World Economy

LECTURE X

Dornach, 2^nd August, 1922.

LADIES AND GENTLEMEN,

We must now consider something which I indicated yesterday when speaking to a few among you. I mean the relation between Labour and that which happens when Nature is transformed and elaborated into an object of economic value. In the further course, as we saw, organised Labour — divided Labour — is caught up, in a certain sense, by Capital; and Capital eventually emancipates itself and passes over completely into free spiritual activity, if we may so describe it. From all this you will observe that while there is no such thing as a direct economic value in Labour (this has already been explained), nevertheless, it is Labour which sets economic value in motion. The Nature-product, as such, comes into economic circulation by being worked upon; and the elaboration which gives it its value is the real reason why the object of economic value begins to move. It is so at least within a certain sphere. Subsequently it is the human Spirit working in Capital which keeps the movement going. To begin with, therefore, we have to do with movement. For as soon as we enter the sphere of Capital, we have to reckon with the movement that takes place through Trade Capital, Loaned Capital and eventually through Production Capital proper — Industrial Capital.

Speaking of this movement, we must be aware of one thing above all, namely this: There must be something to bring the values into economic circulation. To get the right idea in this respect, we must today concern ourselves with a somewhat ticklish question of Economics. This question cannot be seen clearly unless we try again and again to discover from direct economic experience what can be said about it and in a certain way to verify things.

I refer in the first place to that which we may call economic profit. The question of profit is extremely difficult. Let us imagine, for instance, that a purchase is taking place: A buys from B. In ordinary lay thinking, we generally apply the concept of profit to the seller only. The man who sells is supposed to make a profit. It is, of course, really an exchange between what the buyer gives and what the seller gives; but if you think the matter through exactly, you can by no means admit that the seller alone makes a profit in the case of purchase and also of barter. For if the seller alone were to profit, then in the total economic life the buyer would always be placed at a disadvantage, whenever a simple exchange takes place. The buyer would always be at a disadvantage; and you will readily admit that this cannot be so; otherwise every transaction of purchase would be an exploitation of the buyer and that is obviously not the case. We are well aware that the man who buys wants to buy advantageously, not at a disadvantage; there can be no doubt about that. Thus, the buyer too can buy in such a way as to make a profit. We have therefore this peculiar phenomenon: Two people make an exchange, and — at any rate in the normal process of purchase and sale — each one of them must make a profit. For practical Economics it is far more important to consider this than is generally realised.

Let us therefore suppose that I sell something and receive money for it. I must gain by giving my commodity away and getting money for it. I must desire the money more than I do the commodity. The buyer on the other hand must desire the commodity more than he desires the money. This, then, is what takes place in the reciprocity of exchange. Both objects passing in exchange — the one in one direction and the other in the other — increase in value. By the bare process of exchange, the things exchanged on both sides become of greater value. How can this be?

Only in this way: When I sell something and receive money for it, I am enabled to do more with the money than he who gives it can do. Conversely, the other man, who receives the commodity, must be able to do more with it than I can. This therefore is the position: The two of us, the buyer and the seller, must stand in different economic situations. The increase of value can only come about through that which lies behind the actual process of purchase and sale. Thus, when I sell something, I must be so placed, economically speaking, that the money has a greater value in my hands than it has in his; while in his case, by virtue of his particular connection with the economic system as a whole, the commodity has a greater value in his hands than it has in mine.

In Economics, you will perceive, we cannot merely consider the actual fact of buying or selling in the abstract. The essential question is: What are the respective economic relationships in which the buyer and the seller stand? If we look at things precisely, we are led, as so often, from what takes place immediately before our eyes at any given place to the whole interconnected economic system. This can also be seen by taking another illustration.

We can observe the real facts if we take our start from barter. Fundamentally speaking, the line of thought I have just opened out can tell you, what is quite true, that barter is not entirely transcended even by the introduction of money into an economic community. In effect, we still barter commodities for money. Precisely inasmuch as both parties make a profit in the transaction, we shall see that the important point is not the mere fact that the one possesses a commodity while the other possesses money. The real point is this: What can each party make of that which he receives? What can he do with it by virtue of his particular economic situation?

