History of Monetary Thought

The problem of money in the Stamp Act crisis comes down to basic definitions. What was money? After the Seven Years War, Parliament sought to alter the monetary basis of British North America, in part, by levying taxes and fees in silver colonists insisted they did not have. The Stamp Act of 1765 made silver absolutely necessary. Without silver, the simplest legal instruments of law and commerce became unattainable. The result was absurd: the Stamp Act was a law that made the operation of law impossible. This paradox provides a new explanation for widespread American resistance to the Stamp Act and the origin of debates that led to revolution.

In today’s world the possibility of competition in the money market is unthinkable, the central bank regime is thought as if it were the only viable. Historically this has not been the case: Most monetary economists of the past have discussed the appropriate role of the state in the money market.  In general terms it is possible to identify certain schools of thought through time. It is the aim of this thesis to accurately describe and analyze the main points of each one and to provide a rough classification of them: 1) First of all, from times of Plato and Aristotle to the XIV century we can acknowledge the existence of two postures – Free minting, which ascribes a mere supervisory role or no role at all to the state and State Minting which pronounces  that the government has the duty and the obligation to intervene in the coinage trade; 1.1) A transitory period in the XV and XVI centuries in which the discussion is centered around the nature of “interest” and  the banking industry; 2) A period that goes from the XVIII to the XIX centuries. The role of the banking business has been accepted and the debates are conformed around the inter dependence of the monetary and financial systems.  Three different schools emerge: a Free Banking School which adheres to the principles of Laissez-faire in the money market;  a Central Banking “rule bounded” School which states that it is necessary to have a central monopolist entity that could keep the national metallic reserves by which it could provide a stable and redeemable money supply ; a Central Banking “discretional” School that manifests that money is endogenous to the economy, yet a central bank is needed for financial stability purposes.  2.1) We can identify a second transitory period in times of the Belle Époque of capitalism (1870-1930) which correctly takes the name of “monetary orthodoxy” and accepts the need of a Central Bank both to provide sound money – via a gold standard- and because its role as the lender of last resort of the economy; 3) A third period comes about the end of the great depression to our own time. First, a renewed Central Banking “discretional” School gains prominence and articulates a second role for the Central Bank: to actively pursue policy objectives (economic activity and employment). For which it is necessary to adopt a fiat monetary system;  given the 70´s stagflation problems,  a rehabilitated Central Banking “rule bounded” school emerges and pin points the importance of stabilizing consumer prices via an unchanging fiat money supply; as alternative to this school, a Modern Laissez-Faire School appears which emphasizes the possibility of free market solutions to the money market via several options  - Hayek-Klein , a fiat private competition system; Selgin-White, a modern free banking approach; and Salerno-Huerta de Soto and Greenfield-Yeager as heterodox approaches.

Study of the monetary policy measures adopted by Henry IV of Castile during the first decade of his reign, between 1454 and 1465, as a relevant aspect to understand the damage of his image as ruler. Particular attention is paid to the political and economic causes, the coherence from the point of view of the intrinsic and extrinsic value of the minted coins –with special attention to the copper coins–, the effective application in urban areas and the results in the Kingdom economy framework. To do this, the ordinances of Aranda de Duero of 1461 and Madrid of 1462, its negative impact on local commerce, on the payment of income and the bankruptcy of economic agents are thoroughly analyzed. Finally, the instrumentalization of these monetary measures by the nobility opposing the monarch –particularly the decrease in the price of gold and silver coins ordered in 1462– is valued as part of the dynamics of delegitimization of the royal political action implemented since 1464.

The article puts forward a case against the nominalist ontology of money, that is, the heterodox notion that moneyness – the quality of being money – is conferred by the money of account. From the nominalist perspective, money is essentially a balance-sheet phenomenon: a credit-debit bookkeeping entity whose origins can be traced back to ancient Near Eastern practices of accounting. This ontological position, which is often erroneously traced back to Keynes’ Treatise, mystifies and obscures the actual history of the money of account as a regime of monetary governance and a mode of speculation that only made sense in the European late medieval context of bimetallism. The article thus provides a critique of monetary nominalism based on Keynes’ reflection on the value of money in the Treatise and the General Theory. In turn, it proceeds to historicize the phenomenon of the money of account, building on the seminal contributions of Marc Bloch and Luigi Einaudi.

