New contributions to monetary analysis the foundations of an alternative economic paradigm

Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 ROUTLEDGE INTERNATIONAL STUDIES IN MONEY AND BANKING New Contributions to Monetary Analysis The foundations of an alternative economic paradigm Edited by Faruk Ülgen www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 New Contributions to Monetary Analysis In the wake of the 2007–8 economic crisis, the need for an alternative paradigm to the mainstream real (non-monetary) equilibrium paradigm gains even more importance, in the same way as some authors (including Keynes) were insisting on a renewal in economic theory in relation to the crisis of the 1930s The monetary approach developed in this book maintains that money – as a set of defined rules and practices – is the basic institution without which no capitalist economy can be understood This approach can give rise to a consistent alternative paradigm to deal with current economic issues The book starts with a long-standing debate in economics: what is at stake in a monetary theory of capitalist economy? From the perspective of the History of Economic Thought, it presents works which offer theoretical foundations of modern research on money as well as the origins of analytical ambiguities that dominate contemporaneous debates on monetary issues The book then develops the monetary approach in terms of the monetary constituents of capitalism, the payment system, the coordination issue in a decentralized market economy and the ambivalence of money, financial instability, the paradox of profit in a monetary economy, the conflict between financial rents and wages, money in a socialist economy, and the innovative way of teaching economics by using a (alternative) monetary paradigm This book sheds light on some of the most recent developments in monetary analysis which offer a theoretical framework for a renewed monetary approach and related policy extensions It points to recent research on what a consistent and broad-scope monetary theory could be based on in the twenty-first century It highlights new interpretations of monetary theory as put forth by some leading economists since the eighteenth century and new developments in the analysis of current monetary issues Faruk Ülgen is Head of the Department of Economics and Management (Bachelor’s Degree), Branch campus of Valence, Grenoble University, France Matthieu Méaulle is Economic Advisor, Foundation for European Progressive Studies (FEPS) Rémi Stellian is Teaching Assistant, Distance University of Switzerland and Grenoble University, France Ramón Tortajada is Emeritus Professor, Grenoble University, France www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Routledge International Studies in Money and Banking Private Banking in Europe Lynn Bicker Bank Deregulation and Monetary Order George Selgin Money in Islam A study in Islamic political economy Masudul Alam Choudhury The Future of European Financial Centres Kirsten Bindemann Payment Systems in Global Perspective Maxwell J Fry, Isaak Kilato, Sandra Roger, Krzysztof Senderowicz, David Sheppard, Francisco Solis and John Trundle What is Money? John Smithin Finance A characteristics approach Edited by David Blake Organisational Change and Retail Finance An ethnographic perspective Richard Harper, Dave Randall and Mark Rouncefield The History of the Bundesbank Lessons for the European Central Bank Jakob de Haan 10 The Euro A challenge and opportunity for financial markets Published on behalf of Société Universitaire Européenne de Recherches Financières (SUERF) Edited by Michael Artis, Axel Weber and Elizabeth Hennessy 11 Central Banking in Eastern Europe Edited by Nigel Healey and Barry Harrison 12 Money, Credit and Prices Stability Paul Dalziel 13 Monetary Policy, Capital Flows and Exchange Rates Essays in memory of Maxwell Fry Edited by William Allen and David Dickinson 14 Adapting to Financial Globalisation Published on behalf of Société Universitaire Européenne de Recherches Financières (SUERF) Edited by Morten Balling, Eduard H Hochreiter and Elizabeth Hennessy www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 15 Monetary Macroeconomics A new approach Alvaro Cencini 24 Financial Market Risk Measurement and analysis Cornelis A Los 16 Monetary Stability in Europe Stefan Collignon 25 Financial Geography A banker’s view Risto Laulajainen 17 Technology and Finance Challenges for financial markets, business strategies and policy makers Published on behalf of Société Universitaire Européenne de Recherches Financières (SUERF) Edited by Morten Balling, Frank Lierman, and Andrew Mullineux 26 Money Doctors The experience of international financial advising 1850–2000 Edited by Marc Flandreau 27 Exchange Rate Dynamics A new open economy macroeconomics perspective Edited by Jean-Oliver Hairault and Thepthida Sopraseuth 18 Monetary Unions Theory, history, public choice Edited by Forrest H Capie and Geoffrey E Wood 28 Fixing Financial Crises in the 21st Century Edited by Andrew G Haldane 19 HRM and Occupational Health and Safety Carol Boyd 29 Monetary Policy and Unemployment The U.S., Euro-area and Japan Edited by Willi Semmler 20 Central Banking Systems Compared The ECB, The pre-Euro Bundesbank and the Federal Reserve System Emmanuel Apel 30 Exchange Rates, Capital Flows and Policy Edited by Peter Sinclair, Rebecca Driver and Christoph Thoenissen 21 A History of Monetary Unions John Chown 22 Dollarization Lessons from Europe and the Americas Edited by Louis-Philippe Rochon and Mario Seccareccia 23 Islamic Economics and Finance: