Freiwirtschaft

Free economy is an anarchistic economic model from the 20th century, based on the review of the monetary system and the criticism of the basic pension by Silvio Gesell. Free economy has set itself the goal of achieving a stable and liberal market economy without monopoly rents by the possession of money or property on the ground or trading rights, in addition, there is full employment.

Ground rent and interest on money cause by free opinion an unjust economic and constantly reinforcing process of redistribution of wealth from the poorer to the richer ones. As regards implementation, social justice not by prohibitions, but on the one hand by the transfer of the land in common ownership with both private use upon payment of constant use taxes to the Community, referred to as "free ", use our so-called " free money ".

• 3.1 Settlement and cooperative projects
• 3.2 Currency projects

• 5.1 Immediately after Gesell
• 5.2 Until the beginning of the 21st century
• 5.3 presence

• 6.1 Liberal criticism of the free economy
• 6.2 Economic criticism of the free economy 6.2.1 Substitution by other currencies
• 6.2.2 Lack of experimental verification
• 6.2.3 inflation

History of Ideas

Silvio Gesell developed his theory at the beginning of the 20th century and published his most important theses for the first time in 1916 in the book " The Natural Economic Order free country and free money." The basic idea of open land, interest free and cooperative economy had already in 1890 in his novel the field, the Austrian economist Theodor Hertzka - published a social vision of the future. The ideas of the book found many followers in Germany and Austria and led to settlement projects, associations and political movements in different countries. The free economy dissociates himself while in their opinion, both capitalism and socialism, but not of the market economy. It uses a basic structure with both private ( means of production ) as well as common property (land ) operating systems.

In 1949 " ( free money Initiative) to ensure the purchasing power and full employment " was in Switzerland a popular initiative instead. This initiative was rejected by the referendum of 15 April 1951, 87.6 % No votes, and received fewer votes than signatures to submit to the people's initiative were collected. Was Adopted by the popular vote, however, the counter-proposal to the Federal Assembly, with 69.0 % and in 22 (19 6/2) stands. Theme of the vote, however, was not the introduction of a circulation safeguard itself, but the partial abandonment of the gold standard, to ensure monetary stability. With the collapse of the Bretton Woods system, this gold standard was later overturned.

Goals and demands

The main objective of the free economy is a stable, socially just market economy. In a free -sector economic system of production and consumption to be mediated by the market (market economy). Private or public companies bear the risk and generate business with the use of capital profit-related return. The financial investment is subject to a negative interest rate, making it " secured revolving " is considered. Thus the velocity of free money is to be increased, which were ready enough funds for investment. With the free money even a drop in the general market interest rates to 0 % ( or even less) would be allowed. At the same time by means of open land reform against the power-free income arising from land ownership and systemically not be eliminated, to be paid to the general public and socialized.

The demands for reform of, especially in the 1920s had grown up in German-speaking free economic movement are often combined with "FFF ": free money, free land, hard currency.

Free money ( monetary reform )

Main demands of the monetary policy are:

• Introduction of a circulating hedged currency
• Abolition of the gold standard

Silvio Gesell called for the abolition of the hitherto most popular gold backing, because only a limited amount of gold is the circulation of money available, while an economy can grow almost unlimited. Gold deficiency could cause deflationary conditions, gold surplus could have destabilizing inflation.

In the free market theory, the fundamental problem of money is the lack of storage costs. Two approaches exist to illustrate this: The Gesellsche approach is based on the analysis of Pierre -Joseph Proudhon, which states that the owner of money against the owner or provider of goods, products, services and labor would have a decisive advantage: the storage of goods, products and services do not incur ongoing costs, in money but. Thus, the owner would receive money ( demand ) a systemic advantage over the offer, which would mean that money would be sold more expensive than goods. He defined this additional value as the " Urzins " (estimated amount: 3-5 %).