Bene e valore sono sinonimi? E per chi lo sono? Comune rinvia a una forma specifica di società e di appartenenza: quella comunitaria. In quali spazi e tra quali confini si distende quell'essere in comune? Comprenderne la portata è una sfida cruciale che attraversa questioni ecologiche, diritti sociali, elaborazioni di concetti riguardanti democrazia e cittadinanza, diritti della persona. Nella lunga traiettoria storica e politica, che li ha condotti al centro delle discussioni attuali su scala europea e mondiale, si riconosce l'importanza di uno sguardo, di una misura necessaria al futuro stesso delle donne e degli uomini che abiteranno il pianeta.

In this paper, we examine the representations of money by three major political philosophers, namely Thomas Hobbes, John Locke, and Johann Gottlieb Fichte. These authors had a major impact on the making of Western states, notably through their ways to express the issue of the people’s sovereignty. In their political constructions they granted a critical place to the issue of money. We first recall the various meanings of the signifier “sovereignty” from the 16th century to the late 18th century, as well as of its modellings that have structured the field of modern political philosophy. Thereafter we successively display the status and forms of money in the three models respectively proposed by Hobbes, Locke and Fichte by showing that money as embedded in politics—assumes a different nature each time. Our conclusion offers a synthesis about what is common and opposite in these three models. We also review some of their legacy.

The change from the bimetallic monetary system to the gold
standard in July 1854 was preceded by lengthy discussions in the Portuguese parliament. Through the analysis of parliamentary speeches, this paper seeks to uncover the underlying bases of the new institutional framework. Whilst all members of parliament recognised the need for a change in the monetary system in force at that time, demonstrating their
complete convergence of opinion in regard to this aim, they showed no unanimity in their proposals as to the particular type of standard that was to be adopted. The study of the various directions taken by the debates takes into account the theoretical and doctrinaire systems of reference that were used, situating these referents in the context of
Portuguese economic thought at that time. One of the conclusions drawn highlights the pragmatism of the solution that was found, a situation that was justified not only by the longstanding British-Portuguese alliance, but also by the already significant amount of gold coins in circulation, as
well by the fact that this was the monetary standard that best served the interests of a politically liberal regime.

https://journals.openedition.org/oeconomia/9122

The paper compares the definitions of the concept of finance capital in the work of Karl Marx and Rudolf Hilferding. While Marx outlines a definition of finance capital as the separation and monopolization of capital-money transactions, Hilferding refers to the merger of banking and industry and the domination of the latter by the former. In spite of their differences, both definitions are based on an analysis of the relationship between the credit system and production. Through an examination of the similarities and differences between the two authors, the paper argues that while Marx’s ambition was to propose a general theory of finance capital, Hilferding constructed a theory of the financialization of capitalism.

Sin quasi alla fine del '900 si è voluto considerare minore il contributo dei Minori al pensiero e all'etica economica; di contro il XXI secolo registra una crescente attenzione per la scelta ideale dei poveri volontari. La messa in mora di alcuni dogmi economici ad opera di crisi reiterate e planetarie ha innescato la ricerca di modelli capaci di coniugare crescita economica e dignità umana. L'opzione francescana ha così conquistato una centralità che, dovrebbe tuttavia fare i conti con la storia che ne è all'origine, incardi-nata in norme ed istituzioni nate nel XIII secolo. Il volume analizza come i Minori abbiano interpretato e vissuto, tra XIII e XIV secolo, la sfida più radicale posta dallo stesso Francesco: il divieto non solo di possedere ma anche di usare il denaro, misura di tutte le relazioni economiche. È una storia che merita di essere conosciuta e discussa anche da coloro che indi-viduano nell'opzione francescana un modello per ristrutturare i rapporti tra etica del profitto ed etica civile.

