Capitalism and Social Ideas (Capital, Labor)

Toward Social Renewal: Basic Issues of the Social Question

by Rudolf Steiner [1919]

Chapter 3: Capitalism and Social Ideas
(Capital, Labor)

It is not possible to judge what kind of action is demanded by the resounding events of the times without the will to be guided in this judgment by an insight into the basic forces of the social organism. The preceding presentation is an attempt to arrive at such an insight. Measures based on a judgment which derives from a narrowly circumscribed field of observation cannot have positive results today. The facts which have grown out of the social movement reveal disturbances in the foundations of the social organism — and by no means superficial ones. Therefore it is necessary to arrive at insights which penetrate to these foundations.

When capital and capitalism are spoken of today, they refer to what proletarian humanity considers to be the causes of its oppression. It is only possible to form a worthwhile judgment concerning the way in which capital furthers or hinders the social organism's circulatory processes by perceiving how individual human capabilities, rights legislation, and the forces of economic life produce and consume capital. When human labor is spoken of it refers to the function that, together with the natural base of the economy and capital, creates the economic values through which the worker becomes conscious of his social condition. A judgment as to how this human labor must be introduced into the social organism in a manner which does not disturb the worker's sense of human dignity will result only from observing the relation which human labor has to the development of individual capabilities on the one hand and to rights-awareness on the other. 

People are asking today — and rightly so — what is the first step to be taken in order to satisfy the demands which are arising in the social movement. Even the first step will not be taken in a worthwhile manner if it is not known what relation this step should have to the foundations of the healthy social organism. One who knows this will be able to find the appropriate tasks wherever he happens to be, or wherever he decides to go. Acquisition of the insight referred to here has been prevented by what has passed over, during a long period of time, from human will into social institutions. People have become so accustomed to these institutions that they have based on the institutions themselves their views about what should be preserved in them and what should be changed in them. Their thoughts conform to the things, instead of mastering them. It is necessary today to perceive that it is only possible to arrive at factual judgements through a return to the primal thoughts which are the basis for all social institutions.

If adequate sources are not present from which the forces that reside in these primal thoughts constantly flow into the social organism, then the institutions take on forms which inhibit rather than further life. The primal thoughts live on, more or less unconsciously, in the human instinctive impulses, however, while fully conscious thoughts lead to error and create hindrances to life. These primal thoughts, which manifest themselves chaotically in a life-inhibiting world, are what underlie, openly or disguised, the revolutionary convulsions of the social organism. These convulsions will not occur once the social organism is structured in such a way that the tendency is prevalent to observe at what point institutions diverge from the forms indicated by the primal thoughts, and to counteract such divergences before they become dangerously powerful.

In our times, divergences from the conditions required by the primal thoughts have become great in many aspects of human life. The living impulse of these thoughts stands in human souls as a vocal criticism, through events, of the form the social organism has assumed during the last centuries. Goodwill is therefore necessary in order to turn energetically to the primal thoughts and not to underestimate how damaging it is, especially today, to banish them from life as ‘impractical’ generalities. Criticism of what modern times have made of the social organism exists in the life and in the demands of the proletarian population. The task of our times is to counteract the one-sided criticism by finding, in the primal thoughts, the direction to be taken in order that events be consciously guided. For the time has passed in which humanity can be satisfied with what instinctive guidance is able to bring about.

One of the basic questions that has developed in contemporary criticism is how to put an end to the oppression which proletarian humanity has experienced through private capitalism. The owner, or manager, of capital is in a position to put the physical labor of others at the service of whatever he undertakes to produce. It is necessary to differentiate between three sectors in the social relationship which arises through the cooperation of capital and human labor: the managerial activity, which must be based upon the individual abilities of a person or a group of persons; the relationship of the manager to the worker, which must be a legal one; the production of an article, which acquires commodity value in economic circulation. Managerial activity can participate soundly in the social organism only when forces are active in this organism which allow individual human abilities to manifest themselves in the best possible manner. This can occur only if there is a sector of the social organism which allows capable individuals free initiative to exercise their abilities, and enables the evaluation of these abilities to be made through the free understanding of others. It is evident that the social activity of a person utilizing capital belongs in the sector of the social organism in which spiritual life provides the laws and administration. Should the political state participate in this activity, then a lack of appreciation of the effectiveness of individual abilities must necessarily become a co-determining factor. The political state must be based upon, and occupy itself with, those requirements which are common and equal to all. It must, in its sector, ensure that each individual is able to assert his opinion. The appreciation or non-appreciation of individual abilities is not one of its functions. Therefore, what takes place within its framework may not influence the exercise of individual human abilities. Nor should the prospect of economic gain be the determining factor in the exercise of individual abilities through the use of capital. Many critics of capitalism lay particular stress on this economic gain factor. They assume that individual abilities can be actuated only by this incentive. As ‘practical’ people, they refer to ‘imperfect’ human nature, which they pretend to know. It is true that within the social order which contemporary conditions have occasioned the prospect of economic gain has attained enormous importance. But this fact is no less the cause of the conditions which are now being experienced. These conditions call urgently for the development of some other motivation for the actuation of individual abilities. This motivation will have to be found in the social understanding which issues from a healthy spiritual life. With the strength of free spiritual life the schools, education, will equip the individual with impulses which, by virtue of this inherent understanding, will enable him to put his personal abilities into practice.

This opinion is by no means fantastic. Certainly, fantastic notions have caused as much damage in the field of social will as in any other. But the view expressed here, as can be seen from the foregoing, is not based upon the delusion that ‘the spirit’ will work wonders if only those who think they have some talk as much as they can about it; it is rather the result of observing the free cooperation of human beings in spiritual fields of endeavor. This cooperation, when it is able to develop in the truly free manner, acquires, through its own essence, a social form.

