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Historical Background Gesell not only pioneered taxing money schemes, he also developed a program of social reform which included an economic theory, a monetary policy scheme, and was firmly based on a social utopia. He and his work were also comparatively well-known before World War Two, as is shown by Dillard’s (1942a, p. 348) list of works referring to Gesell and by his appearance in the Encyclopaedia of the Social Sciences (Garvy, 1975, p. 392). In addition, experiments with stamp scrip were conducted in Germany and Austria during the Great Depression. Besides Erfurt and Schwanenkirchen, the Austrian town of Wörgl became a frequently-cited proof of the effectiveness of Gesell’s proposal (see Muralt, 1989, and Senft, 1990, pp. 199-212). In the United States some rural communities, e.g. Howarden, Iowa, put limited amount of stamp scrip into circulation in order to pay for public works, 13 with even more contemplating such a move. Hans R. L. Cohrssen, Fisher’s assistant and a committed free-economist, counted approximately 450 U.S. municipalities that wanted to issue stamp script. Moreover, in 1932 there was a short-lived legislative initiative (Bankhead-Pettengill Bill) which asked for the creation of one billion Dollars of stamp script in order to finance labour intensive public works.
Silvio Gesell 15 was born as the seventh of nine children in St. Vith, district of Malmedy 16, on the 17th of March 1862. His father was a protestant Prussian civil servant, his mother a catholic Walloon teacher. He was educated at the local secondary school and attended grammar school in Malmedy, which he was forced to leave before graduation, as his parents were unable to afford his further attendance. Gesell then joined the Reichspost (Imperial Post), but left the civil service soon after to join his brother’s commercial company in Berlin in 1878. Four years later, he went to Malaga as a commercial correspondent until 1884, when he was forced to return to Germany for his military service. In 1887, he emigrated to Buenos Aires, where he opened a business for dental equipment, called the ‘Casa Gesell’. Instigated by the ongoing economic and social crisis in Argentina (Dillard,  1997, pp. 121-14; see also Werner, 1990, p. 8; Senft, 2006, pp. 68-69), Gesell begun his autodidactic reflections on the monetary system. In his debut treatise, Die Reformation im Münzwesen als Brücke zum Sozialen Staat, he presents his main concept of negative interest rates on ready money via the stamping system, which he later named Freigeld (free money), for the first time (Onken, 1999, p. 8). After his return to Europe in 1899, Gesell went on to live in Switzerland, where he took up farming and intensified his autodidactic studies. The idea of Freiland (free land) was ‘Free’ refers to Gesell’s claim that depreciative money will set the stage for a truly free economy by eliminating monetary interest which constitutes unearned income and hampers capital growth. See the discussion below. Today, the free economy movement is most visible in the various regional currency initiatives in Germany (Gelleri 2008), which are nearly all designed as depreciative currencies, and are intended to realise regional, environmental and socio-political ends (Rösl, 2006, pp. 6-8). Rösl (2008) offers a short critical assessment of existing regional and local currencies.
See Onken (1999) and Wolf (1995) for an extensive overview of Gesell’s life and work.
Malmedy and Eupen were two Prussian/German districts that were annexed by Belgium after the First World War. Its population makes up Belgium’s German minority.
added to his repertoire during this period in 1904 (Bartsch, 1994, p. 324).17 He went to live again in Argentina between 1906 and 1911, before returning to Europe, where he published The Natural Economic Order, his main work (Onken, 1990, p. 19), in 1916.
After World War One on April 7th 1919, Gesell became a Volksbeauftragter (people’s commissioner) for finances in the first libertarian Bavarian Soviet Republic. Gesell remained in office for only a week as the libertarian government was quickly replaced by a communist regime after an attempted coup by troops loyal to the republican government in Bamberg on the 13th of April. 18 The new communist leadership dismissed Gesell on the 14th of April, shortly after he had finished his program, which included a land reform, the introduction of stamped money, and an annuity to all women with children (Engert, 1986, pp. 29-31). His announcement of a monetary reform led to bank runs, and caused a massive loss of confidence in the government (Karl, 2008, p. 184). Following the defeat of the communist administration at the hands of the federal government in Berlin, Gesell was arrested on the 2nd of May, and tried for high treason but acquitted after only one day of trial on July, 9th. During his imprisonment Gesell prepared a plea that was never held but transported his messianic sense of purpose (Gesell, 1920a, p. 39). However, his actual defence was somewhat more earthly, insisting that he had no part in the decisions of the Soviet and was merely trying to prepare a program of financial reconstruction (Gesell, 1920b, p. 42). Indeed, Gesell offered his services to the parliamentary government in Bamberg shortly on April 13th, showing little loyalty to the Soviet Republic. Furthermore, civil servants working in the ministry of finance testified that Gesell had not interfered with the daily business at all (Karl, 2008, p. 184). This claim seems plausible since The later added ‘Freiland’ idea postulated a landowners’ monopoly on land. Since land is not reproducible, its owners will receive an unjustified rent, because the law of competition does not apply. Hence currency reform will affect the scarcity of land and may still cause monopoly rents or interest (see the discussion below). Therefore, a free society must forbid the ownership of land. Given that Gesell proposal for land reform has received little attention (see for example Keynes, 1936, p.
355), I will not elaborate on it further. For a short overview of the proposals for free-land, see Wirth (2003, pp. 111-128).
See also Lorber (2009).
See, for an overview of the revolution including further references, Grau (2009).
Gesell was the only member of the Soviet that was not found guilty (Karl, 2008, p. 185).
