A working translation of section 5 from Chapter 2 of "The Philosophy of Freedom as a Basis For Artistic Creation" has just been posted on the blog with the same title. (Note that it is not the Paragraphs that are being translated, as I noted, but the sections.) Here is how it reads:
This is the place to insert a note on the nature of psychic observation or introspection. The subtitle of “The Philosophy of Freedom” is, as can be read on the title page, “Results of Psychic Observations According to the Method of Natural Science“. These observations pertain to the unobserved part of our normal spiritual or mental life. They raise our continually subconscious participation in the construction of reality into consciousness. There is no object, no matter how insignificant, of which the shape is not determined by spiritual formative forces. We continually participate in executing this formative process with the formative forces of our thinking. Yet it is only by psychically observing or introspection of the cognitional process that we become fully conscious of our share in reality. In the co-formation of the reality surrounding us, we construct at the same time the reality of our own spiritual being. Psychic observation therefore illuminates a twofold unconscious awareness, namely that of our surrounding reality as well as that of our own reality. Just as in the case of every configuration (Gestalt) of our outer or inner world, we also partake subconsciously in the formative construction of a conceptional work of art. If we make ourselves conscious of this construction through psychic observation, we then participate in the creative, thus free work of a thought-constructor or conceptionalist. We do not only hear explanations about freedom, but we are co-executors of a free deed in great style. The often expressed demand that the presentation of “The Philosophy of Freedom” should be clarified by examples is fulfilled in a most generous manner through the conceptional artistic organization of “The Philosophy of Freedom”. Whoever desires an example of the nature of freedom and of free deeds need only partake in the observation of the conceptional formative process through which “The Philosophy of Freedom” came about. He then acquires much more than just an indirect elucidating example, for he turns himself into a co-executor of a free deed and is cognizant of it.
Who thereupon with a tone of disappointment asks whether this freedom is “only” of an aesthetic nature, must concern himself with the answer that conversely everything truly free is aesthetic. Because only those deeds are free that are done for their own sake out of creative (moral) intuitions. Who subsequently now asks of what use these deeds then are, must face a possibly even more disappointing answer. “Useful” in a higher sense is namely only what occurs for no other external use, thus in this sense “useless”. Or conversely: what is done for reasons of carrying out something useful (for example out of obedience to some sort of moral maxim) thus not free, is in a higher sense “useless”. For the meaning of freedom is the development of hitherto completely unknown new faculties of thinking and willing, of a new type of consciousness and humanity, the genesis of a new hominid. There can be no other meaning of human life than this spiritual, the natural superelevating generational succession, the self-generation in the true sense of the word. For the repetition of something already present would be absurd, the servitude under a natural or moral necessity unworthy. Modern natural science has released an irreversible, steadily enhancing conscious awareness. This conscious awareness can no longer tolerate an organization of the life of society, whose basic principle is not the answering down to the latest details of the question of the meaning of human existence. This answer can ascribe this meaning not to putting the creative faculties of the human being into the service of his material needs, rather only to their service towards his free creative power. Whoever in the future does not envisage with every measure within the social sphere the free unfoldment of the human faculties as the highest and solely valid goal, does not serve the march of progress, but the relentless catastrophe’s, which must emerge from the growing indignation of forces that, although undeveloped, seek to violently discharge themselves. They sense the inhumanity of every sort of unfreedom, be it instinctively yet with unrelenting violence.