Only the unfree kind of spiritual life has, until now, prevented this social form from emerging. Spiritual strength has been cultivated within the ruling classes in a way that has unsocially restricted its achievements to these classes. What was accomplished within these classes could be transmitted only artificially to proletarian humanity. And this part of humanity could draw no soul-sustaining strength from spiritual life because it did not really participate in these spiritual values. Institutes of ‘popular adult education’, ‘leading’ the people to an appreciation of art, and similar actions, are not really valid means to the propagation of spiritual values in the people as long as these spiritual values retain the character they have taken on in recent times. The ‘people's’ innermost human essence is not to be found in such values. They can therefore only look on from an outside observation point. What holds true in respect of spiritual life proper is also the case with the ramifications of spiritual activity which flow into economic life along with capital. In a healthy social organism the proletarian worker should not merely stand at his machine, concerned with nothing but its operation, while the capitalist alone knows the fate of the produced commodities in economic circulation. Through fully active participation the worker should be able to develop a clear idea of his own involvement in society through his work on the production of commodities. Regular discussions, which must be considered to be as much a part of the operation as the work itself, should be arranged by management with a view to developing ideas which circumscribe employer and employed alike. A healthy activity of this kind will result in an understanding by the worker that correct management of capital benefits the social organism and therewith the worker himself. By means of such openness, based on free mutual understanding, the entrepreneur will be induced to conduct his business in an irreproachable manner.

Only someone who cannot sense the social effect of a common undertaking's united inner experience will hold what has been said here to be meaningless. Someone who can sense this effect will see how economic productivity is stimulated when the capital-based management of economic life has its roots in the free spiritual sector. The interest in capital for the purpose of making and increasing profits can be replaced only by an objective interest in the production of commodities and in achievement if this prerequisite is met.

The socialistically minded strive for the administration of the means of production by society. What is justified in their efforts can be attained only when this administration becomes the responsibility of the spiritual sector. The economic coercion which the capitalist exercises when he develops his activities from the forces of economic life will thereby become impossible. And the paralyzing of individual human abilities, as is the case when these abilities are administered by the political state, cannot occur.

The proceeds from the use of capital and individual human abilities must derive, as is the case with all spiritual effort, from the free initiative of the doer on one side, and the free appreciation of those others who require his efforts on the other. The determination of the amount of these proceeds must be in agreement with the doer's own free insight into what is suitable, taking into consideration his preparation, expenditures, and so forth. His claims in this respect will be satisfied only when his efforts are met with appreciation.

Through the kind of social arrangements described here, the ground can be prepared for a truly free contractual relation between manager and worker. This does not mean an exchange of commodities, i.e. money, for labor-power, but an agreement as to the share each of the persons who jointly produced the product is to receive.

What is achieved for the social organism with capital as its basis depends, by its very nature, on how individual human abilities intervene in this organism. The corresponding impulse for the development of these abilities can be obtained only through a free spiritual life. In a social organism in which the development of these abilities is harnessed to a political state or to the economy, the real productivity of everything requiring the expenditure of capital depends upon free individual forces overcoming these paralyzing conditions. But development under such conditions is unsound. Free deployment of individual abilities in the use of capital has not been the cause of conditions in which labor-power has become a commodity; the fettering of these abilities by the political state or economic interests is responsible for these conditions. Unprejudiced comprehension of this fact is a prerequisite for everything which should come about in the field of social organization. Modern times have produced the superstition that the means for making the social organism healthy can emerge from the political state or the economic sector. If humanity continues in the direction indicated by this superstition, social institutions will be created which will not lead humanity to what it strives for, but to an unlimited increase in the oppression which it seeks to avert.

People began thinking about capitalism at a time when it was the cause of a deterioration in the social organism. One experiences this deterioration and sees that it must be fought against. It is necessary to see more. One must become aware that the illness has its origin in the draining of the effective forces in capital by the economic process. Only by avoiding the illusion caused by the manner of thinking which sees the management of capital by a liberated spiritual sector as the result of ‘impractical idealism’ is it possible to work in the direction which the evolutionary forces of contemporary humanity are beginning to demand.

Certainly people are poorly prepared at the present time to directly relate the social ideas, which are to guide capitalism along a healthy course, with spiritual life. Only economic life is taken into consideration. It is easily seen how, in modern times, commodity production has led to large-scale enterprise, and this in turn to the contemporary form of capitalism. Cooperatives, which work to satisfy the needs of the producers, are supposed to take the place of this economic form. Since modern means of production are obviously to be retained, however, the concentration of all enterprises in one great cooperative is called for. In such a system, it is thought, each person would produce on behalf of the community, which could not be exploitive because it would be exploiting itself. And because one must, or wants to, relate to what already exists, one looks to the modern state, which is to be transformed into an all-embracing cooperative.

It is not realized that what is expected of such a cooperative is less likely to occur the larger it becomes. If the integration of individual human abilities into the cooperative organism is not structured as described here, then the common management of labor cannot lead to the social organism's recovery.

The present meager inclination toward an unbiased judgment as far as the intervention of spiritual life in the social organism is concerned is the result of people having become accustomed to imagine the spiritual as being as far removed as possible from everything which is material and practical. They will not be few who will find something grotesque in the view expressed here, that the actuation of capital in economic life should partially manifest the effects of the spiritual sector. One can well imagine that the members of the hitherto ruling classes are in agreement with socialist thinkers on this point.

In order to recognize the importance for the recovery of the social organism of what they consider grotesque, one must direct one's attention to certain contemporary currents of thought which, in their way, derive from honest impulses of the soul, but hinder the development of real social thinking wherever they find entry.