From keynesianism to libertarianism. The place of money in the transformations of the authorized economic knowledge
This article looks for an understanding and explanation of the responsability of economics in the upsurge and development of the present crisis. It studies the interdependencies between the three streams of ideas which today dominate the departments of economics and finance of universities. Financial economics and « new classical » macroeconomics, combined with a renewal of « austrian » economics, form, thanks to their common reference to a libertarian ideology, an oligopoly which controls the new economic science that jointly with financial globalization has developped in the United States. As the paper starts from the evidence that the present crisis finds its origin at the monetary level, the analysis of this oligopoly is based on the place that money has in its three components. In Section I we justify this choice. Section II shows how money, whose characteristic is to have no economic role in General Equilibrium Theory, has tormented american mainstream economics since the nineteen seventies. Section III displays a topography of the field of economic ideas that allows to understand how the three libertarian streams of ideas, despite their large differences, were able to unite in order to form an hegemonic block and monopolize the production of authorized economic discourses. Final Section IV examines the paradox of a science that professes perfect self-regulation of markets and therefore its own uselessness, but in the same time has had an increasing role in the economic and political functionning of the present capitalist market economy.

Money and exchange in the modern constitution This paper provides an interpretation of the classical conception of money as a neutral instrument for pure market exchanges, based on the concept of constitution as proposed by Bruno Latour in Nous N'Avons Jamais Été Modernes. The aim is to support the hypothesis of an association between the epistemic constitution of modernity and monetary orthodoxy, as this modern conception also postulates an autonomous sphere of mercantile exchange. In the end, questions are raised concerning a possible renewal of the conception of money so as to correspond to a constitution that would overcome the limits of the modern form.

Resenha: EVANGELISTI, Paolo. La Balanza de la soberanía. Moneda, poder y ciudadanía en Europa (s. XIV-XVIII). Barcelona: Editorial Ausa, 2015, 317p. RESUMO: O livro de Paolo Evangelisti promove um debate novo sobre a tradicional visão da história econômica e sobre os estudos clássicos da soberania. Aliando esses dois temas, a reflexão dos sentidos políticos da moeda mostra a emergência de um ideal de comunidade que irá permanecer sobre seu valor simbólico como medium nas relações de trocas comerciais, um meio não apenas material, mas representativo do tipo de elemento fiduciário que movimenta as trocas econômicas. É neste sentido que, ainda em linha econômica, vem a reflexão dos filósofos franciscanos sobre moeda como elemento da cidadania, integrada a uma comunidade política que pactua o valor da moeda entre seus usuários-cidadãos. Neste cenário, o poder do príncipe é apresentado segundo as limitações desse pacto e da impossibilidade de uma apropriação ilegítima sobre o patrimônio coletivo. A ideia de soberania passa assim a ser extensiva aos atributos do poder civil. Boa-fé e estabilidade são assim os elementos impregnados à construção teórica da moeda. ABSTRACT: Paolo Evangelisti's book brings a new debate on traditional view of economic history and on classical studies of sovereignty. Combining these two themes, reflexion on the political meanings of currency shows emergence of an ideal of community that will remain on its symbolic value as a medium in trade relations, a medium not only material but representative of the type of fiduciary element that moves economic exchanges. It is in this sense that, still economically speaking, comes the reflections of Franciscan philosophers on currency as an element of citizenship, integrated to a political community that establishes the value of currency among its users-citizens. In this scenario, power of the ruler is presented according to limitations of this pact and the impossibility of an illegitimate appropriation on collective patrimony. The idea of sovereignty thus extends to the attributes of civil power. Good faith and stability are thus the elements impregnated on the theoretical construction of money.

A cluster of intellectual innovations appearing withing scholastic natural philosophy in the fourteenth century played a critical role in the future development of scientific thought.  Beneath  these innovations lay a profound reconceptualization of nature.  This book attempts to analyze the components of this reconceptualization and to uncover the presures and concerns that shaped it.  To do so. it looks both within the medieval university and beyond it, to the monetized society that surrounded and supported it.  It argues that the transformation of the conceptual model of the natural world within scholastic natural philosophy, c 1260-1380 was directly linked to the social and economic processes of monetization and market development that transformed European society over this same period.

The Gibson paradox is the positive correlation between the long-run rate of interest and the price level. As observed by Tooke (1838, 1844), who by this time had become the main representative of the Banking School in opposition to the Currency School in the nineteenth century in England, “[a] higher rate of interest, in consequence of the absorption by the war loans of a considerable proportion of the savings of individuals; such higher rate of interest constituting an increased cost of production” (Tooke, 1838, p. 347).