To understand it more exactly, let us turn back to the most primitive form of barter. That will throw light on what obtains in circumstances economically more complicated. Suppose that I buy peas. I can do many different things with these peas. I can eat them. And so, assuming that barter is the order of the day and that I have exchanged some other thing which I have manufactured — that is, some commodity — for peas, I get the peas by means of barter and I can, if I like, eat them. But suppose I have acquired a very, very large number of peas, so many that I cannot eat them all — not even if I have a large family — then I shall find someone who may be needing peas, and I shall exchange them with him for something which I in my turn require. I give him peas in return for something which I for my part can use. Substantially, the peas have remained the same; but economically they have not remained the same at all. Economically they have changed, through the very fact that I, instead of consuming them myself, have passed them into circulation, myself merely effecting a transfer of them in the economic process. Economically speaking, what have the peas become by this process? Given the necessary conditions including a statute enacting that everything shall be exchangeable for peas (a sufficient number of peas would have to be produced and it would have to be the law that everything can be exchanged for peas) — and then the peas would be money. In such a case, peas would have become money in the economic process. I mean it literally, in the true sense of the word “money.” A thing does not become money by being essentially different from other things existing in the economic process. It becomes money by undergoing — at a particular point of this process — a transformation from commodity to money. This has been the case with all money: all money has at one time or another been turned from a commodity into money.

Hence you will see once more that with the economic process we always come to the human being: we can do no other than place the living human being into the process. The human being is there in the economic process in any case as a consumer. As a consumer, he stands within it from the very outset. But if he plays an active part in some respect which does not lie within the sphere of consumption, he enters into quite another relationship with the economic life than that which he has as a pure consumer. Such things must be taken into account if we would work towards the formation of true economic judgments, the kind of judgments, in fact, which must above all be formed in what I have called the “Associations.” Within the Associations there must be people who by their practical experience can form their judgments on the basis of such points of view.

Now the point is: If we have any kind of elaborated Nature or divided Labour in the economic process, we must investigate what it is that brings these economic elements into movement, into circulation. Yesterday, in another circle, I said that we ought to bring into our economic thinking the work or Labour which is active in the economic process, in precisely the same way that the physicist, for example, brings the concept of “work” into his thinking about Physics. The physicist does this by developing a formula, wherein Mass and Velocity occur. Mass is a thing which we determine by the balance. It is with the help of the balance that we are enabled to determine it. Apart from such quantitatively determinable mass, there would be nothing to move forward in the process of “work” in the sense of Physics. The question arises: Is there anything similar in the economic process, so that here, too, Labour or work gives value to the objects, and then at a later stage the active entry of the Spirit gives them value? Is there anything in the economic process comparable, as it were, to the weight of an object in the process of “work” in the sense of Physics? If I describe diagrammatically the progression of the several economic processes, I

see at once that something must be there to bring the whole thing into movement — to push or press the economic element, so to speak, from here to here (see Diagram 6). Moreover, the thing would be still more pronounced if there were not only a pressure working from here to here, but in addition a suction from the other side, so that the whole thing were driven forward by a real force present in the economic process. The economic process would, in fact, have to contain something that drives it forward.

What is it then that drives it forward? I showed you a little while ago how certain forces constantly arise, in the case of both the buyer and the seller. With everyone who has something to do with any other human being in the economic process — not at all in the moral but in the purely economic sense — advantage or profit arises. There is no place within the economic process where we cannot speak of advantage or profit. Nor is this profit anything merely abstract; the immediate economic desire of the man attaches to it, and it must needs be so. Whether he is a buyer or a seller, his economic craving attaches to the profit, to the advantage of the transaction. It is really this attachment to profit which generates the economic process and is the force in it. It is the thing that corresponds to Mass in the process of “work” in the sense of Physics.

You will observe that we have thus revealed something very weighty in the economic process — literally weighty, I would say. Weight, you will admit, is a most prominent thing in purely material products — those products for which the stomach craves. It is the stomach which tells the purchaser that the fruit is more advantageous than the money, in the moment at which he makes the exchange. Here, then, we have in the human being himself the driving motor. And in other cases too — not only in the case of material goods — there must be such a driving force. You need but consider that the mood or feeling of making an advantageous deal is also present in me when I sell a thing and receive money for it. I know that I by my faculties or opportunities shall be able to do more with the money than with the commodities which I possess. At this point, I am already taking a hand in the process with my spiritual faculties.

