The Renewal of the Social Organism

Four Articles From
The Newspaper:
The Social Future

Capital and Credit

Various people [1] have expressed the opinion that all questions concerning money are so complicated that they are almost impossible to grasp in clear, precise thought.

A similar view can be taken regarding many questions of modern social life. At the same time, we should consider the consequences that must follow if we allow our social dealings to be guided by impulses rooted in imprecise thoughts, or at any rate in thoughts that are very hard to define. Such thoughts do not merely signify a lack of insight and a confusion in theory; they are potent forces in actual life. Their vagueness lives on in the institutions they inspire; these, in turn, result in impossible social conditions.

The conditions under which we live in modern civilization arise from just such chaotic thinking. This 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 we find ourselves. But there is far too little inclination to follow objectively the path that leads from a mere perception of these troubles to the human thoughts that underlie them. It is too easy to dismiss as impractical idealism any attempt to proceed from bread-and-butter issues to ideas. People do not see how impractical their accustomed way of life is, how it is based on unviable thoughts. Such thoughts are deeply rooted within present-day social life. If we try to get at the root of the “social question,” we are bound to see that at present even the most material demands of life can be mastered only by proceeding to the thoughts that underlie the cooperation of people in a community.

To be sure, many such thoughts have been pointed out within specific contexts. 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 reduced it to a mere commodity. They believe this is harmful to society. Yet opinions such as these do not lead to practical results, for because of their own interests, those in other spheres of life do not admit that these opinions are justified.

It is from an unflinching perception of such facts that the impetus should come to guide and direct any attempt to solve “the social question.” For such a perception can show that one who opposes justified social demands because they require a way of thinking opposed to his own particular interests, is in the long run undermining the very foundations on which his own interests are built.

Such an observation can be made when considering the social significance of land. First we must take into account how the purely capitalist tendency in economic life affects the valuation of land. As a result of this purely capitalist tendency, capital creates the laws of its own increase; and in certain spheres of life these laws are no longer consistent with the principles that determine the increase of capital along sound lines.

This is especially evident in the case of land. Certain conditions may very well make it necessary for a district to be cultivated in a particular way. Such conditions may be of a moral nature; they may be founded on spiritual and cultural peculiarities. However, it is entirely possible that the fulfillment of these conditions would result in a smaller interest on capital than would investment in some other undertaking. As a consequence of the purely capitalist tendency, the land will then be exploited, not in accordance with these spiritual or cultural viewpoints (which are not purely capitalist in character), but in such a way that the resulting interest on capital will equal the interest resulting from other undertakings. Thus values that may be very necessary to a real civilization are left undeveloped. Under the influence of this purely capitalist orientation, the estimation of economic values becomes one-sided; it is no longer rooted in the living connection we must have with nature and with cultural life, if nature and spiritual life are to give us satisfaction in body and in soul.

It is easy to jump to the conclusion that for this reason capitalism must be abandoned. The question is whether in so doing we would not also be abandoning the very foundations of modern civilization. Anyone who thinks the capitalist orientation a mere intruder into modern economic life will demand its removal. However, he who sees that division of labor and social function are the essence of modern life, will only consider how best to exclude from social life the disadvantages that arise as a byproduct of this capitalist tendency. He will clearly perceive that the capitalist method of production is a consequence of modern life, and that its disadvantages can make themselves felt only as long as increase of capital is made the sole criterion of economic value.

The ideal is to work towards a social structure in which the criterion of capital increase will no longer be the only power to which production is subjected. In an appropriate social structure, increase of capital should rather serve as an indicator that the economic life, by taking into account all the requirements of our bodily and spiritual nature, is correctly formed and organized.

Anyone who allows his thought to be determined by the one-sided point of view of capital increase or of a rise in wages will fail to gain clear and direct insight into the effects of the various specific branches of production in the economy. 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 people to what they produce is thereby undermined. For the mere quantity of a capital sum, it is of no account whether it is used to acquire one kind of commodity or another. Nor does it matter if one considers only the amount of a wage whether it is earned through one kind of work or another.

