Basic Issues of the Social Question - Unresolved

by Frank Thomas Smith

I. Beyond Capitalism and Socialism

Juancito is nine years old but looks six. He lives on the streets of a Latin American city and lives by the laws of the streets. He is already a criminal of sorts because begging is illegal and he is a beggar. In a year or two he will graduate to petty thievery and then on to violent crime. More than likely he will become a drug addict, thereby making his own violent end at the hands of the police or disease inevitable. Members of the middle and upper classes will shake their heads at the depravity of the poor or in commiseration, consciously or not will wish him good riddance and carry on as before. Juancito's name is legion; he can be found in virtually all regions of the world. He is a victim of social injustice -- a euphemism for greed.

Society is at a point in history where it must decide upon the path it wishes to follow. A crossroads is usually thought of as an either-or decision. One road goes in one direction, the other in a different direction. Modern history has, in fact, drawn two apparently different paths: socialism or capitalism. One part of the world chose one of these paths and came upon a dead-end, hurled itself forward and crashed into a wall, aptly symbolized in Berlin, drenched in blood and misery. The other part kept to its chosen path of Capitalism, only slightly modified, and fought to defeat or at least contain the hegemonistic ambitions of the Soviets. The Communists lost and logic seems to conclude that the other path was the correct one all along, and on which the whole world must now tread. The danger of this conclusion lies in the possibility that socialist criticism of Capitalism was and is basically correct and that the insistence on following this road will only lead to a repetition of the communistic - or some other ideological - experiment, with similar and foreseeable disastrous consequences. The fact that Communism has been found, in practice, to be worse than the evil it wished to supplant, does not necessarily mean that its criticisms of capitalism are not, at least to a large extent, correct and that the Juancitos of the world's suffering is indeed the result of capitalist indifference.

Capitalist theory is based on the belief in the goodness of greed. This is no secret. The father of capitalist theory, Adam Smith, said so in so many words. If capitalist man is allowed to exert to the full his egoistic yearnings to accumulate money and goods production will increase, society will be enriched and all will benefit. Stated in this way, the axiom sounds so simplistic and erroneous that one is astonished that virtually the whole world passionately believes it and tries to practice it.

Another great Briton, Charles Darwin, had much to do with humanity's capitulation to the theory of greed as goodness. Originally Darwinism applied only to the biological world: the origin of species and the survival of the fittest. However, what he observed in the plant and animal kingdoms was soon carried over, by others, into the human social realm and became "Social Darwinism". Both Smith and Darwin were religious men and believed that the hand of God was behind the observable phenomena in nature and in society. Adam Smith literally described the "invisible hand" guiding free market activities, a concept which was necessary to soothe his nineteenth century conscience. It was also necessary to cushion the jolt to common sense, for how else is it possible to accept the premise that such a complex activity as the economic one can simply run by itself like a perpetual motion timepiece when given the label "free market". The invisible hand image has been dropped in modern economic thinking, but the concept is the same when vague "market forces" are alluded to.

Karl Marx and his followers agreed that man is egoistic (or anti-social, as it were), but believed that this was the result of economic forces preying upon him from without. Given the opportunities inherent in the "free" capitalist system, one class - the propertied - would inevitably exploit the non-owners, the workers. Although production would indeed increase, its fruits would not accrue to all, but only to the owners. In fact, the workers would become even poorer than they already were at the time he wrote - which was poor indeed - until their condition became so intolerable that they would revolt, in a necessarily bloody fashion, and take over society in the name of the proletariat. But here Marx joins Smith and Darwin as a mystic: the dictatorship of the proletariat (the state) will cure humanity of its egotism and will itself eventually wither away, urged on, apparently, by some other-worldly, invisible force. Reality has proved this to be nonsense. Marx also predicted that economic power would be concentrated in few hands as the stronger capitalists absorbed the weaker ones. When one considers that 70-80% of world industrial output is accomplished by a dozen TNCs (transnational companies) it is hardly possible to assert that the prediction is far off the mark.

