Silvio Gesell: The Natural Economic Order
Part 1: Distribution


A worker in this book means anyone living on the proceeds of his labour. By this definition farmers, employers, artisans, wage-earners, artists, priests, soldiers, officials, kings, are workers. The antithesis of a worker in our economic system is therefore the capitalist, the person in receipt of unearned income.

We distinguish between the product of labour, the yield of labour and the proceeds of labour. The product of labour is what is produced by labour. The yield of labour is the money received through the sale of the product of labour or as the result of the wage contract. The proceeds of labour mean what a worker, out of the yield of his labour, can buy and convey to the place of consumption.

The terms: wages, fee, salary are used instead of the term yield of labour when the product of labour is not a tangible object. Example: street-sweeping, writing poems, governing. If the product of labour is a tangible object, say a chair, and at the same time the property of the worker, the yield of labour is not called a wage or salary, but the price of the object sold. All these designations imply the same thing: the money-yield of the work done.

Manufacturers' and merchants' profits, after deduction of the capital interest or rent usually contained in them, are likewise to be classed as yield of labour. The manager of a mining company draws his salary exclusively for the work done by him. If the manager is also a shareholder, his income will be increased by the amount of the dividend received. He is then at once a worker and a capitalist. As a rule the income of farmers, merchants and employers is made up of the yield of their labour plus a certain quantity of rent or interest. A farmer working on rented land with borrowed capital lives exclusively on the proceeds of his labour. What is left to him of the product of his labour after payment of rent and interest, is the result of his activity and is subject to the general laws determining wages.

Between the product of labour (or service rendered) and the proceeds of labour lie the various bargains which we strike daily in buying the commodities we consume. These bargains greatly affect the proceeds of labour. It very commonly happens that two persons offering the same product of labour for sale obtain unequal proceeds of labour. The reason for this is that though equal as workers, they are unequal as dealers. Some persons excel at disposing of their product for a good price, and at making judicious choice when purchasing the commodities they need. In the case of goods produced for the market, the commercial disposal of them and the knowledge necessary for successful bargaining contribute as much to the success of labour as does technical efficiency. The exchange of the product must be considered as the final act of production. In so far every worker is also a dealer.

If the objects composing the product of labour and those composing the proceeds of labour had a common property by which they could be compared and measured, commerce, that is, the conversion of the product of labour into the proceeds of labour. might be dispensed with. Provided the measuring, counting or weighing were accurate, the proceeds of labour would always be equal to the product of labour (less interest and rent), and the proof that no sort of cheating had taken place could be supplied by examination of the objects of the proceeds of labour, just as one may asceration by one's own scales whether the druggist's scales weigh correctly or not. Commodities have however no such common property. The exchange is always effected by bargaining, never by the use of any kind of measure. Nor does the use of money exempt us from the necessity of bargaining to effect the exchange. The term "measure of value" sometimes applied to money in antiquated writings on economics, is misleading. No quality of a canary bird, a pill or an apple can be measured by a piece of money.

Hence a direct comparison between the product of labour and proceeds of labour will not furnish any valid and legal proof as to whether the labourer has received the whole proceeds of his labour. The right to the whole proceeds of labour, if by that phrase we mean the individual's right to the whole proceeds of his labour, must be relegated to the realm of imagination.

But it is very different with the common or collective right to the whole proceeds of labour. This only implies that the proceeds of labour should be divided exclusively among the workers. No proceeds of labour must be surrendered to the capitalist as interest or rent. This is the only condition imposed by the demand for the right to the common or collective whole proceeds of labour.

The right to the collective whole proceeds of labour does not imply that we should trouble about the proceeds of labour of the individual worker. For whatever one worker may fail to secure will be added to the remuneration of another worker. The apportioning of the workers' shares follows, as hitherto, the laws of competition, competition being keener, and the personal proceeds of labour being less, the easier and simpler the work. The workers who perform the most highly qualified work are most securely withdrawn from the competition of the masses, and are therefore able to obtain the highest price for the product of their labour. In certain cases some natural physical aptitude (such as singing, for example) may take the place of intelligence in eliminating the competition of the masses. Fortunate is he whose service liberates him from the dread of competition.

The realisation of the right to the whole proceeds of labour will benefit all individual workers in the form of an addition to the present proceeds of their labour, which may be doubled or trebled, but will not be levelled. Levelling the proceeds of labour is an aim of communism. Our aim, on the contrary, is the right to the whole proceeds of labour as apportioned by competition. As an accompanying effect of the reforms necessary to ensure the right to the whole common proceeds of labour, we may, indeed, expect the existing differences in the individual proceeds of labour which are sometimes, particularly in commerce, very great, to be reduced to more reasonable proportions; but that is only an accompanying effect. The right to the whole proceeds of labour, in our sense, does not imply any such levelling. Industrious, capable and efficient workers will, therefore, always secure larger proceeds of labour, proportionate to their higher efficiency. To this will be added the rise of wages in consequence of the disappearance of unearned income.


  1. The product of labour, the yield of labour and the proceeds labour are not immediately comparable. There is no common measure for these quantities. The conversion of one into the other is not done by measuring but by contract, by a bargain.
  2. It is impossible to say whether the proceeds of labour of in workers do or do not correspond to the whole proceeds of their labour.
  3. The whole proceeds of labour can only be understood to the common or collective proceeds of labour.
  4. The right to the whole collective proceeds of labour implies the total abolition of all unearned income, namely interest and rent.
  5. When interest and rent are eliminated from economic life, proof is complete, that the right to the whole proceeds of labour has been realised, and that the collective proceeds of labour are equal to the collective product of labour.
  6. The suppression of unearned income raises the individual of labour - doubling or trebling them. There is no levelling to be expected, or only a partial one. Differences in the individual product of labour will be accurately translated into the individual proceeds of labour.
  7. The general laws of competition determining the relative amounts of the individual proceeds of labour will remain in force. The most efficient worker will receive the highest proceeds of labour, to use as he pleases.

Today the proceeds of labour are curtailed by rent and interest, which are not, of course, determined arbitrarily, but by the conditions of the market, everyone taking as much as the conditions of the market allow him.

We shall now examine the manner in which these market conditions are created, beginning with rent on land.


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