Interventi di Giovanni Legnini, Vice presidente CSM, Giovanni Sabatini, Direttore generale ABI, Donatella Strangio, professore ordinario di storia economica, Dino Pesole, editorialista Sole 24 ore, Paolo Evangelisti, autore del volume

http://www.carocci.it/index.php?option=com_carocci&task=schedalibro&Itemid=72&isbn=9788843082063

The omnipresence of the motto “In God We Trust” in the notes and coins of the Federal Reserve of the United States of America is at the origin of this paper. This religious faith statement printed on fiduciary money appeared to me not as a hazardous coincidence but as a hieroglyphic. Numismatics explains the signifier of this sign, but as professor of Economics I wondered if it would provide any significance to the presence of this double relation of Faith in God and Faith in Money.
    History registers a very early literary testimony of faith in God in the Old Testament; and another of faith in money in Thornton’s Paper Credit. The former work is at the origins of the occidental civilization, the latter could be considered an expression of the maturity of its monetary thought. Between both there is a succession of works containing economic ideas and theories. And we can follow the chain of these economic texts in order to identify the monetary ones. If this search takes in account the Historical and Theoretical context in which these texts arose we will obtain a reconstruction of the Making of Monetary Theory.
    By means of this exercise, this paper vindicates the topicality and the pedagogical virtues of the teaching of the History of Economic Thought. Departing from a material fact of the present -an institutional inscription as “In God We Trust” in a quotidian monetary instrument: a note or a coin of dollar-, we can reconstruct the history of the thought of the matter to which this object belongs -the History of Monetary Thought- ; and, in turn, this history provide us with an explanation about the origins and nature of this instrument in the present -fiduciary money-, the presence in it of a faith statement -“In God We Trust”-, and the fields covered by the faith from one to another.

In a 1958 article, Pierre Dieterlen refers to a 'triumvirate' in order to qualify the team formed in France during the Poincare stabilization by Emile Moreau, Governor of the Banque de France (BDF), Charles Rist, Professor at La Sorbonne and Deputy-Governor and Pierre Quesnay, his former PhD student, Head of the Department of the Economic Studies and Chief Adviser of the BDF. Pierre Quesnay is the youngest of the trio and has been quite neglected by the historians until the recent paper of Olivier Feiertag (2009) on the Monetary Internationalism during the Inter-War period. From the end of the war in 1918 until 1937, the short life of Pierre Quesnay is fully concerned by the monetary disorders generated by the suspension of the Gold Standard, the difficulties to find alternative monetary solutions, and the management of the monetary consequences of the Great Depression. Building mainly on the Quesnay's papers of the Archives Nationales, the purpose of this paper is to ev...