Essentially, both points of view are right and wrong at the same time, as all ideologies tend to be. Most will agree that man is egoistic, but when this is carried over into social science and called anti-social, the cries of outrage are immediately heard. "Man is a social animal, needs love and warmth, etc". I am inclined to agree with Smith in respect to the origin of this trait: that it is innate and not wholly negative. Individual human behavior is purely social only when the one strives exclusively for the well being of the other. This, however, is virtually impossible. Even Mother Teresa had to eat, and every time she did so she consumed what another could not. This is of course a grotesque example, but deliberately so. What I wish to point out is that the satisfaction of one's own needs deprives another, if only to a minuscule extent, of that satisfaction. Yet we are obliged by the nature of things to provide for our own needs and for those of our children or we and they will no longer exist. In doing so we tend ignore the needs of others, of those who are hungry. No moral criticism is implied; no moral question is involved. It is only when the satisfaction of one's own needs also becomes the satisfaction of one's own desires does this behavior become effectively anti-social, for it is then often necessary to exploit others in order to satisfy superfluous desires.

Another type of commonly observed behavior can be called asocial. This is usually deemed to be negative, and is indeed so when someone just doesn't give a damn and refuses to get involved. However, the desire to improve oneself through study or the need to get away for the weekend now and then, or even meditation, are essentially asocial behavior because they are done alone. They don't do any harm, nor do they help anyone except oneself.

To recapitulate, the three forces are:

* Social - acting for the benefit of others. Christ's message, Love thy neighbor as thyself, loses its meaning if it is understood to mean a passive feeling towards others, even if that feeling is called love and assuming that the lover knows what love is. Love must rather be demonstrated through acts, or it is abstract.

* Asocial - acting for self-benefit, without affecting others.

* Anti-social - consciously or unconsciously acting against the interests of others. The place where anti-social activity is most likely to have grave negative effects is in the economic sphere, for it is here that exploitation of the many by the few in fact takes place and is the main cause of social unrest.

The central question is whether the egoistic forces in society can be harnessed and their energy redirected towards social instead of anti-social actions. If it is possible to demonstrate this, it would indicate that the choices available are not only Capitalism or Socialism, but that another alternative may exist. If such a third way exists it must be found and acted upon.

This third way has, in fact, been described by Rudolf Steiner in his book Basic Issues of the Social Question1 (Kernpunkte der Sozialen Frage � 1919), in which he urges a "threefold" or tripartite social structure. There is no question that the book is dated. The essential concept is, however, valid.

II. Is Slavery Really Dead?

Roberto Cavallo leaves home at 5.30 a.m. in order to arrive at his job by 7. He is employed in a small company, which manufactures gas heaters, where he earns $500 per month. The country is Argentina, where the cost of living is approximate to that of the United States. Of course he and his family (two children) cannot live on his salary, so he has a second job as a gardener and his wife works as a maid. He considers himself lucky. The owners of the firm, two brothers in their early forties, send their children to exclusive private schools, own second country homes and vacation in Europe.

Slavery existed in civilized human society from the beginning of recorded history until the middle of the nineteenth century, when it was abolished in the United States, the last "civilized" country in which it was officially condoned, not as the result of a humanitarian impulse, but by means of a bloody civil war. To the Western mind, the fact that slavery was condoned in ancient Rome, Arabia, Africa, even the United States during its early period, is not particularly surprising. That the most enlightened souls in ancient Greece also accepted it and found it normal is, however, somehow shocking. How could Plato, Aristotle, Socrates justify such an inhuman institution? That they did not bother to justify it indicates that it was simply in the order of things and it never occurred to them or anyone else to question it. This implies a development of consciousness, for not even the reactionary elements today would try to reinvent slavery. In the southern United States the real reason for slavery was the economic need for free labor on the plantations. The rationale was that the Africans were not quite human and it was therefore legitimate to treat them as what they were thought to be: animals. This was probably sincerely believed by many, if not the majority. Even the Nazis needed a rationale for the murder of the Jews: their racial inferiority, which was a danger for the purity of the German nation.