Transfer this idea to the sum-total of Loaned Capital in any economic organism, and you will soon see: Those who desire to undertake or to do anything, and who need Loaned Capital for the purpose, have precisely the same motive force in their need for Capital as is inherent in the striving for profit. Only, the Loaned Capital works as a kind of suction. If we regard advantage or profit as an impelling, pushing force, the effect of Loaned Capital is one of suction. Moreover, it sucks in the same direction in which advantage or profit pushes. Thus, in profit and in Loaned Capital respectively, we have the forces of pressure and of suction in the economic process.

We thus gain a clear picture of the fact: Inasmuch as the economic process consists in movement and everything must be brought about in it by movement, we must place the human being in it everywhere. For an objective science of Economics this may be uncomfortable; man is a kind of incommensurable magnitude, he is changeable, we have to reckon with him in so many different ways. But there is no getting away from it, this is the fact; and we must reckon with the human being in many different ways.

Now we have seen that, in the process of lending, a kind of suction takes place in the economic process. You know there were times when it was considered immoral to take an interest on loans; it was only considered moral to lend free of interest. Under these conditions there would be no profit in lending. This is indeed the fact. Originally, lending did not arise from the profit one derives from it, that is to say, from the interest; but it arose from the following presumption. If I lend someone something, he can do something with it which I cannot do. Take the simplest instance: Suppose that someone is in dire need and that he can alleviate his need if I am in the position to lend him something. Under conditions more primitive than those of to-day, he would not pay me interest, but the presumption would be that if I, too, am ever in need, he in his turn will help me out. Wherever you trace the matter back in history, you will see that this is the pre-supposition of lending: The other man will lend to me in turn when need arises. It even applies to more complicated social conditions, for the same thing happens when someone borrows money from a money-lending firm and requires guarantors. It has always been the experience of money-lenders that mutual aid plays a great part even in this service. A comes to a money-lender and brings B and C with him to stand sureties; they enter their names as guarantors. In such a case, money-lending firms always reckon on the probability that if B ever comes to borrow money, he will bring with him A and C; or again, B having paid his debt, C will arrive one day and will bring with him A and B as guarantors. In certain circles this is taken as a matter of course. Economists declare that such a law can be assessed just as well as any that can be clothed in mathematical formula. Of course these things are to be taken with the well-known grain of salt which we must always take into account. Our power to do so is part of the mobility of the economic process.

To sum up, therefore, we must say: Originally, there is no return for the service of lending, save the presumption that the borrower will lend to us again; or if not that, that at least he will help us in borrowing, as we helped him. Notably where it is a question of lending and borrowing, human mutuality or “give and take” enters the economic process in a striking way.

If this be so, what is interest? Interest — as has already been remarked by some economists — interest is what I receive if I renounce this “mutuality,” that is to say, if I lend someone something and we agree that he shall be under no obligation to lend to me. If I renounce this mutual right, he pays me interest for it. Interest therefore resolves something which takes place between two human beings; it is a compensation for the human mutuality which plays in the economic process.

This is, however, something which we must set in its right place in the whole economic process. In doing so we must of course remember that there is no sense nowadays in studying economic processes other than those which stand entirely under the sign of the division of Labour; for it is these with which we are in fact concerned. When Labour is divided and distributed, human beings grow dependent on the principle of mutuality to a far greater extent than is the case when every man not only grows his own cabbages but also makes his own hats and boots. It is with the division of Labour that the dependence on mutuality comes. In the division of Labour we have a process working in such a way that the several currents diverge. Yet in the economic process as a whole we see it come about that all these different streams tend to unite again, only in a different way, through the exchange which, in the case of a more complicated economic process, takes place with the help of money. Thus at a certain stage the division of Labour makes mutuality a necessity. In other words, it involves the same element in human intercourse which we find in the case of lending and borrowing. Where much is lent, this principle of mutuality is inherently involved, but in this case it can be redeemed by interest. For interest is mutuality realised. It has been transformed into the abstract form of money. The forces of mutuality are the interest; only they have undergone a metamorphosis. And what we see quite plainly here in the payment of interest takes place throughout the economic process.

