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Rudolf Steiner e.Lib
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World Economy
Rudolf Steiner e.Lib Document
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World Economy
Schmidt Number: S-4923
On-line since: 13th November, 2000
Dornach, 31st July, 1922.
Today we shall have to correct certain current misconceptions which
merely hinder anyone who wishes to think objectively, in accordance
with realities, on matters of Political Economy, or to enter with such
thinking into the actual course of economic life. For an economic
science which cannot fertilise our practical life is of no real value.
The concepts derived from this merely contemplative economic science
must always prove rather inadequate.
We have already seen that the most important question in Economics is
that of Price. The point will now be to observe prices in the sense
which I have indicated. The rise or fall, or stability of prices
the fact that the prices of certain products are too high or
too low (for one can have a feeling of these things)
indicates whether or not the economic organism is in good order. It
must fall to the Associations to discover, from the barometer of
prices, what is to be done in the economic life as a whole.
Now you are familiar with the point of view, still widely prevalent,
according to which nothing can be done in practice with the price
problem except to allow the so-called law of supply and demand to take
its course. It is true that under the pressure, not so much of
economic facts as of the increasingly urgent demands of the social
movement, this theory has been shaken the theory (maintained by
many others besides Adam Smith) that prices regulate themselves of
their own accord through the working of supply and demand. The theory
simply says: If the supply is too great, this will of itself lead to
its reduction the supply will not be maintained at that level.
In this way a regulation of prices will automatically ensue.
Similarly, if the demand is too great (or too small) it will
inevitably follow that the producers will regulate matters so as not
to produce too little (or too much). Under the influence of supply and
demand it is thus imagined that prices on the market will,
automatically, as it were, approach a certain stable level.
It is important to know whether with such an idea as this we are
merely moving in a theoretical world in a notional system
or whether we are truly entering into realities. And we are
certainly not entering into realities. For as soon as you
really tackle these concepts of supply and
demand you will see that it is quite impossible,
economically speaking, even to establish them. As contemplative
students of Economics you can do so, no doubt you can send
people into the market to observe how supply and demand are working.
But the question is: With such observations, are you entering deeply
enough into the working of the economic processes? Can you make any
use of these concepts? In reality you cannot, because you are leaving
out in every case what lies behind the processes which you are
trying to grasp. You look at the market; you see the working of
supply and what is called demand. But that
does not include what lies behind the phenomenon of
supply; nor will it comprise all that precedes
the appearance of demand. Yet it is there that you will
find the real economic processes, processes which are only summarised,
so to speak, in the market itself. The best evidence of this is the
extraordinary fragility of these concepts.
If we wish to form proper, useful concepts, our concepts can and must
be mobile in relation to life. We must be able, as it were, to carry
such a concept about from one domain of reality to another, and as we
do so the concept itself must change. It must not simply go up in
smoke. But that is just what happens with the concepts of
supply and demand. Take
supply: It is supply when a man brings
commodities on to the market and offers them for a price. That is
supply, you say; but I say: No, it is
demand. For if a man brings commodities on to the market
and wants to sell them, in his case it is unquestionably a demand for
money. In effect, if we do not enter further into the economic
process, it makes no difference at all whether I have a supply of
commodities and a demand for money, or whether I come forward with a
demand in the cruder sense. If I wish to develop a
demand, I must have a supply of money.
Supply of commodities is demand for money and supply of money is
demand for commodities. And these are economic realities, for the
economic process (in so far as it consists in trade or barter) cannot
take place at all, unless there are both supply and demand in
the case of both buyer and seller. For what the buyer has for
supply namely, money must also first have been evolved
in the economic process somewhere behind his back, or behind the back
of the demand, just as the commodity which appears as a supply must
also first have been evolved or produced.
Our concepts are quite unreal if we imagine that price arises from the
inter-action of what is ordinarily called supply and
demand. In actual fact, price does not evolve at all as it is
defined by this line of thought. For the development of price is
undoubtedly influenced by the question, whether the demander can
become a supplier of money, or whether perhaps, at a given time in the
whole working of the economic process, he cannot become a supplier of
money with respect to a given product. The point is, not only that
there must be a certain number of commodities available as supply, but
also that there must be a certain number of people able to develop a
supply of money for these particular commodities. This will show you
at once that we cannot simply speak of an inter-action of supply and
demand.
On the other hand, if we look now not to the concepts (which may
always be wrongly formed) but to the real facts the facts of
the market or even of the pure, marketless exchange of
commodities and money it is unquestionable that prices evolve
as between supply and demand. Only the supply and demand are always
there on both sides. This is undoubtedly the case, as a pure matter of
fact.