Investment would not take place in his opinion, the general market interest rate would be less than three percent. Instead, it would be held as most liquid medium and used in accordance with company for speculative purposes. From the perspective of investors would give the investment crisis, from the perspective of entrepreneurs would give the impression of scarcity of capital. Deflation and asset bubbles would experience, the consequences of such situations.

As an antidote to society offers the circulation safeguard which aims to ensure that would continue to invest the occupied negative interest money. Therefore, the circulation backup is like a tax impact on liquidity in order to control the velocity of circulation. This should - according to free economic assumption - full employment, comparable to occur with a permanent boom, which wages rose while prices would fall in real terms.

Such "free money " does not fulfill the function of money " store of value " function.

Field

Another criticism of the free economy on the existing distribution of capital goods and resources is the private ownership of the land. It gives its owners generally a ground rent that accrues to them as powerless income, both for self- use of land as well as the lease of and rent. After a user- economic view, the rent of land should not be sent in private control, but get the general public, because soil is a product of nature and not a created man good, and the value, and therefore the rent of land, is created only by the public.

Through land reform, the Free Economic wants to combine public ownership of the land with its private use. For this purpose, it demands to convert all soil against full compensation of its previous owners into public ownership, for example, in municipal ownership. The previous owners kept it the right to use their land against payment of a regularly recurring use tax to the public sector. Ground until then public property that is not explicitly used for public purposes, shall be awarded to the highest bidder for use.

In contrast to the soil can and should continue to be private property and can be used for private purposes, because they are the result of human labor thereon or in the future to be constructed facilities such as buildings or industrial systems. The rights to rent or lease of such facilities remain free after economic idea guaranteed, but not the private lease of the land use.

Who needs and use ground want - both individuals and legal entities, both previous owners as new users - should the relevant land administration authority for the use of the soil regularly recurring pay a use tax, which corresponds in its height about the ground rent. The levy should be calculated depending on the desirability of the land in question and can be calculated as the highest bid, for example, in an auction of rights of use. Thus, the amount of the State fee would be determined in accordance with market principles of supply and demand.

This land reform requires the creation of a legal separation between the ground and facilities located thereon, whereas the existing law does not distinguish between ground and buildings, but both referred to as property and legally treated as a whole. With the new order, trading and speculation would with soil no longer possible, still, however, purchase and sale of private institutions. When selling a building, the buyer would have to take the seller also the land use agreement with the concerned authority.

With the land use levy the land rent will flow to the general public. Society itself was planning the money won by the socialization of the land rent as a mother 's pension, a kind of high child support, to be distributed to the mothers, to make this economically independent of men.

A land reform by free economic model would be necessary to prevent Großgeld owners whose power-free income would be cut from interest after the introduction of free money, resort to the purchase of land. This land prices would climb into immeasurable heights and therefore the rent of land in private hands, much to the detriment of all others, because each person is instructed to live and work on the ground.

Company refers to the land reform theory of Henry George. This looks to land from a property tax in an amount that adequately neutralized the basic pension. Company but keeps it open land for systemically superior solution.

Free trade

Another aspect that is part of the free economy, free trade. Thus, the abolition of national economic boundaries is meant. Since free trade is required and endorsed by virtually all economists, free trade is the only free economic aspect, which seems to prevail as far as global. Organizations such as the WTO exert great international pressure on states to reduce tariffs and import barriers and abolish export subsidies in the matching with the original free economic movement belief that intensive trade relations and linkages ensure a long-term peace between the countries of the world.

Free economically oriented practice tests

Municipal and cooperative projects

At the suggestion of Theodor Hertzka book free country go numerous consumer, productive and cooperatives, as well as various housing projects back, including the Eden Project, the future residence of Gesell.

Currency projects

One of the first attempts to try the free economic free - money theory in practice, was the so-called Wara experiment. It was conducted in the late 1920s in many places in Germany. This trial was initiated by the company followers Hans Timm and Helmut Rödiger in 1926.