Let no one object that this line of approach is then rigidly determined after all and that “freedom” is therefore just another word for the categorical imperative for a certain mode of action. Whoever judges in this way has completely misunderstood these deliberations. For the principle of creative, thus not utilitarian unfoldment has no objective content, but solely that of sharpening psychic observation for the individual nature of the human being, and therefore does not in the least concern a general principle. To create institutions which, in a positive sense, give room to the most possible all-round unfoldment of free human beings through enhancing the gaze for their uniqueness, through the trust in their productivity and the provision of all necessary basics, and which, in a negative sense, deters them from everything that goes against this, only such institution can be considered progressive, worthy of human dignity and social. Only when along with each measure the question is answered correctly how thereby the needs of human beings are put in the service of the development of free faculties and not, the other way around, the latter enslaved in the service for the production of their needs, only then can there exists any hope for the future of humanity. Everything else must necessarily lead to always greater evils and incidents, to the loss of all security and the disappearance of trustworthiness. Only the knowledge of freedom, the love for the unfoldment of free spirits and the trust in the spirit of freedom, which wants to spread among humanity, gives in the face of the volcanic seething harm’s way any prospect for the survival of the world. Fateful beyond all measures would be the collaboration with the forces of evil through all sorts of stop-gap solutions for the improvement of mere details. They will only prolong the evil and thereby increase it. The end would have to be the war of all against all or the enslavement of all through the violence of the very few.
These remarks wanted to show what unique significance can be ascribed to psychic observation. It has after all the task through opening the mind’s eye for reality and humanity to convey the answer to the basic question of our times, the question about the meaning of our existence.
However, one will not only expect information about the effect or merit of psychic observation but also about its nature. This answer can best be given in a generic form. In the observation of thinking, the human being becomes conscious of his faculty to bring forth something based on its own laws (namely the thought-contents). This bringing forth is at the same time a form of gazing, for it is an exchange-of-being, a knowing of oneself in what is known. The known (the thought-content) is, however, at the same time also the connection with all world phenomena. If thought activity is aroused, but only for it to be held back, thus withholding itself from the transition into the thought-contents and thereby into the world of percepts, which it is capable of permeating, then comes about what is called a thinking gaze, observation or attention, thus a self-reflecting consciousness. Psychic observation is a form of gazing or contemplation, not communicative thinking. Because it keeps the gap between itself and its objectivities open, it is by stemming the forces called upon to bridge that gap the faculty of becoming conscious of the unconnected, incoherent that nevertheless in its enigmatic nature announces itself, thus the pure perceptual. One is left with a considerably deceptive mistake by maintaining that a pure percept is only capable of being perceived in exceptional states of mind or by a never definitely operational reduction process of eliminating all conceptional correlations (which only has an interpretational significance). The pure percept is rather a given that is in each case exposed to the thinking gaze and as such always capable of being observed. It is always the as yet unconnected within the complex of the already connected. Without this unconnected element there would be no starting point for thinking, no cognitional progress. One can therefore conversely also designate the pure percept as the in each case sensed starting point in the connective process. It is therefore, just as the exchange-of-being in thinking and the formative construction through thinking, a permanent on-going experience, yet one that is sunk into the subconscious and only to be raised from the consciousness underground through psychic observation.
Psychic observation therefore appears for one’s own gaze in a twofold manner. It conveys, on the one hand, the answer to the most pressing riddle, the question of meaning. It is, on the other hand, the gaze on the numerous riddles continually surrounding us, the pure percepts.
To unearth the meaning of the addition “According to the methods of natural science” on the title page of “The Philosophy of Freedom” would require extensive deliberations. It concerns the way judgements are formed, thus ascertaining the truth. The complete epistemological basic work of Rudolf Steiner is devoted to this difficult problem. Here only this much can be said about it, that this addition states that the connection of concepts with the observed percepts in the formation of judgments may not proceed on the basis of presuppositions, may thus not lead to hypotheses. Instead, the formation of representations or mental images that is expressed in the formation of judgments would have to be determined only by that which in each case is perceived. The formation of representations may therefore not proceed from the judging subject but only from the perceived object – it would therefore have to be the result of a judgmental experiment, the decision of which is not made by the “judge”, but by the percept in the form of the acceptance, i.e. the individualization of the concept offered to it..
Note: Still to be translated in this second chapter is section 6.
 See H. Witzenmann, “Intuition and Observation” in the work with the same title. Spicker Books, Ca. 1986 (out of print). A partial translation of “Intuition und Beobachtung” (Part I) and other essays by H. Witzenmann.
 See H. Witzenmann “Ein Weg zur Wirklichkeit – Bemerkungen zum Wahrheitsproblem“, in „Intuition und Beobachtung“, Part II, Stuttgart 1978.