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The Future of Economy - A Memoir for Economists
International Association for a Natural Economic Order (Ed.)

Biographic Note on Silvio Gesell
A Dogmatic History of Economies through the Eyes of Silvio Gesell
Gesell's Contribution to the Development of a Basic Economic Theory for the Future

Ladies and Gentlemen:

During the "golden" years of the fifties and sixties Professor Paul A. Samuelson, the famous American colleague of yours, the author of the most successful textbook in economics produced after the war as well as a bearer of the Nobel Prize in economics, sustained with great self-confidence that the modern "mixed economy" had gained firm control over the problems posed by business cycles and crises. According to him, it was totally impossible for a great world-wide economic crisis to recur.
   The economic developments of only a few years were sufficient, however, to destroy this faith in the power of economic science and in the feasibility of an economy free of crisis-prone fluctuations. Long-term mass unemployment has shaken the experts' self-confidence and hurt their prestige in the public eye. The havoc wreaked on the environment, the armament race, and the unresolved conflict between the industrialized northern world and the nations of the underdeveloped South also did their bit.
   In public as well as among your own ranks, dismay has been voiced frequently about the present state of economics, which was not able to prevent these problems. Professor Joan Robinson, your famous English colleague, recently deceased, even went to the extreme of diagnosing an "obvious bankruptcy of economic theory". Although this diagnosis may be slightly exaggerated, it cannot be denied that the economic sciences are experiencing a severe crisis and offering an image of helplessness and discord to the rest of the world.
   These unexpected challenges have resulted in a process of reconsideration and reorientation in your field, as is shown by the sudden appearance of a relatively large number of theoretical novelties, such as the "new political economy ", "new microeconomics", "new macroeconomics", and the notion of an "alternative economy". This process can also be observed at the specialized congresses, where the existing theoretical positions are critically reviewed and solutions to the present crisis looked for.
   We share this alarm about the pressing issues of our times and have followed your search of possible solutions with great interest and respect. Nevertheless, we have noted that the reconsideration process has as yet to encompass the general organic foundations of existing economic systems. Over and above the frozen confrontation between the economic systems of the East and the West, between the North and the South, no conception capable of balancing the contradictions and satisfying the demands of personal freedom and social justice, environmental conservation and peace, has so far taken shape. Therefore we would like to appeal to you, as competent experts in the field, to focus your research in greater measure on the development of an organic model transcending the different economic systems.
   Our specific concern in addressing this memoir to you is, moreover, to urge you to take into special consideration, as you search for new roads in economics, the suggestions that were already made several decades ago by the social reformer Silvio Gesell as to a review of the present notions and strategic connections in the scientific structure of economics.
   In the past, unfortunately, a deeper exchange of ideas between university-bred economists and the disciples of Gesell, as outsiders to these circles, has hardly ever taken place. Economists may have formerly found their access to the work of Silvio Gesell rendered more difficult by the often too messianic bearing of his followers. Those engaged in developing the neoclassical school of thought therefore either neglected it completely or - as often occurs with new and unconventional theories - failed to take it seriously.
   Nevertheless, several renowned economists have called attention to Gesell's significance over the years, despite the reservations of the experts. Their remarks about Silvio Gesell, which we have included in the appendix, encourage us to call up his memory and to appeal to you, Ladies and Gentlemen, to critically review his thoughts as to their possible contribution to surmounting the social, environmental, and political tensions that are evermore coming to a head in individual and international terms.
   At present, an analysis of Gesell's work may be hindered not only by incidental prejudices but also by the time elapsed since its creation and by its time-bound, unscientific form of expression. In order to remove such potential barriers to understanding we would like to offer you the following brief introduction to Gesell’s life and work.


