19th century Romanian essayist and poet Mihai Eminescu, unlike most poets (but like Ezra Pound), was a great economist as well as a great poet. Eminescu shared many economic ideas in common with influential early 20th century German economist Gottfried Feder. For instance, like Feder, Eminescu opposed usury. Both Eminescu — who is mentioned several times as an intellectual precursor in Corneliu Zelea Codreanu’s For My Legionaries — and Feder — who profoundly influenced Hitler’s economic views and achievements — evidently preferred that a nation’s economy be measured with ancient empiricism, not with modern infinitesimals. The former they associated with a concrete political economy; the latter, with nation-killing usury.
These ideas provide refreshing alternatives not only to Marxism, but also to the likes of Milton Friedman and to assorted characters whose families probably pimped their way to “respectability” in the infamous late Austro-Hungarian Empire. (Not surprisingly, both Eminescu and Feder deplored equality of civil rights for the Jews in their countries.) Here we shall see some examples of their economic thought. To start with, we will reproduce in its entirety an editorial by Eminescu published in the spring of 1880:
THE DISCOUNT AND CIRCULATION BANK
The opposition’s objections could not prevent the law regarding the establishment of a bank of discount and circulation from being voted or promulgated, as they could not prevent the redemption of the railways.
The unexpected success of the redemption transaction is due to the mortgaging of tobacco income, an income of 10 million corresponding to a capital of 200 million, rather than to the skillfulness with which the redemption contract was drafted. It is clear that by orderly mortgaging of all state revenues, by finding ourselves in Egypt’s or Turkey’s position, and by exposing ourselves to the possibility of having an international financial institution within our treasury, we will be able to conclude more similar transactions.
A loan does not necessarily imply mortgaging all income and belongings as a way of getting money. An efficient debtor is one who, through strategic transactions, proves that he is not as irresponsible as to risk losing all of his belongings or to squander them on falderals. Only someone who tirelessly saves money can have credit. Dr. Platter, a professor at the University of Chernovtsy, in his booklet entitled Usury in Galicia and Bukovina, provided highly documented information supporting the idea that owning real estate does not make a man eligible for a loan. Owning a real estate worth hundredfold the credited loan does not lower the usurious interest rates, making it possible that thousands of francs be mortgaged for a capital of 6 or 7 francs due to high interest rates and penalty clauses. By mortgaging real estates and revenues, the illusion of credit is produced; thus its true meaning is misinterpreted.
Therefore, the success of the redemption transaction is due, on the one hand, to the mortgaging of tobacco income, which was not enlisted in the Strasberg nor in the Bleichroeder Convention, and, on the other hand, to the exceptional stipulations made to shareholders, namely that they will hold a better position in the company than before. To prove this, we have only to compare the stock prices before the proclamation of the redemption with the stock prices we see today.
Nothing is easier to produce, and harder to maintain, than the economic illusion. Once we will have nothing more to mortgage, the financial management of the liberal party will prove its ineffectiveness, although the party is in the habit of withdrawing from power, letting others manage and fix its wrong-doings when the situation looks dire. The Discount and Circulation Bank is as problematic, from an economical point of view, as the redemption itself.
The so-called aridity of economic and financial capital consists in the fact that contracts are drafted using an abstract and complex language instead of a day-to-day one, so that the one reading the contract does not understand the terms and conditions written within. He is so deluded by the splendid outlook which seems to emerge from the contract’s abstractions that he overlooks the supreme principle, namely that any theory, even if presented in the most abstract way possible, needs to be reduced to something practical and concrete. Physical content is evidence for any truth. Otherwise, it is all a scam.
What do economic terms such as manufacturing, consumption, production, exchange, trade, etc., materially amount to?
What is production?
It is the act of modifying an object, either by hand or through the use of instruments, with the goal of manufacturing a valuable item.
What is consumption? It is the act of wearing out an instrument through labor. This category includes all resources that can be consumed and used. Food, shelter, clothes – these are all are necessary for the best and most durable labor instrument, namely manpower.
What is money, furniture or real estate then, if not savings?
It is a fact of life that the one who works the earth, having to plough, sow, thresh and cultivate wheat, will barter the result of his work with another item, for instance, with clothing, which is the product of the woolen manufacturer, of the weaver, the dyer and the tailor. An array of services is bartered for another, thus it is fair to conclude that not only is merchandise exchanged for merchandise, but in the end, labor is exchanged for labor.
However, one does not directly barter merchandise with a needed item, for the trade would be cumbersome. Therefore a commodity, one that is difficult to extract and rare in relation to its usage, was sought in order to pay for all kinds of services; one that can be divided and subdivided without losing its value. One that has easily distinguishable qualities such as constant weight, the distinct sound it makes, the ability of recognizing its alloys and that it does not tarnish. Gold and silver are the noble metals that meet all the required quality conditions.
We have the tendency of converting labor in quality and durable items, as such a great deal of labor can be amassed and exchanged for objects made from these metals, which do not lose their value even if they are melted, whereas other objects deteriorate and wear out.
Hence, these metals are merchandise, like any other.
Are banknotes also merchandise? Can you make something out of a banknote which produces a profit of at least one thousand part the original printed worth?
The answer is no, because that piece of paper has no value on its own and is used as a way of showing the worth of one’s labor. Banknotes were issued in order to be redeemed for a legal tender, either gold or silver, of the same value as the provided service, a somewhat cumbersome process. Therefore metal money is the valuable representative of the commercial banknotes. When do we need banknotes, a currency which has opposite qualities of metal money? One is a commodity, the other is not; one can be divided without losing its value, while the other one can be nullified by cutting it with a pair of scissors; one serves as a labor instrument used in a myriad of industries, while the other is not. One is money and the other is void. Be they issued by the state, by the national bank or by a simple merchant in Venice, banknotes are simply notes that show that whoever issues them will receive, by all means, the legal tender with a value equal to that which is printed on the note when the universal commodity, namely precious metals, is not at hand. Hence, banknotes are credit contracts.
In agricultural countries, labor is, by its own nature, limited and rigid, being able to produce a definite amount of produce of a precise value. An acre of land can only yield a limited amount of wheat, without the possibility of exceeding that limitation. Manpower is limited and no amount of exercise can overcome that; the same goes for the land, which, no matter the amount of fertilizer, cannot overcome its naturally limited production capacity. Hence, physical work, in which intelligence plays a small role, is characterized by limitation, loss, simplicity and difficulty.
The situation is entirely different where the arts and industries are concerned, areas in which intelligence is of utmost importance and physical work plays a secondary role. In this case utilization is not seen in relation to production, as in order to paint a picture, one only needs a canvas and a few paint colors; in order to tailor a dress one needs a pair of scissors, a quality pattern, thread and lace. The value of industrial work is thus infinitely multiplied. Farm work is burdensome and yields a limited amount of produce, while industrial work implies less effort and has, at least in theory, a limitless profit potential.
Agriculture will always be profitable. Not all people need lace for their dresses, but wheat is a necessity. Everybody, whether from India, the Greek islands or from Asia Minor, is forced by necessity to trade precious metals for produce. Thus, a universally necessary product is bartered with another product of equal importance. On the contrary, industrial objects need retail markets, namely places where their necessity is artificially produced. However, these markets are often isolated. It is, however, true that once the products reach the outlet markets, their worth will be translated into precious metal, but until then the producer needs to receive a note that stipulates what his labor is worth, and that note is the banknote.
The principle of the fiduciary issue is that it is directly proportionate with labor; if one doesn’t work, one won’t make much money, and if ones does work, then that person will make money accordingly. It is obvious that the amount of issued banknotes is directly proportionate with the industrial production quantity, which in turn can be multiplied in disproportion with the existent amount of issued money. An infinitely augmentable production requires an augmentable representative, which can be subjected to the same fluctuations as that of the industry, simultaneously rising and falling.
Thus we see that the difference between metal money and paper money is represented by the differences between the finite row production and the infinite industrial one. Labor is the basis of political economy. We think that our discourse has clearly demonstrated that, on the one hand, banknotes and production should necessary be directly proportionate, and on the other hand, that an exclusively agricultural country does not necessarily need banknotes. The needed industrial products, which are made abroad, cannot be bought with banknotes, and a country’s production shouldn’t be sold for a foreign currency.
An agricultural country sells grains for metal money, and with that money it buys industrial merchandise, and so the economical cycle goes. Administrating an agricultural country and its necessities should be as simple as agricultural labor itself. When market demand is greater than market supply, the country and its citizens will be left in ruins, no matter the temporary alternatives used in order to save the economy.
As far as the industry is concerned, namely the possibility of giving products a hundredfold or thousandfold of their original, row value, it cannot be and never was established without protection. Yet, protection can only be exercised by powerful political states. However, when one is bound by trade contracts and by the necessity of living on the breadline, thus leaving workers unemployed because the laborers from the neighboring countries provide cheaper labor, then a company cannot develop and specialize. On the contrary, it is gradually retrograded and the production is further limited, a limitation that is dictated by the very nature of production.
This theory, that the immanent dualism of money as a unit of account, depends on the dualism of labor, is challenged. The unprocessed production and the industrial one have nothing to do with our bank, as it only issues banknotes based on transactions made within the country. If such transactions are made, the bank will issue banknotes, and if they are not being made, it will not.