The mining engineer Max Hebecker led in collaboration with Hans Timm and Helmut Rödiger after 1929 the Swan kirchener free money experiment. In the following period, the region experienced to Schwanenkirchen one in the public paid much attention to economic recovery.

About the borders of Europe became the so-called miracle of Wörgl awareness. The Wörgler Mayor Michael Unterguggenberger worked in the context of the world economic crisis in 1929 made ​​an emergency relief program, which is modeled on the Gesellschen free economy and that caused revolving secured free money has been spent as a complementary currency for the region Wörgl.

In the United States it came in the early 30s of the 20th century in many places to carry out a free market money experiment. Under the name of stamp scrip, the experiment gained so much popularity that the economist Irving Fisher also published a scientific study.

As a continuation of this historic free money experiments applies the so-called regional currency, which is now in many places under different names as a complementary currency in circulation.

Organizations of the Free Economic

The free hosts have joined, inter alia,

• Initiative for Natural Economic Order ( INWO ) Germany eV, also INWO Switzerland and Austria INWO, with the magazine Fairconomy
• DF German free Wirtschaftsbund
• Human Economic Party (Human Resources); 2001 emerged from the free Social Union (FSU ); this was established in 1950 and was a merger of radical social Freedom Party (RSF ) of the British zone of occupation, social Freedom Party (SFP ) of the American occupation zone and the Free Socialist Party (FSP ) of the French occupation zone. From about 1958 she called herself free Social Union, after 1968, the additional name of the Democratic center, it was decided for the party name.
• Friends of Natural Economic Order eV with the magazine Humane Economy
• Alliance for the Future; this party was formed in 2001 as a free economic spin-off of Alliance 90/The Greens
• Action Third Way / Social Liberal Party within the Alliance 90/The Greens, representing free-market ideas and published in the journal Alternatives
• Free Economic Youth Association eV

The following private educational institutions try to spread free-market ideas through courses, conferences and publishing magazines:

• Sociological Society eV, Northeim, the Journal of Social Economics
• Foundation for reform of the monetary and land tenure in Kirn / Nahe
• Seminar on Freedom of Procedure of the culture, the economy and the state eV in Bad Boll
• Archive for money and land reform in Oldenburg

Among other things, free economic positions represented:

• Christians for just economic order eV ( CGW ) (various currents idea: Judeo-Christian social teaching, the free economy and anthroposophic insights, insights of modern monetary theory and environmental economics )
• Club Equilibrism (holistic approach to sustainable solution to the existential global problems in the social, political and ecological )

Collections free economic literature are, among others,

• In the anarchist library of the Free, Berlin
• In the Archives of money and land reform at the University of Oldenburg
• In Unterguggenberger Institute Wörgl

Role of free economy in economics

Immediately after Gesell

John Maynard Keynes came in his 1936 published major work The General Theory of Employment, Interest and Money ( General Theory of Interest, Employment and Money ) to the following assessment of Gesellschen teaching: " I believe that the world will learn more from the spirit of Gesell as by the spirit of Marx. " Inspired by a model experiment in Wörgl pleaded the U.S. economist Irving Fisher for free money like" stamped scripts to introduce " in 22 cities and towns in the United States.

By the beginning of the 21st century

In the popular economics textbooks and magazines, the free economy was rarely discussed. However, Dieter Suhr, 1975-1990 Professor practiced fundamental constitutional criticism of the present monetary system of public law at the University of Augsburg, in his books and, where essential, both theoretical as well as practical ideas for further development of the free economy.

Bernd Senf, a professor of economics at the University of Berlin School of Economics, presented in his first published in 2001 Book The blind spots of the economy, the free economy as one of seven historically significant schools of economics (besides physiocracy classical economics, Marxism, neo-classical, Keynesian economics and monetarism ).