A Glossary, 2nd Edition Muhammad Akram Khan 31 Great Architects of International Finance The Bretton Woods era Anthony M Endres 32 The Means to Prosperity Fiscal policy reconsidered Edited by Per Gunnar Berglund and Matias Vernengo 33 Competition and Profitability in European Financial Services Strategic, systemic and policy issues Edited by Morten Balling, Frank Lierman and Andy Mullineux www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 34 Tax Systems and Tax Reforms in South and East Asia Edited by Luigi Bernardi, Angela Fraschini and Parthasarathi Shome 35 Institutional Change in the Payments System and Monetary Policy Edited by Stefan W Schmitz and Geoffrey E Wood 36 The Lender of Last Resort Edited by F.H Capie and G.E Wood 37 The Structure of Financial Regulation Edited by David G Mayes and Geoffrey E Wood 38 Monetary Policy in Central Europe Miroslav Beblavý 39 Money and Payments in Theory and Practice Sergio Rossi 40 Open Market Operations and Financial Markets Edited by David G Mayes and Jan Toporowski 41 Banking in Central and Eastern Europe 1980–2006 A comprehensive analysis of banking sector transformation in the former Soviet Union, Czechoslovakia, East Germany, Yugoslavia, Belarus, Bulgaria, Croatia, the Czech Republic, Hungary, Kazakhstan, Poland, Romania, the Russian Federation, Serbia and Montenegro, Slovakia, Ukraine and Uzbekistan Stephan Barisitz 42 Debt, Risk and Liquidity in Futures Markets Edited by Barry A Goss 43 The Future of Payment Systems Edited by Stephen Millard, Andrew G Haldane and Victoria Saporta 44 Credit and Collateral Vania Sena 45 Tax Systems and Tax Reforms in Latin America Edited by Luigi Bernardi, Alberto Barreix, Anna Marenzi and Paola Profeta 46 The Dynamics of Organizational Collapse The case of Barings Bank Helga Drummond 47 International Financial Co-operation Political economics of compliance with the 1988 Basel Accord Bryce Quillin 48 Bank Performance A theoretical and empirical framework for the analysis of profitability, competition and efficiency Jacob Bikker and Jaap W B Bos 49 Monetary Growth Theory Money, interest, prices, capital, knowledge and economic structure over time and space Wei-Bin Zhang 50 Money, Uncertainty and Time Giuseppe Fontana 51 Central Banking, Asset Prices and Financial Fragility Éric Tymoigne www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 52 Financial Markets and the Macroeconomy Willi Semmler, Peter Flaschel, Carl Chiarella and Reiner Franke 53 Inflation Theory in Economics Welfare, velocity, growth and business cycles Max Gillman 54 Monetary Policy Over Fifty Years Heinz Herrman (Deutsche Bundesbank) 55 Designing Central Banks David Mayes and Geoffrey Wood 61 The Capital Needs of Central Banks Edited by Sue Milton and Peter Sinclair 62 Monetary and Banking History Edited by Geoffrey E Wood, Terence Mills and Nicholas Crafts 63 New Approaches to Monetary Economics and Theory Interdisciplinary perspectives Edited by Heiner Ganßmann 64 Social Banks and the Future of Sustainable Finance Edited by Olaf Weber and Sven Remer 56 Inflation Expectations Peter J N Sinclair 57 The New International Monetary System Essays in honour of Alexander Swoboda Edited by Charles Wyplosz 58 Taxation and Gender Equity A comparative analysis of direct and indirect taxes in developing and developed countries Edited by Caren Grown and Imraan Valodia 59 Developing Alternative Frameworks for Explaining Tax Compliance Edited by James Alm, Jorge Martinez-Vazquez and Benno Torgler 60 International Tax Coordination An interdisciplinary perspective on virtues and pitfalls Edited by Martin Zagler 65 Policy Makers on Policy The Mais lectures Edited by Forrest H Capie and Geoffrey E Wood 66 Prediction Markets Theory and applications Edited by Leighton Vaughan Williams 67 Towards a Socioanalysis of Money, Finance and Capitalism Beneath the surface of the financial industry Edited by Susan Long and Burkard Sievers 68 Doing Money Heiner Ganßmann 69 Banking Regulation and the Financial Crisis Jin Cao 70 Banking Crises, Liquidity and Credit Lines A macroeconomic perspective Gurbachan Singh www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 71 New Paradigms in Financial Economics How would Keynes reconstruct economics? Kazem Falahati 76 New Perspectives on Emotions in Finance The sociology of confidence, fear and betrayal Edited by Jocelyn Pixley 72 Risk, Risk Management and Regulation in the Banking Industry The risk to come Peter Pelzer 77 Global Finance in Emerging Market Economies Todd A Knoop 73 Financial Systems in Troubled Waters Information, strategies, and governance to enhance performances in risky times Edited by Alessandro Carretta and Gianluca Mattarocci 74 Reforming the Governance of the Financial Sector Edited by David G Mayes and Geoffrey Wood 78 Monetary Policy in Theory and Practice Facing the internal vs external stability dilemma Nicolas Barbaroux 79 New Contributions to Monetary Analysis The foundations of an alternative economic paradigm Edited by Faruk Ülgen (with the collaboration of Matthieu Méaulle, Rémi Stellian and Ramón Tortajada) 75 Money in Economic Theory Hasse Ekstedt www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 New Contributions to Monetary Analysis The foundations of an alternative economic paradigm Edited by Faruk Ülgen (with the collaboration of Matthieu Méaulle, Rémi Stellian and Ramón Tortajada) www.ebook3000.com First published 2013 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business c 2013 selection and editorial material, Faruk Ülgen; individual chapters, the contributors The right of the editor