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Silvio Gesell

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Silvio Gesell
Gesell in 1895
Born(1862-03-17)17 March 1862
Sankt Vith, Rhine Province, Kingdom of Prussia
Died11 March 1930(1930-03-11) (aged 67)
Oranienburg, Brandenburg, Weimar Republic
NationalityGerman
Notable workThe Natural Economic Order (1916)
ChildrenCarlos Idaho Gesell
Academic career
FieldMonetary theory, Interest, monetary and land reform
School or
tradition
InfluencesTheodor Hertzka
Henry George
Pierre Joseph Proudhon
ContributionsDemurrage currency, Unearned income

Johann Silvio Gesell (German: [ɡəˈzɛl]; 17 March 1862 – 11 March 1930) was a German-Argentine economist, entrepreneur, and social reformer. He was the founder of Freiwirtschaft, an economic model for market socialism.[1] In 1900, he founded the magazine The Money and Land Reform (German: Die Geld- und Bodenreform), but it soon closed for financial reasons. During his time in Oranienburg, Gesell started the magazine Der Physiokrat together with Georg Blumenthal. In 1914, it closed due to censorship. In 1916, he published his most famous work, The Natural Economic Order.

Gesell is mainly known for his monetary theory. In particular, he noticed that there is an assymmetry between the durability and hoardability of money versus the fragility and depreciation of goods and services that lose value due to entropy and the passage of time.[2][3] He believed that people who own or hoard money have an unfair economic advantage over people who are dependent on producing decayable goods and services for their livelihoods. Gesell theorized that the premium conferred to those who own hoardable money was responsible for the creation of interest rates and recessions,[2][3] which later influenced John Maynard Keynes's theory of liquidity preference.[2] To resolve this problem, Gesell proposed inventing a new form of money that depreciates over time (German: Freigeld).[2][3]

Gesell also supported free land (German: Freiland) and free trade (German: Freihandel). He disagreed with Henry George that land value taxes could solve the problem of land rent,[4] as he believed that the taxes could be passed onto the tenants.[5] Instead, he proposed that public ownership of land should be accomplished by making the government purchase all land from current landowners through a massive amount of government land bonds, which would be paid over in 20 years by leasing the land through a system of competitive bidding for leases.[2] This would achieve many of the intended effects of Georgism, but two of the main differences are that it would compensate previous landowners through bond payments and it would not be necessary to repeatedly re-appraise the value of land.[6]

On suggestion of Erich Müchsam and Gustav Landauer, he served as the finance minister of the Bavarian Soviet Republic in 1919. The republic had a violent end, and Gesell was detained for several months on a charge of treason, but was acquitted by a Munich court after he gave a speech in his own defense.[1]

In the second half of 20th century, Gesell's ideas were published and discussed only in the limited circle of his supporters. Since the beginning of the century, Gesell has caught increasing attention among the general public. The reasons for this include discussions about so-called local currencies and cryptocurrencies, and the zero interest-rate policy of different central banks.

Life

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Silvio Jean Gesell was a son of a marriage between Ernst and Mathilde Gesell, the seventh of nine children. His mother was a daughter of Nicolas and Jeanette Joseph Talbots. She was Walloon and his father, Ernst Gesell, was German, originally from Aachen. He was a secretary of the earlier Prussian Kreis Malmedy [de], now part of Belgium. His birthhouse is located in St. Vither Rathausstraße 81. The building is decorated with a commemorative plaque. His grandmother Jeanette Talbots, who Gesell was given his middle name after, was daughter of the well-known St. Vither builder Josef Lentz. Before her marriage, she worked in Verviers and Andenne as a teacher Don Carlos, prince of Capua and brother of Francis II of the Two Sicilies.

Der Firmensitz, die "Casa Gesell“, in Buenos Aires

After attending public school in Sankt Vith, he moved to the Gymnasium in Malmedy. He had to pay for his living expenses from an early age and could not afford higher education, so he decided against attending a university and worked for the German Reichspost, the postal system of the German Empire. However, he was dissatisfied with the job, so he began an apprenticeship to his merchant brothers in Berlin. He then lived in Málaga, Spain for two years, working as a correspondent. He then returned to Berlin to complete his compulsory military service. Subsequently, he worked as a merchant in Braunschweig and Hamburg.

