This exposition approaches the global financial crisis from the point of view of associative economics. While the fuller meaning of associative economics will become apparent as the book unfolds, a preliminary reference is warranted at this stage. Deriving mainly from lectures given by Rudolf Steiner in 1922,7 associative economics is an approach that is little known in general economic history. In consequence, its propositions are scarcely known, let alone tested.
1.3.1 InTRoduCIng ASSoCIATIvE EConomICS
Fundamental to associative economics is that it seeks an understanding of modern economic life that is true to economic, as distinct from political reality. This entails significant challenges, given the normal tenor of twentieth-century economic thinking and its generally accepted ground of an intermingling between state and economy. One readily admits that in the general way of today’s world such a distinction is usually greeted with scepticism and may have little prospect of realising itself; but that does not invalidate and should not deter one from the analytical exercise. After all, to paraphrase the British economist, Tim Congdon, whose work is featured later in this book, it is
7 While these lectures have as their wider background the world view known as ‘anthroposophy’ (from the Greek,
‘wisdom of man’), suitably edited they can be taken as a stand-alone discourse that is capable of being considered in everyday terms. Indeed, their significance can only perhaps be fully grasped if one enters into their content strictly on that basis. That is to say, not treating them as representative of a world view (although of course they are), let alone with the intent of proselytising, but as a basis for examining the ability (or otherwise) of modern consciousness to grasp the deeper nature of economic life, not only in its technical aspects (how it ‘works’) but why it is ‘there’ in the first place.
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neither the number of people who believe in an idea nor the length of time they cling to it that makes it true. Indeed, one can take heart from Geoffrey Wood’s words in the September 2009 edition of the Institute of Economic Affairs journal: ‘Some of [one’s]
proposals may appear politically impossible. But as the history of the UK alone shows, few sensible proposals remain politically impossible for ever’ (Wood 2009: 4). Though Wood was not referring to the thesis of this book, the point still stands.
One can further characterise associative economics by mentioning three of its key elements not generally found in other perspectives:
the deliberate endeavour to enter into the thinking of as many schools of thought as possible in order both to appreciate their differences and to identify common ground,
the inclusion of the work of Rudolf Steiner qua economist (see below),
the strong link to accounting in terms of its inner logic, rather than convenient use (or abuse) – see Chapter 11.
The novelty of its perspective notwithstanding, this book treats associative economics as a formal discipline. It does so for three reasons. Firstly, to throw a light on the global financial crisis from a new angle. Secondly, thereby to conduct an examination that is also expository as regards the associative economic approach. Thirdly, to ask the questions:
does associative economics have a link to current developments? And is now the time to give it serious consideration?
It should be added that one is not looking for a ‘yes’ or ‘no’ answer to this question.
One is not craving recognition, nor wanting to be à la mode. In economics there is no merit in ideas that do not accord with reality. Our only question is whether the book’s conclusions contribute in any way to improving our understanding of global finance, not only at this currently critical stage, but also in a more stable, enduring sense. If they do, and if, in fact, this is because of the associative economic approach, any influence they have will be found in their nuancing of the quiet ongoing march of economic development, not displayed in flashing lights above history.
1.3.2 RudoLF STEInER quA EConomIST
Concerning the book’s substantial reference to Rudolf Steiner, it is part and parcel of economics that it is a domain in which we all find ourselves and need all to be able to take
‘ownership’ of. In such a world what matters is not the who of economics, but the what, and whether a person’s contribution serves our overall understanding. Modern economic life is characterised by people lining up behind Milton Friedman or John Maynard Keynes, for example, usually in expression of a bias. Yet what matters is whether an individual economist bequeaths ideas we can all recognise. It is of set purpose in this book that Friedman and Keynes are not systematically opposed because in respect to monetary economics, at least, their ideas coalesce, making it a matter of political contrivance or intellectual laziness if one builds separate universes around the individuals concerned.
In similar vein, Rudolf Steiner’s reputation varies depending on how one relates to the extensive range of material he covered. It is not usual for one person to be knowledgeable in the many fields in which Steiner was versed, ranging from medicine to architecture, agriculture to pedagogy. Few if any seers, for that is a significant aspect of Steiner’s 1.
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biography, also taught double-entry bookkeeping. One should be wary, however, of regarding Steiner as a dilettante, a jack-of-all-trades but master of none. Many a critic has come to grief on the supposition that Steiner’s knowledge was hearsay!
Here the reference is not to Rudolf Steiner as a person, however, nor to his wide field of activity, but to Steiner the economist and in particular to his economic and monetary analysis, with such contextual sociological commentary as seems warranted.
1.3.3 SIx pRobLEmS
Therein lie difficulties enough, because to the English mind Steiner’s economic analysis presents a number of problems. One is its absence from general economic discourse, hardly figuring even among ‘alternative economics’, where some – but not this author – would locate it. Even those banks8 that claim their lineage in Steiner’s oeuvre seldom make overt reference to his analysis to the full extent and depth they could, in part perhaps because it implicitly refers to a world beyond banking as we know it.
