Johan Geisel is the author of “interest-free money.” Also called a nightmare for capitalists, he argued that only the nationalization of resources and the abandonment of money as a tool for enrichment would prevent a crisis.
Johan Silvi Geisel is a German scientist and reformer, he is the author of the theory of "free economy". Years of life 1862-1930.
Johan was born to Ernest Geisel and Jeannette Talbot. All that is known about Johan's childhood is that he was the seventh of nine children. In 1887 he moved to Argentina, where he proved himself as a successful merchant. He takes an interest in studying the problems of monetary circulation, the crisis, which was most acutely felt in Argentina, only strengthens his interest in economics and finance. Already in 1981, his first work "Reform of the Monetary Business as a Way to a Welfare State" was published. In it, he published basic ideas about money.
The main ideas of Johan Geisel
Johan believed that the land should belong to everyone equally. And any traits of people - gender, race, class, religion, as well as ability - should not affect this.
He also believed that it was necessary to nationalize the land and abolish interest on loans issued. This would make it possible to make the speed of movement of money more even, which would protect the economy from crisis and make it more resilient. That is, Johan's main idea was to make money an instrument of exchange, but not an instrument of enrichment, accumulation and saving. At the same time, he proposed variants of the economic model, where for the use of funds, their owners pay a percentage to the state. This would avoid the accumulation of funds in the same hands and stimulate people to use money more efficiently.
Experiment in practice
Geisel's theories were used in an experiment in Austria. A city with a population of 3,000 was chosen. The experiment was carried out in 1932. The result was really decent. They managed to increase investment in public services, build a bridge and significantly improve the city's infrastructure. And when all of Europe was desperately struggling with unemployment, in Wörgl it dropped by 25% naturally. Such achievements attracted attention and more than 300 Austrian communities became interested in Gesell's economic model. However, the National Bank of Austria saw this as a threat and banned the printing of local banknotes. No other community was able to repeat the experiment, despite the fact that the ban only concerned the issue of money, and not the principles of the system.
Today, Geisel's principles are actively used by other economists. Thus, the Nobel laureate in economics Jan Tinbergen has repeatedly written that the Geisel system deserves attention and discussion, and the economist John Keynes indicated that he actively used the theses of Geisel's monetary theory when working on the General Theory of Employment, Interest and Money.
Criticism of the Geisel principles
Many economists found flaws in Geisel's ideas. Chief among them is that the application of Geisel's principles would lead to a rapid depreciation of the money supply and subsequent inflation. Emphasizing at the same time that in the short term, its principles really allow to significantly increase the speed of circulation of money. And, as you know, during a period of stagnation and crisis, both people and enterprises try to reduce spending and save capital on their own.
That is, the short-term experiment was effective only because it was forcibly terminated. And the experience of one city is too little to talk about the high efficiency of this concept. In addition, the experiment cannot be considered independent, since many factors were not taken into account and other parameters could have influenced economic growth. In addition, critics point out that a positive result was observed during the crisis, and research was not carried out in conditions of stability or economic growth.
In any case, some of Geisel's ideas are still used today, although in its pure form his concept contradicts the principles of capitalism, but it can give results if properly applied in a crisis.