The important thing is this: Supply, Demand and Price are three
factors, every one of which is primary. We cannot merely write:
Price is a function of supply and demand, or to
speak mathematically treat S and D as variables and P, the
price, as a third magnitude resulting from the two, i.e., P = (S,
D). No; we must regard all of them, S and D (supply and demand)
and P (price), as mutually independent variables and by that means
arrive at another magnitude, X. You see, we are coming to a formula.
We must not merely suppose that S and D are the independent variables
and that the price is a function of the two. No; we have three
mutually independent variables which come into mutual interplay and
give rise to something new: X = (S, D, P). The price
is there between the supply and demand, but it is there in a
peculiar way.
The fact is, we must approach this whole line of thought from another
angle. If we do see supply and demand, at any given point on
the market, in the relationship in which Adam Smith saw them if
it really is so in any particular domain then it is
approximately so for the circulation of commodities as seen from the
standpoint of the Trader. Even here, it is not entirely the case. And
it is absolutely not the case from the standpoint of the
Consumer, nor from that of the Producer. For the consumer something
quite different is true. The standpoint of the consumer is conditioned
by what he has. Between what the consumer has and what
he gives, a relationship arises, similar to that which arises
for the trader as between supply and demand. The consumer has to
consider the mutual inter-action between price and
demand. He demands less when for his pocket the price is too high;
he demands more when for his pocket the price is sufficiently low.
Altogether, as a consumer he confines his gaze to price and demand.
We may say, therefore, that in the consumer's case we must observe
rather the inter-action of price and demand; in the trader's case we
must observe rather the inter-action of supply and demand. Lastly, in
the producer's case we shall have to observe the inter-action between
supply and price. For he will in the first place arrange his supply of
commodities according to the prices that are possible in the whole
economic process. Thus we may call our first equation P = (S,
D) the Trader's Equation. Adam Smith applied it to the economic
system as a whole. Thus applied, it is incorrect. For we can also form
the following equation: We can regard supply, S, as a function of
price and demand. And thirdly, we can indicate demand as a function of
supply and price. In this last equation we shall have D = (S, P)
that is to say, demand is a function of supply and price. This
is the Producer's Equation. And in the equation, where supply is a
function of price and demand S = (P, D) we have the
Consumer's Equation. But as I beg you to observe, we shall still have
made these equations qualitatively different, inasmuch as here
(in the consumer's case) the supply is a supply of money, in the
producer's case it is a supply of commodities.* In
the case of the trader we have to do with something that lies
midway between money and commodity.
P = (S, D) ......... Trader's Equation.
S = (P, D) ......... Consumer's Equation.
D = (S, P) ......... Producer's Equation.
At any rate, you see how far more complicated our thoughts on the
economic life must be. It is just because we try to get at the ideas
so easily and quickly, that we have no proper science of Economics
today. If we wish to enter into the realities, we must ask ourselves:
What is there in this economic life? What really lives in it?
We may say: What I get for my own needs comes in the first place into
my realm. (I will speak of property and
ownership at a later stage; at present I will express
myself as indefinitely as possible even so, it will suffice to
cover the facts). It passes under the conditions that obtain
today into my realm. I give money or something that I have
produced instead of money. That is how things happen as a rule. But
think: In saying this, have we really exhausted the full reality of
economic life? After all, I may acquire things otherwise than by
giving a commodity for money or money for a commodity. I may acquire
money and commodities in a different way. Suppose I steal them.
Then, too, I shall have acquired something. And if I should carry on
the stealing on a large enough scale, as the old robber chieftains
sometimes did for decades at a time why, to apply to such
conditions, a very different science of Economics would have to be
evolved from that which has, generally speaking, to be evolved for our
own code of ethics! Well, it may seem to you a grotesque example when
I say: Suppose I steal the things! But what is stealing
in reality? To steal is to take something away from someone else
without his being in a position to defend himself; or again, without
the stealer finding it convenient to exchange the thing for an
adequate return. Compare, for example, this now disreputable concept
of stealing with the concept which we (in the German
language) signify with a foreign word, when we speak of
requisitioning or commandeering. Under
certain circumstances one commandeers things that is to say,
one takes something away from people and gives them nothing in return.