A second problem is that Steiner stands outside the Anglo-Saxon tradition, to which, thirdly, certain of his key ideas – e.g. that money is not a commodity – present too direct a challenge. If money is not a commodity, how can there be a market in it? (To which question Steiner would reply that what we call a money market may in fact be something else; not that it does not exist, but that it masks some deeper economic meaning and possibility.)
Fourthly, there is Steiner’s explicit questioning of Newtonian thinking. Building on the work of the German poet, statesman and scientist, Wolfgang Johannes Goethe, Steiner’s approach has greater affinity with German idealism, and thus, in the British tradition, with the likes of Samuel Taylor Coleridge.
In all these respects, however, one should guard against the premature conclusion that Steiner’s ideas are foreign to modern economic life, least of all on the grounds that Steiner was an esotericist. Later in the book, attention will be drawn to the fact that Newton was also an esotericist, and that many today think economics, and especially financial economics, needs to find a link to Romanticism, precisely because the global financial crisis has shown its epistemological foundations to be weak.
A fifth problem is that many advocates of Steiner’s economic ideas interpret and represent them as finance-averse and with an NGO, third-sector or left-of-centre bias.
Yet, many of his ideas overlap with neo-liberalism in fact (see 1.3.6: Steiner and The Austrians), a thought that is difficult to accept for many people familiar with Steiner’s work – even though ‘liberal’ is an allusion to Aristotelian economics, a genesis Steiner would in no way disavow.
Sixth, there is the awkwardness that Steiner’s ‘spiritual scientific’ (a combination of terms usually kept far apart in the Anglo-Saxon mind) view flatly contradicts positivism, though such a stark opposition could perhaps only occur to what Owen Barfield, an early proponent of associative economics and one of the original translators of Steiner’s economic texts into English, called a ‘naughty materialist’. Barfield (1944) distinguished between true materialists, for whom the non-material world does not not exist, but is all that is left over, all that, while we might experience it, cannot be explained materially.
8 Most well-known are Triodos Bank, based in Holland, the GLS Bank in Germany, RSF Social Finance in San Francisco and Prometheus Finance in New Zealand.
[English philosophy] seeks the material everywhere; it deals with the material, with the physical, in which it feels itself at home. That is one side of the picture. On the other side we have – what is left! If you laid your finger on everything that is material, wherever it is to be found, it follows that whatever is left is non-material. You have detached the material from the immaterial, and the immaterial that is left rejoices, as it were, in its freedom. And such is indeed the gift of English philosophy to Europe – the license for free speculation in the realms of pure thought, unhampered by disguised forms of materialism. One cannot of course say that the English philosophers had any such purpose in view; but there are other purposes besides conscious ones. In the light of the whole history of western consciousness it is very clear that English philosophy proper … was engaged on a definite task. It sought for matter everywhere – in order not to confuse it with Spirit. And by doing so it detached ‘what is left’ from the cosmos and made it free. (90–91)
Untrue materialists, ‘the ‘naughty’ ones, are those who, being amateur or inconsistent in their thinking, argue that because matter cannot explain the non-material, the latter does not exist.
1.3.4 And A SEvEnTh …
This brings one to the last of the problems that Steiner presents to modern economics:
the fact that his manner of expression is seldom hypothetical. To an English mind this can amount to a sin against science and rational thought – a ‘sin’ that has to be atoned for if Steiner’s ideas are to be given serious consideration. This last point is perhaps the most crucial. By way of atonement on his behalf (but not disavowal), where in this book Steiner’s economic and monetary analysis is treated it is done so in a hypothetical, even counterfactual spirit. That is to say, it invites consideration of his views divorced from one’s opinion of them or any changes in behaviour they might imply. It is not about proselytising or peddling his perspective, but asking for a fair hearing. In Steiner’s words,
‘One does not by any means wish to agitate that this or that must be done ... [Economic]
science, after all, has only to indicate the conditions under which things are connected’
(1996b: Lecture 6: 83).
It is in this spirit that Steiner is taken as a reference; because, in short, he has some interesting insights to share. It is in this spirit, too, however, that this book neither intends nor pretends to offer a systematic presentation, let alone defence, of Steiner’s ideas.
References to them appear as and when they are pertinent to the author’s exposition of his own lines of thought or enquiry, and where in the author’s own experience they have served as valuable (and usually valid) propositions for understanding events, good servants in a life-long endeavour to understand the deeper trends of modern economic life.
1.3.5 RudoLF STEInER And gEo-poLITICS
To these difficulties needs to be added another, the somewhat delicate matter that Steiner’s analysis entails the end – or at least, conscious recognition – of geo-politics. He considered, for example, that the main effect of the Treaty of Versailles was that global economic affairs after World War I would fall under the dominion of the Anglo-American peoples, who would in consequence have to bear the responsibility ‘going forwards’. Here is not
the place to go into this matter in any detail, but awareness of it is necessary, otherwise one would be perceived as historically nạve. It is for this reason that Philip Bobbitt’s image of the future is included in this book (5.3: The Market State), a future based on market states because we face a period of generalised terrorism. Its self-confessed lauding of Anglo-American concert and its sad and pessimistic view of humanity’s potential notwithstanding, Bobbitt’s book nonetheless provides an important foil for sensing the importance and salience of Steiner’s views for the simple reason that part of the global financial crisis entails the question: where to after the US dollar? Is the world’s future currency really to be the yuan, or the yuan-euro-dollar, or even some mix of yuan-rupee- real? Or should it not become something above and beyond all nations and all parts of the world economy, a single world currency in fact (see 5.4: A Single Global Economy), belonging to a civilisation that knows how to share the world’s economy because it also knows how to celebrate its diversity? Does it have to be about terror, in other words?
