Fundamentals of a theory of money: untangling Fine, Lapavitsas and Zelizer

Abstract

This article criticizes both the 'Marxist' and 'sociological' conceptualizations of money to be found in the recent debate between Fine, Lapavitsas and Zelizer in Economy and Society. They neglect important contributions to the theory of money, especially the 'credit' and 'state' theories of money in the social sciences. These emphasize, as did Keynes, the central theoretical importance of money of account. These approaches were banished from orthodox economics and lost to sociology in the post-Methodenstreit division of intellectual labour in the social sciences. Marxist economics has never properly addressed this monetary analysis. Although neglected, it is not obscure and informs the more widely known post-Keynesian theory of money. This article argues that these heterodox theories of money are essentially sociological in that they involve the conceptualization of money as abstract value constituted by the social relation of the 'promise to pay'.

Wildcats in banking fields: the politics of financial inclusion

“…This simply demonstrates the fact that the self-expansion of capital based on the contradictory nature of capitalist production permits an actual free development only up to a certain point, so that in fact it constitutes an 11 Marx was almost single-minded in his focus on the extraction of labor-power as the source of value and profit in capitalism, so his writings on money and credit tend to be subordinated to his arguments about the larger social shifts that derive from production (Ingham 2001). Famously, he invited the reader to abandon the "noisy sphere" of circulation to follow capitalists and owners of labor-power in the "hidden abode of production, on whose threshold there stares us in the face 'No admittance except on business.'"…”

Money and Credit in Heterodox Theory: Reflections on Lapavitsas

“…32 Marx 1977. 33 The author is reacting to Ingham 2001, a 33 Lapavitsas also engages in an exploration of some aspects of the 'social relations' involved in production. He first reviews the debate on whether the gift relation is an antithesis to the commodity relation, focusing on Gregory.…”

The Two Approaches to Money: Debt, Central Banks, and Functional Finance

“…The subsequent debates did not go further and we can say that even now "Menger's (1892) rational choice analysis of the evolution of monetary systems remains the basis for all neoclassical explanations of money's existence" (Ingham 2001).…”

“…It is this social mechanism that allows a piece of gold (or of paper) to be transformed in money, something that can extinguish debts, preserve value, and give measure to any value (Ingham 2004;see also Hayes 2012 In the modern economy, most money takes the form of bank deposits. But how those bank deposits are created is often misunderstood: the principal way is through commercial banks making loans.…”