In other cases, too, it happens in the economic process that something
is taken away from people and they receive nothing in return. These
are things which we need only mention, for if we dwelt on them any
longer, people would imagine that we were anxious to agitate; and I
only wish to develop a science here, I do not wish to
agitate. Now assume for a moment that somewhere or other
within a comparatively small region I establish a social
order wherein money is abolished. Instead, I organise a system of
raids with the necessary armed forces. Those who possess anything are
knocked down or killed and the things taken away from them. Well, what
is there against that happening? There is this: that the others may
perhaps defend themselves. In that case they must have the means to do
so. Or again, it might not be worth while. If my territory were not
large enough, it would not be worth while.
All this shows that something else has to play over into the economic
process at this point. I cannot without more ado take something away
from someone else. Why not? Because first, it must somehow be
recognised by my fellow-men that I shall be allowed to keep it. And it
will by no means be recognised that I am allowed to keep what I have
acquired by killing my fellow-men in the surrounding country. What is
it then that plays into the economic life at this point? It is the
life of Rights; it is Law and Order. You cannot really consider the
economic process without observing how law plays into it at every
point. You cannot think out the economic life, nor can you bring to
pass whatever it may be that you intend, without considering this
interplay of legal Rights and Economics. Why, the moment you pass from
mere barter to trade assisted by money, you see directly how the
principle of Law plays into Economics. For how otherwise, ladies and
gentlemen, could it be possible, in return for a pair of boots, to get
not a top hat, say, but a pound or whatever it may be, I have saved
myself the trouble of giving the tradesman a top hat; I have given him
a pound instead. I have my boots; he has the pound. How otherwise
should this be possible? If the pound (even if it were a golden
sovereign) were recognised by no one as a real value a value
for which something could be received again in return if it
were not rightly installed in the whole economic process, the cobbler
might have collected ever so many pounds; it would be of no use to
him. Thus the moment Money makes its appearance in economic
intercourse we see quite palpably the appearance of the element of
law. It is extremely important to bear this in mind. We can only look
at the social organism as a whole, if we pass from purely economic
events to events which take place under the influence of the life of
rights.
Let us now assume that I have got my pair of boots from the cobbler
and have given him the pound. Now it might happen that the cobbler,
just after having sold me the pair of boots, suddenly remembered that
cobblers have at times in the world's history been something else
besides cobblers (witness Hans Sachs and Jacob Boehme) and having got
the pound he might think of doing something quite different with it
instead of making another pair of boots. He might do anything with it,
into which he put his ingenuity, his genius. So that the pound would
suddenly have quite a different value for him than the value of a pair
of boots. Thus, the moment we have transformed the commodity into
money, that is to say into a lawful right, the right can either be
kept (I use the pound to buy me something of equal value with the pair
of boots) or through my ingenuity I can do something with the money to
produce an altogether new value in the economic process. It is here
that the human faculties come in. The individual faculties,
which grow quite freely among men, enter in and incorporate themselves
in the rights which men acquire with money, just as money, which may
be regarded in this sense as rights realised,
incorporates itself outwardly in the commodity. Thus we have now
placed into the organic process which we described provisionally when
we spoke of Nature, Elaborated Nature, and Labour divided and
organised by the Spirit we have now placed into this whole
process the principle of Law or Rights and the Individual Faculties of
men. We have found, within the economic process itself, a division
which is in truth a threefold order a Dreigliederung
(threefold memberment, threefold articulation). Only it is necessary
that we think of this Dreigliederung in the right way.
If we observe the economic process, we perceive that just because the
things I have now been describing are real facts, just because of
this, certain impossibilities are actually realised in the
economic life. For, you see, one can also acquire a right by conquest
or the like; by having the power to take it. One does not always
acquire a right by mere exchange; one can also acquire it by having
the opportunity or the power to take it for oneself. Here we have an
element in right, which, in so far as it is present, is quite
incapable of comparison with commodities. There is no point of contact
between commodities and rights. Nevertheless, in the actual economic
process, commodities (or the money-values representing them) are
perpetually being exchanged for rights. Precisely when we pay for
land, even when we merely help with our rent to pay for the value of
the land, we are paying for a Right with a Commodity or with the money
which we have received for a Commodity. At any rate, we pay for a
Rights-value with a Commodity-value. Again, when we appoint a school
teacher and give him a certain salary, we are (sometimes, at any rate)
paying for spiritual faculties with the value of a commodity or a
corresponding money-value. Thus there perpetually occur in the
economic process exchanges between Rights and Commodities, between
Faculties and Commodities and also between Faculties and Rights.
Mutually incommensurable things are exchanged for each other in the
economic process. Consider what happens when someone gets paid for an
invention, which he has patented. To begin with he accepts payment for
a purely spiritual value that is being paid for in commodity-values.