These currents of thought flow — more or less unconsciously — away from what gives inner experience the right impulse. They strive after a philosophy and an inner life of the soul and intellect which accords with the search for scientific knowledge, but which is like an island in the sea of human existence. They are not able to build a bridge from that life to the everyday life of reality. One can see how many people nowadays find it ‘fashionable’ to reflect, in their ivory towers, in scholastic abstractions on all kinds of ethical-religious problems; one can see how people reflect on how man can acquire virtues, how he should behave lovingly toward his fellow-men, and how he can become inspired with an ‘inner meaning of life’. But one also sees the impossibility of realizing a carry-over from what people call good and loving and benevolent and right and moral to what surrounds humanity in everyday external reality in the form of capital, of labor compensation, of consumption, of production, of commodity circulation, of credit, of banks and stock markets. One can see how two universal currents also flow alongside each other in human thought-habits. One current is that which remains at divine-spiritual heights, so to speak, and has no desire to build bridges between what constitutes a spiritual impulse and the realities of the ordinary dealings of life. The other lives, devoid of thought, in everyday life. Life, however, is a unity. It can prosper only if the strength from ethical-religious life works down into the commonplace, profane life, into that life which, to many, may seem less fashionable. For if one fails to erect a bridge between these two aspects of life, one falls into mere fantasy, far removed from true everyday reality as far as religious and moral life and social thinking are concerned. These true everyday realities then have their revenge. From out of a certain ‘spiritual’ impulse man strives toward all kinds of ideals, toward what he calls ‘good’; but he devotes himself without ‘spirit’ to those other instincts based on the ordinary daily necessities of life which must be satisfied through economic activities. He knows of no practicable way from the concept of spirituality to what goes on in everyday life. Therefore this life takes on a form having nothing to do with ethical impulses, which remain at fashionable, spiritual heights. But then the revenge of the commonplace is such that the ethical-religious life constitutes an inner lie, for it remains at a distance from the commonplace, out of direct contact with practical life, without this fact even being perceived.

How many people there are nowadays who, through ethical-religious high-mindedness, demonstrate the best will to live correctly together with their fellow-men, wishing their fellows only the very best. They fail, however, to adopt the necessary sensibilities, for they cannot acquire the concrete social concepts which affect the practical conduct of life.

It is people such as these, fantasists who think they are practical, who in this historical moment when the social questions have become so urgent, hinder all real progress. One can hear them speak as follows: ‘It is necessary for humanity to rise up from materialism, from the external material life which has driven us into the catastrophe of the world-war, and turn to a spiritual conception of life.’ In order to show the path to spirituality, they never tire of citing the personalities of the past who were venerated for their spiritual way of thinking. If, however, one tries to indicate what the spirit must necessarily accomplish today in practical life, how daily bread must be produced, it is immediately contended that first of all people must be brought to once again acknowledge the spirit. But the heart of the matter today is that the guidelines for the recovery of the social organism are to be found in the strength of spiritual life. For this it is not sufficient that people occupy themselves with the spirit as a sideline. For this it is necessary that everyday life become spiritually oriented. The tendency to treat ‘spiritual life’ as a sideline has led the hitherto ruling classes to acquire a taste for social conditions which have resulted in the current state of affairs.

In contemporary society, management of capital for the production of commodities is closely allied to the possession of the means of production — which is also capital. Nevertheless, these two relationships of man to capital are quite different as far as their effects within the social organism are concerned. Management through individual abilities, when they are properly exercised, supplies the social organism with goods in which everyone who belongs to this organism has an interest. Whatever a person's situation in life, it is in his interest that nothing be lost of what flows from the sources of human nature in the form of individual abilities, by means of which the goods are produced that purposefully serve human life. The development of these abilities can ensue only when their possessors are able to activate them with their own free initiative. The welfare of mankind is, at least to a certain extent, deprived of whatever is not able to flow from these sources in freedom. Capital is the means by which such abilities are made effective for wide areas of the social organism. Everyone within a social organism must have a real interest in the sum total of capital being managed in such a way that particularly gifted individuals or groups have this capital at the disposal of their own free initiative. Every person, whether his work is spiritually creative or that of a laborer, if he wishes to objectively serve his own interests, must say: I would like a sufficiently large number of competent persons or groups of persons not only to have capital freely at their disposal, but also that it become accessible to them through their own initiative. For only they can judge how their individual abilities, through the mediation of capital, will purposefully produce goods for the social organism.

It is not necessary to describe within the framework of this book how, in the course of human evolution, private ownership developed out of other forms of ownership in connection with the activation of individual human abilities. In recent times, ownership has developed within the social organism under the influence of the division of labor. We are concerned here with contemporary conditions and their necessary further development.

However private ownership may have arisen — through the exercise of power, conquest, and so forth — it is a result of social creation bound to individual human abilities. Nevertheless, the current opinion of the socialistically minded is that the oppressive nature of private ownership can be done away with only through its transformation into common ownership. The question is put so: How can the private ownership of the means of production be prevented, in order that the resulting oppression of the unpropertied cease? Whoever puts the question in this way overlooks the fact that the social organism is constantly becoming and growing. It is not possible to ask how something that grows should be organized in order that this organization, which is thought to be correct, be preserved into the future. One can think in this way about something which remains unchanged from its beginnings. But it is not valid for the social organism. As a living entity it is constantly changing whatever arises within it. To attempt to give it a supposedly best form, in which it is expected to remain, is to undermine its vitality.

One of the conditions of the social organism's life is that those who can serve the community through their individual abilities should not be deprived of using their free initiative. Where such service requires that the means of production be freely at their disposal, the hindering of this free initiative would only be harmful to the general social interest. The usual argument, that the entrepreneur needs the prospect of profit as an incentive, and that this profit is closely related to ownership of the means of production, is rejected here. The kind of thinking from which the opinions expressed in this book derive, that there is a further evolution of social conditions, must see in the liberation of spiritual life from the political and economic sectors the possibility that this form of incentive can cease to exist.

Liberated spiritual life will, necessarily, develop social understanding; and from this understanding will result quite different forms of incentive than that which resides in the hope of economic advantage. However, it is not a question of which impulses arouse sympathy for private ownership of the means of production, but whether the free disposition of these means or that disposition which is regulated by the community is what corresponds to the vital needs of the social organism. Moreover, it must always be kept in mind that the conditions which are thought to be observed in primitive human societies are not applicable to the contemporary social organism; only those conditions which correspond to today's stage of development are applicable.

At this present stage, a fertile activation of individual abilities cannot be introduced into the economic process without free disposition over capital. If production is to be fruitful this disposition must be possible, not because it is advantageous to an individual or a group of individuals but because, when utilized with the proper social understanding, it can best serve the community.

