troubles, to
the human thoughts that lie at the root of them. It is only too easy
to think it a piece of practical idealism to set out on this path
— from the economic bread-and-butter question to the human
thoughts. And men do not see how unpractical is a practice of life to
which they have grown accustomed, which nevertheless is based on
thoughts that are impossible to life. Such thoughts are
contained in present-day social life. If we try to go to the root of
the social question we are bound to see that at the present day even
the most material demands of life can be grappled with only by
proceeding to the thoughts that underlie the co-operation of men and
women in a community.
Many of these thoughts have
indeed been pointed out by people who speak from the point of view of
one circle in life or another. For example, people whose activity is
closely connected with the land have indicated how, under the
influence of modern economic forces, the buying and selling of land
has made land into a commodity. And they are of opinion that
this is harmful to society. Yet opinions such as these do not lead to
practical results, for men in other spheres of life do not admit that
they are justified.
It is from an unflinching
perception of facts like these, that power should come to guide and
direct any attempt to solve “the social question.” For it
can reveal the truth that one who opposes right demands in social
life, because through his own particular interests he lives in
thoughts that do not accord with them, is in the long run undermining
the very foundations on which his own interests are built.
Such a truth can be
perceived in considering the social significance of land. We must
first take into account how the purely capitalistic tendency in
economic life affects the valuation of land. As a result of this
purely capitalistic tendency, capital creates the laws of its own
increase, and in certain spheres of life these laws no longer accord
with the principles that determine the increase of capital on sound
lines.
This is especially evident
in the case of land. Certain conditions in life may very well make it
necessary for a district to be made fruitful in a particular way.
Such conditions may be of a moral nature — they may be founded
on spiritual and cultural peculiarities. But it is very possible that
the fulfilment of these conditions would result in a smaller interest
on capital than the investment of the capital in some other
undertaking. As a consequence of the purely capitalistic tendency,
the land will then be exploited, not in accordance with these
spiritual or cultural points of view (which are not purely
capitalistic in character) but in such a way that the resulting
interest on capital may equal the interest in other undertakings. And
in this way values that may be very necessary to a real civilisation
are left undeveloped. Under the influence of this purely
capitalistic orientation, the estimation of economic values becomes
one-sided; it is no longer rooted in the living connection which men
must have with nature and with spiritual life, if nature and
spiritual life are to give them satisfaction in body and in soul.
It is easy to jump to the
conclusion: The capitalistic orientation of economic life has
these results, and it must therefore be abandoned. But the question
is, whether in so doing we should not also be abandoning the very
foundations, without which modern civilisation cannot exist. One who
thinks the capitalistic orientation a mere intruder into modern
economic life, will demand its removal. But one who recognises how
modern life works through division of labour and of social function,
will rather have to consider how to exclude from social life the
disadvantages which arise as a by-product of this capitalistic
tendency. For he will clearly perceive that the capitalistic method
of production is a consequence of modern life, and that its
disadvantages can only make themselves felt so long as the capital
aspect is made the sole criterion in estimating economic values.
The ideal is to work for a
structure of society whereby the criterion of increase of capital
will no longer be the only power to which the production is made
subject. In a right structure of society, increase of capital should
rather be the symptom which shows that the economic life, by taking
into account all the requirements of man's bodily and spiritual
nature, is rightly formed and ordered. Anyone who determines his
thought by the one-sided point of view of capital increase, or, which
is the necessary consequence, of rise in wages, will fail to gain
clear and direct insight into the effects of the various specific
branches of production on the cycle of economic life. If the object
is to gain an increase in capital or a rise in wages, it is
immaterial through what branch of production the result is achieved.
The natural and sensible relation of men and women to what they are
producing is thereby undermined. For the mere quantity of a sum of
capital, it is of no account whether it be used to acquire one kind
of commodity or another. Nor does it matter for the mere height of
wages, whether they are earned in one form of work or in another.