to be identified as the author of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data New contributions to monetary analysis: the foundations of an alternative economic paradigm/edited by Faruk Ülgen [et al.] p cm Money Monetary policy I Ülgen, Faruk HG221.N39243 2012 339.5’3–dc23 2012039227 ISBN: 978-0-415-82181-0 (hbk) ISBN: 978-0-203-55321-3 (ebk) Typeset in Times New Roman by Sunrise Setting Ltd, Paignton, UK www.ebook3000.com Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Contents List of figures List of tables List of contributors Preface and acknowledgements Introduction: renewal of monetary analysis xi xii xiii xv FARUK ÜLGEN PART I Marchands, salariat et capitalistes of Carlo Benetti and Jean Cartelier 17 After thirty years 19 CARLO BENETTI AND JEAN CARTELIER A few questions left unanswered 27 RAMÓN TORTAJADA Nominalism and money in C Benetti and J Cartelier 31 ARNAUD BERTHOUD PART II Money in the history of economic thought 41 Processes of monetary exchange 43 JOSÉ M MENUDO Unit of account and means of payment GHISLAIN DELEPLACE www.ebook3000.com 60 Money in the socialist economy 249 Indeed, in the attachment relation the user depends on the supplier for the possession of the good, while in the transfer relationship the supplier depends on the user for his appraisal by his superior However, the performance by the supplier of the order of his superior on the manufacture and delivery of the good is finally revealed by the payment Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 References Arnold, A Z (1937) Banks, credit, and money in Soviet Russia, New York: Columbia University Press Bensimon, G (1996) Essai sur l’économie communiste, Paris: L’Harmattan Berliner, J (1957) Factory and manager in the USSR, Cambridge: Harvard University Press Brender, A (1977) Socialisme et cybernétique, Paris: Calmann-Levy Davis, C (1989) “Priority and the shortage model: the medical system in the socialist economy,” in C Davis and W Charemza (eds) Models of disequilibrium and shortage in centrally planned economies, London/New York: Chapman and Hall: 427–60 Gray, J (1831) The social system – A treatise on the principle of exchange, New York: Augustus M Kelley Publishers, 1973 Grossman, G (1981) “La seconde économie et la planification économique soviétique,” Revue d’études comparatives Est-Ouest, 12(2): 100–23 Kornai, J (1980) Economics of shortage, Amsterdam: North-Holland Lavigne, M (1979) Les économies socialistes soviétique et européennes, Paris: Armand Colin Meyer, M (1966) L’entreprise industrielle d’etat en Union soviétique, Paris: Cujas Pelikan, P (1969) “Language as a limiting factor for centralization,” The American Economic Review, vol LIX: 625–31 Powell, R P (1977) “Plan execution and the workability of Soviet planning,” Journal of Comparative Economics, 1(1): 51–76 Roland, G (1989) Economie politique du système soviétique, Paris: L’Harmattan Tartarin, R (1975) Le système de l’approvisionnement des entreprises en URSS et la théorie de l’économie soviétique, Ph.D Thesis, Université de Rennes — (1980) “Planification et régulation dans les économies socialistes: pour une théorie de la valeur comptable,” Second Congrès Mondial d’Etudes Soviétiques et Est-Européennes, Garmisch Zaleski, E (1962) Planification de la croissance et fluctuations économiques en URSS, T 1, 1918–1932, Paris: SEDES — (1984) La planification stalinienne, Paris: Economica Zinoviev, A (1981) Le communisme comme réalité, Paris: Julliard/L’Age d’Homme Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 17 The monetary approach by Benetti and Cartelier, and the teaching of economics The experience in Colombia José Félix Cataño Introduction The monetary approach made by Benetti and Cartelier (hereafter B&C) is marginal in the context of the theoretical reflection of the economic system However, it introduces itself as an alternative to the general lines of thought about the capitalist system, i.e the classic and neoclassic They also differ as an alternative to other attempts – heterodox – developed by the heirs of radical positions of Keynes such as the post-Keynesians The main results obtained by B&C can be summarized as follows: A critic to the Walrasian model of general equilibrium B&C gather critical contributions from among the same Walrasians, i.e the absence of stability and unity of equilibrium and the lack of a good monetary theory In the same way, either, their own critical contributions, or from the heterodoxy, regarding the arbitrary determination of market prices, centralization of the economic relations by declaring their inexistence in disequilibrium or by the communication and relation with multilateral entities without giving scope to bilateral and decentralized relations, as seen in the case of the tâtonnement of Walras or the transaction technique throughout the compensation box proposed by G Debreu A critic to the model of equilibrium prices of Sraffa: first, identifying the existence of a unique equilibrium in just a particular case (without accumulation); second, signaling the absence of an analysis of circumstances in disequilibrium; and third, by the emptiness diagnosed in the description of wage relations by confusing them as if they were an extra economic subtraction or slice of the product A critic to the orthodox interpretation of Marx by showing itself as a theory of equilibrium of goods without incorporating effective mercantile transactions, of a monetary perspective, and thus without the sanction of the market, as Marx himself intended Thus, the theory of Marx becomes a particular case and, in a given way, an