The human being relates to what he produces, alone or together with others, as he relates to the dexterity of his own limbs. The undermining of free disposition over the means of production is equivalent to crippling the free application of dexterity in his limbs.

Private ownership is, however, nothing other than the medium for this free disposition. As far as the social organism is concerned, the only significance of ownership is that the owner has the right of disposition over the property through his own free initiative. One sees that in society two things are bound together which have quite different significance for the social organism: the free disposition over the capital base of social production, and the legal relationship through which he who exercises this disposition, by means of his right of disposition, precludes others from the free utilization of this capital base.

It is not the original free disposition which leads to social damage, but only the prolongation of the right of disposition when the appropriate conditions which connect individual human abilities to this disposition have ceased to exist. Whoever sees the social organism as something evolving, growing, will not misunderstand what is indicated here. He will seek possibilities whereby that which serves life on the one hand can be administered so that its effects will not be harmful on the other. What lives cannot be fruitfully established without disadvantages occurring during the process of becoming. And should one work on an evolving entity, as man must on the social organism, then the task may not be to hinder a necessary facility in order to avoid damage, for then one would undermine the possibilities for life of the social organism. It is a matter of intervening at the right moment, when what has been appropriate is about to become harmful.

The possibility of free disposition over the capital base through individual abilities must exist; it must be possible to change the related property rights as soon as they become a means for the unjustified acquisition of power. We do have a facility in our times which partially fulfills this requirement in respect of so-called intellectual property. At a certain time after its creator's death it becomes community property. This corresponds to a truly social way of thinking. Closely as the creation of a purely intellectual property is bound to an individual's talents, it is at the same time a product of human society and must, at the right moment, be handed over to this society. It is in no way different with respect to other property. That which the individual produces in the service of the community is only possible in cooperation with this community. The right of disposition over a property cannot be administered separate from the community's interests. A means of eliminating the ownership of the capital base is not to be sought, but rather a means of administering this property so that it best serves the community.

This means can be found in the threefold social organism. The people, united in the social organism, act as a totality through the rights-state. The exercise of individual abilities pertains to the spiritual organization.

Everything in the social organism, when viewed realistically and without subjective opinions, theories, desires, and so forth, indicates the necessity for the triformation of the social organism. This is particularly true as regards the relation of individual human abilities to the capital base of economic life and the ownership of this capital base. The rights-state will not have to prevent the formation and administration of privately owned capital as long as individual abilities remain bound to the capital base in a way that constitutes a service to the whole of the social organism. Furthermore, it will remain a rights-state in regard to private property, never making private property its own, but ensuring that rights of disposition are transferred at the right moment to a person or a group of persons capable of restoring the appropriate individual relationship to the property. The social organism will thereby be served from two completely different angles. The democratic rights state, which is concerned with what affects all people in an equal manner, will guard against property rights becoming property wrongs. Because this state does not itself administer property, but ensures its transfer to individual human abilities, these abilities will develop their productive powers for the totality of the social organism. Through such organization, property rights, or the disposition over them, may retain a personal element as long as seems opportune. One can imagine that the representatives in the rights-state will, at different times, enact completely different laws concerning the transference of property from one person, or group of persons, to others. At the present time, when a great mistrust of all private property is widespread, a radical transference of private property to community property is contemplated. Should this way be followed, it will be seen to impair the vital potentialities of the social organism. Taught by experience, another way will then be taken. It would, however, doubtless be better if arrangements were undertaken now which would, in the sense indicated here, bestow health on the social organism. As long as a person alone, or in connection with a group, continues the productive activity which procured for him a capital base, his right of disposition over the capital accumulation which results from operating profits on original capital will have to remain in effect when it is used for an expansion of production. From the moment such a person ceases to manage production, this capital accumulation should pass to another person, or group of persons, to be utilized for the same or some other type of production which serves the social organism. Capital gains which are not used for expansion should be similarly treated. The only thing personally owned by the individual who operates an enterprise should be what he draws in accordance with the terms agreed to when he takes over responsibility for production, and which he feels are appropriate to his individual abilities; and which, furthermore, seem justified by the confidence of others in granting him the use of capital. Should the capital be increased through the activities of this individual, then he would be entitled to a portion of the increase, which would correspond to an interest-like percentage. When the first administrator no longer can or will manage an enterprise, the capital with which it was established will either be transferred to a new administrator, along with all obligations, or, depending on the wishes of the original owners, be returned to them.

Such arrangements concern the transference of rights. The legal provisions by which these transfers are to take place are the province of the rights-state. It will also have to see to their execution and administration. One can safely assume that the detailed determinations which regulate such rights transfers will vary according to what rights-awareness considers correct. A realistic way of thinking will never desire more than to point out the direction that such regulation can take. If this direction is taken with understanding, the appropriate action for specific individual cases can always be found. The correct solution will always have to be in accordance with the spirit of the thing as well as whatever special conditions practical considerations may impose. The more realistic a way of thinking is, the less it will seek to establish laws and rules from predetermined requirements. On the other hand, the spirit of such a way of thinking will necessarily lead to certain requirements. One such result will be that the rights-state will never take over the disposition of capital through its administration of transfer rights. It has only to provide for the transfer to a person or group of persons whose individual abilities seem to warrant it. In general, it follows that it should at first be possible for someone who proposes to effect such a capital transference under the circumstances described to freely choose his successor. He will be able to choose a person, or group of persons, or transfer the disposition rights to an establishment of the spiritual organization. A person who has purposefully served the social organism through the management of capital will determine the future use of this capital with social understanding derived from his individual abilities. Furthermore, it will be more advantageous for the social organism to depend upon this determination than to dispense with it and have settlements made by people not directly concerned with the matter.

Settlements of this kind will pertain to capital accumulations exceeding a certain amount which are acquired by a person or group through the use of means of production (to which real estate also belongs) and which are not included in what is originally agreed upon as compensation for the activities of individual abilities.