Biographic Note on Silvio Gesell

Silvio Gesell was born in 1862 in St. Vith, a town of eastern Belgium, as the son of a Vallonian mother and a German father. In 1887 he emigrated to Argentina, where he attained success as a trader, importer, and manufacturer and where severe economic crises spurred him to theoretical deliberation.
   In 1900 Gesell retired from his business activities and emigrated to Switzerland. On a farm near Neuchatel he turned to agriculture and pursued extensive independent economic studies, unfolding his practical experiences and theoretical insights in numerous publications. In 1916 his chief work “A Natural Economic Order Through Free Land and Free Money” was published in Bern. To date ten editions have appeared in German, as well as translations into English, French, and Spanish.
   In April of 1919 Gesell almost had the opportunity of putting his theories to a practical test. By recommendation of the cultural philosopher Gustav Landauer he was elected Minister of Finance of the First Republic of Councillors of Bavaria. His term of office lasted only one week, however; after that the first, liberal administration of councillors was overthrown by the second, a communist one. Afterwards Gesell was charged with high treason, but in the end he was acquitted.
   On account of his participation in the revolution of Munich, the Swiss authorities denied him the right to return to his farm in the Jura of Neuchatel. Gesell temporarily moved to the Potsdam area and later to the cooperative settlement of Eden-Oranienburg, located to the north of Berlin and co-founded by Franz Oppenheimer. There he continued writing until his death in 1930.

A Dogmatic History of Economies through the Eyes of Silvio Gesell

The fundamental organic core of Silvio Gesell's work comes to light when it is examined in relation to the three great periods of modern economy and the doctrines prevailing during each: laissez-faire capitalism and classical and neoclassical economics; the Keynesian revolution and the age of state interference introduced by it; Friedman's counter-revolution and the present renaissance of the market.
   Without any doubt, a great step was taken forward in history when classical liberalism managed to overcome medieval feudalism and mercantilism and smoothed the way for an economy characterized by decentralized self-regulation. The classical and later the neoclassical economists developed a theoretical structure to prove the superiority of a liberal economy based on free enterprise, as opposed to the mercantile system of an economy resting on individual minority of age and directed from above. The idea of a natural and freely developing order of economy and society served as their point of theoretical departure.
   The classical and neoclassical school was founded on the conviction that the "wealth of nations" (Adam Smith) grows when not the government but free and responsible individuals determine the course taken by an economy. The power of economic decision-making could therefore be passed on from the government to the individuals, because the free market economy balances the individuals' selfinterests through its "invisible hand" and promotes public weal better than the state can. According to this principle of laissez faire, the manufacture and distribution of goods is directed automatically by a succession of profits and losses regulated in a decentralized fashion on the markets. Since any supply produced will create its own demand and be sold without difficulty, as is stated by Say’s law, the free market economy, even without interference by a superior entity, will always automatically achieve a stable (dynamic) balance.
   As we all know, reality did not live up to the expectations of the classical and neoclassical economists. It became evident that certain structural flaws had found their way into the theoretical foundations, because soon the rule of men over their fellows celebrated a comeback in the power structures erected by private enterprise, such as monopolies and oligopolies. As they grew ever stronger signs of discord appeared which did not fit into the classical or neoclassical picture of a natural and harmonic economic order.
   The ideal of a free market economy in fact degenerated into a capitalist market economy in which production was not cut out exclusively to meet human needs, but primarily according to the self-interests of private power structures. In other words, the capacity of the economy for decentralized self-regulation declined and the allocation of resources consequently remained under the optimum level, with no opportunity of ever achieving it. As far as distribution of the national income was concerned, money turned out to be not a neutral medium of exchange at the service of the economy, but an extremely biased instrument of power. Instead of enabling a just exchange of services, it allowed income and wealth to be concentrated to a degree not justified any more by individual differences in productivity and aptitude. The internal confusion thus produced in the capitalist market economy, through the existence of private concentrations of power, ultimately evidenced itself through a chronic instability marked by alternate deflationary or inflationary fluctuations in the purchasing power of money and by the periodic recurrence of involuntary unemployment.


