Re: Putting Chartalism In Its Place?

[Colin Danby <danby@xxxxxxxxxxxxxxxx>]

Just a few notes in support of Barkley's comments. Yes, the more
eclectic textbook approach has merits. See Hicks' amplification of the
textbook approach (_Critical Essays in Monetary Theory_ and elsewhere)
and discussion of "partial" monies. It's important to see the textbook
approach as giving us a *framework* rather than an absolute definition.
Hicks was right that:

"Monetary economics, try as economists will to reduce it to a pure
theory, is in fact the study of a particular social institution which
inevitably developed in different ways in different social milieux."

(John Hicks 1985 [1943]) A French View of Money, in Hicks (ed) Money
Interest and Wages: Collected Essays on Economic Theory, Vol. II,
Cambridge, MA: Harvard University. p. 133

I'd argue that all theories of money must be institutionally-grounded,
and therefore require an explicit layer of institutional methodology,
tying them to a place and time. To argue abstractly over a single
universal money-essence, or a single universal
institution-that-makes-something-money, is a complete (and potentially
sectarian) waste of energy. There is none.

(Moreover any theory that presupposes a state ought to be explicit about
what it means and how, empirically, it establishes the presence of the
kind of state it imagines.)

Mat's recent post is interesting in that he broadens the discussion to
any entity able to impose an obligation on some group of people. But
whether we can regard the existence of some institution doing this as an
explanation or cause for this "money" is another question, as he will
agree.

(Re Barkley's reference to Paul's work, in a Spring 2000 JPKE paper I
tried to distinguish between tax-chartalism and Paul's
contract-enforcement chartalism. Paul's approach strikes me as the more
interesting of the two because it focuses attention on a much wider
variety of linkages between economic actors, though I still have
disagreements that I have discussed in older postings.)

If one wants a more general theory of money, it seems to me more
plausible to start with commerce and finance, which are widespread
across history. Don't assume states or nations a priori. Then ask under
what conditions do certain assets acquire money-like properties among
particular groups of people (remembering that there may be multiple
monies or partial monies in existence in one place at one time.)
Taxation may play a role in come places, contract-enforcement by courts
may play a role in others, *evasion* of states (a Greg Nowell
observation from a while back) may play a role in still others, and so
forth. Private institutions and private initiatives e.g. interlinked
bankers may play critical roles in liquidifying certain categories of
assets.

Best, Colin


P.S. As long as we're throwing references into the pot, how about _Money
matters : instability, values, and social payments in the modern history
of West African communities_ edited by Jane I. Guyer Portsmouth, NH :
Heinemann ; London : J. Currey, 1995. Very good on multiple, overlapping
monies. Guyer has a new volume coming out along similar lines in early 2004.