Just as slavery was a natural condition for the ancients, a form of modern slavery is natural for us: we do not question it. The modern form of slavery deals in the buying and selling of human labor. Previously the whole person, body, soul and spirit, was owned by another, was bought and sold, abused or treated decently as animals still are, depending on the whim of the owner. The slave was an object, no more than an intelligent means of production. To what extent has this changed? It is no longer possible to buy a whole person. If we compare the modern industrial worker and the agricultural slave, we find that freedom exists today for the former, but only to a degree. If he doesn't like his job he can quit and try to find another. If he does, he will find that nothing has substantially changed. He still sells his work to the highest bidder. The employer is in the position of being able to buy (but not sell, except in professional sports) an essential part of the human being: his work. If this sounds at first glance exaggerated, observe the "labor market", in which the negotiations take place. Labor unions have the obligation to obtain the highest possible price for the labor they represent, and management attempts to buy the commodity as cheaply as possible. Trans-national companies seek out countries where labor is cheapest in order to invest in new plants. There is no question that labor has the nature of a commodity, an object, an intelligent machine - still, under the capitalist system.

The effect this has on the worker is profound. In under-developed countries, where labor is exploited through low pay levels and miserable working conditions, there is constant friction between labor and ownership which often spills over into the political arena. Demagogues or military interests take advantage of the misery experienced by the lowest (working) levels of society in order to seize political power. They promise the workers much and usually deliver nothing except more misery. In any case, the development of democratic institutions is inevitably interrupted and set back for years. Hitler and Mussolini, to name only the most extreme examples, were originally the leaders of workers' movements. Such demagogues are able to seize power because they are supported by the masses. But even in economically "advanced" countries, where workers are paid decent wages, labor dissatisfaction is always prevalent as is evidenced by constant union demands for more pay and benefits. These demands are made even when wage scales and benefits are adequate. The results are higher production costs and inflation.

We can curse union lack of responsibility until we are blue in the face, or enact legislation which limits their influence, but it does not help because neither rhetoric nor superficial legal measures get to the heart of the matter. The fact that workers are forced to sell their labor, thereby consolidating their semi-slave status, results in a deeply felt sensation of being wronged, regardless of the amount of remuneration received. Until this situation is recognized and corrected, harmonious labor relations in industry will not be achieved.

The question is: how can this situation be corrected? History has shown that turning ownership and control of industry over to the state is a grave error. There is, however, an alternative. A look at the reasons for the astonishing success of Japanese industry reveals a clue. Japanese industrialists are no less capitalist than their western counterparts, but they do something essentially different. Despite their reputation for being an ant-like society, the reality is quite different. Japanese industrial culture considers the worker to be a human being - not a machine as in the west - and treats him accordingly. Kaoru Ishikawa states this unequivocally in his revolutionary book "What is Total Quality Control?" When workers are able to organize their own work through institutions like Quality Circles and are fully informed concerning the objectives and policies of the company they become motivated. An organization with motivated co-workers will out-perform by far one with unmotivated personnel. This does not mean that the Japanese have solved the social problematic which began at the inception of the industrial revolution. They have, however, taken a first, tentative, perhaps unconscious step in the right direction. In their society industry is still owned by anonymous shareholders as it is in the rest of capitalist society. The problem of ownership of the means of production remains unresolved. Their success, however, is certainly enhanced by the fact that foreign competition has not been willing or able to take even that first step, despite the fact that the philosophy behind the humanizing of industry originated with western industrial psychologists such as Douglas MacGregor and J.A.C. Brown.

Profit sharing is another baby step in the right direction. Unfortunately, the percentage of profit shared is usually infinitesimal and is therefore perceived by workers as being the cynical sop that it is.

These two steps, worker participation in decision-making (which does not mean control of the decision-making process, but only participation in decisions which directly affect them and their work) and profit sharing, can be grasped as already existing methods which could be expanded to the extent that justice is achieved. If all workers, including managers, are part owners of the company in which they work, and if there are no other part owners, the semi-slave status of workers would be eliminated. This is not communism. I am not advocating that industry should be turned over to the state which supposedly represents the workers, but that it should be owned by all those who actively participate in it, and only by those.

The obvious objection to this concept is based on a myth: the necessity of stock markets. Capital is indeed raised by the sale of company stocks in the market. But the main function of this market is a speculative one. It is little more than respectable gambling, somewhat safer than the racetrack or the roulette table at Las Vegas. It is the forum in which the rich increase their capital without the necessity of resorting to work. The myth is its necessity. Other means of raising capital for production exist: bank loans and bond issues. In both of these alternatives the lender may reap a reasonable profit, but has neither a voice nor a vote in the company's policies. In other words, he is not an anonymous owner with the capability of reaping profits for himself at the expense of those who do the work. The conversion of anonymously owned companies to worker-owned enterprises would be complex and would take time, but it could be done with the necessary basis of corresponding laws, which could be enacted by any democratic legislature not dominated by economic interests.