   In view of the gross contradiction between classical and neoclassical theory and economic reality, it is not surprising that doubts about the theory should have surfaced. John Maynard Keynes took it upon himself to deny the existence of an "invisible hand" and thus initiate the "end of laissez faire".
   lt was also Keynes who laid the theoretical groundwork for a - as he once called
it - “judicious management of capitalism by the state". To be sure, his chief work did not constitute a general theory, in the sense that it excluded the essential theoretical problem posed by prices and distribution given a less-than-optimum allocation of resources, as well as ignoring the unequal distribution of income and wealth. Keynes concentrated mainly on the problem of involuntary unemployment and  believed in its possible solution through government interference in the market, while at the same time maintaining non-neutral money and the private structures of economic power.
   Instead of searching for the causes of the capitalist market's instability in the existence of power structures alien to the system, Keynes merely stated the fact that the automatic healing powers of the market, deformed by capitalism, were functioning very inadequately. As unions successfully opposed wage reductions, the mechanism of wages on the labor market did not achieve the results that would have been necessary in order to stabilize it in a state of total employment. Furthermore, the automatic adjustment of interest rates did not suffice to channel total savings toward investment whenever the profit margin of real capital - Keynes’ “marginal efficiency of capital" - , after a period of constant increase, dropped in favor of the wages. Money did not then find enough profitable options for investment and temporarily disappeared from the (investment) markets as effective demand. Say’s law, according to which total supply creates an equivalent demand, was deemed false. The breaches in private demand translated into a stagnation of sales, which in turn triggered dismissals and involuntary unemployment.
   At first glance Keynes' recipe against unemployment seemed to be very simple. It consisted mainly in the idea of closing any gaps in private demand through a supplementary demand implemented by the state and financed by credits, without any consideration for allocation and distribution, that is to say, for microeconomic factors. Thus supply and demand would be reconciled again on a macroeconomic level and it would be possible to return to a stable balance of full employment.
   Many nations followed these suggestions in their economic policies after the Second World War. They established an extensive statistical apparatus in order to analyze the economic cycle and aid in their decisions about applying the principle of supplementary demand created by the state. They tried to control the instability of the capitalist market economy with "shots" meant to activate the economy and employment programs.
   On the whole, however, the results of these experiments have not been convincing. Apart from certain operational problems, such as determining the scope of the programs, the time of their implementation, unforeseeable side-effects, and delays in their taking effect, shortly after their introduction it became obvious that in an economy supported in this fashion the marginal efficiency of real capital did not increase to the desired degree and even tended to decline. Under Keynes' followers, therefore, the state policy for employment evolved into a policy of state promotion of economic growth, with the goal of creating new and profitable possibilities of investment for the private money supply through big projects subsidized by the state, civilian as well as military in nature, and of thus luring it out on the market as effective demand.
   In this way it was indeed possible to temporarily lessen social contradictions, since the lower and middle strata of society could also share in the "fruits" of growth. Nevertheless, weighty reasons deny that Keynes' and his disciples' answer to the first great challenge posed to the economy by the until then greatest crisis of laissez-faire capitalism can be considered a permanent solution to the problems of our times.
   As far as the economy is concerned, government interference cannot satisfy the expectations placed in it nor do away with unemployment. It has triggered the inflationary deceit and immense national debts, which have pushed the interest rates up and therefore made financial investments in many cases more attractive than real investments, which stands in direct opposition to labor policies. The faulty allocation of resources and inappropriate structures inherent to the confusion of the capitalist market economy are augmented by the results of deficient state planning in different sectors, such as energy production.
   In relation to social matters, state interference can only reach seeming solutions because it is limited to covering up the differences in income and wealth by redistribution, instead of truly diminishing them. As far as there even exists an awareness of the problems posed by the market's being taken over by private enterprise, it is mistaken in the expectation of the state's ability to control private power. Instead of neutralizing each other, the two blocks of power form a coalition.
   This false social solution places an ever greater burden on the environment. Since the inequality in property remains taboo, a lessening of social strain requires raw materials and energy to be constantly transformed into a production increase for distribution. Natural resources are increasingly spent and environmental balance is upset.
   Irrespective of the economic growth promoted by the state, which is based on post-Keynesian thought, the capitalist market economy - as the neoclassical theory of growth stresses - also tends to intrinsic growth, which does not mean to say that human needs are infinite or that technical progress falls from heaven like manna. Rather, biased money or monetary capital, as a dysfunctional instrument of control and distribution, contains a tendency to exponential self-multiplication through simple and compound interest. Since monetary capital is furthermore tied into the commercial economy in many ways and cannot grow outside these limits, it exerts a circumstantial pressure on real capital to grow at the same rate as simple and compound interest.
   This typical tendency toward exponential growth shown by the capitalist market only begins to stall when the possibilities for the profitable investment of monetary capital start to decline. When in such an - environmentally healthy - situation the diminishing tendency to grow is boosted through reenforcement by state interference, it means that the market's central error - its dysfunctional money - has been left alone and that its unavoidable consequences, such as instability and the tendency to grow, are being ‘fought’ by magnifying those same consequences, that is to say, by making a new mistake to ‘correct’ an existing one.
   Since an exponential economic growth inevitably clashes with its environmental limits, the pursuit of this fundamentally abortive economic strategy cannot be justified.
   The urge of the money, in its quest of investment possibilities, into the armament industry, where profitability is guaranteed by the state, promotes the armament race. This year the unbelievable sum of a trillion dollars will be invested in armament around the globe, threatening the peace of the world and all life forms with nuclear destruction.