underdevelopment of the Ricardian Model Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Monetary approach and teaching economics 251 The critic to some of the topics tackled by Marx serves, furthermore, to show that the problems of commercial and wage relations, as those regarding the functioning of capitalist relations in general, are well set out but not properly developed This leads, henceforth, to discharge traditional approaches of Marx such as the merchandise character of money and the work force, as well as the ideas of the transmission throughout time of the value of the capital i.e constant and real capital The recovery of some novelty ideas of Marx Among them: i) the vision that a commercial society is, by essence, a monetary society; ii) the “general equivalent” as a product of not commercial rules; iii) the “ideal price” as an ex ante price to the market; iv) the commercial uncertainty contained in the idea of the “mortal jump” of the merchandise; v) the value of the merchandises as an effective price of a commercial transaction; vi) the monetary circuit to uncover the stages of the generation of surplus value and the process of simple interchanges; and finally, vii) the “fictitious capital” to rescue a financial vision of the capital before the predominance of the capital as value of the merchandises that serve as conditions of production Following the introduction of the concepts from the heterodoxy, a general and static model has been proposed to understand a simple and commercial economy, which highlights the description of a decentralized economy, and above all, in disequilibrium, in the context of monetary and wage rules A novelty vision on the history of the economic analysis The positive development of the monetary analysis by B&C comes, in part, from a critical study of the history of the economic analysis The outcomes of such endeavor can be summarized as follows: i) a new vision over the birth of economics as a social science in the eighteenth century The economic science did not emerge to solve a question over the real world of the eighteenth century but an abstract question set out over a debate of political science; that is to say, a question driven by a liberal individualist and anti-state ideology Here, the proposed thesis is that economics is born from the felt need by an intellectual elite to create arguments to substitute societies based on moral, the control and centralized rules, by a decentralized society that links individuals by interpersonal mechanisms; ii) the argument of the “invisible hand” of the market, and thus, of prices, is accepted as the central point of the economic theory, in a similar fashion to the neoclassic orthodoxy Here we concentrate on the question about whether or not we can imagine a system with relations driven by a price system (anonymous mechanisms) without the presence of a public entity that guarantees order and compatibility; iii) the history of economic thought and the study of the main authors constitutes a heritage that needs to be rediscovered, looked after, and studied in order to contribute to the current development of the economic science The critical study of Marx and of the Neoclassics, as mentioned above, is the first step in this direction Nevertheless, and without doubt, a critical balance on Sraffa and Keynes constitutes additional evidence that building an alternative approach is grounded in an explicit and general diagnosis of the achievements and failures of the mainstream of theories 252 José Félix Cataño Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 All these results have their own value which is not going to be discussed here Instead, our interest is to show the way in which such results from the analysis by B&C has affected the history of economic thought and the teaching of Marxism theory in Colombia Subjects of the history of economic analysis from a monetary heterodoxy Our main experience initially refers to subjects of the history of economic analysis that still survive in some, and mainly the best, universities of Colombia We know that the orthodoxy economists give no importance to the history of economic analysis given their consideration that history is not more than the succession of stages in the formation of “correct” ideas, originally set out in a rustic and not coherent way, until the achievement of the current frontier of the theory The history would be, then, a long process with the virtue to adopt the correct and discharge the incorrect The reality is that by having a perspective of a monetary heterodoxy and its critical balance of economic theory, we have developed a new idea as how to show and teach the history of economic science In fact, we have adopted a vision more analytical and critical that derives a presentation more pessimistic and difficult of the evolution of the economic history, that sustains the idea that economic science has not achieved its initial purpose and, otherwise, moves away from such when examining its modern development In this sense, the history of the diverse paradigms takes another sense and structure Despite the fact that the initial motivations of economic theory are shown, the focus is now addressed toward, in the first place, the limited results of the neoclassic theory in its more general form (the Walrasian model of general equilibrium), thus justifying the reason for going back to the past to discover new paradigms, new “schools,” new problems, and new solutions; for instance, to shed light on the particulars of the Classics with respect to the neoclassical economists, or