By Daniel Osmer Sebastopol, CA, USA 

“My interest in science was always essentially limited to the study of principles ...“. Albert Einstein

The fields of physics and mathematics are first built upon principles and axioms. Associative Economics is also built up with principles, axioms and images that fit the phenomena. The phenomena of economics and the exchange of human value are invisible and in perpetual movement just as in physics, invisible and spinning phenomena must be understood and describe accurately, even if indirectly. Prices, values and capital are invisible economic categories that are also in perpetual movement and ever changing, yet need to be observed and understood.

Associative Economics Café #3 met last Friday with a larger group as we re-read the first 3 short sections of Prelude in Economics that we discussed at the last gathering. We also read aloud the next 2 sections bringing us to section 5 ʻCapital as Human Capacitiesʼ. After each paragraph was read aloud, we paused for questions, comments and related anecdotes. We are still working on understanding the basics; the nature of price and value in the exchange of human value. Philip mentioned Adam Smith and Karl Marx in relation to the ideas behind the labor theory of value, utility value and exchange value and the need to find deeper and truer principles. So we kept reading and exchanging our thoughts and understanding of the material as we made our way forward together.

Following in thought the intuitive unexamined process of exchange, this is what we are working with so far:

1. Exchange requires each party to consider both immediate needs and future requirements
2. Both sides of an exchange (transaction) must make a gain for an exchange to happen
3. Both sides in an exchange need to receive enough to produce sufficiently more to produce again
4. In economics there is no ʻintrinsic valueʼ; economic value is ever fluctuating and is given or taken away by human beings
5. Economic value cannot be stored – both goods and capital
6. Economic life is subject to growth and decay – both goods and capital
7. Value is a function of production and consumption
8. Production is the expression of human gifts and capacities
9. Value is not constant with place or time or person
10. It is not the material goods that matter in economics but the ever changing economic values that cannot be Ê»seenʼ

As we struggled to completely understand the material before us the term capital arose in section 3 of Prelude to Economics. The energy level and interest also increased, as we moved from wondering ʻwhat is capital?ʼ to ʻwhat is the capital formation processʼ? What we found was surprising to some, as a sense of movement and transformation was injected into the capital conversation. An astounding image depicted capital in the following way, as “ ... a kind of crystallization or materialization of capacities that people first experience as talents or gifts with which they have been born (Potential Capital). These talents can then be honed or educated to become consciously applied skills (Kinetic Capital). It is the application of such skills to nature that results in capital in material form (Manifest Capital).” Section 3 Prelude in Economics.

“The outer expression of intelligence, in this connection, is in the manifold formations of capital.” Lecture II, Economics Course 1922, Dr. R. Steiner.

“What is the economic process?” is the concern of section 4 of Prelude in Economics. “In meeting its material needs, humanity creates values over and above its material requirements, this additional value is capital. Capital is used up in the production of further values.” This is not the usual view of capital and we will make this the topic of discussion for AE Café on the 19th of March. The twin theory of value will be depicted with color chalk on blackboard with an ʻeconomic valueʼ discussion to follow.

The movement from production to consumption gives rise to the economic process. Capital and material things are a reflection of one another. Section 5 ends by describing a ʻsymmetryʼ between cultural life and economic life that could be seen as an axiom of associative economics, “It is the economic task of the cultural life to use up values by transforming capital into new capacities. These new capacities will in turn create new values when they are employed in the economic realm.” Is this implied abundance possible and realistic? Letʼs talk!

Please let us know if you would like to join the next session of AE Café as we continue to discuss the ideas and principles touched on above.