This, at any rate, is a central image of this book – a single global economy shared and mutually governed by a choir of the world’s peoples. This gesture is expressed in the well- known Hymn for the Russian Earth albeit of uncertain provenance:
If the people lived their lives As if it were a song
For singing out of light Providing music for the stars To be dancing circles in the night.
Intriguingly, a similar gesture seems to inform Milton Friedman’s famous dictum (from which Keynes would not distance himself) concerning monetary policy:
Flexible exchange rates are a means of combining interdependence among countries through trade with a maximum of internal monetary independence; they are a means of permitting each country to seek for monetary stability according to its own lights, without either imposing its mistakes on its neighbours or having their mistakes imposed on it. If all countries succeeded, the result would be a system of reasonably stable exchange rates; the substance of effective harmonisation would be attained without the risks of formal but ineffective harmonisation.
(1966: 200)
Nạvely perhaps, the thought thus occurs that precisely where Keynes and Friedman are of one mind associative economics finds its interface with current conventions.
1.3.6 STEInER And ThE AuSTRIAnS9
Though his formative years and early twenties were spent in Austria-Hungary and Vienna, Steiner cannot be described as an ‘Austrian’ in the sense that has in the history of economic thought. Although the economic philosophies of both Steiner and the Austrian school esteem the free, creative individual, this can also obscure the differences between them. Owen Barfield’s characterisation of Steiner’s general philosophy as ‘romanticism
9 For this section, a debt is owed to Mark Arnold, lecturer in economics and philosophy at Oxford and Cherwell Valley College, England, who provided the ‘ghost’ text.
come of age’ (see later discussion) indicates a very different orientation compared to the Austrian school. The holistic traditions of the German Historical School with its roots in Hegel were formative for Steiner, whose cosmology is framed in terms of evolutionary consciousness, a social philosophy which speaks of the ‘souls of nations’ and society characterised as organic, described later.
These and other themes such as ‘historical stages’ and notions of ‘social wholes’ are alien to Austrian metaphysics, witness the Austrians’ three main arguments:
Ludwig Von Mises argues that socialism, which would abolish such institutions as money and private property, will find it impossible to carry out economic calculations with the consequence that it simply defaults into planned chaos.
For Friedrich von Hayek (1945), socialism’s problem lies in the fact thatknowledge of particular circumstances exists only as the widely dispersed, personal possession of a multitude of different individuals, and consequently it is ‘practically impossible’ to assemble and process all the actual existing knowledge within the mind of a single central planner. Decentralisationof the use of knowledge is capitalism’s strength.
Murray Rothbard advocates a natural rights theory which justifies the ownership of private property attaching to the first appropriation of unused resources. It is the duty of government to protect such private property rights.
In contrast, the focus for Steiner is on recognising and gradually improving the working of and between society’s three autonomous yet interdependent economic, political and spiritual sub-systems (see Chapter 5, Rudolf Steiner’s Conception of Society).
He is also averse to dressing up in complex abstractions what is in fact aggregated human behaviour, if that is a fair description of ‘Austrian’ economics. And he is less concerned with who owns capital than that it finds itself in the ‘hands’ of people with appropriate capacities to use it and make it good in service to their fellows.
Austrian and (some) associative economists recognise the importance of utilising accounting models in decision-making; however, financial information needs to be supplemented by discursive space within the wider economic sphere. Steiner himself proposed institutional arrangements (‘associations’, hence associative economics) which bring together producers, traders and consumers whose task is to co-ordinate economic life. Von Mises would be critical of such institutional arrangements, arguing that it is unlikely that consensus will emerge between economic actors and that the state will have to intervene in order to sort out the mess. Von Mises also cautions that no one should be allowed, especially in a globalised economy, to representthe consumer except oneself.
Effectively, therefore, Steiner challenges the Austrian notion of ‘the market’ as the ultimate arbiter of how economic values are to be allocated. Firstly, ‘the market’ is to be contained by limits given by the environment, rights, and traditional ways of life.
Secondly, it is to evolveinto a confluence of individuals acting in conscious association with one another, rather than, as now, in relative alienation.
In saying this, aspects of Steiner’s approach to economic life are touched on that will not in fact be elaborated. Our attention will be confined to such of Steiner’s ideas as strike the author as directly related to the global financial crisis in its more ‘practical’ aspects.
The aim, as already stated, is not to provide a comprehensive exposition of Steiner’s work directly, but to include it in general financial discourse
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