Gustav Landauer - Monetary and Economic Philosophy

Monetary and Economic Philosophy

In "Aufruf zum Sozialismus" (Call to Socialism) Landauer describes 3 aspects of economical slavery of modern Capitalism, as he calls it:

1)The first problem he points out is ownership of land. It is the cause of "the begging and dependent position of those without possessions". The landowner can deny it to the landless. But the latter needs the land for the purpose of direct and indirect consumption thus creating a dependency. Land ownership and its correlate, landlessness, according to Landauer, are the roots of slavery, bondage, tribute, lease, interest and the proletariat.

The solution to this problem simply lies in the dissolution of land ownership. In "Aufruf zum Sozialismus" (Call to Socialism) Landauer says (p. 170):

The abolition of property will mainly also be a change of spirit; from its rebirth will stem a powerful redistribution of property with the will, to redistribute the land at different intervals in the future over and over again.

Justice will of course depend on the inner spiritual attitude of the people. There will be no need for legal procedures pertaining to the just distribution of land because the spirit of the people will "voluntarily" recognise what a just distribution is.

2) The second evil stressed by Landauer is the superiority of money as a means of exchange for goods. After some time goods lose their value through use. Money makes the disastrous exception that it is part of the exchange but not of the devaluation. If there is to be a just exchange economy, the money that is used cannot have the quality of our money with an "absolute value". Landauer also regards interest as damaging because it creates constant economical growth. But the main evil of present money is its non-consumptiveness. Landauer's idea is that in a free exchange economy money must become equal compared to goods having the dual character of exchange and consumption. He basically refers to ideas of the economist Silvio Gesell. In "Aufruf zum Sozialismus" (Call to Socialism) he writes:

Therefore the proposals of Silvio Gesell to find a kind of money which, unlike today, does not gain in value but on the contrary, progressively loses value with time. Thus the vendor of a product now possessing money will be pressed to exchange it for another product as soon as possible etc., etc..

According to Landauer, Silvio Gesell is one of the very few who learned from Pierre Joseph Proudhon. When producing or acquiring a means of exchange there will be no other interest but consumption. This was Proudhon's idea that the fast circulation of money brings happiness and liveliness into one's private life while the dropping off in the market and the stubbornness of persisting money also brings life to a grind.

Silvio Gesell proposed the reformation of the monetary system: Instead of the money used until now, so called "free money" is to be introduced. Money is given out in the form of notes along with little tickets to be torn off as smaller change. The little tickets also serve as devaluation, because every week it must be diminished by 1/1000 of its value. Every week the owner of a note must attach a stamp to indicate the devaluation of 1/1000. This induces the owner of the "money" to spend it as soon as possible. Coins would be abolished and the Central Bank would be replaced by a currency office responsible for transactions, contributions and regulation of circulation. This office would also withdraw all notes at the end of the year and replace them with new ones. Gustav Landauer fully supported this idea of Silvio Gesell.

3. The third evil leading to slavery according to Landauer is added value. Value initially means to have a claim against someone, meaning an economical, not an ethical value. The word "value" includes the expectation that the price should equal the material value. The respective price is usually much higher than the sum of wages paid to make the product. This is because people want to make use of every advantage, not only of property but also of the rarity of a commodity in demand or the ignorance of the consumer. As a result, work cannot buy everything it was paid to produce so that a considerable part remains for the buying power of profit.

In "Aufruf zum Sozialismus" (Call to Socialism) Landauer criticizes Marxism as follows:

This is about pointing out, that the one-sided emphasis on the question of wages by workers and unions is connected with the wrong perception of added value by the Marxists. In earlier times we saw how wages and prices were mutually dependent; we now point out that the opinion is totally false, according to which the so-called added value is an absolute quantity produced by the undertaker, from where it flows into the other capitalist categories.

The truth for Landauer is that every and each profit is drawn from labour. There is no productivity of property and no productivity of capital as such, but only a productivity of labour. This is a conclusion he shared with Marx.