Silvio Gesells vision on monetary reform: how to reduce social inequalities

This chapter addresses the proposal of Silvio Gesell to reduce social inequalities by implementing a monetary and land reform. It shows how Gesell adhered to eugenic ideas, widespread at the time, and how this influenced his economic proposals. The core of Gesell’s theory is the theory of interest, deriving from his theory of money. Basic interest (or money interest) is a pure monetary phenomenon, inherent to the traditional form of money. Because money yields interest, the loan-interest rate and interest on real capital are positive. Gesell proposed land nationalisation and the implementation of stamped money that lost 5% of its value yearly. After the implementation of his proposed Free Land and Free Money reform, basic interest would be eliminated and, in time, loan and real capital interest rates would fall to zero. As a consequence, unearned income would be suppressed without socialising the means of production.