In 1887, Gesell relocated to Buenos Aires, Argentina, where he became self-employed and opened a franchise of his brother's business in Berlin. The 1890 depression in Argentina hurt his business considerably, so he transferred ownership of his Argentinian franchise to his brother in 1890. The ongoing economic crisis caused him to think about the structural problems caused by the monetary system. In 1891, Gesell released his first theoretical writing on currency: The Reformation of the Monetary System as a Bridge to a Social State (German: Die Reformation des Münzwesens als Brücke zum sozialen Staat). He also wrote and published The Nerve of Things (Latin: Nervus rerum, 1891) and The nationalization of money (German: Die Verstaatlichung des Geldes, 1892). He returned to Europe in 1892.

After a short stay in Germany, Gesell settled in Les Hauts-Geneveys in the Canton of Neuchâtel in Switzerland, where he acquired a farm. In addition to working in agriculture, he dedicated himself to studying economics and writing. He completed his self-taught education by reading the works of the most important economists, trying to contrast their monetary theories. Judging by the quotations, he read David Hume, Adam Smith, David Ricardo, Karl Marx, Pierre-Joseph Proudhon, Henry George, Knut Wicksell, Eugen von Böhm-Bawerk, Carl Menger, Georg Friedrich Knapp, John Law. He also started publishing a magazine, The Money and Land Reform (German: Die Geld- und Bodenreform) in 1900, but it was not a great success. He discontinued it in 1903 for financial reasons.

From 1907 to 1911, Gesell lived in Argentina again. He then returned to Germany where he chose to live in the vegetarian-oriented fruit-growing cooperative called Eden (Heaven) (German: Obstbaugenossenschaft Eden), which was founded by Franz Oppenheimer in Oranienburg, north of Berlin.[citation needed] There, he founded his magazine Der Physiokrat together with Georg Blumenthal. In March 1916, further publication was prohibited due to wartime censorship during the World War I.[1] Gesell left Germany and returned back to his farm in Switzerland. Through his business, he acquired certain assets, with which he was able to dispatch so that crises did not damage him to a large extent. He also received support from his friends, especially from Paul Klemm in Transylvania, Romania, a wealthy wood manufacturer who occasionally paid the printing costs for Gesell's most sold publications.

Postkarte von Silvio Gesell um 1920. Er schreibt unter anderem: "Das grosse Haus wurde von meinem Urgroßvater gebaut […]“,[7] gemeint ist der St. Vither Baumeister Josef Lentz.
Silvio Gesells Grab auf dem Stadtfriedhof Oranienburg am 17. März 2023 (Koordinaten: 52°44′52″N 13°13′35″E / 52.7478°N 13.2265°E / 52.7478; 13.2265 (Grabstätte von Silvio Gesell))
Infotafel am Grab (17. März 2023)

In April 1919, Gesell received a call from Ernst Niekisch from the revolutionary government of Bavarian Soviet Republic to come to Munich. This offered him a seat in the so-called Socialization Commission and he was appointed shortly, on suggestion of Erich Müchsam and Gustav Landauer, as the "People's Representative for Finance" (German: Volksbeauftragte für Finanzen) situated in Munich. Gesell worked with law Professor Karl Polenske [de] from the University of Greifswald and the Swiss physician and mathematician Theophil Friedrich Christen. He wrote a law for the creation of Freigeld (Free Money), a currency system he had developed. However, his term lasted for only seven days.

After the violent end of Soviet Republic, Gesell was arrested. There he shared a cell with the poet Gustav Gräser, whose writing on revolution he funded. After several months in prison, he was acquitted on July 1919 in a high treason trial for his self-defense speech in front of a Munich court martial.[1] He claimed that he didn't have anything to do with the political decisions of the Republic and was just trying to offer a plan to restructure the economy.[8] The legal costs of the process were paid by the state treasury. However, he, Gräser, and others was deported from Bavaria. Immediately after his discharge, Gesell and his supporters resumed their activism for his revolutionary ideas

Due to of his participation with the Munich Soviet Republic, the Swiss authorities refused to let him return to his farm, as an "undesirable foreigner". Gesell subsequently retired to Bergholz-Rehbrücke [de], Potsdam-Mittelmark, then back to Oranienburg-Eden once again. In 1924, another stay in Argentina followed. In 1927, he lived in Eden again until he died from pneumonia on 11 March 1930. He was buried in a cemetery in Oranienburg. Bertha Heimberg [de] delivered his funeral speech. Silvio Gesell was married to Anna (born Böttger), with whom he had four children. From his relationship with Jenny Bumenthal (born Führer), his son Hans-Joachim Führer was born in 1915. Gesell had further relationships and children with Wanda Tomys and Grete Siermann.

