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The Value of Money: A Survey of Heterodox Approaches

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  • L. Randall Wray

Abstract

This paper examines heterodox theories of the determinants of the value of money. Orthodox approaches that tie money's value to relative scarcity of money or to the price level are rejected as inconsistent with the monetary theory of production embraced by heterodox traditions linked to Marx, Veblen, and Keynes. This paper examines and integrates (1) recent contributions by David Graeber and Duncan Foley that reinterpret Marx's labor theory of value, (2) the interpretation of Keynes's liquidity preference theory as a theory of asset pricing that began with Sraffa and was further developed by Minsky and Kregel, and (3) Modern Money Theory's approach to sovereign currency. As Heilbroner argued, money is central to the internal logic of the capitalist system, and is what makes capitalism truly different from other social organizations. Our theory of value informs our beliefs about how the deep structure of the economic system generates a system of prices denominated in the money of account.

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  • L. Randall Wray, 2024. "The Value of Money: A Survey of Heterodox Approaches," Economics Working Paper Archive wp_1062, Levy Economics Institute.
    • Handle: RePEc:lev:wrkpap:wp_1062
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    References listed on IDEAS

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    1. Sam Levey, 2021. "Modeling Monopoly Money: Government as the Source of the Price Level and Unemployment," Economics Working Paper Archive wp_992, Levy Economics Institute.
    2. Duncan K. Foley, 1982. "The Value of Money the Value of Labor Power and the Marxian Transformation Problem," Review of Radical Political Economics, Union for Radical Political Economics, vol. 14(2), pages 37-47, June.
    3. Marc Lavoie, 1992. "Foundations of Post-Keynesian Economic Analysis," Books, Edward Elgar Publishing, number 275, March.
    4. Dimitri B. Papadimitriou & L. Randall Wray, 2021. "Still Flying Blind after All These Years: The Federal Reserve's Continuing Experiments with Unobservables," Economics Public Policy Brief Archive ppb_156, Levy Economics Institute.
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    Keywords

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    JEL classification:

    • B14 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - Socialist; Marxist
    • B24 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Socialist; Marxist; Scraffian
    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • B51 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Socialist; Marxian; Sraffian
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;
    • E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Kaleckian
    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory

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