Now it is just in so far as
they can be bought and sold for sums of capital, in which their
specific nature finds no expression, that economic values become
commodities. But the commodity nature is only suited to those
goods or values which are directly consumed by man. For the valuation
of these, man has an immediate standard in his bodily and spiritual
needs. There is no such standard in the case of land, nor in the case
of artificial means of production. The valuation of these latter
things is dependent on many factors — factors which only become
apparent when one takes into account the social structure as a
whole.
If cultural interests
demand that a certain district be put to economic uses, which, from
the capital point of view, seem to yield a lower return than other
industries, the lower return will yet not harm the community in the
long run. For in time the lower return of the one branch of
production will affect other branches in such a way that the prices
of their products will also be lowered. This connection of things can
only escape the momentary point of view, which reckons on nothing
beyond the narrow egoistic kind of value.
Now where there is simply a
“market” type of relationship — where “supply
and demand” are the determining factors — there the
egoistic type of value is the only one that can come into the
reckoning. The “market” relationship must be superseded
by associations regulating the exchange and production of goods by an
intelligent observation of human needs. Such associations can replace
mere supply and demand by contracts and negotiations between groups
of producers and consumers, and between different groups of
producers. One man's making himself a judge as to the legitimate
needs of another being excluded on principle, these negotiations will
simply be based on the possibilities afforded by natural resources
and by human power.
Life on this basis is
impossible while the economic cycle is governed simply by the point
of view of capital and wages. Land, means of production, and
commodities for human use — things for which there is in
reality no common standard of comparison — are exchanged for
one another. Nay more, human labour-power, and the use of man's
spiritual and intellectual faculties; are also made dependent on the
abstract standard of capital and wages — a standard which
eliminates, both in man's judgment and in his practical activity, his
natural and sensible relations to his work.
Now in modern life there is
no possibility of bringing about that relation of man to economic
values which was possible under the old system of barter, nor even
that relation which was still possible under a simpler money system.
The division of labour and of social function, which has become
necessary in modern times, separates a man from the recipient of the
product of his work. Without undermining the conditions of modern
civilisation, there is no altering this fact; nor is there any way of
escaping its consequence — the weakening of a man's immediate
interest in his work. The loss of a certain kind of interest in work
must be accepted as a result of modern life. But we must not allow
this interest to disappear without others taking its place. For men
cannot live and work in the community indifferently.
It is from the spiritual
life and the life of rights, as they are made independent, that the
necessary new interests will arise. From these two independent
spheres, impulses will come, involving other points of view than
those of a mere increase of capital or standard of wages. A free
spiritual life creates interests which have their source in the
depths of the human being, and which imbue a man's work and all his
action with a living aim and meaning in the social life. Developing
and caring for man's faculties for their own inherent value, such a
spiritual life will create in man the consciousness that his talents,
and the place he fills in life, have real meaning. And moulded by men
whose faculties have been developed in this spirit, society will ever
adapt itself to the free expression of human faculties. The life of
rights and of economics will take their stamp from the developed
faculties of man.
The deep inner interests of
individuals cannot unfold fully and freely through a spiritual life
that is regulated by the political sphere, or that develops and uses
human faculties merely as dictated by their economic usefulness. This
kind of spiritual life may supply men with artistic and scientific
movements as idealistic adjuncts to life, or it may offer them
comfort and consolation in religion or philosophy. But all
these things are only leading men outside the sphere of social
realities into regions more or less remote from every-day affairs. It
is only a free spiritual life that can penetrate the everyday
affairs of the community, for it is only a free spiritual life that
can set its own stamp on them as they take shape.
In my book
The Threefold Commonwealth,
I tried to show how a free spiritual life will,
among other things, provide the motives and impulses for a healthy
social administration of capital. The fruitful administration of a
certain piece of capital is only possible by a person or group of
persons who have the human faculties to perform that particular work
of social service for which the capital is used. It is therefore
necessary for such a person or group of persons to have the
'administration of the capital only so long as they are able to carry
on the work of management themselves by virtue of their own
faculties. As soon as this ceases to be the case, the capital must be
transferred to other persons who have the faculties. Now, since under
a free spiritual life the human faculties are developed purely out of
the impulses of the spiritual life itself, the administration of
capital in the economic sphere will become a result of the
unfolding of spiritual power, and the latter will carry into
the economic life all those interests that are born within its own
spiritual sphere.