   The disillusionment caused by the failure of government interference in the economy has led to a rebirth of the market economy. Professor Milton Friedman, in his restatement of the quantity theory of money, lent it a theoretical basis which was expanded by the consideration that an improvement in the conditions for profitable investments required reforming the state of supplies for enterprise through tax reductions, dismantling bureaucratic obstacles, etc.
   The market's own forces of regulation and remedy were called upon again, not by philosophically resorting to the "invisible hand" but in the conviction that the government should dictate the general rules of the game by establishing its legal framework and taking care, as an impartial judge, that it is complied with, without interfering directly in the course of the economy. lt was definitely not mistaken to reconsider the market's capacities and recognize that they had to be tied into a legal framework created by the state. However, until now this has only lead to a return of a modified form of laissez-faire capitalism. Friedman's conception of the government's legal framework remained very incomplete, since he did not touch the distortion of the free market as a market taken over by private capitalism through dysfunctional money.
   Thus the old problem of a loss of private demand - the unforeseeable alternation between effectiveness and ineffectiveness of large parts of the money in circulation - still exists today. lt was recognized but not solved by Keynes, and neither recognized nor solved by Friedman. The so-called velocity of circulation of money with regard to short and medium-length periods of time is not as constant as was originally assumed by Friedman and the monetarists. Its fluctuations, which no theory of probabilities can predict, thwart any effort to constantly regulate the amount of money and lead as before to a loss of balance in the whole economy because of involuntary unemployment and variations in the value of currency.
   The time to pass a final judgement on the most recent turn in economic policy may not yet have come. Nevertheless it already seems very probable that monetarists and supply-side economists will not manage to stabilize the economy and create a permanently crisis-free system. They have also failed to recognize the constructional flaw embedded in the foundation of the market economy in the form of dysfunctional and biased money, as well as the allocation and distribution disturbances it produces and the resulting compulsion of the system toward exponential growth. While even they consider quantitative exponential growth to be the main ground for achieving a stabilization of the economy, it in truth is already a result of the internal disorder of the capitalist market economy.
   Monetarism is cut out completely to assure a permanent increase in the amount of money in circulation and the production potential. The possibility of a nonexpanding economy does not fit into its theoretical scope. It is notable to specify the conditions for stability in case such a situation should occur. The pressure for growth exerted by money on real capital has found its most striking theoretical expression in the annual targets set for expanding the "money mantle" that the potential for production shall ‘grow into’.
And a supply-side economy is basically nothing else than the attempt, also
motivated by the idea of economic growth, to improve the secondary economic conditions for correlative growth of the real capital and to see that the money supply regains the prospect of an "adequate service" through labor, among other ways by a so-called "reasonable labor policy", thus becoming automatically available again as effective demand. This theory is also the exact opposite of the constitutional framework necessary for an automatic regulation of the market, which would guarantee the availability of money to those who work, as a useful and neutral means of exchange. Exaggerating slightly, supply-side economics is therefore a policy that serves the capitalist interests hidden behind the "market economy" label.

