Silvio Gesell - The NATURAL ECONOMIC ORDER
In a socialistic State, with all prices fixed by the Government, price tickets could replace money. Committees of appeal and written complaints would take the place of bargaining between individuals. The individual would receive for his product a priceticket and a book for complaints. With an economic system based on money, bargaining about the price takes the place of the committees and the book of complaints. Differences of opinion are settled on the spot by the parties concerned, without the intervention of the law. Either the transaction does not take place, or the price is legally valid beyond the possibility of appeal. Herein lies the distinction between price-tickets and money. The frequent confusion of price-tickets and money in economic literature is, no doubt, mainly due to the fact that both money and price-tickets can be made of any material, and that in neither case has the material any influence upon prices, unless the material of which money is made influences the quantity of money in circulation. Of late years many economists have been ca ht in this pitfall-Bendixen, Liefmann and many pupils of Knapp. Indeed the only investigators to escape it were those who perceived the true nature of money (as revealed, for example, by the demonetisation of silver described in the previous chapter).)
Wares must therefore be sold for money; that is, there exists a compulsory demand for money equal in amount to the stock of wares. The use of money is therefore as indispensable to all as the division of labour is advantageous to all. The more advantageous the division of labour, the more indispensable is money. With the exception of the small farmers who consume almost all they produce, the whole population is unconditionally under an economic compulsion to sell its produce for money. Money is the essential condition of the division of labour as soon as the scope of the latter exceeds the possibilities of barter. But what is the nature of this compulsion? Must all who wish to participate in the division of labour sell their produce for gold (silver etc.), or must they sell it for money ? Money was formerly made of silver, so all wares had to be sold for thalers. Money was then divorced from silver, Yet the division of labour remained, the exchange of products proceeded. It was not, therefore, silver on which the division of labour depended. The demand for a medium of exchange caused by the wares was not a demand for the material of the medium of exchange. The money need not necessarily be made of silver. This is now proved, once and for all, by experience. But must the medium of exchange be made of gold ? Does a peasant who has grown cabbages and wishes to sell them to pay a dentist, need gold ? Is it not, on the contrary, a matter of complete indifference to him, for the short time during which, as a rule, he retains the money, of what substance the money consists ? Has he, as a rule, even time to look at the money ? And can one not use this circumstance to make money out of paper ? Would not the necessity of offering the products of the division of labour, namely the wares, in exchange for money still exist, if we substituted cellulose for gold in the manufacture of money ? Would such a transition cause the abandonment of the division of labour, would the population prefer to starve rather than recognise cellulose-money as the instrument of exchange ? The theory of the gold standard asserts that money, to serve as the medium of exchange, must have an "intrinsic value", since money can exchange only as much "value" as it contains, somewhat as weights can be raised only by weights. But as cellulose-money has no intrinsic value, it cannot exchange the wares, which have value. Nought cannot be compared with one. Cellulose-money has no relation to the wares because it lacks "value" and is therefore an impossibility. The advocates of the gold standard still hold to these arguments but in the meantime paper-money is quietly taking possession of the world. It is true that the fact is still denied, the theorists now speaking of "transferred" forces. Paper-money, they say, is in use in every country, but it passes current only because it is rooted in gold. If there were no metal money in existence, paper-money would go to pieces like a sparrow's nest in a falling tower. The holder of paper-money is promised gold, and this promise gives paper life. The "value" of the gold is transferred to the paper by the fact or promise of conversion in to gold. Paper-money is like a bill of lading which can indeed be sold, but loses its value if the goods it represents disappear. If the gold or the promise of redemption is removed, all paper-money is reduced to waste-paper. Hence what supports paper-money is merely a "transferred value". This is about all that is said against the possibility of paper-money, and the argument seems so conclusive that almost everyone who trusts his own power of judgement denies, without further consideration, the possibility of paper-money.
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