Now it is precisely insofar as they can be bought and sold for sums of capital in which their specific nature cannot find expression, that economic values become “commodities.” Their commodity-nature is suited, however, only to those goods or values meant for immediate human consumption; for the valuation of these, we have an immediate standard in our physical and spiritual needs. There is no such standard in the case of land or artificially created means of production. The valuation of these things depends on many factors that become apparent only when one takes into account the entire social structure of human life.

If cultural interests demand that a certain district be put to economic uses that, from the viewpoint of capital, seem to yield a lower return than other industries, the lower return will not in the long run harm the community. In time the lower return of the one branch of production will affect other branches such that the prices of their products will also be lowered. Only a viewpoint that deals with momentary gain of the most narrow and egotistical kind can fail to see this connection. Where there is simply a market relationship — where supply and demand are the determining factors—only the egotistic type of value can be considered. The “market” relationship must be superseded by associations that regulate the exchange and production of goods through an intelligent consideration 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. Excluding on principle one person's making himself a judge of another's legitimate needs, these negotiations will be based solely on the possibilities afforded by natural resources and by human abilities.

Life on this basis is impossible so long as the economic cycle is governed by the consideration of capital and wages alone. As a result of this orientation, 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. Even human labor power and the use of our spiritual and intellectual faculties are made dependent on the abstract standard of capital and wages — a standard that eliminates, both in human judgment and in our practical activity, our natural, sensible relationship to our work.

In modern life, there is no possibility of preserving the relationship to economic values that was still possible under the old system of barter, nor even the relationship still possible under a simpler monetary system. The division of labor and of social function that has become necessary in modern times separates the laborer from the recipient of the product of his work. There is no changing this fact without undermining the conditions of modern civilization; nor is there any way of escaping its consequence — the weakening of one's immediate interest in one's work. The loss of this interest must be accepted as a result of modern life. Yet we must not allow this interest to disappear without finding other kinds to take its place, for human beings cannot live and work indifferently in the community.

It is from the cultural and the political spheres, as they are made independent, that the necessary new interests will arise. From these two independent spheres will come impulses involving viewpoints other than those of mere increase of capital or wages. A free spiritual-cultural life creates interests that dwell in the depths of the human being, and imbue one's work and all one's action with a living aim and meaning for social life. Developing and nurturing human faculties for the sake of their own inherent value, such a cultural life will call forth a consciousness that our talents and our place in life have real meaning. Molded by individuals whose faculties have been developed in this spirit, society will continually adapt itself to the free expression of human abilities. The legal life and economic life will take on a form in keeping with the human abilities that have been allowed to develop.

The deep inner interests of individuals cannot unfold fully and freely within a cultural life that is regulated by politics, or that develops and uses human faculties merely according to their economic utility. This sort of cultural life may provide people with artistic and scientific movements as “idealistic” adjuncts to life, or it may offer them comfort and consolation in religion or philosophy. Yet all these things only lead out of the sphere of social realities into regions more or less remote from everyday affairs. Only a free cultural life can permeate the everyday affairs of the community, for it is only a free cultural life that can set its own stamp on them as they take shape.

In my book, Toward Social Renewal, I tried to show how a free cultural life will, among other things, provide the motives and impulses for a healthy social administration of capital. The fruitful administration of a certain amount of capital is possible only through a person or a group that has the abilities to perform the particular work or social service for which the capital is used. Therefore, it is necessary for such a person or group to administer the capital only as long as they are able to carry on the work of management themselves by virtue of their own abilities. As soon as this ceases to be true, the capital must be transferred to others who have the requisite abilities. Since under a free cultural life faculties are developed purely out of the impulses of the cultural life itself, the administration of capital in the economic sphere will be a result of the unfolding of spiritual powers; the latter will carry into the economic life all those interests that are born within its own sphere.

An independent legal life will create mutual relationships between people living in a community. Through these relationships, they will have an incentive to work for one another, even when the individual is unable to have an immediate, 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 legal life he helps build. Thus the part one plays in the independent legal life can become the basis for a special impulse to live and work apart from economic and cultural interests. One can look away from one's work and the product of one's work to the human community, where one stands in relation to his fellows purely and simply as an adult human being, without regard to one's particular mental abilities, and without this relation being affected by one's particular station in economic life. When one considers how it serves the community with which one has this direct and intimate human relationship, the product of one's work will appear valuable, and this value will extend to the work itself.