Such earnings, acquisitions, and savings which result from the individual's own work will remain in his personal possession until his death, or in his descendants' possession until a later date. Until this date, interest (the amount of which is to be determined from rights-awareness and set by the rights state) will be paid by whoever receives such savings for the procurement of means of production. In a social order based upon the principles described herein, it will be possible to completely separate the proceeds which result from the use of means of production from assets acquired by means of personal (physical and mental) work. This separation accords with rights-awareness as well as the interests of the social community. What someone saves and makes available for production serves the general interest, for it makes the management of production through individual human abilities possible in the first place. Capital increase through the use of means of production — after the deduction of legitimate interest — owes its development to the overall social organism. It should therefore also flow back into it in the way described. The rights-state has only to insure that the transference of the capital in question takes place in the manner indicated; it will not be incumbent upon it to decide which material or spiritual production is to have disposition over transferred capital or over savings. That would lead to a tyranny of the state over spiritual and material production — which is best administered through individual human abilities. In case someone does not wish to personally select the receiver of capital accumulated by him, he will be able to delegate this function to a unit of the spiritual organization.

After the death of the earner, or at a certain time thereafter, assets acquired through savings, along with the corresponding interest, also go to a spiritually or materially productive person or group — but only to such a person or group, and not to an unproductive person in whose hands it would constitute a private pension — to be chosen by the earner and specified in his will. Here again, if a person or group cannot be chosen directly, the transfer of disposition rights to an establishment of the spiritual organism will come into consideration. Only if someone does not himself effect a disposition will the rights-state step in and, through the spiritual organization, make the disposition for him.

In a social order arranged in this way the initiative of the individual as well as the interests of the social community are taken into account. Indeed, such interests are fully satisfied by individual initiatives being placed at their service. Under such an arrangement, someone who entrusts his labor to the guidance of another will know that the results of their joint efforts will serve the community, and therewith the worker himself, in the best possible way. The social order meant here will create a healthy, sensible relationship between capital, as embodied in means of production, together with human labor-power on the one hand, and the prices of the articles produced by them on the other. Perhaps imperfections are contained in what is presented here. Then let them be found. It is not the function of a way of thinking which corresponds to reality to formulate perfect ‘programs’ for all time, but to point out the direction for practical work. The intention of the specific examples mentioned here is to better illustrate the indicated direction. A productive goal can still be attained as long as improvements coincide with the direction given.

Justified personal or family interests will be brought into concordance with the requirements of the human community through such arrangements. It is of course possible to point out that there will be a strong temptation to pass on property to one or more descendants during the original owner's lifetime. Also, that although descendants could be made to look like producers, they would nevertheless be inefficient compared to others who should replace them. This temptation could be reduced to a minimum in an organization governed by the arrangements described above. The rights-state has only to require that under all circumstances property transferred from one family member to another must, upon the lapse of a certain period of time after the death of the former, devolve upon an establishment of the spiritual organization. Or evasion of the rule can be prevented in some other way through the law. The rights-state will only insure that the transfer takes place; a facility of the spiritual organization should determine who is to receive the inheritance. Through the fulfillment of these principles an awareness will develop of the necessity for offspring being made qualified for the social organism through education and training, and of the socially harmful results of transferring capital to unproductive persons. Someone who is really imbued with social understanding will have no interest in his relation to a capital base passing to a person or group whose individual abilities do not justify it.

No one with a sense for the truly practicable will consider what is presented here as utopian. The only arrangements proposed are those which can develop in accordance with contemporary conditions in all walks of life. It is only necessary to decide once and for all that the rights-state must gradually relinquish its control over spiritual life and the economy, and not to offer resistance when what should happen really happens: that private educational institutions arise and the economy becomes self-sustaining. The state-owned schools and economic enterprises do not have to be eliminated overnight; but the gradual dismantling of the state educational and economic apparatus could well develop from small beginnings. Above all, it is necessary for those who are thoroughly convinced of the correctness of these or similar social ideas to provide for their dissemination. If these ideas find understanding, confidence will arise in the possibility of a healthy transformation of present conditions into others which are not harmful. This is the only confidence that can bring about a really healthy evolution, for whoever would acquire this confidence must perceive how new institutions could be practically merged with existing ones. The essential element of the ideas developed here is that they do not advocate the advent of a better future through even greater destruction of society than has already occurred, but that the realization of such ideas is to come about by building upon what already exists. Through this building, the dismantling of the unhealthy elements is induced. Explanations which do not instill confidence of this sort cannot attain what absolutely must be attained: a course in which the value of what has hitherto been produced, and the abilities which have been acquired, are not simply thrown overboard, but are preserved. Even those who think in a very radical way can acquire confidence in a new social structure which carries over existing values, if the ideas which accompany it are capable of introducing truly healthy developments. Even they must realize that regardless of which social class attains power, it will not be able to eliminate the existing evils if its impulses are not supported by ideas which make the social organism healthy and viable. To despair because one does not believe that a sufficiently large number of people, even in the present troubled circumstances, can find understanding for such ideas even if sufficient energy is dedicated to their dissemination is to despair of human nature's susceptivity to purposeful and health-giving impulses. This question, whether one should despair or not, should not be asked — rather only this other: How can ideas which instill confidence be explained in the most effective possible way?

An effective dissemination of the ideas presented here will meet opposition from the thought-habits of contemporary times on two grounds. Either it will be argued that to tear asunder uniform society is not possible because the three sectors which have been described are, in reality, interrelated at all social levels; or that the necessary autonomous character of each of the three sectors can also be attained in the uniform state, and that what is presented here is no more than a phantasy. The first objection unrealistically supposes that unity can be achieved only in a community by means of directives. Reality, however, demands the opposite. Unity must arise as the result of activities streaming together from various directions. The developments of recent years have run counter to this reality. Furthermore, what lives in human beings has resisted the ‘order’ brought into their lives from without which has led to the present state of social affairs.

