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Is money a convention and/or a creature of the state? the convention of acceptability, the state, contracts, and taxes

Listed author(s):
  • David Dequech

This article begins by presenting the idea of money as a convention, first in the economics of conventions and then in post Keynesian economics, also examining whether and how one can reconcile money as a convention with Keynes's essential properties of money. The article then considers the view of money as a creature of the state, in two versions, which connect money to contracts or to taxes, respectively. Finally, it further explores the monetary foundations of a market economy, the conventional foundation of money, and the role of the state. Acknowledging that money is ultimately or fundamentally a convention requires recognizing limits to the state's ability to impose its money on the private agents. At the same time, the state is usually in a much better position than any private agent to influence the process through which the convention of acceptability of money emerges and is reproduced. A stronger proposition is that without state money there would be no stable money in a market economy. Both the fundamental conventionality of money and the essential role of the state can be thus emphasized.

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Article provided by Taylor & Francis Journals in its journal Journal of Post Keynesian Economics.

Volume (Year): 36 (2013)
Issue (Month): 2 (January)
Pages: 251-274

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Handle: RePEc:mes:postke:v:36:y:2013:i:2:p:251-274
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