the specific differences of Marx before the Classics, a subject that the research and conclusions of B&C have been particularly very useful In a more precise way, given the existence of this new monetary approach, it is required to find a space for its disclosure but in such a way that it can find a truthful legitimacy In order to achieve it we turn to the strategy of showing, in the first place, the other approaches, mainly the classic (Ricardo and Sraffa) and neoclassic systems of prices Without a critical presentation showing the ambiguities or diverse possibilities of interpretation of these approaches, it would not be possible to justify the effort to look for an alternative heterodoxy In reality, this alternative can only find a space to be discussed if it constitutes a hope or a path in exploration, that pretends to overcome the already identified problems in the other approaches, mainly those that threat the theory of value, distribution, and a decentralized – monetary – economy Doing it in this way, the students benefit from the opportunity to know, in a critical way, the existence of an economic science which is wider and more diverse, Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Monetary approach and teaching economics 253 but with more limited results than those stated by the textbooks Thus, the students know alternative theoretical projects and are grateful by being made conscious of the unilateralist position of the neoclassic professors when discovering that the neoclassic results are not as powerful as they are normally taught Furthermore, the monetary perspective introduces forgotten subjects that cannot be easily found in the orthodoxy Within these subjects we can point out the following: the relationship between vision and economic theory, the specific character of money with regards to merchandise, the mercantile decentralization, bilateral commercial relations, the asymmetry of agents, the description of disequilibrium, the particularity of wage relationships with respect to commercial ones, the institutional context for pure economic relations Nevertheless, and judged by our experience, several difficulties appear when carrying out this structure of teaching Among them are: Professors face a more complex subject, given the demand for a specific and thorough preparation with more erudition, pluralism, and critical sense The students react in an ambiguous way In the first place, they are thankful that the heterodoxy perspective makes explicit the weaknesses of the dominant paradigm before a routine presentation professed by the orthodoxy professors It is like we were helping to draw back the veil of what is called “the nudity of the King.” In the second place, they are astounded that the theory continues to be taught as an adequate platform for economists as if nothing were happening However, and at the end, the feeling that the heterodoxy constitutes a minority and with not so much public and international outreach, the students adapt themselves to the current ideas as an adaption strategy to the normal world of the economists Another possibility is that, by assuming the defects of the standard theory and the predominance of a liberal and equalitarian ideology, it is easier that the game theory approaches of experimental economics become more useful or accepted alternatives Overall, the current discontent with the general paradigms does not help the monetary approach to be welcomed with enthusiasm This is seen as a recovery of Marx, who very few would like to study these days, or as aspects of the Keynesian inheritance Courses of Marxist economic theory The economic theory of Marx in Latin America has been a proper space to develop heterodoxy thoughts linked to ideological projects of complaint about the capitalism system, and, thus, of the theories that would like to legitimate this system of production The monetary approach by B&C has allowed a change from this perspective In fact, it has been possible to develop a new optic of teaching that contains these aspects: Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 254 José Félix Cataño Marxism can now be shown as unbound from an explicit ideological or political model of condemnation about the capitalist system It is placed now as an antiRicardian Stage of the analysis of capitalism which can be inaugurated as a break in the way to conceive a modern economic system The monetary approach of B&C is a legitimate alternative in the teaching of the economic work of Marx However, B&C does not forget that the good questions must receive different answers if considered as a critical analysis of Marx itself Here some key questions can be pointed out to highlight the differences with respect to the orthodoxy interpretation of the theory of Marx In particular, i) the merchandise character of money of Marx is replaced by the monetary social rules prior to the exchange; ii) the merchandise character of the wage relations is replaced by a subordinate monetary relation; iii) the transmission of value is replaced by the simultaneity of value of the merchandises; iv) the interchange of equivalents in the market is replaced by the equivalence between the money spent and the money received by the agent; v) the value of constant capital is replaced by the financial and current value of the capitalist projects Hence, the teaching of Marxism goes through a destructive phase of the orthodox Marx that puts at risk the validity of reading Marx itself today However, this risk corresponds to the general risk that assumes the monetary approach before all the real