This is the great difficulty which besets the formation of economic ideas. You cannot form them in any other way than by conceiving things pictorially. No abstract concept can enable you to grasp the economic process; you must grasp it in pictures. Whereas it is just this which makes the learned world so uneasy today — this demand, no matter in what sphere of thought, that we should pass from the mere abstract concepts to ideation of an imaginative kind. Yet we can never found a real science of Economics without developing pictorial ideas; we must be able to conceive all details of our Economic Science in imaginative pictures. And these pictures must contain a dynamic quality; we must become aware how such a process works under each new form that it assumes.

You will understand me rightly if you will acknowledge to yourselves that there are actually human beings in the economic process — no doubt at its more primitive stages — who are quite unable to think in the way you have learned — or are supposed to have learned — to think in the course of your studies. Nevertheless, they are often excellent husbandmen, excellent economists. They feel precisely whether a given object can be bought or not be bought at such and such a price — whether or no it will be advantageous to buy it. Sometimes a peasant, for example, has not the remotest notion of economic concepts; yet, having attained a certain age, having simply observed the conditions of the market here or there in his district, he knows with precision — without relying on any theoretical concepts — what the picture signifies, when he gives a certain sum of money for a horse or plough. Of course he may make a mistake, but you may do that even if you have studied the logic of Economics! — but the mistakes will not be the most important thing. The picture that is composed before his mind — the picture of a certain sum of money and a plough — calls forth in him the immediate feeling that he can still afford to give so and so much more money, or else that he cannot. He has it directly out of his feeling-experience. Now even in the most complicated economic process, this feeling-experience is not to be eliminated. That is thinking in pictures.

To form abstract ideas would only be fruitful if we could say definitely: One thing is a commodity and another thing is money and we are trading the commodity for money, the money for the commodity. If that were all, it would be simple; but as I showed you just now, even peas may become money. It is simply not true that we in the economic process can grasp anything of it by working abstract concepts into it; it is only by working imaginative perceptions into it that we can grasp anything of it. For instance, we may have the imaginative perception of peas on their way from the market-stall to the mouths of the people only. That is one definite picture. Or we may have the imaginative perception of peas being used as money. That is another picture. Even in Economic Science we must work towards such pictures, pictures taken from what is immediate perception. This means, in other words, that to act rightly in the economic sense, we must make up our minds to enter into the events of production, trade and consumption, with a picture-thinking. We must be ready to enter into the real process; then we shall get approximate conceptions — only approximate ones, it is true — but conceptions which will be of real use to us when we wish to take an actual part in the economic life. Above all, such conceptions will be of use to us when what we do not know by our own sensibility (supposing we ourselves have not arrived through sensibility at the corresponding pictures) is supplemented or corrected by others who are associated with us. There is no other possibility. Economic judgments cannot be built on theory; they must be built on living association, where the sensitive judgments of people are real and effective; for it will then be possible to determine out of the association — out of the immediate experiences of those concerned — what the value of any given thing can be.

Strange as it may sound, it is not possible to determine theoretically wherein the value of a product may consist. We can only say; A product enters into the economic life as a whole through the several parts of the economic process; and its value at a given place must be judged and estimated by association.

How can it be done? How is it that such judgments can be formed — judgments which if they arise in the true way in the economic process do actually arrive at the truth? You can understand it best by analogy with any human or animal organism. The human or animal organism assimilates the foodstuffs that come into it. If I may draw your attention to the scientific facts in this sphere, I may say for example: The human being absorbs the food, permeates it with ptyalin and pepsin, passes it through the stomach, through the intestines. No matter whether the food is flesh or vegetable, the first thing necessary is for the food that is thus passed through the organism to be killed; its life must be quelled. All life must be eliminated from what we have in our intestines. Thereupon, that which we have in our intestinal organs is sucked up by the lymphatic glands and called to life again within ourselves. That which passes from the lymphatic glands through the lymphatic vessels into the blood consists of nature-products (plant or animal) which have died and have been called to life again. Now if you wanted to determine theoretically how much a certain lymphatic gland should receive and call to life again, you simply could not do so: for in one man a lymphatic gland must absorb more, and in another less. Not only so; in one and the same man a lymphatic gland at one place must absorb more and a lymphatic gland at another place must absorb less. Digestion is a most complicated process; no human science could keep pace with this wisdom of the lymphatic glands, with all their beautiful division of labour.

