How does the money system described in Money for a Threefold Society [MTS] relate to what Rudolf Steiner says about X-Wheat?
In his fourteenth lecture of World Economy, Steiner imagines a closed village community – consisting of 30 physical workers and three spiritual workers – a teacher, a priest, and a village clerk (CW 340, p. 178ff).
In order to provide for the needs of the three spiritual workers, the 30 physical workers must collectively produce an extra 10% – over and above what they need for themselves. Then, each gives the spiritual workers a credit note – a cheque or IOU – as a way to compensate them for what they provide the community. At a later time, the spiritual workers can redeem these credit notes for real goods produced by the physical workers.
This is the essence of money – a form of credit – that comes into existence on the basis of future goods to be produced by physical labour working on the means of production. This same credit money later vanishes from existence once these goods have been purchased from the producer. [1]
This process describes the threefold dollar money system exactly. The manager of the means of production – the asset – obtains newly issued threefold dollars from the financial community. [2] Threefold dollars represent the future value of goods and services the physical labour working on the asset under the manager’s direction will produce – called the book value. [3] These threefold dollars are credit notes that can be passed to others as compensation for what they provide.
In this way, the threefold dollars that the producers borrow and spend – that is, the current total of outstanding usage loan principal – are credit notes that circulate among all the different people in the village.
Eventually, when the manager receives these credit notes back again – in exchange for goods and services provided through physical labour working on the asset – these return to the financial community to repay the usage loan. At this same moment, these are withdrawn from circulation: the money is deissued and ceases anymore to exist.
To make all this more concrete, let us imagine that our small village community has a vegetable garden. The financial community can appraise this garden as having a certain book value, based on an estimate of the vegetables the manager – the gardener – can produce through physical labour applied to this garden, to the land.
Initially there is no money in existence. However, the garden manager is able to borrow new credit notes – threefold dollars – issued by the financial community against the productive economic value of the garden – up to the specified maximum of the book value. And then the garden manager can use these notes to compensate the teacher, priest, and clerk for their services. [4]
At some later time, the teacher, priest, and clerk can drop by the garden and exchange their credit notes – threefold dollars – for vegetables to eat. Thus the value of the threefold dollars is in fact the physical labour spared the spiritual workers, which is instead provided by physical workers who work the land. As the garden manager collects the credit notes – threefold dollars – back again, these pass to the financial community to pay off their usage loan – causing these notes to be withdrawn from circulation and deissued. Thus, the situation returns to the starting point again, with no money in existence.
Compare this to what Steiner said in Lecture 14 of World Economy:
Go back to the hypothetical case I took yesterday—the closed village economy, In such a self-contained village economy you have the manual workers, but I assumed that the only spiritual workers were the parson and the schoolmaster and possibly the parish clerk. It is a very simple economy! Most of the people are doing bodily work, bodily work upon the soil; only, they have to do in addition enough bodily work to provide for the needs—food, clothing, etc.—of school-master, parson and clerk. It will be additional, for the schoolmaster, the parson and the parish clerk do not do their work upon Nature for themselves. Say that the village economy consists of 30 peasants plus the three—what shall we call them?—“worthies.” These three supply their spiritual services. They need the spared Labour of the rest. Suppose that every one of the 30 peasants gives to these three, or to each one of them, a token, a ticket, on which is written so much, say x, of wheat—that is, wheat elaborated to a certain point. Another member of the community might give a ticket on which something else was entered, something comparable to wheat for purposes of consumption. These things can be ascertained. The schoolmaster, the parson and the clerk will collect these tickets. Instead of going out into the fields to fetch their wheat and rye and beef for themselves, they will hand over their tickets to those concerned, who in their turn will do the necessary Labour in addition to their own and will give them the product in exchange. That is a process which cannot help developing of its own accord. It cannot possibly be otherwise, nor does it make any difference if it occurs to some bright individual to introduce metallic coin instead of tickets. It amounts to this: Some kind of tokens must be devised, based on the stored-up material Labour—Labour expended on means of production, Labour invested in economic values. And these tickets must be handed over to those who need them, so that they can save themselves the Labour.
Hence you will see that no kind of money can in reality be any other than an expression of the sum-total of means of production available in a given region—means of production including in the very first place the land itself—reduced to the form in which it can be most suitably expressed. This will relate the economic process to something which we can at least take hold of (CW 340, pp. 178–179).
And also compare to:
We shall find that our currency, representing, as it were, the day-to-day book-keeping of world-economy, will have to be inscribed, let us say: “Wheat producible over a given number of acres,” and this will then be equated to other things. The different products of the soil are the easiest things to equate. So you see where it is we must start from—our figures must mean something. It simply leads away from reality if money has inscribed on it: “So much gold.” It leads towards reality if it has inscribed on it: “This represents so much Labour upon such and such a product of Nature.” For we shall then have this result: Say there is written on the money “x wheat,” all money will be stamped “x of wheat, y of wheat, z of wheat.” The real origin of the whole economic life will then be made evident. Our currency will be referred to the usable means of production upon which bodily work is done—the means of production of the given economic region. This is the only sound basis of currency—the sum-total of the usable means of production (CW 340, p. 181).
For a further, more detailed articulation of this lecture and Steiner’s imaginary village – and how this relates to the issue and value of money – see the trialogues near the end of Money for a Threefold Society (Part VI, Chapters 30–32).
– T. Michael Cox, 20 September 2024
— NOTES
[1] Furthermore, although Steiner does not say so explicitly, these same notes might also be issued between physical workers – so that, say, a forester gets wheat from a farmer now in exchange for a credit note, allowing the farmer, at a later time, to use this note to claim wood from the forester.
[2] The financial community issues threefold dollars as a matter of practicality – so that everyone in the village uses the same fungible, standard notes for exchange. If, by contrast, each producer were allowed to issue their own notes, villagers would invariably have to contend with converting among a variety of non-standard notes in different denominations – representing different goods such as wheat, rye, beef, and so on, in various quantities. Furthermore, if producers were allowed to issue their own credit notes, what is to stop them from issuing an unlimited number of them? So instead, the financial community provides the village with a common means of exchange – threefold dollars – and appropriately limits the credit issued by any one producer to the book value, which corresponds to an estimate of the future goods and services the producer is able to produce.
[3] Book value is defined in MTS as “the share of the value of the goods and services produced by the asset that accrues to the owner” considered over the lifetime of the asset (MTS Note 77 to Chapter 4). This share is normally very small in comparison to the share of the value of the goods and services produced that accrue as compensation to workers and managers for their physical and spiritual contributions.
[4] Of course, the garden manager can also use these credit notes – threefold dollars – to compensate the physical workers who provide physical labour to grow and harvest the vegetables. Later, these same physical workers can return to the garden and exchange their credit notes for vegetables to eat – just like the teacher, priest, and clerk.