There is absolutely nothing that could figure as a standard of
comparison in such a case. Here we are touching on an element where
Life enters into the economic process with a vengeance! And the thing
becomes still more complicated when we introduce the concept of
Labour.
I have already said that the wage-labourer does not in reality receive
what is generally understood by the idea of wages, but
that he really sells the product of his Labour for shillings and pence
to the enterpriser and thus receives payment. It is only through his
expert knowledge of the market that the enterpriser gives the proper
value or at any rate a higher value to that which he
buys from the labourer. Economically considered, the profit is not
extracted from the Labour as a surplus value. By economic thinking we
cannot possibly arrive at such a judgment. We can at most arrive at it
by a moral judgment. The profit is due to the fact that the labourer
is in a less favourable social situation. The products which he sells
have less value at the point where he sells them than at the point
where the enterpriser sells them. For the enterpriser is in a
different position he knows the circumstances far better, he
can sell at a greater advantage. The worker's relation to the
enterpriser resembles the case of a man who goes on to the market and
buys a commodity for a given price. He must buy it there, for
the simple reason that his circumstances will not allow him, let us
say, to buy it anywhere else. Another person may perhaps be able to
buy it more cheaply at another place. The two cases are exactly the
same. Economically speaking, that which obtains as between the
enterpriser and the wage-labourer is simply a kind of market.
But it undoubtedly does make a certain difference, ladies and
gentlemen, whether I am fully conscious that this is the case or
whether I imagine that I am paying the labourer for his Labour. You
may think the difference merely theoretical, but let such a view of
things or two such views, the one and the other become
real. Let them be realised, and you will see how the economic
relationships change under the influence of one view or the other. For
what happens between human beings is, among other things, the result
of their mental outlook, of the ideas they entertain. As our mental
outlook changes, it changes the course of events. Today the whole
proletariat bases its agitation on the idea that Labour must be
properly paid for, But in fact Labour is nowhere paid for; only the
products of Labour are paid for; and this if it were truly
understood would also come to expression in the actuality of
price. We cannot say that it makes no difference whether we call
something a wage or the price of a commodity. For the moment we speak
of wages, we imagine that we are paying for Labour, and then we go on
to all the secondary concepts which confuse Labour as such with other
economic processes which are value-creating. Then the social conflicts
arise in a false way. The social contracts arise in a true way, in so
far as they arise out of sentiments and feelings. Sentiments and
feelings are always in some way right; but we can never correct what
ought to be corrected if we have not the right concepts. This, ladies
and gentlemen, is the fatal thing in social life. Often the grievances
arise in a way which is right, but the corrections are made under the
influence of false concepts. In every detail people evolve these false
ideas and carry them over into their whole conception of the economic
process, so as to work havoc.
Take a very simple example. A gentleman (this is a true story) once
said to me, I am very fond of sending picture postcards to my
friends. I send lots of them. I said, I am not at all
fond of sending picture postcards and that, I said,
for economic reasons. At that time I had not quite as
much to do as I have now. Why? he asked. I said,
Every time I send a picture postcard, I cannot help thinking:
Perhaps a postman will have to run right up to the fourth floor with
it. In short, I cause a change, a redistribution, in the economic
process. It is not the Labour of the postman that matters, but in the
postman you cannot easily distinguish the service, the thing done,
from the Labour. It is the service that we must estimate. If I keep
sending picture postcards to my friends, I increase in an uneconomic
way the services to be rendered by postmen. That is an
economic fallacy, said the other man; for on the
assumption that one postman need only do a limited amount, an increase
in the number of picture postcards will mean that new postmen will
have to be employed and these postmen will get paid. So you
see, he said, I am really a benefactor to the people who
get these jobs. I could only answer: Yes, and do you
also produce all that they eat? You do not increase the available
means of consumption in the very least. You merely bring about a
redistribution. To employ more postmen is not to increase the
available means of consumption.
Yet this very idea, ladies and gentlemen, often brings about the very
crudest errors in individual cases. For suppose that there is a
Borough Council consisting of people like my friend as may well
happen; indeed, such men may even become Cabinet Ministers and then it
will be a Cabinet. Then they will say: There are so and so many
unemployed. Let us put up new buildings or the like, then the people
will be provided for. Yes, for the next five steps ahead you
have rid yourselves of the problem, but you have still produced
nothing new. The workers as a whole have no more to eat than they had
before. If I let one side of the scale sink, the other side must rise.
