What would Steiner do?

Off to an Anthroposophical Society of Ireland workshop on the financial crisis in Dublin (looking forward to it if not the 6am start!) 'Money - In Search of Truth and Reality within the Financial Crisis'.

I've been reading a little about Steiner's view of the economy - as part of his conception of the 'threefold social order' (economy, state, society), but can't say I've really understood him. In an effort to better do this I've joined and now subscribe to the Centre for Associative Economics - http://www.cfae.biz/The latest issue its journal - Associate! has some interesting articles. In one I read the following:

"To bring balance to purchase money and loan money, we need to step in through gift money and convert our excess surplus into purchase money: in effect to give away capital to maintain a healthy economy. This is not necessarily a matter of more charity; there are other ways this can be accomplished such as interest free loans, or loans that can be written down as the borrower achieves success in his or her business activity. The other solution is to cut debt, to reduce the principal on a housing loan, in effect just shrink the amount of debt in the economy. These actions free up funds to spend on core activities; ideally activities which serve the general needs of humanity – education, health, culture. This gesture is guided by the understanding that capital cannot grow indefinitely in relation to spending money, that excess surplus has to be returned to the economy in a healthy way, that my surplus at some point is probably best used by someone else, not accumulated for my benefit. “What is mine is yours and what is yours is yours.” This, according to the Rabbi, is the attitude of the virtuous for it recognizes the importance of giving. The parallel in the associative economic view is the importance of gift money".

This idea of 'gift money' seems to be that for moral as well as sound economic reasons (to prevent booms and crashes) 'surplus' profits (or a proprtion of them) should be simply recycled back into the system. The idea of interest free loans has a definite appeal in relation to the financing of any 'Green New Deal' with innovative financial mechanisms such as 'Green Bonds' or creating a 'Green Bank'.

In Steiner's 1922 lectures on economics he writes perceptively about money and its role in the economy;

"We ought not to let money merely flow
into circulation and give it freedom to do
what it likes. For we thereby do something
very peculiar in economic life. If we require
animals for some kind of labour, the first
thing we do is to tame them. Think how
long a horse has to be tamed before it can
be used. Yet we let money circulate quite
wildly in the economic process"

Steiner, R Lectures on Economics, New Economy Publications, Canterbury 1996 - emphasis added.

From what I can gather - or gather so far from my very limited reading and understanding of his ideas - what Steiner had in mind was the necessity to build in devaluation within the money supply. This is something I've come across before in my research and reading on alternative/complementary currencies and the use of 'scrip money' during the 1930s Depression (I wonder will our current economic woes which are being called a recession develop into a depression so that it will have to have a capital D like the 1930s?!), which was a form of local money existing alongside the official currency http://www.depressionscrip.com/.

One of the main issues with scrip money is it had an in-built depreciation mechanism - either each time you used it, this was one transaction closer to it being no longer useable (i.e. each scrip note had a fixe number of transactions it could be used for), or there was a date set when the scrip note would be worthless and no longer accepted as a medium of exchange. The ingenoius element of scrip money, and which speaks to Steiner's concern about the dangers of 'surpluses' being accumulated, is that these currencies encouraged exhange and economic activity but discouraged hoarding. What's the point of hoading currnecy that is 'worthless' after it time limit has come?

I would suspect that as the economic crisis deepens we'll see a return to such localised responses. Alongside people shopping more in charity shops anothe depression-beater is re-localisation, and one of the most successful and best know recent examples of this is the Totnes pound championed by the Transition movement http://totnes.transitionnetwork.org/totnespound/home .

Had great fun today blogging and responding to posts I put up on TASC's Progressive Economy website - first reponding to comments from mainstream neo-classical economists on the release of the Comhar Green New Deal report -http://www.progressive-economy.ie/2009/10/comhar-report-towards-green-new-deal.html? and also a reply 'The Neo-classical empire strikes back' - http://www.progressive-economy.ie/2009/10/green-new-deal-neo-classical-empire.html to a post Richard Tol had put up on http://www/irisheconomy.ie attacking the report. The replies to these two posts and ensuing conversations were illiminatation. I'll put them below