An independent political
life will create mutual relationships between the human beings living
in a community. Through these political or civic relationships
they will have an incentive to work for one another, even when the
individual is unable to have that direct creative interest in the
product of his work. This interest becomes transformed into the
interest that he can have in working for the human community, whose
political life he helps to build. Thus the part that a man plays in
the independent life of rights can become the basis for a special
impulse to life and work alongside the economic and spiritual
interests. A man can look away from his work and the product of his
work to the human community, where he stands in relation to his
fellows purely and simply as an adult human being, without regard to
his particular spiritual or mental talents, and without this relation
being affected by his particular station in economic life. When he
considers how it is serving the community to which he has this direct
and intimate human relationship, the product of his work will appear
valuable, and this value will extend to the work itself.
Nothing but an independent
life of rights can bring about this intimate human relationship. For
it is only in the sphere of rights that every human being can meet
every other human being with equal and undivided interest. All the
other spheres of social life must by their very nature create
distinctions and divisions according to individual talents or kinds
of work. This sphere of rights bridges over all differences.
As regards the
administration of capital, the independence of the spiritual life
will have the effect that increase of capital will not act as the
direct and driving motive. Increase of capital will only
result as a natural consequence of other motives, and these
other motives will proceed from the proper connection of human
faculties with the several spheres of economic activity.
It is only from such points
of view as these — points of view that lie outside the purely
capitalistic orientation — that society can be so constructed
as to bring about a satisfactory balance between human work and its
return. And as with regard to the capitalistic orientation, so it is
with regard to other matters where modern life has removed man from
the natural connection with the conditions of his life.
Through the independence of
the spiritual life and the life of rights, artificial means of
production, land, and also human labour-power, will be divested of
their present character of commodities. (The reader will find a more
exact description of the way in which this will come about in my book,
The Threefold Commonwealth).
The motives and impulses
which will determine the transference of land and of means of
production, when these are no longer treated as marketable
commodities, will have their root in the independent spheres of
equity or politics, and of spiritual life. The same may be said of
those motives that will inspire human labour.
By this means forms of
social co-operation that are suited to the conditions of modern life
will be created. And it is only from these forms that the greatest
possible satisfaction of human needs can result. In a community that
is organised purely on a basis of capital and wages, the individual
can apply his powers and talents only in so far as they find an
equivalent in capitalistic gain. Consider, moreover, that confidence
by virtue of which one man will place his forces at the disposal of
another in order to enable the latter to accomplish certain work. In
a capitalistic community, this confidence must be based on the belief
that the other person's circumstances are such as to inspire
confidence from the purely capitalistic point of view.
Work done in confidence
of the return achievements of others constitutes the giving of
credit in social life. Now just as in older states of
civilisation there was a transition from barter to the money system,
so, as a result of the complications of modern life, there has
latterly taken place a progressive transformation, from the simpler
money system, to a working on a basis of credit. In our age, life
makes it necessary for one man to work with the means that are
entrusted to him by another, or by a community, in confidence of his
power to achieve a result. But under the capitalistic method the
credit system involves a complete loss of the real and satisfying
human relationship of a man to the conditions of his life and work.
Credit is given when there is a prospect of an increase of capital
that seems to justify it; and work is done always subject to the
point of view that the confidence or credit received will have to
appear justified in the capitalistic sense. These are the motives
underlying the giving and taking of credit. And what is the result of
this state of affairs? Human beings are subjected to the power of
dealings in capital, which take place in a sphere of finance remote
from life. And the moment they become fully conscious of this fact,
they feel it to be unworthy of their humanity.