In such a case we are not dealing with judgments propounded, but judgments working in reality. In deed and truth, between our intestinal organs and our arteries, such a sum total of Intelligence is working that nothing comparable to it is to be found in all our human science.

So it is with the economic process. The economic process can only be sound when such a wise self-active Intelligence is working within it. And this can only happen if human beings are united together — human beings who have the economic process within them as pictures, piece by piece; and, being united in the Associations, they complement and correct one another, so that the right circulation can take place in the whole economic process.

Of course, the right mentality is needed for such a thing as this, but the mentality alone is not enough. You may even found Associations, Associations whose members have a great deal of economic insight; yet if something else is not contained within the Associations, all their insight will be of little avail. Something else must be contained in the Associations, and will be contained in them once the necessity of such Associations is recognised. There must be in them the community-spirit — the sense of community, the sense for the economic process as a whole. The individual who immediately uses what he buys can do no other than satisfy his own egoistic sense. Indeed he would come off very badly if he did not satisfy his own egoistic sense. As a single man in the economic life, he cannot say, if someone offers him a coat for 40 francs: “Oh, no, that price does not suit me; I will give you 60 francs for it!” That will not do; at this point the individual within the economic process can do absolutely nothing. But the moment the life of Associations enters the economic process, it is no longer a question of immediate personal interest. The wide outlook over the economic process will be active; the interest of the other fellow will be actually there in the economic judgment that is formed. In no other way can a true economic judgment come about. Thus we are impelled to rise from the economic processes to the mutuality, the give and take between man and man, and furthermore to that which will arise from this, namely the objective community-spirit working in the Associations. This will be a community-spirit, not proceeding from any “moralic acid” but from a realisation of the necessities inherent in the economic process itself.

I should like this to be observed in relation to all the discussions that are opened up, for instance, by my book The Threefold Commonwealth. There is no lack of people nowadays who say: “Our economic life will be good — ever so good — if once you human beings are good; you must become good.” Think of the people like Professor Förster and his kind, who go about preaching: “If men will only become selfless, if they will only fulfil the categorical imperative of selflessness, the economic life will become good.” Such judgments are really of no more worth than this one: If my mother-in-law had four wheels and a handle in front, she would be a bus! Truly the premiss and the conclusion stand in no better connection than this, except that I have expressed it rather more radically.

What underlies The Threefold Commonwealth is none of this moralic acid, which can, no doubt, play a great role in another field. Rather the purpose is to show, simply out of the economic facts, how selflessness cannot help being inherent in the very circulation of the elements of economic life. This is the case, even in the detailed instances. Take, for example, the case where someone is in a position to receive Loaned Capital on credit and is thus enabled to establish an undertaking or an institution and to produce by means of it. He goes on producing so long as his own personal faculties are united with the institution. Afterwards, the thing he has worked up will be handed on in the most intelligent way to some other individual who has the necessary faculties. It will be transferred by a gift — a gift, not from one man to another, but one that takes place through the whole course of economic life. We need only consider how such gifts will be able to be made in an intelligent way by the threefold social organism. Here the domain of economics borders on the social element in man, in the most comprehensive meaning of the term. It touches on that which needs to be conceived for the social organism as a whole.

And you can see it also from the other side. I pointed out how in the simple case of exchange, where money becomes more and more important, or indeed where exchange is recognised at all, the economic life enters directly into the region of law and rights. Moreover the moment Intelligence is to enter the economic life, we must allow to flow into the economic domain that which prevails in the free life of the Spirit. The three members of the social organism must stand in the right relation to one another, so that they may work on one another in the right way.

This was the real meaning of The Threefold Commonwealth — not the splitting into parts of the three members; the splitting apart is always there. The point is rather to find how the three members can be brought together, so that they may really work in the social organism with inherent intelligence, just as the nerves-and-senses system, the heart-and-lungs system, and the metabolic system, for example, work together in the natural organism of man. That is the point, and of this we shall have more to say in the near future.