Gesell's Contribution to the Development of a Basic Economic Theory for the Future

Our short review of dogmatic and economic history probably did not reveal any substantially new information, since the facts as such are well-known. It is possible, however, that both Silvio Gesell's interpretation of the causal connections and the suggestions be made in his time to overcome social and political differences and create a stable economic order may seem unusual. The environmental question was not as yet relevant, but Gesell’s theories can be expanded with it in mind.
   The above retrospective view of the three great eras in modern economics has already shown that Gesell perceived the deeper causes of social and political differences as well as econornic instability to lie in the position of power occupied by money, which restricts competition in the market economy. In other words he did not, as Marx had done before him, ascribe the degeneration of the market economy into laissez-faire capitalism to the market itself (in environmental terms, the principle of decentralized self-regulation of an intertwining system of regulatory cycles encompassing the whole of nature). He was far from proposing the abolishment of the market and its substitution by centralized government planning. Rather Gesell wanted to create a legal government framework, more consistent than the one advocated by Friedman, in order to surmount the structural power of money over the market by assuring its availability at all times as private demand. The legal framework was meant to guarantee money to serve the economy as a truly neutral means of exchange, so that as such it might not independently influence the allocation of resources, the distribution of income and assets, and the dynamics of economic development.
   By eliminating the monetary defect of the market economy Gesell intended to promote full development of the still restricted forces of self-regulation and healing of the market. Consequently unlike the ideas advocated by the school of laissez faire, government interference is by all means asked for in his theory, but not in the sense of compensating a reduction in private demand with a government demand substitute or indeed in that of direct investment management by the government. The state should rather create a legal framework around the hub of a monetary order which on the one hand maintains the freedom of decision in private enterprise, but on the other indirectly guarantees that real investment of the existing monetary capital is not abstained from for reasons of profitability.
   As is known, Keynes already studied Gesell in the twenty-third chapter, sixth section, of his General Theory, and defined his theory as "antimarxist socialism", which points out its potential significance as an alternative to capitalism and communism and a manner of overcoming the differences between the East and the West. Gesell's outlook could just as well be called "anticapitalist liberalism" and the econorny structured accordingly a “postcapitalist market economy". These definitions point out its role as an alternative to the post-Keynesian and monetarist doctrines which predominate in the West. In the line of the considerations advanced here it is in fact possible that ways may be found to overcome the division of economics between the microeconomically founded neoclassical school and macroeconomic post-Keynesian theory.
   Gesell’s analysis of the power wielded by money of course contains several weak points due, perhaps, to the limitations of his times. In accordance with the gold standard still in use at the time he based his reasoning on the material superiority of money backed up by gold, over and above any naturally perishable goods. His analysis thus remained fragmentary and was not apt to muster any greater power of persuasion. Only very recently has Professor Dieter Suhr expanded it with regard to the theory of liquidity, thereby placing it on a sounder foundation.
   Because of several "blatant shortcomings in his reasoning" - said Keynes about
Gesell and his theories - "I was totally at a loss to find any virtues." It was only after Keynes had developed his own concept of government interference that he recognized the significance of Gesell’s "profoundly original endeavours" though this did not motivate him to correct his own course of economic thought. Therefore the matter concluded with Keynes' admission, without consequence for the time being, that Gesell’s work, despite its analytical shortcomings, was "sufficiently developed to produce a practical conclusion that may contain the seed of what is necessary."
   The "practical conclusion" consisted in the idea of eliminating the power wielded by money, based on its advantages of liquidity, by charging it, in case of being retired from circulation as effective demand, with so-called demurrage payments. The advantage in liquidity held until now by money, over the products of human labor and all kinds of commodities, would thus be offset by a disadvantage in liquidity. Thereby money, especially in the form of monetary capital, would be induced to create an effective demand (of investment properties) on the market, even if it did not any more receive an "adequate return" as soon as marginal efficiency of real capital started to diminish and, under extreme circumstances, to approach zero percent.
