© 2004-2010
Paul Cooijmans


The essential flaw in current economy is that money has itself become subject of trade. In other words, the existence of interest. The phenomenon of "making money with money", without actual productivity, without adding or creating value. There is nothing wrong with trade, as long as one does not trade in money itself.

The obvious solution is to abolish interest and related phenomena, and restore money as a means of buying goods and labour, saving, and as a unit for calculation and expressing values. The amount of money in a society corresponds to the amount of value in that society, whereby value is created by supply - production, service - , and not by demand or by any other mechanism. Various aspects of this solution are discussed below.

Electronic pocket calculator from the 1970s.

Money itself

Money should be as concrete as possible to avoid emptiness and artificially inflated economies. Therefore paper money, let alone transferable money, are abolished. Better are coins with the value of the material they are made of. Banks may still exist to keep safe the coins of people, and to do long distance payments. They may charge money for both tasks. They do not pay interest, as interest is abolished.

Lending and borrowing

Lending and borrowing in themselves are allowed, but as interest is abolished no one in his right mind will lend money, unless as a friendly service. People will only buy what they can afford. It is impossible to spend more than one has.


Lotteries are not allowed, as it is counter-productive to give large sums of money to random people who have done nothing to deserve it.


Insurance is abolished because it mainly serves to generate money for the insurance companies. The need for insurance is an artificially created need. Most risks in life do not require insurance (note that with the abolishment of insurance prices will go down that were previously artificially inflated because "insurance pays anyway"), and the one serious risk - medical cost - is better handled by providing medical care paid from tax money.

It must be understood that insurance is a covert form of lending against interest; the interest and repayment are disguised as "premium", and the loan itself as "remittance". And if you realize that this loan in most cases remains in the pockets of the insurance companies, you will understand why they are so keen to safely insure you against anything they can think of and that will most likely never happen.


The measures described in this article guarantee a constant value of money. There is no inflation, after an initial period needed for prices to settle. The laws of demand and supply still function.


Economic growth, in the new system, only occurs insofar it is real and needed; the current pressure for ever more growth for the sake of growth disappears. The reason so many people now want growth is that they thrive on the money that emanates as a side-effect of growth in the form of dividend, interest and the like. They need growth for its side-effects, not because growth itself is required in society. They need growth because investors and speculators make more money in a growing market.

A common error of current "experts" is to advocate a lowering of interest in periods of depression; then people can spend more, they say, and that is good for economic growth. Apparently they think it is good for economy if people just spend a lot of money on things they do not really need, even if that money is not their own but borrowed. They could not be more wrong. Obviously what would really benefit economy is if people would be frugal - or economical; that is where the word comes from in the first place - and only buy what they need and can afford (where "afford" means: pay for without needing to borrow).


Owning and trading in shares are allowed, but shareholders remain personally responsible for the (bankrupt) company's debts and there is no dividend.


Tax is paid over money made through work, trade, enterprise etcetera. The guiding principle is that the greater the value of the work in question for society (as judged by the government), the lower the tax percentage will be. Money made through unethical practices is taxed so high that that behaviour becomes unprofitable. The tax percentage does not depend on the amount of money made. The latter is currently the case in many countries, but counter-productive as it discourages good work.


Payment is based on one's output (productivity, result) rather than time spent on the job.

Income differences

Differences in income and wealth will result from natural differences in ability and achievement and reflect those. These differences will be smaller than those in current capitalism, where differences in income and wealth are artificially inflated by the phenomenon of "making money with money". In current capitalism, those who possess money can easily make more money without any actual creative output, via interest, dividend, insurance and so on. The abolishment of "making money with money" will lead to more natural differences in wealth, based on ability and achievement.