Banks of course are also anonymously owned, profit oriented enterprises. They should be required to convert to a special non-profit-making status. Not that there would be no profit, but it would be used only to cover the banks' own costs and reinvestment requirements. An important and immediate benefit deriving from such a conversion would be lower interest rates due to the abrogation of the need to pay dividends to stockholders. Dividends are, in reality, a cost; hence, lower costs and the resultant lower interest rates, meaning greater borrowing power for industry, which should more than offset the lack of anonymous investment capital.

Another myth, the motivating power of profit, will be approached in the next essay.

III. Motivation and Reality

"The well-being of a working community is that much greater the less each individual claims of the proceeds of his efforts for himself; that is, the more he cedes to his fellow workers, and the more his needs are not satisfied by his own efforts but by the efforts of the others. All activities within a community which contradict this law must, in the long run, cause suffering and misery." Rudolf Steiner2

The above statement requires some reflection. Steiner called it a social law, and compared it to a law of nature. Should it indeed have the authority of a social law, much of the suffering and misery being experienced in the world today can be understood as the result of this law being contradicted in an extreme manner. Although tax systems require us to cede a portion of the "proceeds of our efforts" to the community, in the case of the rich as individuals and corporate organizations it is a small portion and contributes little or nothing towards the just distribution of wealth. Nor can it be taken for granted that a graduated income tax system is intrinsically beneficial. It is no secret that the wealth of the world is concentrated in the hands of very few and that the majority of the human beings currently alive live either in poverty or abject poverty. The capitalist prediction that an increase in production will bring prosperity to all has been disproved by reality, just as the Marxist prediction that a social utopia can be obtained by the worker state expropriating the means of production (capital) and administering it has been disproved by the same inexorable judge. Although it is true that the populations of certain more favored countries of the "first world" have benefited materially from increases in production, it is also true that economic activities are no longer national, but worldwide. Therefore while Switzerland and Sweden prosper, Somalia and Guatemala suffer in inverse proportion.

The "mixed" economy, part state owned, part privately owned, seems only to incorporate the worst of both systems. The state is eminently incapable of operating economically viable enterprises. As governments are obliged to reduce losses, the tendency is towards "privatization", thereby strengthening the capitalist system and increasing the size of the gap between rich and poor.

The principal argument in favor of capitalism is motivation. The entrepreneur (capitalist) is motivated by profit. The manager is motivated by his high salary, the worker by whatever he earns plus fear of losing his job.

An incident from my own work experience illustrates the absurdity of this proposition. As manager of a branch office, I received a call one day from my boss in head office. He informed me that he had received instructions from the president of the company (who in turn was instructed by the board of directors) to reduce management personnel in his section by 25%. I was safe, he hastened to assure me, although my heart had already jumped to my throat, but he had to decide immediately which ten people would be let go. He wanted my opinion concerning his shortlist. Although we were scattered around different cities of the world, all the people concerned were, if not intimate friends, at least friendly colleagues. I had no desire to share the boss's anguish at having to decide. A quick calculation of my income, which was far in excess of my needs, reduced by 25%, led me to make what seemed to me to be a logical suggestion. Why not ask everyone if they would voluntarily take a 25% cut? The result in company saving would be practically the same. This was, by the way, long before the concept of lean management was introduced by necessity into corporate thinking. For us, the work was there and we were already lean in relation to it. The reduction in personnel was dictated by purely financial considerations and was instigated by a new financial director anxious to make a name for himself. There was a long pause at the other end of the line as my superior calculated his own reduction. Then he said that he doubted the idea would be accepted higher up, but that he would consult and let me know. He called back the same day to inform me that my suggestion had been seriously considered at the highest level, that my interest was greatly appreciated, etc., but that the idea had been rejected. The reason given was that a person was considered to be worth what he earned and if we reduced management salaries it would mean that we were all worth less, would be that much less motivated and our production would be reduced accordingly. I told him that was absurd. He agreed, but that's the way it goes, everybody knows - to quote Leonard Cohen.

