Imagine that you earn a living by raising chickens and selling eggs, and I raise cows and sell milk. We both support ourselves by specializing in the production of one product, and we must sell that product in order to procure all of the other goods and services that we don’t produce for ourselves.
I need to get a stamp each week, right? Seems like an extra burden - going somewhere to stamp the money. In addition, what if I, say, get sick and can't go but need money urgently, like, for taxi? You get my point - it seems very inconvenient in practice.
And what if half a population forgets to go and stamp their money in time? What happens?
The convenient thing about money is that it is stable. I can exchange it for goods at any time.
I could say that way - if money loses its store value, then it becomes shaky also as to its exchange value.
1) Physical stamped money was the only way to implement Gesell's idea a hundred years ago when it was first proposed. At that time, yes, it was somewhat cumbersome and inconvenient. But with today's information technology, that would no longer be the case. First of all, most money at this point is digital. Demurrage on digital money (i.e. bank balances) could easily be automated so there would be no effort whatsoever required by money holders. As for physical currency (which today represents a small fraction of the overall money supply), there are a number of different ways demurrage can be applied without requiring people to buy and affix stamps. One such approach would be to have different series of notes, which periodically need to be exchanged in order to remain valid. The point is that your arguments would have been much more relevant in Gesell's day, but today they are quite easy to solve.
2) I completely disagree with your statement that removing the store of value function of money would cause its exchange value to become shaky. In fact, I would say the exact opposite is true. From a Gesellian perspective, shaky exchange value (like we currently have with our existing form of money) is largely due to the fact that money is designed to be accumulated/hoarded. Therefore monetary circulation is irregular and unpredictable. Sometimes money circulates too quickly and other times not quickly enough. This is why we go through periods of inflation alternating with periods of stable prices alternating with periods of deflation. Non-hoardable currency would circulate more consistently, thereby resulting in more price stability, not less. So Gesell would say the exact opposite of what you said. The only way to achieve stable exchange value is to eliminate the SoV function of money.
1) Just yesterday I had to pay in cash because the card reading apparatus got stuck. I wouldn't make all cash digital - it can crash. Also a big inconvenience.
2) Will price stability follow naturally? Or should prices be fixed, say, to a standard of a loaf of bread, that is, what loaf should never cost more than, e.g., 1 Gesellian free currency unit.
Gesell proposes the creation & monitoring of price indices and then adding to/reducing the money supply as prices rise or fall, with the goal of keeping prices as near to completely stable as possible. He wrote that monetary policy would only require two pieces of equipment -- a printing press and an incinerator.
I saw your comment. Honestly I didn't really understand your point. I don't agree that Worgl taught us that savings and financial intermediation are not necessary.
i.e. the concentration of billion$ in Saving$ into the hands of Hierarchy AND enabling Hierarchy to economically bootstrap themselves AND amplify their power -- using Workers' savings
i.e.
- directly:
initially, through control over pension funds,
next: through control of commercial banks, and their appointees to the Federal Reserve Banks to effectively control private and public debt, thus control money supply & interest extraction
then: through control of corporations via equity stake and bank loans
- indirectly, getting co-funding through the stock market for the corporations that they control
But let's say there are a bunch of people who just want to rob the community of its goods. Will the community spend some of their sparetime to learn how to fight and depend (not effective against professional robbers) or will some just get goods from the community in exchange for specialising in the art of defending the community?
Ok, what about those bunch of guys who want to engage in pure mathematics? They can't exchange the fruit of their labour into eggs (the egg guy doesn't need it).
I don't understand your first question. There will still be government, police, etc.
Regarding your second question, there will still be money. People will still have jobs where they get paid in money. Money will not lose its value immediately. Silvio Gesell proposed an annual depreciation rate of 5%. So in terms of earning a livelihood and paying for necessities, demurrage money will work just like regular money. It just won't be suitable as a medium for long-term savings.
I would suggest you read the other articles on this Substack page. That issue is discussed extensively. The whole Gesellian theory of money is based on the observation that money's two primary functions (medium of exchange and store of value -- many would add a third function, i.e. unit of account, but I consider that to be inherent in the medium of exchange function) are inherently incompatible. If you want to read just one article, I would recommend "Money: medium of exchange vs. store of value".
OK, how would it technically work in practice?
I need to get a stamp each week, right? Seems like an extra burden - going somewhere to stamp the money. In addition, what if I, say, get sick and can't go but need money urgently, like, for taxi? You get my point - it seems very inconvenient in practice.
And what if half a population forgets to go and stamp their money in time? What happens?
The convenient thing about money is that it is stable. I can exchange it for goods at any time.
I could say that way - if money loses its store value, then it becomes shaky also as to its exchange value.
1) Physical stamped money was the only way to implement Gesell's idea a hundred years ago when it was first proposed. At that time, yes, it was somewhat cumbersome and inconvenient. But with today's information technology, that would no longer be the case. First of all, most money at this point is digital. Demurrage on digital money (i.e. bank balances) could easily be automated so there would be no effort whatsoever required by money holders. As for physical currency (which today represents a small fraction of the overall money supply), there are a number of different ways demurrage can be applied without requiring people to buy and affix stamps. One such approach would be to have different series of notes, which periodically need to be exchanged in order to remain valid. The point is that your arguments would have been much more relevant in Gesell's day, but today they are quite easy to solve.
2) I completely disagree with your statement that removing the store of value function of money would cause its exchange value to become shaky. In fact, I would say the exact opposite is true. From a Gesellian perspective, shaky exchange value (like we currently have with our existing form of money) is largely due to the fact that money is designed to be accumulated/hoarded. Therefore monetary circulation is irregular and unpredictable. Sometimes money circulates too quickly and other times not quickly enough. This is why we go through periods of inflation alternating with periods of stable prices alternating with periods of deflation. Non-hoardable currency would circulate more consistently, thereby resulting in more price stability, not less. So Gesell would say the exact opposite of what you said. The only way to achieve stable exchange value is to eliminate the SoV function of money.
1) Just yesterday I had to pay in cash because the card reading apparatus got stuck. I wouldn't make all cash digital - it can crash. Also a big inconvenience.
2) Will price stability follow naturally? Or should prices be fixed, say, to a standard of a loaf of bread, that is, what loaf should never cost more than, e.g., 1 Gesellian free currency unit.
Gesell proposes the creation & monitoring of price indices and then adding to/reducing the money supply as prices rise or fall, with the goal of keeping prices as near to completely stable as possible. He wrote that monetary policy would only require two pieces of equipment -- a printing press and an incinerator.
ICYMI - please check out my response on this thread
I saw your comment. Honestly I didn't really understand your point. I don't agree that Worgl taught us that savings and financial intermediation are not necessary.
The balance between two functions of money:
- medium of exchange and store of value
-- which way would demurrage tilt the balance?
There is a much simpler and more elegant solution: DO NOT SAVE.
.
Savings are not necessary, nor financial intermediaries, and central policy makers
Those were the initial real lessons from the Worgl experiment.
These were the real reasons it had to be shut down - in the midst of the Great Depression - else, the lessons would have spread like wildfire.
Thus, another lesson from Worgl: Hierarchy subjugates
Else, this (https://archive.is/WjwB9) would not be possible:
i.e. the concentration of billion$ in Saving$ into the hands of Hierarchy AND enabling Hierarchy to economically bootstrap themselves AND amplify their power -- using Workers' savings
i.e.
- directly:
initially, through control over pension funds,
next: through control of commercial banks, and their appointees to the Federal Reserve Banks to effectively control private and public debt, thus control money supply & interest extraction
then: through control of corporations via equity stake and bank loans
- indirectly, getting co-funding through the stock market for the corporations that they control
Ok.
This works for goods.
But let's say there are a bunch of people who just want to rob the community of its goods. Will the community spend some of their sparetime to learn how to fight and depend (not effective against professional robbers) or will some just get goods from the community in exchange for specialising in the art of defending the community?
Ok, what about those bunch of guys who want to engage in pure mathematics? They can't exchange the fruit of their labour into eggs (the egg guy doesn't need it).
I don't understand your first question. There will still be government, police, etc.
Regarding your second question, there will still be money. People will still have jobs where they get paid in money. Money will not lose its value immediately. Silvio Gesell proposed an annual depreciation rate of 5%. So in terms of earning a livelihood and paying for necessities, demurrage money will work just like regular money. It just won't be suitable as a medium for long-term savings.
Confusing article. You never give us your definition of "money".
I would suggest you read the other articles on this Substack page. That issue is discussed extensively. The whole Gesellian theory of money is based on the observation that money's two primary functions (medium of exchange and store of value -- many would add a third function, i.e. unit of account, but I consider that to be inherent in the medium of exchange function) are inherently incompatible. If you want to read just one article, I would recommend "Money: medium of exchange vs. store of value".