Nothing but an independent legal and political life can bring about this intimate human relationship because it is only in this sphere that each human being can meet every other 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 bridges all differences.

Once the cultural life has been made self-subsistent, mere increase of capital will no longer be an immediate and driving motive. Increase of capital will result only as a natural consequence of other motives; these other motives will proceed from the proper connection of human faculties with the several spheres of economic activity.

It is only from such viewpoints — viewpoints that lie outside the purely capitalist orientation — that society can be constructed in a way that will bring about a satisfactory balance between human work and its return. And so it is with other matters where modern life has alienated us from the natural basis of life.

Through the independence of the cultural and legal-political spheres, the means of production, land and human labor power will be divested of their present commodity character. (The reader will find a more exact description of the way this will come about in my book, Toward Social Renewal.) The motives and impulses that shall determine the transference of land and of the means of production when these are no longer treated as marketable commodities shall be rooted in the independent spheres of rights and cultural life, as shall the motives that will inspire human labor.

In this way, forms of social cooperation suited to the conditions of modern life will be created. It is only from these forms that the greatest possible satisfaction of human needs can come. In a community organized purely on a basis of capital and wages, the individual can apply his powers and talents only insofar as they find an equivalent in monetary gain. Consider, moreover, the confidence with which one individual will place his forces at the disposal of another in order to enable the latter to accomplish certain work. In a capitalist community, this confidence must be based on a purely capitalist point of view.

Work done in confidence of the achievements of others is the social basis of credit. In older civilizations there was a transition from barter to the monetary system; similarly, as a result of the complications of modern life, a transformation has recently occurred from the simpler monetary system to working on a credit basis. 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. Under capitalism, however, the credit system involves a complete loss of any real and satisfying human relationship to the conditions of one's life and work. Credit is given when there is a prospect of an increase of capital that seems to justify it; one's work is constantly overshadowed by the need to justify it in capitalist terms. These are the motives underlying the giving and taking of credit. And what is the result of all this? Human beings are subjected to the power of a financial sphere remote from life. The moment people become fully conscious of this fact, they feel it to be unworthy of their human dignity.

Take the case of credit on land. In a healthy social life, an individual or a group possessing the necessary abilities may be given credit on land, enabling them to develop it by establishing some kind of production. It must be a development that seems justified on that land in light of all the cultural conditions involved. If credit is given on land from the purely capitalist viewpoint, in the effort to give it a commodity value corresponding to the credit provided, use of the land which would otherwise be the most desirable is possibly prevented.

A healthy system of giving credit presupposes a social structure that enables economic values to be estimated by their relation to the satisfaction of people's bodily and spiritual needs. Independent cultural and legal-political spheres will lead to a vital recognition of this relation and make it a guiding force. People's economic dealings will be shaped by it. Production will be considered from the viewpoint of human needs; it will no longer be governed by processes that obscure concrete needs through an abstract scale of capital and wages.

The economic life in a threefold social order is built up by the cooperation 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 perspectives that enter economic life from the cultural and legal spheres will play a decisive part. These associations will not be bound to a purely capitalist point of view. One association will deal directly with another; thus the one-sided interests of one branch of production will be regulated and balanced by those of the other.

Responsibility for the giving and taking of credit will thus be left to the associations. This will not impair the scope and activity of individuals with special faculties; on the contrary, only this method will give individual faculties full scope. The individual is responsible to his or her association for achieving the best possible results. The association is responsible to other associations for making good use of these individual abilities. 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 profit will no longer impose production on the life of the community; production will be regulated by the community's needs, which will make themselves felt in a real and objective way. The need one association establishes will be the occasion for the granting of credit by another.

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 conditions to the threefold system?” It is important to see that what has been proposed here can be put into practice without delay. One need only begin by forming such associations. Surely no one who has a healthy sense of reality can deny this is immediately possible. Associations based on the idea of the threefold social order can be formed just as readily as companies and consortia were formed along 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 replaced artificially 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 idea is not a program or system for society as a whole, requiring the old system to cease suddenly and everything to be “set up” anew. The threefold idea can make a start with individual undertakings in society. The transformation of the whole will then follow through the ever-widening life of these individual institutions. Because it is able to work this way, the threefold idea is not utopian. It is a force adequate to the realities of modern life.