   In the past money has been retired from real investment as soon as the expected return has fallen below about 3 %. By introducing demurrage charges on money the economic cycle would remain closed. The marginal efficiency of real capital and the market rate of interest would gradually fall to around zero percent and the capitalist market economy would pass over to a post-capitalist market economy. Such a development would produce several positive effects.
   The market's forces of self-regulation and healing, which until now have lost their effectiveness near a low point of about 3 % interest, where money is withdrawn from demand, could take effect even below this limit. Interest would not be done away with but would waver between certain limits around a point of equilibrium at zero. As a scarcity indicator it would also provide for the optimum channeling of money flow into the investments most in tune with demand. The channeling function of interest would be preserved not by a fixed minimum rate of about 3 %, but solely by the dynamics of the movement of interest rates.
   Under these circumstances money becomes a means of exchange of complete neutrality in allocation, allowing the just exchange of services on the individual markets. Since the positive and negative deviations of the interest rate from the point of zero offset one another, money also becomes neutral in distribution. In other words, the existing differences in income and assets cannot increase even more. Thus an elementary condition toward mastering and reducing social contrasts is created. Furthermore, such a reduction in the cost of credit results in the opportunity for many of the at present dependently employed or unemployed to find independent enterprises, so that the introduction of demurrage charges on money also promotes decentralization of business. To be sure it would not automatically lead to the dissolution of all existing power structures of private enterprise; such a goal requires additional collateral measures that have still to be designed.
   The post-capitalist market economy that has only been sketchily described here creates a stable order also with respect to employment and the purchasing power of money. Once the rate of interest is leveled at 0 %, total savings flow back into investments under the pressure of the demurrage charges on money and stagnations of trade and involuntary unemployement become things of the past. The conditions advanced by Say’s law of markets are thus fulfilled: supply and demand create a constant state of balance, both on the individual markets as on the whole. This balance remains stable not only from a macroeconomic, but also from a microeconomic point of view.
   As soon as the velocity of circulation of money is no longer, as until now, subject to unpredictable fluctuations but becomes stable under the influence of the demurrage charges on money, it will be more feasible for the central banks to successfully adjust the amount of money in circulation to the potential of production, in such a manner that inflationary and deflationary variations in the purchasing power of money are avoided.
   As a parallel development to the transition to such a postcapitalist market economy, a transition from exponential and quantitative growth to qualitative growth also takes place, thus easing the conflict between the economy and the ecology.
   The declining rate of interest, finally settling around 0 %, also makes it possible to control and eliminate the pernicious urge toward an unchecked exponential growth of monetary capital and consequently also of real capital. Therefore money in the end also attains neutrality in growth.
   The demurrage charges on money make it possible to stabilize an economy without post-Keynesian or supply-side stimuli for growth, even in a situation in which the marginal efficiency of real capital declines. Instead, they support the selfrestraining tendency of quantitative growth that has been observed in previous crises. By forestalling the retreat of monetary capital from effective demand, demurrage simultaneously assures that after satiating one investment market after the other, savings flow into social and cultural fields, producing qualitative growth where for reasons of profitability it has thus far been lacking.
   Nevertheless, in this case it also holds true that additional measures, such as the application of environmental policies conforming to market conditions, are indispensable.
   In a post-capitalist market economy that uses a form of money remaining neutral as to economic growth, the impulse toward growth or decline can only be inspired by human desires and not by monetary capital’s self-interests. On condition that the money supply put in circulation ist also constantly present as effective demand, the economy can be stabilized by the appropriate adjustments in the said money supply, irrespective of whether it grows or not.
   Ultimately, a decline in the rate of interest and in the marginal efficiency of real capital also requires complementary political decisions to prevent monetary capital from switching over from the field of civilian production to the armament industry.


