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Silvio Gesell: 'a strange, unduly neglected prphet'? A reappraisal of a forgotten pioneer of monetary theory

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  • Cordelius Ilgmann

Abstract

Given the renewed interest in negative interest rates, this article analyses Gesell’s theory of interest and its connection to J. M. Keynes’ General Theory. Gesell recognised that money has little or no carrying costs in comparison to goods. Therefore, money holders are able to withhold from purchase without costs while producers of goods incur losses due to natural decay. Based on this insight, Gesell defined interest as a purely monetary phenomenon. Even if the explanation of interest as being a monetary phenomenon caused by the comparatively small carrying cost of money is clearly overly simplistic, Keynes himself expressively acknowledged Gesell’s ‘flashes of deep insight’ in the General Theory. In fact, the theoretical similarities between Keynes and Gesell as well as Keynes’ extensive references to Gesell underline the Post Keynesian claim that Keynes’ departure from classical economics went beyond the ‘bastard’ textbook Keynesianism.

Suggested Citation

  • Cordelius Ilgmann, "undated". "Silvio Gesell: 'a strange, unduly neglected prphet'? A reappraisal of a forgotten pioneer of monetary theory," Working Papers 200923, Institute of Spatial and Housing Economics, Munster Universitary.
    • Handle: RePEc:muc:wpaper:200923
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    File URL: http://www.wiwi.uni-muenster.de/cawm/forschen/Download/Diskbeitraege/Gesell_Ilgmann-2010.pdf
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    Cited by:

    1. Cordelius Ilgmann & Martin Menner, 2011. "Negative nominal interest rates: history and current proposals," International Economics and Economic Policy, Springer, vol. 8(4), pages 383-405, December.
    2. Martin Menner, 2011. ""Gesell Tax" and Efficiency of Monetary Exchange," Working Papers. Serie AD 2011-26, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).

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