Indeed, if the bank were a legitimate institution, nothing could be said against it. The bank, be it opportune or not, would be subjected to risk, as the shareholders won’t receive the dividends they hoped to get, which, in turn, is due to the lack or limitation of real transactions concluded within the country, thus blocking the flow of private capitals. The bank would unmistakably register losses, but no one would be broke. The capital would be blocked, but safe within the bank.
Does this theory apply to our bank?
The established but provisioned principle is that the bank cannot issue notes that exceed 1/3 of the available metal money value and 2/3 of the amount based on bank bills, transactions, and short-term bank rates.
If this principle were to be followed precisely there would be no risks. But the law requires the bank to redeem the 26 million mortgage notes issued by the government, which, despite the obligation of being paid after the termination of the mortgage note, is not a transaction that the bank alone makes. In a time of crisis, the bank could not account for these 26 million, as such it must make a loan and accept the imposed stipulations. From that moment on, the bank becomes a paper money factory.
That which saddens us the most is that discussions on such delicate matters that can lead to total bankruptcy are not pragmatically led. Instead, they are focused on temporary gains, not keeping in mind the feasibility of their actions.
All companies that based their business strategy on artificially produced illusions, without considering their economic feasibility, had such temporary moments of success. Such companies rose with the thousands only to fall into the abyss of bankruptcy, impoverishing myriads of innocent people.
Only the reality of labor, carried out by following the requirements of political economy, namely by taking into account that the supply should be inversely proportionate to the demand, can weather all crises and upheavals. As such, any professional institution can rely only on the reality of labor.
[April 30, 1880] Translated by Tatiana Danilova
As we can see, Eminescu argued that a country’s economy should be measured with empirical concreteness, not with empty abstractions. Eminescu’s distrust of the infinitesimal principle, at least as applied to economics, is similar to the sensibilities of Gottfried Feder in Manifesto for the Abolition of Enslavement to Interest on Money. This short but lucid book has alternately been translated as Manifesto for Breaking the Financial Slavery to Interest. Here are some of Feder’s main themes:
On Loan-Capital vs. Productive Capital
“Where must the abolition of enslavement to interest begin? With loan-capital! Why? Because loan-capital, compared to all industrial big capital, is so overpowering that the great money-powers can only be fought effectively through the abolition of interest-slavery. 20:1 is the proportion of loan-capital to industrial big capital.”
“The insatiable interest-need of big loan-capital is the curse of all laboring humanity!”
“Interest, the effortless and endless influx of goods based on the mere ownership of money without any addition of labor, has caused the great money-powers to grow.”
“The curves of loan-capital show at first a quite gradually rising development; the development then goes faster until, ever wider and dragging everything with it, it raises itself far beyond human concepts and strives toward infinity. The curve of industrial capital by contrast remains in the finite!”
On the Fraudulence of Marxism
“It is now quite astonishing to see how the socialist idea-world of Marx and Engels, from theCommunist Manifesto to the Erfurt Program (especially Kautsky), and even the current social leaders, spare the interests of loan-capital as if on command. The sanctity of interest is taboo; interest is the holy of holies; no one has yet dared to call it into question. While property, nobility, security of person and possessions, the laws of the Crown, privileges and religious convictions, honor of officers, fatherland, and freedom are more or less outlawed, interest is holy and unassailable.”
“Social-Democracy is doomed because it is based on Marxist ideology, which does not recognize the radical difference between industrial capital and loan capital.”
On Usury and War
“The idea of interest on loans is the diabolical invention of big loan-capital; it alone makes possible the lazy drone’s life of a minority of tycoons at the expense of the productive peoples and their work-potential; it has led to profound, irreconcilable differences, to class-hatred, from which war among citizens and brothers was born.”
“The big tycoons lurk indeed as the ultimate driving force behind world-encompassing Anglo-American imperialism; nothing else.”
On Usury in History
“In the Middle Ages short work was often made of usurers; the farmers or citizens having been bled dry got together and beat the profiteers to death.”
“It should be most emphatically stressed that precisely our contemporary culture, precisely the internationality of economic relations, make the interest-principle so murderous. The foregoing historical retrospective should also not be regarded as providing an analogy for the circumstances of today. When the Babylonians overcame the Assyrians, the Romans the Carthaginians, the Germans the Romans, there was no continuation of enslavement to interest; there were no international world-powers. The wars were also not financed through borrowing but with treasures accumulated during peace. David Hume gives a very nice overview of this in his Essay on Public Credit. Only the modern age with its continuity of ownership and its international law allows loan-capital to escalate into infinity.”
In conclusion, Eminescu and Feder seem to have wanted to ban abstract modern forms of measurement from political economy, and replace them with concrete, empirical ones. To both economic thinkers, modern infinitesimal mathematical ideas only serve to justify usury, at least if these systems of arithmetic are applied to economics. Such systems may be useful for science and technology, but they have no place in the economy.