   None of the positive effects of demurrage charges on money, which we have only hinted at here, could take place, however, if they were introduced in the form originally suggested by Gesell (fixing a payable stamp on the banknotes or machine-stamping them for a charge). These methods cannot be put into practice. In this sense Keynes was justified in his reservations about demurrage payments: "The idea behind the stamped money is sound, ... although it cannot be carried out in the way suggested." In the meantime Gesell’s followers have developed better methods of carrying out this "sound idea".
   lt should not remain unsaid, finally, that as a result of such a change in the nature of money Gesell feared its flight into material assets, especially land property, as has already been seen during inflationary periods. Nevertheless, in order to prevent any speculation whatsoever with the land he suggested that it be gradially reacquired by the general public from private hands and leased to the highest bidder in hereditary tenure for his personal use by usufruct. In this case it also holds true that other ways of putting this fundamentally "sound idea" in practice must be found. In addition, a solution is required not only for the problem of surface speculation, but also for that of the exploitation of mineral resources below it.
   There can be no doubt that Silvio Gesell’s theories, as briefly summarized here, do not address a great number of questions that have not as yet been answered by Gesell and his followers. This is not, however, reason enough to turn away from them without closer consideration and to again tread the beaten paths of neoclassical or post-Keynesian thought, but rather a challenge for economic science to clarify whether the unanswered questions can be solved on the ground of Gesell's thoughts.
   The declarations made by renowned economists about Gesell which are included in the following appendix confirm the premise that his proposition may contain the seed for a new basic economic theory. lt is a possibility which justifies the employment of authorities in economic research to first of all translate Gesell’s thoughts into modern terms, tie them up with the present stage of theoretical development, and finally expand them into a platform for an economic order in accordance with which the many particular problems not mentioned here may also be solved.


„Free money may turn out to be the best regulator of the velocity of circulation of money, which is the most confusing element in the stabilization of the price level. Applied correctly it could infact haul us out of the crisis in a few weeks ... I am a humble servant of the merchant Gesell."

Prof. Dr. Irving Fisher, economist at Yale University New Haven/USA
Stamp Scrip, New York: 1933, p. 67 and Mail and Empire, Toronto: 11/21/1932.


"Gesell's chiefwork is written in cool and scientific terms, although it is run through by a more passionate and charged devotion to social justice than many think fit for a scholar. I believe that the future will learn more from Gesell’s than from Marx’s spirit.”

John Maynard Keynes, Economist, Fellow of King's College, University of Cambridge/England
General Theory of Employment, Interest and Money, London (1957), p. 355 (whole text on Gesell p. 353-358 and 379).


"Gesell's standpoint is both anticlassical and antimarxist. ... The uniqueness of Gesell's theory lies in his attitude to social reform. His theory can only be understood considering his general point of view as a reformer ... His analysis is not completely developed in several important points, but all in all his model shows no fault. "

Prof. Dr. Dudley Dillard, economist at the University of Maryland /USA
Gesell's Monetary Theory of Social Reform, American Economic Review (AER), Vol 32 (1942), p. 348–349.


"We would especially like to certify our great esteem for pioneers such as Proudhon, Walras, and Silvio Gesell, who accomplished the great reconciliation of individualism and collectivism that the economic order we are striving for must rest upon. "

Prof. Dr. Maurice Allais, economist at the University of Paris/France
Economie et Intérèt, Paris 1947, p. 613


“Academic economists are ready to ignore the ‘crackpots’, especially the monetray reformers. Johannsen, Foster and Catchings, Hobson and Gesell all had brilliant contributions to make in our day, but could receive no audience. It is hoped, that in the future economists will give a sympathetic ear to those who possess great economic intuition.”

Prof. Dr. Lawrence Klein, economist at the University of Pennsylvania/USA
The Keynesian Revolution (1949/1968), p. 152.


