Natural Economic Order (INWO)
Flowing Money & Free Land

The Initiative für Natürliche Wirtschaftsordnung e. V. (INWO – in Germany INWO Deutschland e. V., address in Frankfurt am Main) is a non-profit association that combines monetary reform and land law. It calls its social model FAIRCONOMY: a sustainable, stable and just market economy without capitalist excesses, oriented to human needs and natural limits. The name refers to Silvio Gesell's main work “Die Natürliche Wirtschaftsordnung durch Freiland und Freigeld” (1916; English: The Natural Economic Order).

The INWO's fields of reform: Money (circulation-secured money, interest towards zero), Land (free land, or as an interim step a land value tax), Resources (levies on natural resources, redistributed per head) and Society (among others basic income, a code of values). Goals according to the INWO: equal starting chances, prosperity for all instead of wealth for a few, curbed wealth concentration, full employment, growth only where there is real need (instead of a compulsion to yield returns), and peace.

The parking-fee image: Ships lie in port only as briefly as possible, because idle time costs money; parked cars often incur a parking fee. In both cases the fee optimises the use as a means of transport. The INWO transfers this to money: a holding fee (also called circulation-securing fee, “money holding fee” or Freigeld) keeps money flowing.

🔵 According to the INWO, flowing money closes the money-goods circuit: all incomes steadily become demand again – directly or via credit. In the INWO's reasoning this yields a chain: permanent boom and full employment → rising labour incomes → shorter working hours and growing savings rates → growing capital stock → falling interest rates and capital costs → ecologically necessary investments become economical, housing finance and housing costs fall, the public sector pays less interest, and the growth of wealth from the mere holding of money is slowed.

Assessment of this page: The robust core is the first and the last link of the chain – money that can no longer withdraw from the cycle for free, and no return for merely holding money. The statements “permanent boom” and “full employment” are model statements; the INWO texts do not substantiate them empirically and do not weigh them against other positions (as found when checking the sources for this page). How strongly other influences (structural change, foreign trade, commodity prices, demography) interfere remains open.

The INWO's position on interest: Interest should fall gradually towards zero – not by prohibition but because the liquidity premium disappears and the supply of capital grows. It remains as a signal of supply and demand on the capital market but loses its significance as a source of income. Banks continue to earn on the spread between lending and deposit rates and on brokerage and securing of loans.

What exactly disappears – the waiver premium: 🔵 The INWO calls the part of interest that savers receive for giving up liquidity the Verzichtsprämie (waiver premium; Keynes: liquidity premium) and sees in it the “monopoly gain from money's structural monopoly”. Its texts treat it as the component of interest that falls away through the holding fee – interest “really does fall towards zero”. The INWO does not demand abolishing interest by prohibition; it remains as an indicator of supply and demand on the capital market but loses its significance as a source of income. 🟣 On the banks' money creation itself, the INWO texts reviewed say nothing.

The INWO's figures (rules of thumb, 🔵): Prices and taxes contain an interest share of roughly 30 %; financial assets are assumed to earn about 3 %. From this follows: whoever holds less than about ten times their annual consumption spending (including taxes) in interest-bearing assets pays more interest than they receive, net. The winners are at most 10 % of the population in Germany, and fewer still worldwide. The INWO puts the sum of interest flowing from workers to the wealthy at about €980 million per day (position paper 2, as of August 2008). 🟣 These are rough estimates, not official statistics – but as an order of magnitude for the distributional effect of interest, a point worth considering.

The idea: Land cannot be multiplied by labour – it is the most significant monopoly good. Whoever owns it receives a land rent without own effort; non-owners pay it through rising prices, leases and rents. In the INWO model all land is transferred to common ownership; long-term use by individuals remains possible through hereditary leasehold, and the lease income is distributed equally to everyone. Plots no longer serve speculation.

