Rudolf Steiner’s Approach to Financial Politics

Rudolf Steiner was the founder of the Anthroposophical Society. He died in 1925. He left us, incongruously for a ‘religious leader’ of a sect or cult, an interesting treatise on monetary politics. Written years before the Great Depression, it shows an eerie actuality in view of the present crisis.

Rudolf Steiner

Rudolf Steiner is best known for his founding of the Anthroposophical Society, a religion to all intent and purpose. His major achievements can be found in his writings, but also in his architecture and execution of the Goetheanum in Dornach near Basel, Switzerland. It houses the world centre for Anthroposophism. His interests stretched to the problem of money amassing individuals.

In one of his public speeches, he explained: “Other goods, for which capital should be but a representation, have the characteristic trait of either degrading with use or losing their usefulness if not used in time. Capital, insofar as it is liquid capital, should be made to share the doom of all other goods. ... It should be possible to safeguard the interests of savings at the same time.”
 
His view was therefore that savings should be allowed as the money saved into bank accounts is returned to the economy in the form of loans (this view is at this time questionable looking at what the banks are doing, or rather not doing). His aim was targeting cash hoardings and short term investments, which could translate to gold stashes, options, futures, and hedge funds in modern language in addition to the eponymous banknotes under the mattress.

As options, futures, and hedge funds were unknown at the time, his solution presented in one of his treatises was focused on cash stashes. He proposed the regular reprinting of money to get the money back into circulation. His approach resembles the historic facts in the German Empire between 1100 and 1495. Regular reissuing of moneys with a 10 percent levy on the exchange (resembling a negative interest) made people spend or give away their money and in consequence made Germany the richer. The building of large cathedrals during this period would not have been possible without it.

In 1495, Emperor Maximilian introduced Roman law into the Empire and with it a stable and permanent monetary system. This opened the door for the great money princes, the Fugger family, the Wels family, and later the Rothschild family. They earned enormous interests of up to 270 percent by lending their money to the sovereigns in Europe and even overseas.

To understand the problem fully, an imaginary picture might help you. Imagine a dam and behind the dam in the valley a body of water, a reservoir of money. If this reservoir has no exit, the river below the dam runs dry, the economy dies. Only if there is a regular and substantial flow of water or money from the reservoir the economy will flourish. Money in the closed reservoir would be dead capital, not doing anything for anyone.
 
Governments have tried to alleviate the problem of stagnant capital by imposing inheritance taxes. The problem there was (and is) that the tax hurts working capital much more than stagnant capital. To keep in the picture, taking away half of the dead money from the stagnant reservoir does not move the other half; while taking away half of the working capital that keeps the river flowing actually hurts the economy.

The solution to the old conundrum as well as today’s problems therefore must lie in a proper definition of working and dead capital and in finding a way to hurt dead capital while at the same time rewarding working capital. On the way there, studies of Rudolf Steiner’s ideas won’t hurt at all.

Further reading
How Money Came to Dominate Our Lives
Prophet of the Banking Crisis
Museum City: Basel