«Parole est en mostrant ou pour monstrer quelle chose est con-ferente et utile et quelle chose est nuisible». Oresme e la parola dell'uomo civile Abstract: This essay aims to shed light upon one of the main relationships between two texts written by Oresme: the De Moneta and Le Livre de politiques. The significance of the word («parole») was examined in the latter: a faculty belonging only to the man who lives, communicates and trades in the civitas; the man that has to order things and actions in the sphere of expediens, i.e. what is useful, or in the sphere of the nocivum, what is detrimental. In Oresmian texts, this discursive faculty, that was already examined by Albertus Magnus and Thomas of Aquin, becomes directly analytical, taxonomical and provides the ethical dimension to things and actions. In Le Livre, this triple faculty belongs to the «parole»: the elementary brick of the human discourse. The « homme civile » alone is able to seize the meaning and the value of the utilitas: what can be considered, or proven, useful, proper and profitable. He is able to distinguish, along a scale of equivalencies and balances, things and actions that can be defined just or unjust, but only as a result of the previous analytical path made by the «parole». After this analysis the political function of money, established in his oldest text, De moneta, appears strictly connected with the political function of the «parole» defined in Le livre. Intorno alla definizione aristotelica dell'uomo come ani-male naturalmente politico, o, nella sua declinazione me-dievale, «naturalmente civile», esiste una vastissima sto-riografia rinvigorita negli ultimi decenni da un filone del pensiero politico che ha indagato su questa condizione data dell'uomo, interrogandosi sul rapporto, oppositivo o dialettico, tra zoé e bíos proposto dallo Stagirita. Un rap-porto polarizzato tra il nudo fatto del vivere e la vita qua-lificata positivamente, vivente nella comunità e nel dirit-to 1. Tra Due e Trecento la rinnovata attenzione ai testi a-ristotelici della Politica e dell'Etica Nichomachea, resti-tuiti nella loro integralità all'Occidente latino, ci segnala-no una specifica attenzione dei traduttori e dei glossatori europei dedicata a questo passaggio cruciale dello Stagiri-ta (Politica I.i.9). Eppure questo passaggio viene spesso isolato, dalla storiografia che se ne è occupata, separando-lo da ciò che invece in quei testi si presenta come inscin-dibile. Ci si riferisce ai contenuti e alle funzioni assegnati a ciò che distingue l'uomo, politico e civile, da ogni altro animale: il suo essere dotato di parola (Politica I.i.10-11). Interrogarsi su ciò che si ritrova nel passo della Poli-tica che si legge nell'Aristotele latinus è un dato costante che da Alberto Magno a Tommaso d'Aquino attraversa tutto il secolo giungendo sino ai volgarizzamenti trecente-schi. In questa direzione uno degli esempi di maggior pe-so è costituito dalla prima traduzione integrale in una lin-gua volgare europea dell'opera dello Stagirita giunta sino a noi, ed in particolare da ciò che si può leggere nel primo libro del «Livre de Politiques d'Aristote» di Nicolas Ore-sme redatto nel 1372 2. È questo l'orizzonte testuale che verrà analizzato nelle pagine che seguono. Se si è spesso insistito sull'importanza del rapporto che connette il sermo come parte costitutiva, come dote dell'uomo che è «per natura civile», si è indagato meno su ciò che qualifica e, soprattutto, su quali siano le funzioni cognitive e denotative della parola che appartiene unica-mente a questo animale comunitario e politico 3. In questo contributo proveremo a percorrere tale itinerario di inda-gine partendo necessariamente dal testo autorevole dell'Aristotele latinus sul quale si cimentano gli intellet-tuali accademici, laici e religiosi, dell'Europa due-trecentesca. Ex hiis igitur manifestum quoniam natura civitas est quoniam homo natura civile animal; et qui incivilis propter naturam et non propter fortunam […]. Quia autem civile animal homo omni ape et omni gregali animali magis, palam. Nichil enim, ut aimus, in vanum natura facit; rationem autem solus habet homo anima-lium; vox quidem igitur tristabilis et delectabilis est signum propter quod et alis existit animalibus: usque ad hoc enim natura eorum pervenit […] sermo autem ad manifestandum iam expe-diens et nocivum, quare et iustum et iniustum. Hoc enim est pre-ter alia animalia hominibus proprium solum, boni et mali, iusti et iniusti et aliorum sensuum habere. Horum autem communitas facit domum et civitatem 4. È a partire da questo testo che Alberto Magno, nel con-fermare la posizione dello Stagirita servendosi anche dell'autorità del Timeo platonico e di Avicenna, sostiene che il sermo autem solus habet homo super animalia. Nel tradurre ed esplicitare l'argomentazione aristotelica sul significato della parola il magister domenicano afferma che: Sermo autem articulatus et litteratus, quid hominis

In this paper, I examine what I call Milton Friedman's Monetary Instability Hypothesis. Drawing on Friedman's work, I argue that there are two main components to this view. The first component is the idea that deviations between the public's demand for money and the supply of money are an important source of economic fluctuations. The second component of this view is that these deviations are primarily caused by fluctuations in the supply of money rather than the demand for money. Each of these components can be tested independently. To do so, I estimate an otherwise standard New Keynesian model, amended to include a money demand function consistent with Friedman's work and a money growth rule, for a period from 1875-1963. This structural model allows me to separately identify shocks to the money supply and shocks to money demand. I then use variance decompositions to assess the relative importance of shocks to the supply and demand for money. I find that shocks to the monetary base can account for up to 28% of the fluctuations in output whereas money demand shocks can account for less than 1% of such fluctuations. This provides support for Friedman's view.