a/h: the money function. Uncertainty, connection & the law

Given that money is so ubiquitous, it is surprising that neoclassical macroeconomic theories, among other monetarist schools, do not model money: it is assumed. As a consequence, their theories often analyze the economy by a kind of mathematical analogy, This manuscript starts with understanding money by describing the public and private legal processes by which it is created. This reveals that all money is created as specific kind of legal agreement: a forward contract. This concept of money is fundamentally different than the monetarist theories. It is not a commodity based on past work, but an agreement from fulfilling future promises. Archaeological evidence from Mesopotamia that pre-date the alphabet suggests this is what money has always been. Such contracts were the first examples of writing. To help understand mechanisms at work in generating value based on uncertainty and partial information, I provide a philosophy of money that draws the links between Keynes’ concept of probability, a/h, and Claude Shannon and Norbert Weiners’ formulas and concepts of information as entropy. I’ll then examine some of the implications and consequences for monetarist macroeconomics, including on what could be done differently to assess and address the many crises besetting the world.