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An Inquiry into the Nature of Money: An Alternative to the Functional Approach


  • Eric Tymoigne


The paper argues that the functional approach of money does not provide a good method to study monetary history and monetary mechanisms. An alternative approach is developed and illustrated by analyzing the role of tobacco and cowry shells in past monetary systems. It is shown that any monetary system has specific properties that most students of money do not take into account when theorizing about money or analyzing its history. This leads them to miss some important points, and to see monetary systems where none exist. Hence, one can doubt some of the past research on the subject, at least until further investigation is conducted that is based, not on what we think "money" is, but on what its essential properties are. By comprehending what the main characteristics of a monetary system are, one is able to improve regulation of the system and get some insights into the financial mechanisms of sovereign governments.

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  • Eric Tymoigne, 2006. "An Inquiry into the Nature of Money: An Alternative to the Functional Approach," Economics Working Paper Archive wp_481, Levy Economics Institute.
  • Handle: RePEc:lev:wrkpap:wp_481

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    References listed on IDEAS

    1. Éric Tymoigne & L. Randall Wray, 2007. "Money: An Alternative Story," Chapters,in: A Handbook of Alternative Monetary Economics, chapter 1 Edward Elgar Publishing.
    2. Pryor, Frederic L, 1977. "The Origins of Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 9(3), pages 391-409, August.
    3. John F. Henry, 2004. "The Social Origins of Money: The Case of Egypt," Chapters,in: Credit and State Theories of Money, chapter 4 Edward Elgar Publishing.
    4. Hicks, J. R., 1979. "Critical Essays in Monetary Theory," OUP Catalogue, Oxford University Press, number 9780198284239, June.
    5. Starr, Ross M, 1974. "The Price of Money in a Pure Exchange Monetary Economy with Taxation," Econometrica, Econometric Society, vol. 42(1), pages 45-54, January.
    6. L. Randall Wray, 1998. "Modern Money," Macroeconomics 9810002, EconWPA.
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