2003 doctorate Roland Wirth in the business ethicist Peter Ulrich at the University of St. Gallen with a dissertation on the topic of market economy without capitalism. A reassessment of the free economy from business ethics perspective. After reviews of Jost W. Kramer, Professor of Business Administration at the University of Wismar, and Dr. Stephan Märkt, Bologna consultant HRK at the University of Lüneburg, summed up the Berlin Professor Hermann Kendel, Wirths thesis would lead to " the ideas of Silvio Gesell back again in the general technical discussion. "

Presence

With the beginning of the world economic crisis in 2009, the idea of the revolving secured money at various points was taken up again. So Gregory Mankiw Willem Buiter or referred to Silvio Gesell.

Criticism of the free economy

Liberal criticism of the free economy

The liberal social order is largely based on the right to property. Through the money circulation safeguard fee was the property of the owner's money, according to the liberal conception includes the right to hoarding, limited. The interest rate is according to the neoclassical view ( Eugen von Böhm- Bawerk ) the rate of time preference of money the owner and thus the human needs. The interest cost is correct to the neoclassical view social preferences. Each consumer has a free choice between paying the interest costs or reduced consumption. In today's credit-money system has a hoarding of notes also probably no appreciable influence more on the short-and long -term interest rates. In the specific German situation, it is also questionable according to the liberal view, whether a money circulation safeguard fee and a " land value tax" are compatible with the guaranteed in the Basic Law of the Federal Republic of Germany principle of equal treatment for tax purposes.

Economic critique of the free economy

The circulation safeguard fee for cash is the core idea of ​​the free market monetary reform. Supporters and opponents agree that the regular toll Currency Exchange administratively costly. Proponents hope that the economic welfare gain through higher employment outweighs the administrative costs by far. Critics doubt the feasibility of the free economic theory and demonstrate above all doubts in the implementation of umlaufgesichertem money.

Substitution by other currencies

Is criticized, among others, the free economic premise that money was being pushed by the circulation safeguard the consumer and the credit market. The revolving secured money would instead of the citizens substituted by foreign exchange, precious metals or securities, which are not subject to loss of value.

Gresham's Law describes the effect that " bad money drives out good money." Any consumer who has the choice to settle issues with umlaufgesichertem money or other money is made ​​by payment with umlaufgesichertem money. Conversely, every creditor will reject a payment with umlaufgesichertem money when he has the opportunity to ask other money.

Thus, the circulating money is secured through only if the creditor ( seller) are forced by law to accept this "bad" money to the statutory rate or price. However, if allowed to decide all economic operators which they wish to be paid good money will quickly displace the poor, since none voluntarily accepts the bad money at the rate of good money.

The Dodge in precious metals is subject to the same rules as the shift to other currencies and investing in stable value securities is ever the intention of the circulation safeguard.

Lack of experimental verification

Critics criticize a lack of further experimental verification of statements of the free economy, in particular the effect of the circulation safeguard. The effects of the Wörgl experiment positively described can also be explained by other mechanisms, such as with the expectations of the participants. Thus, these effects were observed in part, also Regiogeld attempts that got along without circulation safeguard fee, so did not have a free market approach.

Inflation

According to the quantity equation a circulation safeguard increases the rotating speed. This has basically the same effect as increasing the money supply. The price level would rise in proportion to the rotational speed, which can be foreseen as a temporary, but dramatic inflation in effect.

Not taken into account is that one currency can only partially switch to free money and that the trading volume due to the increased demand for goods in the free economy also increases.

Also, a simple increase in the money supply lead to a concomitant decrease in velocity when money retained by the monetary base and which has a high rotational speed or saved up and thereby on monetary or even is, which have lower rotational speeds. This shift to money amounts with less ( or no ) rotational speed occurs when people

• Hope to price reductions and thus hold back money or
• If some people have a very high income, which they can not use it directly, save up and thus remove it from the circulation of money again, which means that the financial assets of these people increased without a contribution to trading volume to be paid.

These effects are counteracted by the circulation safeguard the free money, because here arises the increase in velocity due to the shift of the long to medium-term money supply and the rapidly circulating amounts of money and.

