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Silvio Gesell: 'a strange, unduly neglected' monetary theorist

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  • Ilgmann, Cordelius
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    Abstract

    Given the renewed interest in negative interest rates as method for removing the floor to nominal interest rates, this article offers a concise review of Gesell's life, work and its place in the history of economic thought. It provides a brief biographical sketch of Gesell, demonstrating both his relative prominence as a social reformer during the interwar years as well as his close affiliation with anarchism. The article then gives a concise summary of Gesell's theory of effective demand and interest as expounded in the Natural Economic Order, the former being neglected by most scholars working on the subject. Finally, it is demonstrated that Keynes endorsement of Gesell as a strange, unduly neglected prophet is another piece of evidence for rejecting Hick's classic interpretation of the General Theory. If one takes Keynes extensive discussion of Gesell's theory of interest as a key for understanding the General Theory, Keynes main innovation of General Theory becomes a monetary theory of interest based on uncertainty that results in liquidity preference. The limited literature on Keynes' link to Gesell, published mainly in the 1940s, has however been widely ignored in the debate about the General Theory. --

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    Bibliographic Info

    Paper provided by Center of Applied Economic Research Münster (CAWM), University of Münster in its series CAWM Discussion Papers with number 23.

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    Date of creation: 2011
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    Handle: RePEc:zbw:cawmdp:23

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    Keywords: History of Economic Thought; Theory of Interest; Negative Interest Rates; John Maynard Keynes; Silvio Gesell;

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    1. Warren Young & William Darity, Jr., 2004. "IS-LM-BP: An Inquest," History of Political Economy, Duke University Press, vol. 36(5), pages 127-164, Supplemen.
    2. Laidler,David, 1999. "Fabricating the Keynesian Revolution," Cambridge Books, Cambridge University Press, number 9780521641739, November.
    3. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    4. P. Davidson., 2006. "The Post Keynesian School," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
    5. William Darity, Jr., 1995. "Keynes' Political Philosophy: The Gesell Connection," Eastern Economic Journal, Eastern Economic Association, vol. 21(1), pages 27-41, Winter.
    6. Jérôme Blanc, 2002. "Silvio Gesell, socialiste proudhonien et réformateur monétaire," Post-Print halshs-00168528, HAL.
    7. Steven M. Fazzari, 2009. "Keynesian macroeconomics as the rejection of classical axioms," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 32(1), pages 3-18, September.
    8. Warren J. Samuels, 2003. "Why the Georgist Movement Has Not Succeeded:," American Journal of Economics and Sociology, Wiley Blackwell, vol. 62(3), pages 583-592, 07.
    9. Mitsuhiro Fukao, 2005. "The effects of ‘Gesell’ (Currency) taxes in promoting Japan's economic recovery," International Economics and Economic Policy, Springer, vol. 2(2), pages 173-188, November.
    10. George Argitis, 2008. "Inflation targeting and Keynes's political economy," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 31(2), pages 249-270, December.
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