Take the case of credit on
land. In a healthy social life, a man or group of men possessed of
the necessary faculties may be provided with credit on land, enabling
them to develop the land by establishing some branch of production.
But it must be a branch of production whose development on that land
seems justified in the light of all the cultural conditions that are
involved. If credit is given on land from the purely capitalistic
point of view, it may happen that in the effort to give it a
commodity value corresponding to the credit provided, that use of the
land which would otherwise be the most desirable is prevented.
A healthy system of giving
credit presupposes a social structure which enables economic values
to be estimated by their relation to the satisfaction of men's bodily
and spiritual needs. An independent spiritual life and life of rights
will lead men to recognise this relation in a living way and make it
a directing force. And from it the economic dealings of men will take
their form. Production will be considered from the point of view of
human needs; it will no longer be ruled by processes which blot out
the concrete needs of men by an abstract scale of capital and
wages.
The economic life in a
Threefold Commonwealth is built up by the co-operation of
associations arising out of the needs of producers and the
interests of consumers. These associations will have to decide on the
giving and taking of credit. In their mutual dealings the impulses
and points of view that enter the economic life from the spiritual
sphere and the sphere of rights will play a decisive part. These
associations will not be bound to a purely capitalistic standpoint.
For one association will be in direct mutual dealing with another,
and thus the one-sided interests of one branch of production will be
regulated and balanced by those of the other.
The responsibility for the
giving and taking of credit will thus devolve on the associations.
This will not impair the scope and activity of individuals with
special faculties. On the contrary, it is only this method which will
give individual faculties full scope. The individual is responsible
to his association for achieving the best possible results. The
association is responsible to other associations for using these
individual achievements to good purpose. Such a division of
responsibility will ensure that the whole activity of production is
guided by complementary and mutually corrective points of view. The
individual's desire for gain will no longer be imposing production on
the life of the community; production will be regulated by the
needs of the community, which will make themselves felt in a real and
objective way. The need which one association establishes will be the
occasion for the giving of credit by another association.
People who depend on their
accustomed lines of thought will say: These are very fine ideas, but
how are we to make the transition from present-day conditions
to the threefold system?
It is important to see that
what has here been proposed can be put into practice without delay.
It is only necessary to begin by forming such associations. Surely no
one who has a healthy sense of the realities of life, can deny that
this is possible without further ado. Associations on the basis of
the Threefold Commonwealth idea can be formed, just as well as
companies and syndicates on the old lines. Moreover, all kinds of
dealings and transactions are possible between the new associations
and the old forms of business. There is no question of the old having
to be destroyed and artificially replaced by the new. The new simply
takes its place beside the old; the new will then have to justify
itself and prove its inherent power, while the old will gradually
crumble away.
The Threefold Commonwealth
idea is not a programme or system for society as a whole,
requiring the old system suddenly to cease and everything
to be set up anew. No the threefold idea can make a start with
individual institutions and undertakings in society. The
transformation of the whole will then follow by the ever widening
life of these individual institutions. Just because it is able to
work in this way, the threefold idea is no Utopia; it is a power
adequate to the realities of modern life.
The essential thing is that
the threefold idea will stimulate a real social intelligence in the
men and women of the community. The economic points of view will be
properly fructified by the impulses that come from the independent
spiritual life and life of rights. The individual will in a very
definite sense be contributing to the achievements of the whole
community. Through his part in the free spiritual life, through the
interests that arise in the political sphere of rights, and through
the mutual relations of the economic associations, his contribution
will be realised.
Under the influence of the
Threefold Commonwealth idea, the operation of social life will in a
certain sense be reversed. At the present day a man has to look upon
the increase of his capital, or the standard of his wages, as a sign
that he is playing a satisfactory part in the life of the community.
In the Threefold Commonwealth the individual faculties of men,
working in harmony with the human relationships that are founded in
the sphere of rights, and with the production, circulation and
consumption that are regulated by the economic associations, will
have as their result the greatest possible efficiency of the common
work. Increase of capital, and a proper adjustment of work, and the
return for work, will appear as a final consequence of these social
institutions and their activities.