The pragmatic interim step – the land value tax: Today's property tax burdens land and buildings; converted to a pure land value tax it would relieve the building and make leaving land idle more expensive. As arguments the INWO cites that 🔵 Denmark made this change in 1922 and that there is practical experience in Australia; 🟢 Germany's Federal Constitutional Court declared the property-tax valuation (outdated building values) unconstitutional in April 2018, and the new law of November 2019 allows the federal states to tax land value alone. Forerunners of this line: Thomas Spence (18th c.), Henry George (19th c.), Silvio Gesell (buying back the land with government bonds and leasing it for limited terms to the highest bidder).

From land to a resource-based basic income: The INWO transfers the thought to all scarce natural goods (land, water, air/CO₂ absorption capacity, mineral resources): levies on their use are redistributed equally per head – an “ecological” or “resource-based” basic income. Worked example in INWO position paper 3: €0.12 per kilowatt-hour of final energy on about 2,500 billion kWh yields €300 billion a year, with about 80 million inhabitants a little over €300 per head and month. 🟣 The INWO itself calls the figures “only a first rough guide” (a back-of-envelope calculation); the thought – price the use of nature, distribute the proceeds equally – is a building block in its own right alongside money.

What the INWO says: Shares are equity with no repayment claim and full risk; they can yield income as long as physical capital earns a return. Long-term, share returns orient themselves on capital-market interest rates and would fall with them, a risk premium would remain. The text says no more on this question.

Keynes' evasion objection: The liquidity premium can shift into substitutes (General Theory, ch. 23). The INWO answers with free land for land. 🟠 For company shares the objection is thereby not answered.

How the Humane Market Economy solves it: Bound company shares are unproblematic there – power arises only at the sale, through the liquidity released. Equity growth flows as input into the value store; sale gains and non-reinvested profits are taxed. → Flowing money in the Humane Market Economy

🔵 1. How are investment & innovation financed? Through the capital market, which remains: whoever provides money as credit pays no fee – savings are lent on. Because money is no longer hoarded, the supply of capital grows, interest falls, credit becomes cheaper. 🟣 This holds as long as savers actually lend their money and do not escape into real assets.

🔵 2. How is the economy kick-started – what are the performance incentives? The incentive is demand: all incomes steadily become demand again, and according to the INWO permanent boom and rising labour incomes follow. A basic income from resource levies is meant to stimulate demand and the economy without endangering natural goods. 🟣 Both are model claims; no performance–price mechanism of its own is described.

🔵 3. How does the value of money stay stable? Through a more even circulation of money: according to the FAQ the fee achieves an “evening-out of money circulation”; in a circulation-secured currency there would be “practically no inflation”. Price rises from imported goods remain untouched. 🟣 There is no backing or value-store mechanism as in HME/RICH; stability depends on the central-bank rate.

Wörgl 1932/33: The Tyrolean municipality of Wörgl, under mayor Michael Unterguggenberger, issued labour-certificates that had to be “stamped” monthly with a stamp (1 % of face value) to remain valid. The money circulated quickly, municipal projects were financed; in 1933 the experiment was prohibited by the Austrian authorities. A small scale, a short duration – 🟠 as proof of the effect on a large scale it is not enough, as proof of the mechanism (fast circulation) it is often cited. According to the INWO account, unemployment in Wörgl fell by 25 % within a year while it kept rising in Austria; projects financed included street and sewer renovation, a bridge renewal and a ski jump.

John Maynard Keynes paid explicit tribute to Silvio Gesell in the General Theory (1936, chapter 23) explicitly: “The idea behind stamped money is sound” – but saw a snag: if money lost its liquidity premium, “a long series of substitutes would step into their shoes” – bank money, debts at call, foreign money, jewellery and the precious metals. On land, Keynes noted that the craving for land ownership, independent of its yield, had kept the rate of interest up; Gesell's land nationalisation would have removed that – this is what the INWO's free land builds on. 🟠 Whether Freigeld and free land cover the substitutes objection today is open – all the more so for shares, real estate, gold, art and crypto assets.