On the Gesellian Pound

In being a barter/exchange value measurement unit — the Gesellian Pound, the new, optional virtual currency at the heart of Beaverteams, is partly inspired by the work of Colin McKay of Deror:

As people do for each other without paying each other in anything but GPs (which can be called “free money”) — the GP ecosystem may, in the short run, resemble a gift economy, but it is not actually so.

The GP is a yardstick by which a giver (of goods and services) can measure how much he has given to his fellow man.

It is expected, at the same time, for this fellow man to be returning such favors, either directly or indirectly, as and when he can. This logic is ingrained in the GP, because of such conditions:

As the GP is a barter/exchange value measurement unit as much as it is a currency, and as “who paid who?” is on record — in the unlikely case that the GP system is unable to continue – there is, still, no need to worry due to the GP’s status as a barter/exchange value measurement unit. That is to say, it’s understood (by all who use GPs), that, in case of system inviability, all outstanding GP debts will be calculated, as shown below, and  repaid in cash or kind.

People holding GPs (“receivers”) can expect to be reimbursed by those (“takers”) who took from them goods and services in exchange for GPs. In case of system dissolution, takers are legally bound to pay to receivers the equivalent of as many GPs as were exchanged — in goods, services, or pre-existing local fiat currencies. Though of course, it may take a while to recover the ‘GP debts’.

Thus in the unlikely event of a “system failure”, one can think of all preceding transactions (which are recorded in the user’s accounts page) as amounting to loans given by the GP receivers (givers of goods and services), who can now recover the ‘GP debts’ — which are calculated as follows:

If user X (taker) uses 10 GPs (say) to pay user Y (receiver), in that case, while Y does get the benefit of 10 GPs moved into his account, he also gets a safety net — an implicit contract is created, which reads:

in case the GP system ceases to exist or work out well (that can be defined as: widely gain currency), X promises to pay Y the equivalent of 10 GPs in goods, services, or pre-existing local fiat currencies”.

Due to the presence of this contract, people may use GPs without worry…

How is the GP debt calculated in the light of how its value changes with time? In the early days,  1 GP roughly equals in value one big burger (or more generally “an affordably-priced meal at a decent place”), which currently costs around $5. As the GP “gains currency”, and as the upward or downward movement of its value gets underway, let’s say 1 GP can buy n number of such meals (n can be less or more than 1 — depending on what the “free market” decides).

In the unlikely event of failure of the GP ecosystem, total outstanding GP debt (in dollars) will be calculated as:

GP debt (in dollars) = Σ [({A x 5 x n x (TC-TL)} + {A x 5 x (TSF– TC)}) / (TSF-TL)]


A = amount in GPs transacted in a given transaction

TC = time of a given transaction/debt creation

TL = time of launch of the GP (2016 end)

TSF = time of system failure


All debts repaid by this rule, one won’t lose a thing even if he is left holding many GPs if  the GP ecosystem becomes unviable.

With any luck, however, it will not crash, and we’ll never have to do these foreboding calculations!

I’m not saying, “Use the GP because it’s egalitarian” — but I surely say don’t interrupt the experiment — let the people decide which mode of payment to use, which is better. If more people use local (fiat) currency, then so be it, it must be better on the whole. If they use more GPs (because of the many advantages the GP brings to the table), so be it, GPs must be better on the whole.

Support for both the GP and local fiat currency is threaded into the GP’s platform (Beaverteams).

Of course the Gesellian Pound is, if we talk of the other part of its architecture, inspired by the work of Silvio Gesell.

Gesellian type of policy is an alternative to our current “capitalist” economic policy. I hope you understand capitalism?

Hasslberger, in his website, gives an introduction: “Current economic policy is rotten. That is the simple and direct message we can glean from a study of economic and monetary matters against historical sources and against the backdrop of social organization in our time. Why is there, apart from normal human greed and desire for power, such an impelling necessity to squeeze people and resources to the last drop? Why are we absolutely forced to maximise profits, and to hell with people’s health and well being? Why do we have to steer technology towards the destruction of the very basis of our survival which this planet has been kindly providing us for as long as we can remember? I believe that a little known economist, Silvio Gesell, has discovered the answer to this riddle in the early part of the twentieth century. He speaks about the need to keep money in circulation, and about the historical role of interest in achieving this end. He points out the hidden role of interest as well, that of shifting buying power from the poor to the rich, and makes a proposal to fix the situation.”

Need a more detailed understanding of Gesellian policy? Read Natural Economic Order by Silvio Gesell.

The reverse side of the Worgl Bills were printed with the following declaration:

“To all whom it may concern!

Sluggishly circulating money has provoked an unprecedented trade depression and plunged millions into utter misery. Economically considered, the destruction of the world has started. – It is time, through determined and intelligent action, to endeavour to arrest the downward plunge of the trade machine and thereby to save mankind from fratricidal wars, chaos, and dissolution. Human beings live by exchanging their services. Sluggish circulation has largely stopped this exchange and thrown millions of willing workers out of employment. – We must therefore revive this exchange of services and by its means bring the unemployed back to the ranks of the producers. Such is the object of the labour certificate [money] issued by the market town of Wörgl: it softens sufferings dread; it offers work and bread.”

About my adaptation of Gesellian theory into a virtual currency, the Gesellian Pound, you can read here.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s