Silvio Gesell - The NATURAL ECONOMIC ORDER
Free-Money is embodied demand, demand is sale, and sale is work. The money reform is an automatic insurance against unemployment; not an official insurance spoon-fed by the State and the employers, but the natural insurance inherent in the division of labour. For labour produces goods, and goods tend always to be exchanged for goods. Through the interference of gold, exchange was forced to pay tribute to two extraneous powers, interest and desire of profit, by which it was hampered. The exchange of goods became conditional upon interest and profit. If exchange did not result in interest or profit, it came to a standstill, because money, the medium of exchange, was held back. With Free-Money such conditions are utterly impossible. Free-Money is a hungry lion seeking whom it may devour; it pounces on the goods, and goods are employment, for it makes no difference whether I buy goods or employ a labourer direct. The merchant from whom I buy the goods will seek to replenish his stock and get rid of the money by ordering new goods from the manufacturer. An absurdly simple insurance against unemployment, an absurdly simple labour bureau ! Every FreeMoney note put in circulation by the State is a substitute for an application for employment: every thousand of these notes is a substitute for a labour exchange. Anyone who sells goods and receives money in return will immediately buy goods again, either for himself or through someone to whom he lends the money; so everyone buys the same quantity of goods that he sells, and everyone sells the same quantity of goods that he buys. There is no room for any surplus; the exact quantity of goods produced is sold. Under such conditions how can slumps, overproduction and unemployment occur ? Such phenomena are possible only when people at times, or usually, buy less goods than they themselves produce. (* Free-Money does not of course guarantee the individual producer the disposal of his output; it only protects the community as a whole. If someone produces poor goods or asks too high prices, or produces blindly without consulting the needs of the market, Free-Money will not enable him to dispose of his produce. The term "unlimited sales", which is repeatedly used here, applies only to the community; after the introduction of Free-Money neither the claims of interest nor the "tone of the market" can obstruct the disposal of goods. Everyone will be compelled to buy immediately exactly as much as he has sold; and when everyone is under such compulsion there can be no surplus. If anyone has no further need of goods he will either cease working or he will lend his money-surplus to others who require more goods than they themselves have sold at the moment. If competition in some commodity is too great (sugar-beet, pig-iron, dancing lessons) its price will fall; and if production at the reduced price does not pay, everyone will know what steps to take.)
What happened formerly? The merchant had to pay interest on his capital, so he made the purchase of goods dependent on the exaction of interest. If the situation made it impossible for him to add the interest to the selling price of the goods, he left the products of the workers untouched, and the latter were thrown out of work through the cessation of sales. No interest, no money; no money, no exchange of goods; no exchange, no employment. Interest was the necessary condition of the circulation of money, upon which employment depends. The Reichsbank itself never issued money without interest, even at times when by universal admission the market was short of money - and this in spite of the fact that according to its charter the main task of the Reichsbank was to adapt the monetary circulation to the needs of the market. (I do not reproach the Reichsbank; even a god would have been powerless if bound by the clumsily framed regulations of its charter). Today the circulation of money has ceased to be conditional. Money means the sale of goods, no matter what the result. Money - sales of goods - employment - money. Under all possible circumstances the circuit is closed. The merchant was, of course, bound to keep his profit in mind; the selling price had to exceed the purchase price. That was the natural, inevitable and, moreover, fully justified condition of all commercial activity. And the price paid by the merchant or debited to his account was in every case a known and unalterable quantity (except with sales by commission), whereas the selling price was a lottery, and commerce as a whole resembled a gambling table at Monte Carlo. For between the purchase and the sale there was an interval of time during which the market might change. Before making a purchase the merchant considered the state of the market, trade prospects and home and foreign politics. If he thought that others shared his belief that a general rise of prices was imminent, he hastened to buy, so as to participate in the looked-for rise with as large a stock of goods as possible. If he was not mistaken, if he had many fellow believers, so that many did buy, that alone was reason enough for the expected to happen, namely a rise of prices - no matter what the reasons 145