But what if motivation is not merely a function of money and greed? What, then, is the true motivation? In order to know, it is necessary to also know something of human psychology, not the psychology derived from the study of the behavior of rats, but from the observation of human beings outside the laboratory. If we believe that the human being is the most developed animal, we are at a dead end and the carrot and stick social Darwinists are right. But if man is more than that, if he has a soul and spirit and is capable of acting from motives which exceed those dictated by instinct, then we are obviously on the wrong track when we suppose that he will react to the same stimuli as a laboratory guinea pig. If some reader expects me now to "prove" that man has a soul and/or spirit, I must disappoint. I cannot cite one single laboratory experiment that provides such proof. Nor, however, can anyone prove the contrary. Neither intelligence nor education can provide the answer, as there are many very intelligent, educated people on both sides of the question. If their training and intellectual capacities were decisive, they would all agree, one way or the other, but they don't.

Are we at an impasse? Not necessarily. In order to show why, I will explain what I mean by "soul" and "spirit". The soul is that part of the human being which feels and is conscious. I see a beautiful landscape with my eyes, but the pleasure it brings me is felt by my soul. Inversely, the pain I feel at the sight of starving children is also a function of my soul. That another might not feel pain, but pleasure, or might even enjoy torturing another human being, merely indicates that his soul has developed differently; has taken an abnormal, sub-human or pathological path. Even the "physical" pain felt as the result of receiving a blow is, in reality, felt by the soul. (When consciousness is absent, there is no feeling.) Sensation and consciousness are shared however, to a lesser degree, by the animals, and if our thesis is that there is a fundamental difference between them and human beings, it is necessary to define this difference. The spirit in this context is the immortal "I", or self, of each individual. This individual self not only thinks, an attribute of man alone, but also intuits. Intuition is hard to define and in any case has several meanings. Here I mean that unconscious knowledge which dimly emerges into consciousness at dispersed, short-lived intervals. It tells us that such things as soul and spirit do exist and that life has a far greater meaning than we have ever guessed. It is sparked by a chance encounter, a piece of music, a poem, a book, a tree. For an instant we are different, we know, we intuit; then it disappears like the flame of a candle blown out by someone behind us. Motivation is a function of soul and spirit. At the soul level, I want recognition, decent working conditions and pay, the possibility to share in decisions and organize my own activities, a friendly social atmosphere. The spirit is more demanding. It wants to know the meaning of my activities, it wants responsibility towards others. It wants to work for others more than for myself. That these desires are unconscious does not make them less real, only more difficult to realize.

This is an existential question. Some may agree that intuition tells us that the above or something similar is true. Others may reject such an assumption outright. But a third possibility also exists, along the lines of Kierkegaard's Either/Or. If my intuition tells me nothing (or if I can't hear it), I should weigh the consequences of acting on the one hand as though it were not true and on the other as if it were. If I act according to a rejection of the spiritual nature of man I can, if I dedicate some thought to my situation, only end in despair, for life has no meaning and death is the end of the road. But if I act according to the hypothesis that I have a spiritual nature, then that spirit is immortal and this has far-reaching consequences. It could even result in the conviction that my Self is destined to reincarnate on the earth in order to continue its development. In any case, it means that life has meaning and each of us has a need to know, or at least intuit this meaning. And it means that our neighbor also has a spiritual nature and is striving for the same development as myself. In this case, do I help him or do I exploit him?

If I want to help him and he is my subordinate in the work place, I must give him the opportunity to develop his Self and to take the first steps along the path to freedom.

My motivation and my perception of the motivation of others change radically. No longer is it possible to believe that motivation is governed by self-aggrandizement. The real human motivational needs are rather related to the need to help others. If this sounds like hopelessly muddled idealism unrelated to reality, I suggest that we look again at Steiner's social "law" and try to envisage an expanded world community in which this law applied. The well being of all would doubtless increase immeasurably. The objection that man is intrinsically an egotist and would never be able to put such a law into practice brings us back full circle. It must be tried before it is rejected.

1.     Steiner, Rudolf. (1919) Basic Issues of the Social Question. Translated by Frank Thomas Smith.

2.     Steiner, Rudolf (1905) Anthroposophy and the Social Question. 3rd of three essays first published in October 1905. GA 34. Mercury Press, New York, 1982. ISBN 0-936132-42-6