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Synthesizing State and Spontaneous Order Theories of Money

In: Entangled Political Economy

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  • Alexander W. Salter
  • William J. Luther

Abstract

What role does government play in determining the medium of exchange? Economists weighing in on the issue have typically espoused one of two views. State theorists credit government with the emergence and continued acceptance of commonly accepted media of exchange. In contrast, spontaneous order theorists find little need for government, maintaining that money emerges and continues to circulate as a result of a decentralized market process. History suggests a more subtle theory is required. We provide a generalized theory of the emergence and perpetuation of money, informed by both approaches and consistent with recent theoretical and empirical advances in the literature.

Suggested Citation

  • Alexander W. Salter & William J. Luther, 2014. "Synthesizing State and Spontaneous Order Theories of Money," Advances in Austrian Economics, in: Entangled Political Economy, volume 18, pages 161-178, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:aaeczz:s1529-213420140000018008
    DOI: 10.1108/S1529-213420140000018008
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joakim Book, 2021. "The mystery of Modern Monetary Theory," Economic Affairs, Wiley Blackwell, vol. 41(1), pages 162-174, February.
    2. Hendrickson, Joshua R. & Luther, William J., 2017. "Banning bitcoin," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 188-195.
    3. Hogan Thomas L. & Luther William J., 2019. "Endogenous Matching and Money with Random Consumption Preferences," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(2), pages 1-9, June.
    4. William Luther, 2014. "Evenly rotating economy: A new modeling technique for an old equilibrium construct," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 27(4), pages 403-417, December.
    5. Davidson, Sinclair, 2023. "Blockchain and the information – calculation problem," Journal of Economic Behavior & Organization, Elsevier, vol. 213(C), pages 142-150.
    6. Harwick, Cameron, 2018. "Money and its institutional substitutes: the role of exchange institutions in human cooperation," Journal of Institutional Economics, Cambridge University Press, vol. 14(4), pages 689-714, August.
    7. Lennart Ante, 2020. "A place next to Satoshi: foundations of blockchain and cryptocurrency research in business and economics," Scientometrics, Springer;Akadémiai Kiadó, vol. 124(2), pages 1305-1333, August.
    8. William J. Luther, 2018. "Is Bitcoin Intrinsically Worthless?," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 33(Spring 20), pages 31-45.
    9. Joshua R. Hendrickson & Thomas L. Hogan & William J. Luther, 2016. "The Political Economy Of Bitcoin," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 925-939, April.

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    More about this item

    Keywords

    Chartalism; Menger; medium of exchange; search; spontaneous order; unit of account; B53; E41; E42;
    All these keywords.

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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