theories, in the sense that this heterodoxy goes through the rightful breakdown of all real analysis The assumed risks are compensated by uncovering “forgotten” and disappeared concepts by the orthodox tradition of Marx Within them we can mention: i) the specifics of the private work with respect to the social work; ii) the “ideal price” with respect to the effective price; iii) the “mortal jump” of the merchandises as a realization of a commercial uncertainty; iv) the wage relations without interchange between entrepreneurs and capitalists as a special relation that incorporates the agents without money in the beginning; v) the surplus value as an anticipated expenditure that becomes effective income of capital in general, etc Once attention of these recovered concepts has been achieved, it is an opportunity to show a heterodoxy reconstruction of Marx This is where it is difficult for the students to appreciate: is the approach by B&C independent from Marx, or just a lecture and recomposition? Concluding remarks Our teaching experience has been modified following the monetary approach by B&C by its contribution to deepen an analytic vision of the history of economic theory where forgotten ideas are valued and where new discussions are regained, such as merchandise socialization and the coexistence of symmetric and asymmetric relations in the economic process In the same way, to make an emphasis with respect to the work by Marx, has allowed fertile teaching of this legacy despite an adverse ideological context Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Index 2007–9 crisis: monetary–structural approach 189–92 A Tract on Monetary Reform 99 academic theory of money: monetary equilibrium 157–8; money is decentralized control of transactions (memory) 158–9; money is essential 158 “access to money” 180 Aglietta, Michel 182 allocation economy 14, 243, 247; allocation process 239; decision to allocate 238–9, 245–7 Aristotle 40 Arrow, Kenneth 8, 92, 103–4, 105, 112, 117–19 Arrow-Debreu model 156, 158, 160 Aubin, Jean-Pierre 22, 166 Austrian Theory of Capital 98 Bank of England 63, 65 Benassy, Jean-Pascal 119 Benetti–Cartelier: monetary approach in Colombia 250–4; social science 144; study 31–9; unit of account and means of payment 60–6; value theories 177; value/money analysis 135–6; wage earners 9, 144, see also Marchands, salariat et capitalistes; nominalism and capitalism Big Brother 10, 159 book summary 3–15 Bretton-Woods agreements 189–90 Bullionist Controversy 95 Cantillon, Richard 5–6, 22–5, 29, 43–4, 52–3, 53–5 Cantillon’s rule 4, 23–5, 52, 156, 161 “Cantillon-Smith” rule 136, 139, 146, 148 Capital (Marx) 68, 95–6 capitalist economy 144 Cassel, Gustav 93 Catalogues des Armes et Manufactures de Saint-Étienne 29 central planning (CP) in socialist economies 238–9, 242–3, 247–8 Clower (1965) and medium of exchange 110–12 Clower, Robert 110–12, 114, 119, 176–7, 180 “common unit of account” 28 coordination in economy: ambivalence and stability 182; conclusions 184–5; coordination, equilibrium and money 174–7; introduction – alternative theories of market economy 172–4; monetary viability/sovereignty 183–4; money in free market economy 177–82; private-social tension 182–3 coordination in economy (money in free market economy): compatibility of separate actions 178–9; dimensional monetary constraints: payment system rules 179–82 coordination, equilibrium and money: axiomatic coordination through equilibrium 175–7; existential issue 174–5 coordination (socialist economy): direction and administration 240–1; indexes 241; maladjustments and their treatment 242–3 CP see central planning credit money 181 Critique of the Gotha Programme 40 “Critique of Political Economy” 19 256 Index Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 currency and incentives: Cantillon, Richard and two circulations 53–5; Law, John and island economy model 52–3 currency and justice: exchange space versus course of trade 48–52; Locke, John and state of nature/money 44–6; Turgot’s primitive state 46–8 Currency Principle (1844) 64 Davanzati, Forges 195, 218 Debreu, Gérard 20, 92, 104–5, 111, 156–7, 160, 165, 175–7, 250 definition of money as unit of account: magnitude and pre-eminence of arithmetic over algebra 35; natural law 36–7; nominalism 37–8; radical individualism and social nominalism 36; value and sufficiency of names 35–6 Descartes 37 DGSE see Dynamic Stochastic General Equilibrium Disequilibrium Analysis and Adjustment Process 119 Dobb Festschriift 96 Dr Pangloss syndrome 158 DSGE/WGE model 93 Dynamic Stochastic General Equilibrium (DSGE) 92, 93 ECB see European Central Bank economics without equilibrium: failure to model monetary economics 93–4; failure to predict crises 93; introduction 91–3; money in economic thought 94–100 Elements of Pure Economics (Walras) 95, 126, 130 employer-employee work relationship 5, 29 equilibrium theory (Hahn process) 117–18, 118–19 Esposito, Torterella 195 Essai (Cantillon) 52, 53–4 Essay on the Production of Wealth (Torrens) 68 essence of money concept 155 essentiality concept 155 ethics and labor market: fair wage and unemployment 219; “gift exchange” hypothesis 219–20 Euphyphro 40 European Central Bank (ECB) 170 “fair wage” 229 fairness, financial rents and conflict: conclusions 229; ethics and labor market 219–20; introduction 217–18; relative wages and social conflict (model) 220–9 fiat money (special commodity money) 10, 162; see also modern academic theory of money Fisher, Franklin 119 “forced savings” 98 Free Banking theories 11 “frictions” and economy 158 Friedman, Milton 1–2, 220 Frisch, Ragnar 