Whilst browsing the web I came across the paper

A Market Economy without Capitalism

at by Werner Onken

It explains how in 1891 Silvio Gesell (1862-1930), a German-born entrepreneur living in Buenos Aires, published a short booklet entitled Die Reformation im Münzwesen als Brücke zum sozialen Staat

This is pretty arcane stuff for anyone used to ‘common sense’ monetary theories, but it does seem worth delving into, as it possibly bears on an important numismatic matter that has puzzled me for years.

Gesell saw one central economic need at the heart of society. It is to maintain free markets with an adequate money supply. He saw one great obstacle to this, the attempts by powerful members of society to monopolize the money supply, and thereby rig markets to their own interests.

His solution was to create a form of money that could not be monopolized because it was inherently perishable. His idea was that banknotes should be dated, and would lose value over time. To keep them at full value, one would have to buy stamps at the post office and stick them on.

Maybe this sounds nuts? Certainly when Gesell stood in elections in Germany he got only 1% of the vote. However, Keynes apparently gave a lot of space to Gesell in his ‘General Theory'. And Gesell's later ideas concerning the International Valuta Association resemble those in Keynes' original proposals for an International Clearing Union submitted on behalf of the British delegation, (but rejected by their American counterparts), at the Bretton Woods conference.

Thus Gesell’s economic insights were not far removed from those of Keynes, whose ideas much influenced economics in the latter part of the 20th century. To summarise the situation in a rather blunt way, Gesell offered an honest, up-front way for democratic governments to defend themselves against organised capital. Keynes liked the idea of being honest, but gave up on it, going for methods of dishonestly achieving the same ends (via induced inflation etc). One has to see the sense in this, since regrettably, one of the fundamental characteristics of democratic politics is that the party with the most palatably presented set of deceptions tends to win the popular vote.

Turning (at last!) to numismatics, it struck me immediately on reading about Gesell that that the change-of-type mechanism, which was applied widely to medieval coinage systems, would achieve exactly the same ends as Gesell’s stamp money. Type-changing consisted of simultaneously issuing new coin types and devaluing the previous currency. Giving out new coins at a premium, and taking in old ones at a discount, a kind of tax on money.

There seems to have been several eras of this sort of type-changing in numismatic annals. They include two widespread events (or even just one very widespread one?). The first had its roots in the policies of the Anglo-Saxon ruler Aethelred II (978-1014) from where it spread to Denmark, Bohemia, Poland, and then to certain German principalities. It continued to be practised into the 13th century. A second seems to have had its roots in the policies of Persian Ilkhan Uljaitu, 1304-16. From there it spread into much of post-Mongol Persia and West Central Asia, and continued, in parts, at least until the 17th century. A further apparently isolated example of rather brutal type-changing took place in early medieval Japan, between about 700 and 950 AD. Similar phenomena, such as the discounting of coinage of past rulers, found for instance under the Sultans of Delhi, are of course even more widespread, and represent another version of type changing.

I did come across an economist who pointed out that Gesell's dislike of capitalism somewhat resembled the traditional Islamic condemnation of usury. (To be fair, traditional Christians once thought the same, and traditional Chinese Confucians should be added to this list, at least as far as predatory loans for consumption go). However, as far as I can find out, no economists seem to have realised that the practical monetary policies of medieval governments seem to have anticipated Gesell’s suggestions by a full millennium. Emeritus Professor Glyn Davis completely misses this point and attempts to explain the change-of-type mechanism merely by reference to ‘greedy milking’ by medieval monarchs (A History of Money, p. 130). Numismatists may not be too surprised by this, as Davis seems to operate within the rather narrow orbit of modern economic orthodoxy, which lacks a sufficiently rich frame of reference within which to understand the full range of man’s economic activities and aspirations. Regrettably Dr Spufford (Money and its use in Medieval Europe, p. 95) does little better, also explaining the entire matter in terms of ‘greed or need’. There are hints throughout Spufford's text that he is aware of broader concerns than those which he is willing to publicly espouse. One feels it a pity if a scholar of his clear abilities should have been so constrained by 20th century political realities as to need to paint us a lop sided picture of our economic past, in this as in other matters.

The resemblance between Gesell’s ideas and medieval change of type practices are so obvious that I feel sure that someone must have voiced this linking hypothesis before. If any reader has heard it I would be delighted to get the reference. This plea goes out especially to German speaking readers, as any relevant research is likely to have been published in German literature, (which regrettably is closed to me).



For more writing using numismatic evidence to try get an objective view of the history of the political economy go to: