Silvio Gesell's vision on monetary reform: how to reduce social inequalities

Abstract

The presentwork addresses the proposal of Silvio Gesell to reduce social inequalities byimplementing a monetary and land reform. We show how Gesell adhered to eugenicideas, 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 theoryof money. Basic interest (or money interest) is a pure monetary phenomenon,inherent to the traditional form of money. Because money yields interest, theloan-interest rate and interest on real capital are positive. Gesell proposedland nationalisation and the implementation of stamped money, that lost 5% ofits value yearly. After the implementation of his proposed Free-Land andFree-Money reform, basic interest would be eliminated and, in time, loan andreal capital interest rates would fall to zero. As a consequence, unearnedincome would be suppressed without socialising the means of production.