From the mere attempt at
reform in the sphere of social effects, the Threefold Commonwealth
idea would guide our transforming and constructive power into the
sphere of social causes. Whether a man rejects this idea or makes it
his own, will depend on his summoning the will and energy to work his
way through into the sphere of causes. If he does so, he will cease
considering external institutions alone, his attention will be guided
to the human beings who make the institutions. Modern life has
brought division of labour in many spheres. The external methods and
institutions require it. The effects of division of labour must be
balanced by living mutual relations between men and women in the
community. Division of labour separates men from one another; the
forces that come to them from the three spheres of social life, once
these are made independent, will draw them together again. The
progressive separation of men has reached its height. This is a fact
of experience, and it gives our modern social life its stamp. Once we
recognise it, we realise the imperative demand of the age, to find
and set out upon the paths to a reunion.
This inevitable demand of
the time is shown in a vivid light by such concrete facts of economic
life as the continued intensification of the credit system. The
stronger the tendency to a capitalistic point of view, the more
highly organised the financial system, and the more intense the
spirit of enterprise became — the more did the credit system
develop.
But to a healthy way of
thinking the growth of the credit system must bring home the urgent
need of permeating it with a living sense of the economic realities
the production of commodities and the needs of men for particular
commodities. In the long run, credit cannot work healthily unless the
giver of credit feels himself responsible for all that is brought
about through his giving credit. The receiver of credit, through his
connection with the whole economic sphere, i.e., through the
associations, must give him grounds to justify his taking this
responsibility. For a healthy national economy, it is not merely of
importance that credit should further the spirit of enterprise as
such, but that the right methods and institutions should exist to
enable the spirit of enterprise to work in a socially useful way.
Theoretically, we may take it, no one will be prepared to deny
that a larger sense of responsibility is very necessary in the
present-day world of business and of economic affairs. But to this
end associations must be created which will work in such a way as to
confront the individual with the wider social effects of all his
actions.
Persons whose task in life
lies in the sphere of farming and who have experience in this
direction, very rightly declare that a man who is administering land
must not regard land as an ordinary commodity, and that land-credit
must be considered in a different way from commodity-credit. But it
is impossible for insight of this kind to come into practical effect
in the modern economic cycle until the individual is backed up by the
associations. Guided by the real connections between the several
spheres of economic life, the associations will set a different stamp
on agricultural economy and on the other branches of production.
We can well understand some
people saying to these arguments: “What is the point of it all?
When all is said and done, it is human need that rules over
production, and no one — to take an instance — can give
or receive credit unless there is a demand somewhere or other to
justify it.” Someone might even say: “After all, all
these social institutions and methods that you are thinking of, come
to nothing more than a conscious arrangement of the very things that
supply and demand will surely regulate automatically.” But to
one who looks more accurately, it will be clear that this is not the
point. The social thoughts that take their start from the
threefold idea do not aim at replacing the free business
dealings governed by supply and demand, by a system of rations and
regulations. Their aim is to realise the true relative values of
commodities, with the underlying idea that the product of one man's
labour should be equivalent in value to all the other commodities
that he needs for his consumption in the time which he spends
in producing it.
Under the capitalistic
system, demand may determine whether someone will undertake the
production of a certain commodity. But demand alone can never
determine whether it will be possible to produce it at a price
corresponding to its value in the sense above defined. This can only
be determined through methods and institutions whereby society in all
its aspects will bring about a sensible valuation of the different
commodities. Anyone who doubts that such methods and institutions are
worth striving for, is lacking in vision. For he does not see that,
under the mere rule of supply and demand, human needs, whose
satisfaction would raise the civilised life of the community, are
being starved. And he has no feeling for the necessity of trying to
include the satisfaction of such needs among the practical
incentives of an organised community. The essential aim of the
Threefold Commonwealth is to create a just balance between human
needs and the value of the products of human work.
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