The second prejudice results from an inability to perceive the radical difference in function inherent in the three sectors of society. It is not seen how the human being has a special relation to each of the three sectors which can only develop if an individual basis exists, separate from the other two but cooperating with them, on which this relation can take on form. According to the physiocratic theory of the past, either governments take measures concerning economic life which are in contradiction to its self-development — in which case such measures are harmful; or the laws coincide with the direction economic life takes when it is left alone — in which case they are superfluous. Academically, this view is antiquated; as thought-habit, however, it still devastatingly haunts men's brains. It is thought that if one sector of life follows its own laws, then everything necessary for life must arise from this sector. If, for example, economic life were regulated in a way that people found satisfactory, then the appropriate rights and spiritual sectors would also result from this orderly economic foundation. But this is not possible, and only thinking which is foreign to reality can believe that it is possible. There is nothing in the economic sector to provide the motivation necessary to regulate what derives from the rights-awareness of a person-to-person relationship. If this relationship is regulated according to economic motivation, then the human being, together with his labor and with the disposition over the means to labor, is harnessed to economic life. He becomes a cog, a mechanism of the economic system. Economic life tends to move in one direction only, and this must be compensated for from another side. Legal measures are not necessarily good when they follow the direction determined by economic life, nor are they necessarily harmful when they run counter to it; rather, when the direction of economic life is continually influenced by the law, in its application to human beings as such, then an existence worthy of humanity will be introduced into economic life. Furthermore, only when individual abilities are completely separated from economic life, when they grow on their own foundation and unceasingly supply economic life with the strength which it cannot produce within itself, will it be able to develop in a manner which is beneficial to humanity.

It is noteworthy that in everyday life one easily sees the advantage of the division of labor. One does not expect a tailor to keep his own cow in order to have milk. As far as the comprehensive formation of human life is concerned, however, one believes that only a uniform structure can be useful.

It is inevitable that social ideas which correspond to reality will give rise to objections from all sides — for real life breeds contradictions. He who thinks realistically will seek to institute facilities the contradictions of which are compensated for by other facilities. He may not believe that a facility which to his mind is ‘ideally good’ will, when put into practice, be without contradictions. Contemporary socialism is thoroughly justified when it demands that the modern facilities which produce for the profit of individuals be replaced by others which produce for the consumption of all. However, the person who fully recognizes this demand cannot come to modern socialism's conclusion: that the means of production must pass from private ownership to common ownership. Rather, he will come to a quite different conclusion: that what is privately produced through individual competence must be made available to the community in the correct way. The impulse of modern industry has been to create income through the mass production of goods. The task of the future will be to find, through associations, the kind of production which most accords with the needs of consumption, and the most appropriate channels from the producers to the consumers. Legal arrangements will ensure that a productive enterprise remains connected to a person or group only as long as the connection is justified by their individual abilities. Instead of common ownership of the means of production, a circulation of these means — continually putting them at the disposal of the persons whose individual abilities can best employ them for the benefit of the community — will be introduced into the social organism. In this way the connection between individuality and means of production, hitherto effected through private ownership, is established on a temporary basis. The manager and sub-managers of an enterprise will have the means of production to thank for the fact that their abilities can provide them with the income they require. They will not fail to make production as efficient as possible, for an increase in production, although not bringing them the full profit, does provide them with a portion of the proceeds. As described above, the profit goes to the community only after an interest has been deducted and credited to the producer due to the increase in production. It is also in the spirit of what is presented here that when production falls off the producer's income is to diminish in the same measure as it increases with an expansion of production. Additional income will always result from the manager's mental achievement, and not from the forces inherent in community cooperation.

Through the realization of such social ideas as are presented here, the institutions which exist today will acquire a completely new significance. The ownership of property ceases to be what it has been until now. Nor is an obsolete form reinstated, as would be the case with common ownership, but an advance to something completely new is made. The objects of ownership are introduced into the flux of social life. They cannot be administered by a private individual for his private interests to the detriment of the community; but neither will the community be able to administer them bureaucratically to the detriment of the individual; rather will the suitable individual have access to them in order therewith to serve the community.

A sense for the common interest can develop through the realization of impulses that put production on a sound basis and safeguard the social organism from the dangers of crises. Also, a management which only occupies itself with economic processes will be able to carry out the necessary adjustments. For example, should a company which is fulfilling a need not be in a position to pay its creditors the interest due them on their savings, other companies, in free agreement with all concerned, could make up whatever is lacking. A self-contained economic process which receives both its legal basis and a continuous supply of individual human abilities from outside itself will be able to restrict its activities to the economic sector. It will therefore occasion a distribution of goods which will ensure that each receives what he is entitled to in accordance with the community's welfare. If one person appears to have more income than another, this will only be because this ‘more’ benefits the community due to his individual abilities.

In a social organism which functions in accordance with the manner of thinking presented here, the contributions necessary for the upkeep of rights institutions will be arranged through agreement between the leaders of the rights sector and the economic sector. Everything necessary for the maintenance of the spiritual organization, including remuneration, will come to it through the free appreciation of the individuals who participate in the social organism. A sound basis for the spiritual organization will result from free competition among the individuals capable of spiritual work.

Only in a social organism of the kind described here will the rights administration be able to acquire the understanding necessary for a just distribution of goods. An economic organism which does not lay claim to human labor according to the needs of the various branches of production, but which has to operate in accordance with what the law allows, will determine the worth of commodities according to the work-performance of the workers who produce them. Commodity values which are unrelated to human welfare and dignity will not determine human work-performance. Rights in such an organism will result from purely human relations. Children will have the right to education; the working head of a family will have a higher income than a single person. The ‘more’ will come to him through arrangements established by agreement of all three social organizations. The right to education could be arranged in that the economic organization's administration, in accordance with the general economic situation, calculates the amount of educational income possible, while the rights-state, in consultation with the spiritual organization, determines the rights of the individual in this respect. Once again, this indication is meant as an example of the direction in which arrangements can be made. It is possible that quite different arrangements would be appropriate in specific cases. However, they can be found only through the purposeful cooperation of the three autonomous members of the social organism. Contrary to what often passes for practical today but is not, this presentation wishes to find the truly practical, namely, a formation of the social organism which enables men and women to strive for what is socially desirable. Just as children have the right to an education, the elderly, the infirm, and widows have the right to a decent maintenance. The necessary capital must be provided for in the same way that it is for the education of those who are not yet productive. The essential point of all this is that the income of the non-earners is not determined by the economic sector; on the contrary, the economic sector becomes dependent upon the results of rights-awareness. Those who work in an economic organism will receive that much less from the results of their work as more flows to the non-earners. However, this ‘less’ will be borne equally by all participants in the social organism if the social impulse described here is realized. The education and support of those who are incapable of working is something which concerns all humanity, and, through a rights-state detached from the economy, it will be so, for every individual who is of age will have a voice in the rights-organization.