Economic philosophy

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In his book The Natural Economic Order through Free Land and Free Money (German: Die natürliche Wirtschaftsordnung durch Freiland und Freigeld), which was self-published, Gesell stated his theories. Gesell based his economical ideas on the self-interest of people, as a healthy and natural inducement which allows them to provide for their necessities and become economically active. He called for free, fair business competition, with equal chances for all. This included the removal of all legal and inherited privileges. Gesell believed that an economic system must do justice to individual proclivities. Such circumstances should establish an economical order for itself, otherwise it is set up for failure. For that reason, Gesell referred to his economical model as "natural". With such a statement, he consciously held himself in contradiction to Karl Marx, who demanded a change in social relations.

"Once again is the marxistic goal to be achieved by force, on the road of law. The nature of people is directed against this goal, arguing it."

— Silvio Gesell, second memorandum for german trade unions for implementation of their activities against capitalism, 1922

Under Freiwirtschaft, the most talented people would have the greatest income, without distortion by interest and rent-seeking. The economic status of the less-talented would improve because they would not be forced to pay interest and rent charges. According to Gesell, this would reduce inequality between the poor and the rich. Furthermore, greater per capita incomes would mean that the poor would have a greater chance of escaping poverty, in part because poor people would have greater disposable income and spending power.

Silvio Gesell advocated a world order and considered himself a world citizen. According to his belief system, inspired by Henry George, the Earth should belong to all people equally, with no difference in race, sex, status, assets, religion, age, or ability to provide. However, his land reform proposal was different from Georgism. He believed that land value taxes could not solve the problem of land rent,[4] as he believed that the taxes could be passed onto the tenants.[5] He believed that the private ownership of land should be abolished and replaced by free-land reform, a sort of public lease of land.[9] He proposed that public ownership of land should be accomplished by making the government purchase all land from current landowners through a massive amount of government land bonds, which would be paid over in 20 years by leasing the land through a system of competitive bidding for leases.[2] This would achieve many of the intended effects of Georgism, but two of the main differences are that it would compensate previous landowners through bond payments and it would not be necessary to repeatedly re-appraise the value of land.[6] Landowners would no longer own their land, but they would be compensated through the bond payments and could obtain private possession of their land if they pay the leases.[6]

According to Silvio Gesell, establishing welfare states without abolishing private ownership of land would be ineffective, because the proceeds of the worker's labor would be determined by the proceeds of labor that they obtain on the lands of the landowners, rather than free-land.[10] Private ownership of land converts all the advantages of using one's land into cash and thus belongs to the landowner.[11][5] In order to not cancel the effects of welfare policies, Silvio Gesell believed that Free-Land reform was necessary.

Some regard Gesell's idea of Freigeld as a negative interest rate policy, but they have different effects. Under the Freigeld reforms of Gesell, hoarding money becomes impossible because the face-value of money depreciates regularly. This forces the circulation of money.[12] By contrast, it is possible to hoard money on negative interests, since the face-value of money is constant and people can use their money as a means of saving. For example, Japan's negative interest rates drove up the sales of safes and strongboxes.[13]

Gesell denied value theory in economics. He thought that value theory is useless and prevents economics from becoming science, and that a currency administration guided by value theory was doomed to sterility and inactivity.[14]

