Changing loans from Compound to Simple Interest will increase the productivity of any economy that adopts it. It has remained with us probably because people believe that free capital markets, where buyers and sellers establish the price of capital, will maximise the production of goods and services.

Anyone investigating natural complex systems soon understands that complex systems do not work that way. We maximise an objective function—like the survival of communities—by everyone working toward that objective and entities working toward the survival of the group. For human societies, that means sharing our economic surplus. Mark Pagel describes this well in Wired for Culture.

I have just published an article that describes how Simple Interest for banks shares new money while compound interest doesn't and what that will mean for an economy that adopts it.