Overcoming Recession and Financial Instability in a Global Financialised Economy? The Contribution of the ‘Crank Heretic’ Robert Eisler

Recurrent shocks — be it geopolitical instability, pandemics, financial crises or climate change and climate transition effects — pose difficulties to permanently ensure a prosperous economy. The writings of Robert Eisler represent an early attempt to design an economic system to permanently stabilise the price level, to solve unemployment and prevent economic crises. Against the backdrop of the Great Depression of the 1920s, Eisler proposed an extensive reform package including public work programmes financed by debt monetisation, the introduction of a parallel currency to level out price level fluctuations as well as instruments for exchange rate stabilisation. Eisler’s work demonstrates the seminal insights that national economies are embedded in a global financial system and that any attempts to reform financial systems require international cooperation in order to be effective. Notwithstanding, Eisler is largely ignored both by monetary reformers and conservative economists, who, if at all aware of his work, declared him a ‘monetary heretic’. This paper analyses Eisler’s entire set of reform ideas for the first time and positions it within current economic policy discourses on the limits to monetary policies, on effective demand and public work programmes and the need to consider international capital when drafting monetary reform proposals.