Works

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In German

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  • Die Reformation des Münzwesens als Brücke zum sozialen Staat. Selbstverlag, Buenos Aires 1891
  • Die Verstaatlichung des Geldes. Selbstverlag, Buenos Aires 1892
  • Die Anpassung des Geldes und seiner Verwaltung an die Bedürfnisse des modernen Verkehrs. Herpig & Stieveken, Buenos Aires 1897
  • Die argentinische Geldwirtschaft und ihre Lehren. 1900
  • Das Monopol der schweizerischen Nationalbank und die Grenzen der Geldausgabe im Falle einer Sperrung der freien Goldausprägung. K. J. Wyss, Bern 1901
  • Die Verwirklichung des Rechts auf den vollen Arbeitsertrag durch die Geld- und Bodenreform. Selbstverlag, Les Hauts Geneveys/Leipzig 1906
  • Die neue Lehre von Geld und Zins. Physiokratischer Verlag, Berlin/Leipzig 1911
  • Die natürliche Wirtschaftsordnung durch Freiland und Freigeld. Selbstverlag, Les Hauts Geneveys 1916; 9. Auflage herausgegeben von Karl Walker: Rudolf Zitzmann Verlag, Lauf 1949 (PDF; 1,4 MB)
  • Gold oder Frieden? Vortrag, gehalten in Bern am 28. April 1916. Selbstverlag, Les Hauts Geneveys 1916
  • Freiland, die eherne Forderung des Friedens. Vortrag, gehalten im Weltfriedensbund in Zürich am 5. Juli 1917 in Zürich. Selbstverlag, Les Hauts Geneveys 1917
  • Der Abbau des Staates nach Einführung der Volksherrschaft. Denkschrift an die zu Weimar versammelten Nationalräte. Verlag des Freiland-Freigeld-Bundes, Berlin-Steglitz 1919
  • Die gesetzliche Sicherung der Kaufkraft des Geldes durch die absolute Währung. Denkschrift zu einer Eingabe an die Nationalversammlung. Selbstverlag, Berlin/Weimar 1919
  • Das Reichswährungsamt. Wirtschaftliche, politische und finanzielle Vorbereitung für seine Einrichtung. Freiland-Freigeldverlag, Rehbrücke 1920
  • Internationale Valuta-Assoziation (IVA). Voraussetzung des Weltfreihandels – der einzigen für das zerrissene Deutschland in Frage kommenden Wirtschaftspolitik. Freiwirtschaftlicher Verlag, Sontra 1920
  • Die Freiwirtschaft vor Gericht. Mit einer Einleitung von Richard Hoffmann. Freiland-Freigeld-Verlag, Erfurt/Bern 1920
  • An das deutsche Volk! Kundgebung des Freiwirtschaftlichen Kongresses zu Hannover. Freiland-Freigeld-Verlag, Erfurt 1921
  • Deutsche Vorschläge für die Neugründung des Völkerbundes und die Überprüfung des Versailler Vertrages. Öffentlicher Vortrag, gehalten in der Aula des Gymnasiums zu Barmen am 20. Dezember 1920. Verlag des Freiland-Freigeld-Bundes, Barmen-Elberfeld 1921
  • Die Wissenschaft und die Freiland-Freigeldlehre. Kritik und Erwiderung. Ohne Verfasserangabe erschienen. Erfurt/Berlin 1921
  • Denkschrift für die Gewerkschaften zum Gebrauch bei ihren Aktionen in der Frage der Währung, der Valuta und der Reparationen. Selbstverlag, Berlin-Rehbrücke 1922
  • Die Ausbeutung, ihre Ursachen und ihre Bekämpfung. Zweite Denkschrift für die deutschen Gewerkschaften zum Gebrauch bei ihren Aktionen gegen den Kapitalismus. Vortrag, gehalten in der Sozialistischen Vereinigung zur gegenseitigen Weiterbildung in Dresden am 8. Mai 1922. Selbstverlag, Berlin-Rehbrücke 1922
  • Die Diktatur in Not. Sammelruf für die Staatsmänner Deutschlands. Freiland-Freigeld-Verlag, Erfurt 1922
  • Das Trugbild der Auslandsanleihe und ein neuer Vorschlag zum Reparationsproblem. Eine weltwirtschaftliche Betrachtung, eine Warnung vor Illusionen und ein positiver Lösungsvorschlag. Freiwirtschaftlicher Verlag, Erfurt 1922
  • unter dem Pseudonym Juan Acratillo: Der verblüffte Sozialdemokrat. 1922 (PDF)
  • Der Aufstieg des Abendlandes. Vorlesung, gehalten zu Pfingsten 1923 in Basel auf dem 1. Internationalen Freiland-Freigeld-Kongress. Freiland-Freigeld-Verlag, Berlin/ Bern, 1923.
  • mit Hans Bernoulli und Fritz Roth: Das Problem der Grundrente. Einleitende Gedanken zu einer wissenschaftlichen Abklärung. Selbstverlag des Schweizer Freiwirtschaftsbundes, Bern 1925
  • Die allgemeine Enteignung im Lichte physiokratischer Ziele. Selbstverlag, Potsdam 1926
  • Der abgebaute Staat. Leben und Treiben in einem gesetz- und sittenlosen hochstrebenden Kulturvolk. A. Burmeister Verlag, Berlin-Friedenau 1927
  • Reichtum und Armut gehören nicht in einen geordneten Staat. Werkauswahl zum 150. Geburtstag, zusammengestellt von Werner Onken. Verlag für Sozialökonomie, Kiel 2011, ISBN 978-3-87998-462-6