“Economic science owes Silvio Gesell profound insights into the nature of money and interest, but Silvio Gesell has always been considered a queer fellow by economic circles. To be sure, he was no professor, which already raises suspicion. ... The decisive fact is that Silvio Gesell's fundamental ideas with regard to an economic order are correct and exemplary. Exemplary is furthermore, that in the creation of a functional monetary order he should see the 'nervus rerum' of a functional economic and social order.”

Prof. Dr. Joachim Starbatty, economist at the University of Tübingen/Germany
Eine kritischeWürdigung der Geldordnung in Silvio Gesells utopischem Barataria (cheapland). Fragen der Freiheit Nr. 129 / 1977, pp. 6 and 30-31.


"Silvio Gesell managed to write clearly and make himself understood, a gift that most pure theorists and reformers as well as many practical experts of today lack. The Natural Economic Order makes worth-while reading even in our days. ...  Gesell developed brilliant concepts and was forgotten, while his less brilliant contemporaries ... dazzied several generations before the realization of their falseness could break through."

Prof. Dr. Oswald Hahn, economist at the University of Erlangen-Nuremberg/Germany
In memoriam Silvio Gesell. Zeitschrift für das gesamte Kreditwesen, Vol. 33 (1980), No. 6, p. 5.


"Gesell is a smart outsider, who ... treated the subjects of money and interest, the right to full proceeds from labor and suggestions for remedies, in a very original way. ... The ideas he conceived regarding his problems and what he deemed appropriate for the crises of his times are worth considering with respect to a fundamental improvement of monetary conditions in general."

Prof. Dr. Dieter Suhr, jurist at the University of Augsburg/Germany
Geld ohne Mehrwert – Entlastung der Marktwirtschaft von monetären Transaktionskosten. Frankfurt 1983, pp. 17 and 51.


"Gesell is the founder of the free economy, an economic outsider who nevertheless was recognized by Keynes, in a certain sense, as his forerunner. He is therefore still considered to be above all a Keynesian economist, even a kind of hyper-Keynesian, that is to say, an advocate of a school that propagates the lowest (nominal) interest rate possible as a means of avoiding crises. Gesell, however, also recognized that the problem of a crisis cannot be solved solely by reducing the rates of interest. ... Gesell suggests, therefore, as the necessary correlative to the introduction of ‘free money’ ... the introduction of ‘free land’. ... Gesell's chief work thus carries the title ‘A Natural Economic Order Through Free Land (!) and Free Money’. It proves that the real aspects of an economy - that is to say, the claim on land or resources - must never be lost from view, even if primary importance is attached to monetary factors. This was recognized more clearly by Gesell than by Keynes."

Prof. Dr. Hans C. Binswanger, economist at the College of Economic and Social Sciences Academy at St. Gallen/Switzerland
Arbeit ohne Umweltzerstörung - Strategien einer neuen Wirtschaftspolitik. Frankfurt 1983, pp. 246 - 248.


Further Reading
Silvio Gesell, The Natural Economic Order (Translation by Philip Pye). Berlin 1929 and London 1958.
- Theophil Christen, Gesells Monetary and Social Reform - Free Economy (Translation by Philip Pye). Berlin 1930.
- John Henry Büchi, Free Money - A Way out of the Money Maze. London 1933.
- Dudley Dillard, Gesells Monetary Theory of Social Reform, in: American Economic Review (AER) Vol 32 (1942), Nr. 2, p. 348–349.
- Roy Harrod, Towards a Dynamic Economics - Some Recent Developments of Economic Theory and their Application to Policy. London 1948.
- Lawrence Klein, The Keynesian Revolution, London 1949 and 1968. Chapter V, p. 124-152.
- Leonard Wise, Great Money Reformers - Silvio Gesell, Arthur Kitson, Frederic Soddy. London 1949.
- Dieter Suhr, The Capitalist Cost-Benefit Structure of Money. New York and Berlin 1989.

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