"I'm sure Richard Tol, if he so chooses, will be well able to defend his position. However, for me, Richard's post identifies the clear choice between, on one hand, governments setting (and committing to) the policy and taxation regime, facilitating the market mechanisms (e.g., cap-and-trade) and applying the necessary regulation and, on the other, governments being the prime movers, investors, policy-makers, regulators, winner-pickers, etc. Att all times and places, when and where this choice is valid,and applying the tried and tested tools of economic analysis, the former is superior to the latter.
October 2, 2009 2:35 PM
John Barry said...
OK, fair enough - its clear where we both stand on an unfettered market and role of the state etc. but what about the other points raised in my post - for example the ideological bias and dominance of one take (neo-classical)on economics? I'm unsurprised whenever I raise this 'hidden' aspect of the mainstream take on economics that the silence is both deafening and telling. I'm NOT saying neo-classical appraches are always and everywhere wrong etc, all I'm asking for is a) an explicit recognition of its normative assumptions and b) greater pluralism in the debate about economic policies. Thanks for taking the time to respond.
October 2, 2009 2:46 PM
Paul Hunt said...
The difficulties always arise when the economic circumstances are such that some deviation from the first option may be required to achieve a valid policy objective. The configuration of energy policy, regulation and economic organisation in Ireland is so dysfunctional that major reform is required if the objective is to begin to alter the pattern of energy consumption and to reduce carbon emissions in the short to medium term.But this, of course, isn't on the political agenda. There may, indeed, be a role for direct government intervention in the context of incomplete, inadequate or malfunctioning markets, but only when the fundamental dysfunction is addressed. As a result we are fated to experience expensive, economy-damaging government interventions.
October 2, 2009 3:00 PM
John Barry said...
And the question as to the ideological and normative assumptions of neo-classical economics?.....Go on, you can say it here - you're among free thinkers!
October 2, 2009 3:19 PM
Paul Hunt said...
You jumped into the join between my posts - posting on this site is a pain. By no means "unfettered". Even the most imaginative S-M fan would struggle to conceive of the incentives and constraints I see as necessary. The huge body of theory and evidence has persuaded me that markets are the least worst tool we have to make capitalists (possessors of human, physical or financial capital)jump through hoops to deliver economically and socially useful outcomes. And, to the greatest extent possible, governments should focus on using this tool effectively - rather than intervening directly. There will always be plenty for governments to do in other areas.
October 2, 2009 3:22 PM
John Barry said...
So, just to be clear - the basic ideological position is the following:Markets are good, but need government regulationGovernments should stay out of marketsMarkets deliver for societyAnd of course none of these are 'objective' or 'scientific' but based on normative assumoptions not about how society or the economy is, but how the economy ought to be.But may I ask, though I guess I know the answer - what are markets for? what does a market based/organised economy deliver? Namely, orthodox economic growth - which again has a whole range of normative implications and assumptions - ranging from how this acts as a substitute for greater socio-economic inequality, its implications in terms of global justice and the distribution of development opportunities globally; how a sub-system (the economy) can expotentially grow when the larger system (the ecosystem) is finte and fixed; to the really thorny issue of the contribution of this model of economic growth to well-being beyond a threshold. So... if one is not an egalitarian, is not particularly concerned abotu global justice, or ecological limits, or that well-being ought to be a matter for public policy, then its clear - neo-classical economic growth is yer only man. Is what I've said here a complete distortion of your position?
October 2, 2009 3:39 PM
Paul Hunt said...
I'm not dodging your legitimate questions. I'm not keen on labelling - it encourages pigeon-holing and stereotyping (as well as creating carricatures), but we need to distinguish between Neocons, Neo-liberals and Progressives. As I have pointed out on previous posts, the Neocons have shamelessly purloined the neo-liberal brand which has a distinguished pedigree from Adam Smith through JS Mill to Keynes and onto Krugman, Sen and Stiglitz in the modern era. Only for the purposes of this post I would describe Neocons as "Markets everywhere; government nowhere (expect to enforce prperty rights, to clean up the mess they make or to prosecute profitable wars)"; Genuine Neo-liberals as "Markets where possible; government as and when required"; Progressives as "Governments everywhere; and markets only if we really have to". I know this is probably unfair, but if the cap fits...
October 2, 2009 3:44 PM
John Barry said...
Paul, I think you misunderstand me. I'm not interested in labelling myself, but am asking about the underlying values, and normative principles which each and every theory of political economy has - whether it makes these explicit or not. Each of the three positions you outline - neo-cons, neo-liberals and progressives - have different (and some shared) normative views, all I'm asking for is a greater honesty or self-awareness that none of these positions - and others - are objective, scientific, value-free or non-ideological. That's all. My main gripe is the continuing fiction amongst neo-classical economists that their position on the economy is somehow non-political or non-ethical or non-ideological.

So far no reply to this last post....

Green New Deal for Republic of Ireland published

Comhar - the Irish Sustainable Development Commission - has today launched its 'Green New Deal' document outlining an alternative, green, sustainable and low carbon path to economic recovery in the Republic.


As someone who has worked on the GND for NI (and as someone who had some small input into this report), I am extremely pleased and welcome it obviously.


Some of the report's findings include:

· Revive the Irish economy and create job opportunities through building an innovative, low-carbon and resource efficient society.

· Protect ecosystems and biodiversity while reducing fossil fuel dependency.

· Provide for greater social inclusion through stimulating new green jobs, reducing fuel poverty and delivering better access to transport.

· Build ecological resilience and capacity to adapt to climate change.



It recommends focusing on the following areas:

· Improve the energy efficiency of existing housing stock
· Renewable Energy
· Transforming the National Grid
· Delivering Sustainable Mobility
· Public Sector Investments
· Skills and Training
· Green Infrastructure



All of which the report argues would create hundreds of thousdands of jobs, create economic activity as well as enhancing energy security, begin dealing with peak oil ('leave oil before it leaves us' as it were) and reducing CO2 emissions.

The report has been discussed in today's Irish Time's by Jim Gibbon

http://www.irishtimes.com/newspaper/opinion/2009/1001/1224255612654.html

The timing of this is interesting in that the Green party has begun negotiations with Fianna Fail about reviewing the Programme for Government and its clear the junior coalition party is going to push for greater 'greening' of that programme and has a list of radical policy demands that may, given the weakened state of FF, be delivered upon.

I'd like to think that there was some synchronisation involved....and good luck to the Green negotiating team in pushing the FFers as far as possible to implement some radical policy changes.