In Spanish

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  • Nervus rerum. Selbstverlag, Buenos Aires 1891
  • El Sistema Monetario Argentino. Sus Ventajas y su Perfeccionamento. Selbstverlag, Buenos Aires 1893
  • La Cuestion Monetaria Argentina. Buenos Aires 1898

See also

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References

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  1. ^ a b c d Onken, Werner (October 2000). "The Political Economy of Silvio Gesell: A Century of Activism". American Journal of Economics and Sociology. 59 (4): 615–616. doi:10.1111/1536-7150.00046. JSTOR 3487828.
  2. ^ a b c d e f Baynham, Jacob (14 November 2023). "What If Money Expired?". Noema Magazine. Berggruen Institute. Retrieved 27 April 2025.
  3. ^ a b c Rosalsky, Greg (27 August 2019). "The 'Strange, Unduly Neglected Prophet'". NPR. Retrieved 17 April 2025.
  4. ^ a b "The Natural Economic Order/Part I/Introduction". Archived from the original on 23 November 2016. Retrieved 23 November 2016 – via Wikilivres.
  5. ^ a b c "The Natural Economic Order/Part I/Chapter 11". Archived from the original on 24 November 2016. Retrieved 23 November 2016 – via Wikilivres.
  6. ^ a b c Sidman, Josh (10 April 2024). "Silvio Gesell: Beyond Capitalism vs Socialism" Class #7. Videotape. Henry George School of Economics. Retrieved 27 April 2025.
  7. ^ Der gesamte handschriftliche Postkartentext lautet: „Das grosse Haus wurde von meinem Urgrossvater gebaut [Pfeil]. Habe hier noch viele alte Bekannte getroffen. Obschon ich seit 30 Jahren nicht mehr dort war, hielten mich manche in den Strassen an. Dir Luder kenne ick. Sie freuten sich alle aufrichtig das verlorene katholische Schaaf wiederzusehen.“
  8. ^ Ilgmann, Cordelius (April 2011). "Silvio Gesell: 'a strange, unduly neglected' monetary theorist". Centrum für Angewandte Wirtschaftsforschung (CAWM). 38 (23): 532–564. doi:10.1080/01603477.2015.1099446. hdl:10419/51275. JSTOR 48540611.
  9. ^ "The Natural Economic Order/Part II/Chapter 3". Archived from the original on 23 November 2016. Retrieved 23 November 2016 – via Wikilivres.
  10. ^ "The Natural Economic Order/Part I/Chapter 13". Archived from the original on 18 October 2016. Retrieved 5 May 2017 – via Wikilivres.
  11. ^ "The Natural Economic Order/Part II/Chapter 4". Archived from the original on 18 October 2016. Retrieved 5 May 2017 – via Wikilivres.
  12. ^ Bershidsky, Leonid (3 July 2015). "'Neglected Prophet' of Economics Got It Right". Bloomberg. Retrieved 1 June 2017.
  13. ^ Shen, Lucinda (23 February 2016). "Japan's Negative Interest Rates Are Driving up Sales of Safes". Fortune. Retrieved 1 June 2017.
  14. ^ "The Natural Economic Order/Part III/Chapter 3 - Bibliowiki". Archived from the original on 10 December 2017. Retrieved 10 December 2017.
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