The essential thing is that the idea of a threefold order shall stimulate a real social intelligence in the people of the community. The economic viewpoint shall be properly fructified by the impulses that come from the independent cultural and political spheres. The individual shall contribute in a very definite sense to the achievements of the community as a whole. Through the role the individual plays in the independent cultural life, through the interests that arise in the political and legal sphere, and through the mutual relations of the economic associations, his or her contribution shall be realized.

Under the influence of the threefold idea, the operation of social life will in a certain sense be reversed. Presently, one must look to the increase of one's capital or wages as a sign that one is playing a satisfactory part in the life of the community. In the threefold social order, the greatest possible efficiency of common work will result because individual faculties work in harmony with the human relationships founded in the legal sphere, and with the production, circulation and consumption regulated by the economic associations. Increase of capital, and a proper adjustment of work and the return upon work, shall appear as a final consequence of these social institutions and their activities.

The threefold idea would guide our transforming and constructive power from mere attempts at reform of social effects into the sphere of social causes. Whether one rejects this idea or makes it one's own will depend on summoning the will and energy to work one's way through to the realm of causes. If one does this, one will cease considering only external institutions; instead, one's attention will be guided to the human beings who make the institutions. Modern life has brought about a division of labor in many spheres, for outer methods and institutions demand it. The effects of division of labor must be balanced by vital mutual relations among people in the community. Division of labor separates people; the forces that come to them from the three spheres of social life, once these are made independent, will draw them together again. This division of society has reached its zenith. This is a fact of experience, and it gives our modern social life its stamp. Once we recognize it, we realize the imperative demand of the age: to find and follow the path that leads to reunion.

This inevitable demand of the times is vividly illustrated by such concrete facts of economic life as the continued intensification of the credit system. The stronger the tendency toward a capitalist point of view, the more highly organized the financial system and the more intense the spirit of enterprise becomes the more the credit system develops.

However, to a healthy way of thinking the growth of the credit system must drive home the urgent need to permeate it with a vital sense of the economic realities — the production of commodities and the people's needs for particular commodities. In the long run, credit cannot work in a healthy way unless the giver of credit feels himself responsible for all that is brought about thereby. The recipient of credit, through his connection with the whole economic sphere (that is, through the associations), must give grounds to justify his taking this responsibility. For a healthy national economy, it is important not merely 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, no one will want to deny that a larger sense of responsibility is necessary in the present-day world of business and economic affairs. To this end, associations must be created that will work to confront individuals with the wider social effects of all their actions.

Persons whose task it is to be farmers and who have experience in agriculture, very rightly declare that those administering land must not regard it as an ordinary commodity, and that land credit must be considered differently from commodity credit. Yet it is impossible for such insight to come into practical effect in the modern economy 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 easily understand that some reply 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 can give or receive credit unless there is a demand somewhere or other to justify it.” Someone might even say, “After all, these social institutions and methods you have in mind amount to nothing more than a conscious arrangement of the very things that ‘supply and demand’ will surely regulate automatically.” It will be clear to one who looks more closely that this is not the point. The social thoughts that originate in the threefold idea do not aim at replacing the free business dealings governed by supply and demand with a command economy. Their aim is to realize the true relative values of commodities, with the underlying idea that the product of an individual's labor should be of a value equal to all the other commodities consumed in the time spent producing it.

Under the capitalist system, demand may determine whether someone will undertake the production of a certain commodity. Yet demand alone can never determine whether it will be possible to produce it at a price corresponding to its value in the sense defined above. This can be determined only 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 lacks vision; he does not see that, under the exclusive rule of supply and demand, needs whose satisfaction would upgrade the life of the community are being starved. He has no feeling for the necessity of trying to include the satisfaction of such needs among the practical incentives of an organized community. The essential aim of the threefold social order is to create a just balance between human needs and the value of the products of human work.

Notes:

1 E.g. the English finance theorist Hartley Withers in his treatise on Money and Credit.