93 General Competitive Analysis (Arrow and Hahn) 8, 110, 112, 117, 174–5 General Theory of Employment, Interest and Money (Keynes) 7–9, 96–8, 100, 122, 124, 163, 221 Gold Standard 99 “Great Accountant” (concept) 165 Guesnerie, Roger 178 Hahn, Frank 7–8, 92, 103–20, 176–7 Hahn Process (history of evolution): challenges 117–19; Clower (1965) and medium of exchange 110–12; description 105–7; introduction: market theory/exchanges 103–5; overtaking of fulfilment: Arrow and Hahn (1971) 112–17; summary 8; theoretical evolution (1962–1971) 107–10 Hayek, F 97–100 Hicks, J 1, 94 Hicks and Modigliani (HM) 100 Hicks-Lange-Patinkin and Keynesian theory 110–11 History of Economic Analysis 1, 156 HM see Hicks and Modigliani Homogeneity Postulate (HP) 93–4, 105–7, 110, 112–14, 116, 118–19 Hume, David 64 Hutcheson, Francis 43 hypothese de nomenclature 19 incentives for going beyond academic theory: money, decentralization and equilibrium 159–61; money theory 161–2 Indian Currency and Finance 99 Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Index 257 Ingot Plan 65 Interest and Prices 96 investment and “paradox of profit” in monetary economy: conclusions 215; introduction 205–6; Kalecki’s profit equation 207–8; monetary profit in multi-period framework 210–12; monetary profit within single-period 208–10; repayment of credit 212–14 IS-LM model 100 Kaldor–Kalecki principle 137, 141–2 Kalecki, M 206, 207–8, 212 KE see Keynesian Equilibrium Keynes, John Maynard: A Tract on Monetary Reform 99; analysis of money 237; Cantillon’s rule 22; economic theory 1, 22, 124–5, 180; employment and price 124; entrepreneurs 125–6; “finance motive” 128; finance motive 205, 218; General Theory of Employment, Interest and Money 7–9, 96–8, 100, 122, 124, 163, 221; gold 61; monetary theory 7, 15; money (economic thought) 97–100; money (role in society) 2, 14; “Proposals for an International Clearing Union” 122, 128–9; Quantity Theory of Money 99; rehabilitation of money 39; Ricardo, David 65; teaching 95; The Monetary Theory of Production 130; Treatise on Money 9, 99, 122, 128; WGE 92 Keynesian economy (model) 135 Keynesian Equilibrium (KE) 92, 93 Kiyotaki–Williamson–Wright model (economy) 1, 157–60, 161, 177 Knight, Frank 92 Kocherlokata model (money theory) 155, 158, 161, 165–6 Lavoisier’s law of economic mass 138–9 Law, John 43–4, 52–3, 54 Lehman Brothers 188 Lenin 96 Locke, John 5, 43, 44–6, 48–50, 52, 55 Locke-Hume Quantity Theory of Money 95 Luther, Martin 37 Luxemburg, Rosa 87–8, 96 M-C-M’ formula (Marx) 95, 123, 136 Mammon (god of money) 39 Marchands, salariat et capitalistes (MSC): Benetti-Cartelier study 31–3; economic models 136; employer–employee relationship 5; history 19–20; individual accounts 4; monetary analysis 3; unanswered questions 27–9; unit of account 66; what survives? 21–5 “market sanction” 180 Marx, Karl: Colombia 15; communist society 40; economic theory 22; economic theory in Colombia 253–4; M-C-M’ formula 95, 123, 136; Marchands, salariat et capitalistes 19–20, 21; mercentalism 39; metallic-standard monetary system 61; monetary theory 6–7, 15, 167; money in economic thought 95–6; Political Economy 5, 32–3, 39; pure market economy 167; “repression” 32; reproduction model (monetary/physical objectivity) 68–75; “the gnawing criticism of mice” Marx, Karl (reproduction model): assumptions 69–70; critical proportions 83–5; equilibrium and asymmetry of accumulation decisions 72–5; Luxemburg, Rosa and Morishima, Michio critique 87–8; monetary and physical systems 70–2; numerical examples 85–7 Mémoire sur les mones et carrières 47 “micro-foundation” of money 160 Mill, J.S 38 mintage process 163 Mississippi System 52 modern academic theory of money (“fiat money” to “payment system”): description 162–7; incentives for going beyond academic theory 159–62; introduction 155–6; money as payment system 167–70; overview 156–9 modern theory of money (overview): academic theory of money 157–9; generalities 156–7 monetary approach in Colombia (Benetti–Cartelier): conclusions 254; history of economic analysis from monetary heterodoxy 252–3; Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 258 Index introduction 250–2; Marxist economic theory 253–4 monetary change: conclusions 55; currency and incentives 52–5; currency and justice 44–52; introduction 43–4 monetary constituents of capitalism: conclusions – money, market and capitalism 143–5; introduction – Walras to Keynes 135–6; monetary economy of capitalist production with accumulation (model IV) 142–3, 150–3; monetary economy of capitalist production without accumulation (model III) 140–2, 147–50; monetary economy of markets (model II) 139–40, 146–7; quantities and individuals in economics structure 136–8; real economy of exchange (model I) 138–9, 145–6 monetary economy: capitalist production (model) 136; markets (model) 136 Monetary Equilibrium 97 monetary objectivity and physical objectivity in Marx’s reproduction model: conclusions 88–9; introduction 68–9; Marx’s model 68–75, 82–8; physical condition of Marx’s equilibrium and crises 75–82 monetary production economy versus real exchange economy: conclusions 130; effective demand 123–5; factors (definition) 125–8; finance motives 128–30; introduction 122 monetary pure market economy (model) 135 monetary theory of production (MTP) 217, 229 money (from fiat money to payment system): commodity in academic theory? 