Thus if you give such instructions, not as part of a whole coherent
economic process but as a mere isolated measure, an economic calamity
must necessarily have arisen on the other side. If we knew how to
observe these things, we should be able to reckon it up: By making
social reforms in this way, merely giving means of subsistence to the
destitute or unemployed, by having new buildings erected, we shall
have increased the price of this or that article for a number of other
people. In the economic sphere, above all, we must not think
short-sightedly. We must think all things in connection. We must think
things in connection with one another, as a whole.
But, you see, that is not at all easy to do, for the simple reason
that the economic process is very different from a scientific system.
A scientific system in its totality can be contained in a single human
being perhaps only in outline, but still, it can be contained
within a single human being. But the economic process can never take
place in its totality within a single human being. The economic
process can only find its reflection where judgments, proceeding from
men who stand in the most varied spheres, are working together.
The only possibility of arriving at a real judgment on these things
not a theoretical but a real judgment is by way
of association. In other words, take the three equations once again: A
man who is familiar only with the ways and customs of a tradesman will
always have the first equation in his head. He himself will trade
under the influence of this equation; he will thus be in a position to
know the influence which this equation exerts. Likewise the consumer
who intelligently follows and observes the process of consumption will
understand the influence of the second equation; and the producer will
know all that is subject to the influence of the third. At this point
you may say: But surely, men are not so unintelligent as not to be
able to think beyond their own narrow horizon. Surely a man who is
merely a consumer or merely a tradesman can think beyond his own
horizon? Yes, that is perfectly right, where one general world outlook
is concerned. But in practical economic life there is no other
effective way of knowing what is going on in trade, for example,
except to be engaged in trade oneself. You must be in the midst of it,
you must be trading. There is no other way. There are no theories
about it. Theories may be interesting, but theories are Natural
Science. The point is not that you should know how trade goes on in
general, but that you should know how the products circulate in the
process of trade in Basel and its immediate neighbourhood. And if you
know that, you do not thereby know how they circulate in the Lugano
district. The point is not that we should know about things in
general, but that we should know something in a particular region.
Likewise if you can form an effective judgment as to the higher or
lower prices at which scythes or other agricultural implements can be
manufactured, you do not thereby know the prices at which screws can
be manufactured or the like.
The judgments that have to be formed in the economic life must be
formed out of immediate, concrete situations. And that is only
possible in this way: For definite domains or regions (whose
magnitude, as we have seen, will be determined by the economic process
itself) Associations must be formed, in which all three types of
representatives will be present alike. From the most varied branches
of the economic life, there must be the representatives of the three
things that occur in it Production, Consumption and
Circulation.
It is really tragic that no understanding should be found in our time
for what is after all so simple and so sensible. For, the moment there
is a real understanding, the thing can be done, not even by the day
after tomorrow, but by tomorrow. It is not a question of radical
changes, but of seeking for the proper associative union and
co-operation in each case. You need only summon the will and the
intelligence to do it. This is the thing that touches one so
painfully, for at this point, after all, economic thinking does to
some extent coincide with moral and religious thinking. To me, for
instance, it is quite unintelligible how this way of tackling the
economic problem could have been entirely neglected by those who are
officially in charge of the religious needs of the world. For there
can be no doubt about it, during recent times it has clearly emerged
that the economic facts are no longer being mastered. The facts have
gone beyond the mastery of human beings. Today we stand before this
question: How can the thing be mastered, how shall we grapple with it?
It must be mastered by human beings, by human beings in
association.
I do not wish to make a pun at the end of a very solemn line of
thought, but I would say: Our science of Economics has not kept pace,
in its conceptions, with the transition which has actually taken place
from the economics of barter to the economics of money and the
economics of human faculties. In its essential concepts, our Economic
Science still fumbles about within the economics of barter. It
continues to regard money as though it were just a symbol for barter.
I know that this will not be readily admitted. But it is implicit,
none the less, in the prevailing theories. And so we have this
situation: In the older economic systems (though these may no longer
appeal to us today) people bartered or exchanged (German tauschen =
to barter). Then money came in. (As I said, I do not wish to make
a pun, but the genius of language itself is working here.)
Tauschen (barter) became
täuschen (illusion or deceit) and everything became
unclear. Today we deceive ourselves in almost all our economic
processes. The tauschen has become a
täuschen the exchange (or barter) an illusion.
I do not mean that there is deliberate deceit, but that the whole
process becomes confused and deceptive. We must first get to the root
of things once more and see how our economic processes inwardly take
place.
Last Modified: 02-Nov-2024
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