Marxist critique of the free economy

For Marxists, the free economy is indeed like Marxism a critique of capitalism, but they reject this theory from the majority because they primarily directed against finance capitalism, the production capitalism as performers of macroeconomics but largely acknowledge. The free economy applies to Marxists as reactionary movement because it by a higher volume of work - the exploitation of the working class is driving and the added value of the ruling class, the owners of capital magnify, - reducing unemployment and creating new jobs.

As with globalization-critical organizations (about attac ) criticism is that the free economy does not want to abolish about the basic capitalist mode of production, but only certain areas (interest). Marxists refer to the class antagonisms ( workers - capital owners ) and the capitalist mode of production as such, in principle, produce misery.

Furthermore, Marxists reject the market economy, such as the free economy they advocated, as spout Social concept from.

Other representatives of the free economy

• Tristan Abromeit (* 1934), co-founder of the Green Party
• Hans Bernoulli (1876-1959), architect and co-founder of the Swiss Federal Free Economic
• George Blumenthal (1872-1929), founder of the movement and editor physiocratic Gesellscher writings
• Helmut Creutz (* 1923), journalist, business analyst, architect and free economically published author
• Theophil Christen (1873-1920), Swiss mathematician, physician and economist
• Eugen Drewermann (* 1940), German theologian and psychoanalyst
• Willi Eberlein (1904-1986), member of the Hamburg Parliament 1949-1953 (RSF )
• Roland Geitmann (1941-2013), 1983-2006 Professor of Public Law at the University of Applied Sciences Kehl
• Eckhard Grimmel ( b. 1941 ), Professor of Geography at the University of Hamburg, co-founder of the German Federal Free Economic
• Max Hebecker (1882-1948), mining engineer and initiator of Wära experiment Schwanenkirchen
• Peter Kafka (1933-2000), German astrophysicist and nuclear power critics, numerous lectures and publications critical of capitalism
• Margrit Kennedy (1939-2013), German architect, professor from 1991 to 2002 at the University of Hannover
• Gustav Lilienthal (1849-1933), architect and social reformer, younger brother of Otto Lilienthal, supporters of the free- motion Hertzka, built in Eden and founded their own Siedlungsgenossenschaft Freie Scholle.
• Hans Langelütke (1892-1972), economist, 1955-1965 President of the Ifo Institute for Economic Research
• Dirk Löhr (* 1964), Tax Consultant and Professor of Ecological Economics and Taxation at FH Trier
• Heinz Nixdorf (1925-1986), German entrepreneur, founder of Nixdorf Computer AG
• Franz Oppenheimer (1864-1943), German physician, sociologist and political economist, trailers Hertzka, further development of the theory of the third way, a market economy without private property.
• Elimar Rosenbohm (1916-1997), economist, co-editor of the Journal of Social Economics ( ZfSÖ )
• Paul of Schoenaich (1866-1954), Chairman of the German Peace Society (DFG )
• Fritz Schwarz (1887-1958), Swiss Life reformer, author and politician
• Hans Konrad Sonderegger (1891-1944), Swiss theologian, lawyer and National
• Hans Trimborn (1891 - 1979), German painter and co-founder of a free economic Wära Expermentes on the island of Norderney
• John Ude (1874-1965), Catholic priest and professor of theology, supporters of the free economy and Victims of the Nazi regime
• Michael Unterguggenberger (1884-1936), former mayor of Wörgl, initiator of the local free money experiment
• Charles Walker (1904-1975), social scientist and author economic writings
• Werner Zimmermann (1893-1982), life reformer, author and co-founder of the Swiss economy WE ring (now WIR Bank )

Sympathizers and artists reflected the free economic issues

• Michael Ende (1929-1995), German writer, criticism processed on interest money, among other things in his novel Momo.

• Hermann Oberth (1894-1989), German physicist and rocket pioneer
• Ezra Pound (1885-1972), American poet, admiring mention of Wörgler free money experiment and the person Michael Unterguggenberger in the Pisan cantos ( Canto LXXVIII ).