162–3; credit 166–7; non-commodity 163–4; payment 164–5; value 165–6 money, banks and payment: 2007–9 crisis: monetary–structural approach 189–92; banks’ book-keeping in finance dominated regions 192–7; conclusions 201; introduction 188; monetary–structural reform of banking (to avert future crises) 197–201 money in economic thought: Marx, Karl 95–6; Myrdal, Hayek and Keynes 97–100; Ricardo, David 94–5; Wicksell, Knut 96–7 money as payment system: minting process 168–9; nominal unit of account 168; settlement of balances 169–70 money in socialist economies: conclusions 248; coordination 239–43; economy of allocation 237–9; introduction 235–7; language of coordination 247–8; payment relationships between firms 244–7 Money and Trade 52 Morishima, Michio 87–8 MSC see Marchands, salariat, et capitalistes MTP see monetary theory of production Myrdal 97–100, 124 natural equity 47 Natural Rate of Interest 97 Neutral Money 95 Nixon, President 61 Nobel, Alfred 29 nomenclature hypothesis 28–9 nominalism and capitalism in C Benetti and J Cartelier: conclusions 38–40; definition of money as unit of account 34–8; doctrine or economic philosophy 31–3 non-tâtonnement model 160 Occam 33, 37 Occam’s razor 33 OECD 217 OLG see Overlapping generations overfulfilment and forced exchanges (Hahn and Negishi) 107–10 Overlapping generations (OLG) 94 payment relationships between firms: allocation decision 245–6; separation of firms and their individualization 244–5 Petty, William 52 Phillips Curve 93, 100 physical condition of Marx’s equilibrium and crises: critical proportions for adjustment crisis 80–2; critical proportions for reproduction crisis 78–80; introduction 75–6; physical constraints 76–8; summary 82 Plan d’un ouvrage sur le commerce 44 Plato 40 Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Index 259 Political Economy 5, 23, 27, 31–3, 37, 38–9, 174, 179, 236 Prices and Production (Hayek) 98 principle of equivalence 183 Principles of Economics (Marshall) 95 Principles of Political Economy and Taxation (Ricardo) 68 Production exists for money 205 Profits, Interest and Investments (Hayek) 98 Proposals for an Economical and Secure Currency 65 “Proposals for an International Clearing Union” (Keynes) 9, 122, 128–9 pure gold currency system 169 Pure market economy 143, 167 Quantity Theory of Money 95, 989 Quesnay, Franỗois 46, 52, 164 Rational Expectations (RE) 92 RBC see Real Business Cycles RE see Rational Expectations Real Business Cycles (RBC) 93 real economy without markets (model) 136 “reallocation” term 243 relative wages and social conflict (model) 220–9 renewal of monetary analysis 1–15 Ricardian economy (model) 135 Ricardo, David: book summary 6–7; economic theory 22; Long Run 95; money in economic thought 94–5; money and payment 164; Principles of Economics 68; rent for land 127; unit of account and means of payment 60–6; WGE 92; Wicksell, Knut 96 Ricardo-Walras classical dichotomy 96 Rochon, L P 206 Samuelson, P Say’s law 13, 94, 215 Schumpeter, Joseph 1–2, 61, 129, 156, 180 Shapley–Shubik rule see Cantillon’s rule Smith, Adam 1, 5, 22, 43, 55, 103, 167 social objectivity 20 Socrates 40 Soros, George 91 “space for goods” 43 Steuart, James 1, 14, 237 Tableau (Quesnay) 52 tâtonnement model 8, 138, 160, 178 Temporary Equilibrium 94 The Accumulation of Capital 96 The Keynesian Counter-revolution: A Theoretical Appraisal 110 The Monetary Theory of Production 130 The Wealth of Nations 43 theoretical evolution (1962–1971): overfulfilment and forced exchanges 107–10 Theory of Economic Development Tractatus (1921) 31 Treatise on Money 9, 99, 122, 128–9 Turgot, A R J 46–8, 50–2, 55 unit of account and means of payment: conclusions 65–6; introduction 60–1; external constraint 64; metallic-standard monetary system 61–2, 65; monetary sovereignty 62–3; prominence of unit of account 63–4 United States (US): Federal Reserve 189; rentier income share 217 Veblenian “leisure class” 218 Vignaux, Paul 36 von Mises, Ludwig 97 Von Neumann growth path 24 wage earners allocatees 246–7 Walras, Léon: economic theory 1, 123–4, 126–7, 164; law 24, 137, 142; see also Elements of Pure Economics Walrasian economy (model) 135–6 Walrasian General Equilibrium (WGE) 7–8, 92–4, 96, 98, 103–4, 111, 118–19, 176, 177; see also Dynamic Stochastic General Equilibrium Walrasian pure exchange economy 138 WGE see Walrasian General Equilibrium WGE-HP 94 Wicksell, Knut 96–7, 97–100 Wittgenstein, Ludwig: I-type 5, 31–2; II-type 38; nominalism 39 Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 This page intentionally left blank Bringing you the cream of our hardback publishing at paperback prices This exciting new initiative makes the best of our hardback publishing available in paperback format for authors and individual customers Routledge Paperbacks Direct is an ever-evolving programme with new titles being added regularly To take a look at the titles available, visit our website www.routledgepaperbacksdirect.com R O U T L E D G E PA P E R B A C K S D I R E C T Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 Routledge Paperbacks Direct Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 This page intentionally left blank Downloaded by [The University of Sydney Library] at 12:07 11 September 2016 ... 2, France Guido Tortorella Esposito Assistant Professor of History of Economic Thought at the University of Sannio of Benevento, Italy Fabrice Tricou Associate Professor of Economics at the Université... insisting on a renewal in the economic theory of their time in relation to the crisis of the 1930s The game is worth the candle and the aim of this book is to shed light on some of the latest updated... by [The University of Sydney Library] at 12:07 11 September 2016 New Contributions to Monetary Analysis In the wake of the 2007–8 economic crisis, the need for an alternative paradigm to the