In a social organism which corresponds to the manner of thinking characterized here, a person's surplus performance, made possible by his individual abilities, will be passed on to the community, just as the legitimate support for the deficit performance of the less capable will be drawn from this same community. ‘Surplus value’ will not be created for the enjoyment of individuals but for the increased supply of intellectual or material wealth to the social organism, and for the cultivation of what is produced within this organism but which is not of immediate use to it.

Whoever is of the opinion that keeping the three sectors of the social organism apart would have only an ideal value, and that this condition would come about ‘of itself’ in a uniformly structured state organism or in an economic cooperative which includes the state and is based on the common ownership of means of production, should direct his attention to the special kind of social facilities which must result from a realization of the triformation. The legitimacy of money as a means of payment, for example, would no longer be the responsibility of the government, but would depend upon measures taken by the administrative bodies of the economic organization. Money, in a healthy social organism, can be nothing other than a draft on commodities produced by others, which the holder may claim from the overall social organism because he has himself produced and delivered commodities to this sector. An economic sector becomes a uniform economy through the circulation of money. Each produces for all on the roundabout path of economic life. The economic sector is only concerned with commodity values. Activities which originate in the spiritual or state organizations also take on a commodity character for this sector. A teacher's activity with respect to his pupils is, for the economic process, of a commodity nature. A teacher is no more paid for his individual abilities than the worker is paid for his labor-power. It is only possible to pay for what they both produce as commodities for the economic process. How free initiative and the law should contribute to the production of commodities lies just as much outside the economic process as the effects of the forces of nature on the grain yield in a bountiful or in a lean year. As far as the economic process is concerned the spiritual organization, in respect to its economic requirements, and also the state, are simply commodity producers. What they produce within their own sectors are not commodities, however; they only become such once they enter into the economic process. Their activities are not commercial within their own sectors; the economic organism's management carries on its commercial activities using the achievements of the other sectors.

The purely economic value of a commodity (or service), in so far as it is expressed in the money which represents its equivalent value, will be dependent upon the efficiency with which economic management functions. The development of economic productivity will depend upon the measures taken by this management, with its spiritual and legal foundation provided by the other two members of the social organism. The monetary value of a commodity will then express the fact that the facilities of the economic organism are producing these commodities in an amount which corresponds to the need for them. Should the suggestions contained in this book be realized, then the economic impulse to accumulate wealth through sheer quantity of production will no longer be decisive; rather will the associations adapt the production of goods to actual need. In this way a need-oriented relation between monetary values and the production facilities in the economic organism will develop.* In the healthy social organism money will really be only a measure of value, since commodity production, the only means through which the possessor of money will have been able to attain it, will back every coin and bank note. Due to the nature of these relations, arrangements will have to be made whereby money loses its value for its possessor once it has lost this significance. Such arrangements have already been alluded to. Property in the form of money passes on to the community after a certain length of time. In order to prevent money which is not working in productive enterprises being retained through evasion of the economic organization's measures, a new printing could take place from time to time. One result of such measures is that the interest derived from capital would diminish in the course of time. Money will wear out, just as commodities wear out. Nevertheless, such a measure will be a just and appropriate one for the state to enact. There cannot be any ‘interest on interest’. Whoever has accumulated savings has surely also rendered services which entitle him to claim reciprocal services in the form of commodities, just as present-day efforts give claim to reciprocal efforts; but these claims are subject to limits, for claims originating in the past can be satisfied only by performance in the present. They may not be allowed to turn into means of economic power. Through the realization of these conditions, the currency question is given a healthy foundation. Regardless of what form money takes due to other considerations, currency as such depends on the rational administration of the overall social organism. No political state will ever solve the currency question in a satisfactory manner by making laws. Contemporary states will only solve it by renouncing their efforts at reaching a solution and leaving the necessary measures to an autonomous economic organism.

* Only a social administration based on the free cooperation of the social organism's three sectors will attain a healthy price relationship for produced goods. Each working person must receive for a product an amount sufficient to completely satisfy his and his dependents' needs until he has again produced an object requiring the same amount of labor. Such a price relation cannot be officially established, but must result from cooperation between the associations active in the social organism. And it will come if the cooperation rests on a healthy relationship between the three members of the social organization, just as a durable bridge must result if it is built according to correct mathematical and mechanical laws. One could make the obvious objection that society does not necessarily follow its laws as a bridge does. Such an objection will not be made, however, by those who recognize that in this book social life is presented as based on living and not on mathematical laws.

Much has been said about the modern division of labor, about its time-saving effects, its contribution to perfecting the production process and the exchange of commodities, etc., but little attention has been paid to how it influences the individual's relation to his work performance. Whoever works in a social organism which is based on the division of labor never really earns his income by himself; he earns it through the work of all the participants in the social organism. A tailor who makes his own coat does not do so in the same sense as a person living in a primitive society who must provide for all his necessities himself. He makes the coat in order to be able to make clothes for others; and the coat's value for him depends on the others' work performance. The coat is actually a means of production. Some would call this hair-splitting. They cannot, however, continue to hold this opinion as soon as they observe how commodity values form in the economic process. They then see that it is not even possible to work for oneself in an economic organism based on the division of labor. One can work only for others, and let others work for oneself. One can no more work for oneself than one can devour oneself. However, arrangements may be made which are in contradiction to the principle of the division of labor. This occurs when goods are produced merely in order to turn over to an individual as property what he is able to produce only because of his position in the social organism. The division of labor exerts pressure on the social organism which has the effect of causing the individual in it to live according to the conditions prevalent in the overall organism; economically, it precludes egoism. Should egoism be present nevertheless in the form of class privilege and the like, an untenable situation arises which leads to severe disturbances in the social organism. We are living under such conditions today. There may well be many people who think little of a demand that the law and other facilities conform to the egoism-free working of the division of labor. They should then realize the consequences of this attitude: that one can do nothing at all; the social movement will lead to nothing. One can certainly do nothing with this movement without respecting reality. The manner of thinking from which the writing of this book is derived intends that the human being strive toward what is necessary for the life of the social organism.

Someone who can form concepts only in accordance with customary practices will be uneasy when he hears that labor-management relations should be disengaged from the economic organism. He will believe that such a disengagement would necessarily lead to currency devaluation and a return to primitive economic conditions. (Rathenau expresses such opinions, which seem justified from his point of view, in his book Nach der Flut.) [Note 6] But this danger will be counteracted through the triformation of the social organism. The self-sustaining economic organism, in cooperation with the rights organism, will completely separate the monetary element from rights-oriented labor relations. Legal facilities will not have a direct influence on monetary affairs, for these are the province of the economic administration. The legal relationship between management and labor will not express itself in monetary values, which, after the abolition of wages (representing the exchange relation between commodities and labor-power), will only measure commodity (and service) values. From a consideration of the social triformation's effect on the social organism one must conclude that it will lead to arrangements which are not present in the political forms which have hitherto existed.

Through these arrangements what is currently referred to as class struggle can be eliminated. This struggle results from wages being an integral part of the economic process. This book presents a social form in which the concept of wages undergoes a transformation, as does the old concept of property. Through this transformation a more viable social cooperation is made possible.

It would be superficial to think that the realization of the ideas presented here would result in time-wages being converted into piece-wages. A one-sided view could lead to this opinion. However, what is advocated here is not piece-wages, but the abolishment of the wage system in favor of a contractual sharing system in respect of the common achievements of management and labor — in conjunction, of course, with the overall structure of the social organism. To hold that the workers' share of the proceeds should consist of piece-wages is to fail to see that a contractual sharing system — in no sense a wage system — expresses the value of what has been produced in a way which changes the workers' social position in relation to the other members of society. This position is completely different from the one which arose through one-sided, economically conditioned class supremacy. The need for the elimination of the class struggle is therewith satisfied.

In socialist circles one frequently hears that evolution will supply the solution to the social question, that one cannot express opinions and then expect them to be put into practice. This must be answered as follows: Certainly evolution must supply the necessary social adjustments —  but in the social organism the impulses behind human ideas are realities. When the times are more advanced and what today can only be thought is realized, only then will what has been thought be contained in evolution. However, it will then be too late to accomplish what is already demanded by today's events. It is not possible to consider evolution objectively as regards the social organism. One must activate evolution. It is therefore disastrous for sound social thinking that current opinion desires to ‘prove’ social necessities in the same way that natural science ‘proves’ things. ‘Proof’, as far as social conceptions are concerned, can be attained only if one's views can assimilate not only what exists now but also what is present in human impulses as potentiality striving to be realized.

One of the effects through which the triformation of the social organism will prove itself to be based on the essential nature of human society is the severance of judicial activities from state institutions. It will be incumbent on the latter to establish the rights between persons or groups of persons. Judicial decisions, however, will depend upon facilities formed by the spiritual organization. This judicial decision-making is to a large extent dependent on the judge's ability to perceive and understand the defendant's situation. Such perception and understanding will be present if the confidence which men feel toward the facilities of the spiritual organization is extended to include the courts. The spiritual organization might nominate judges from the various cultural professions. After a certain length of time they would return to their own professions. Within certain limits, every person would then be able to select the nominee, for a period of five or ten years, in whom he has sufficient confidence to accept his verdict in a civil or criminal case, should one arise. To make such a selection meaningful there would have to be enough judges available in the vicinity of each person's place of residence. A plaintiff would always be obliged to direct himself to a competent judge in the respondent's vicinity.

Just consider the importance such an arrangement would have had in the Austro-Hungarian districts. The members of each nationality in mixed-language districts could have chosen judges from their own people. Whoever is familiar with the Austrian situation will recognize what a compensatory effect such an arrangement could have had in the life of those peoples. Aside from the nationality question, there are other areas in which such arrangements can contribute to sound development. Officials selected by the spiritual organization's administration will assist the judges and courts with technical points of law, but will themselves not hold decision-making authority. Appeal-courts will also be formed by this administration. An essential characteristic of such an arrangement is that a judge, because of his life outside his judgeship — which he can hold only for a limited period — can be familiar with the sensibilities and environment of the defendant. The healthy social organism will everywhere attract social understanding to its institutions, and judicial activities will be no exception. The execution of sentences is the responsibility of the rights-state.

It is not possible to enter into a description of the arrangements which would become necessary in other areas of life as the result of implementing these suggestions. Such a description would obviously require an almost unlimited amount of space.

The individual examples used will have shown that the exposition of these views does not constitute an attempt to revive the three estates — food producers, military, and scholastics — as some have mistakenly assumed upon hearing my lectures on the subject. The opposite of such a structure is intended. Human beings will not be segregated into classes or estates; the social organism itself will be appropriately formed. Through this formation man will be able to be truly man. The formation will enable him to participate in all three social sectors. He will have a professional interest in the sector which includes his occupation; and he will have vital connections with the others, necessitated by the nature of their institutions. The external social organism which forms the foundation for human life will be tripartite; each individual will constitute a binding element for its three sectors. 

Source: http://wn.rsarchive.org/Books/GA023/English/SCR2001/GA023_c03.html