Such a testimony cannot be found in the report of the trial which was published in 1920 together with Gesell’ plea in ‘Die Freiwirtschaft vor Gericht’. However, according to Engert (1986, p. 64), who was present during the trial, the protocol was Gesell’s two associates who helped him in preparing his program were not employed by the Ministry of Finance, but by him privately (Gesell, 1920b, p. 43). After his short intermezzo in politics, Gesell spent the last decade of his life promoting his ideas to different social and political groups, 21 dying on the 11th of March 1930.
Concerning Gesell’s place in the history of economic thought, it is rather difficult to classify him, because, later in life, Gesell developed a rather colourful social utopia around the core of his economic theory. His ideal of an akratic society combined Darwinian elements with the philosophies of Nietzsche and Stirner. In his utopia Der abgebaute Staat, Gesell (1927) for example advocated free female mating, which was to be supported by an annuity to all women in order to strengthen female This somewhat unorthodox weltanschauung renders it difficult to emotional independence.
position Gesell within one of the contemporary ideological currents (Flik, 2004, p. 124) and having offspring from three extramarital affairs, besides his legitimate children, and being openly critical of the dishonesty of Christian society, did not enhance his reputation in academic circles either (Flik, 2004, p. 125; Senft, 1990, p. 36). It is this combination of autodidactic scholarship and mingling economic theory with libertarian social utopia that made his reputation as a ‘typical monetary crank’ (Garvy, 1975, p. 392). Huber (1998, p. 383) has therefore called him a ‘political guru with a sizeable and colourful discipleship’.
Thus, the difficulties in positioning Gesell’s economic theory within one school of thought arise from the blend of socio-political ideals with economic theory, and from the combination of socialist with libertarian 23 ideas. Nevertheless, his economic thought was embedded in set of socialist done by two female sympathizers of Gesell who volunteered for the task as the court had failed to ask for a professional stenographer. Therefore Engert notes that the records of the proceedings offer only an inconsistent account.
Gesell was a very prolific writer, his collected works consisting of 18 volumes.
This was meant to allow women to choose the potential fathers of their children according to their fitness (in Darwinist sense) and not out of economic or social necessity, e. g. marriage. For an overview, see Bartsch (1989, pp. 24-31). An explanation of the social utopia is proposed by Senft (2006, p. 79), who argues that Gesell incorporated much of contemporary zeitgeist into his economic theory in order to enhance its public reception.
For an introduction into libertarian ideas see Vallentyne (2009).
libertarian 24 convictions that deeply influenced his economic reasoning. 25 For example, Gesell argued the normative condemnation of interest as unearned income was common to all kinds of socialism (Gesell, 1958, p. 27). However, Gesell rejected the Marxist solution of collective property and centralized state economy, which he saw as amounting to the ‘abominable rule of officials, the death of personal freedom, personal responsibility and independence’ (Gesell, 1958, p. 15).
While sharing what he perceived to be goals of socialism, he opposed its means as it stands against his normative ideal of individual freedom (Onken, 1990, p. 14). Instead, by monetary and land reform, he aimed to ‘create the conditions necessary for a truly free paly of economic forces’ (Gesell, 1958, p. 15). This concept is called ‘The Natural Economic Order’ (NEO), 26 which, given the nature of man, is founded on self-interest (Gesell, 1958, p. 10). Hence, the distribution of wealth in such a system is apportioned by competition, but all sources of income other than labour are eliminated (Gesell, 1958, p. 38). Therefore the NEO might also be referred to as the ‘Manchester System’, […] (Gesell, 1958, p. 12).
In short, Gesell proposed a libertarian way of achieving socialist goals, positioning himself explicitly in the tradition of the anarchist 27 Proudhon. 28 Darity (1995, p. 34) argued that Gesell was not ‘anarcho-libertarian’ because the state and the monetary authorities in particular played an important part in his scheme (see below). Indeed, there is little doubt the Gesell of The Natural Economic Order is not an anarchist in a strict sense. However, anarchism does not preclude all form ‘Libertarian socialism’ or ‘left libertarianism’ (Sullivan, 2003, p. 612) combines the conventional liberalism of the right with egalitarianism of the left. They distinguish sharply between talents, which are at the complete disposal of an individual, and external resources, of which each individual is just entitled to a just fair share (Fried, 2004, pp. 67-68,; see also Vallentyne et al., 2005).
For the notion of justice in Gesell’s work see Senft (2006).
In the following, I will refer to the concept of ‘The Natural Economic Order’ as NEO, while The Natural Economic Order is used for the book.
There is now single definition of anarchy (De George, 2005, p. 31). Generally speaking, anarchism ‘combines idea and values from both liberalism and socialism and me be considered a creative synthesis of the two great currents of thought’ (Marshall, 2010, p. 639).
See for Proudhon’s concept of ‘mutualism’, a middle way between the principles of property and communism that would reward only labour as a source of income Miller (1987, pp. 11-12). Gesell repeatedly referred to Proudhon (Senft, 1990, pp.
71-76). However, he maintained that he developed his theory without reading Proudhon(Gesell, 1958, p. 31).
of social organisation (De George, 2010, p. 32), even if this is a common believe 29 and the free economy movement consisted of various different currents before World War Two– an anarchistic, a liberal, and a racial school – and Gesell sided with the anarchists, the ‘Physiokratischen Kampfbund’, their program being written by Gesell himself (Bartsch, 1989, p. 17-31). Moreover, in the foreword his last work of 1927, which is dedicated to two anarchists, he claimed to have found a solution to what he called the ‘monetary problem’ which allowed him to discard of the state completely (Bartsch, 1989, p. 24).