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Money, Trust and Hierarchies: To the Question of the Maintenance of Confidence in the Complex Economic Institutions

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  • Alexander Lasco

    () (Russian Presidential Academy of National Economy and Public Administration)

Abstract

Based on a number of monetary theories proposed as economists and sociologists (including credit theory of money and the concept of "Plurality of money"), this paper examines the mechanisms through which is created in the economy of individual institutional support confidence in money. The author shows that the individuals involved in economic exchanges, rely on the ordered hierarchy of institutions that support the trust, and that the diversity of this type hierarchy reflects many social contexts in which there are cash transactions. Moreover it is assumed that the transition to higher levels of these pyramidal structures due to the increase of liquidity (or security) monetary liabilities arising on the appropriate level of the hierarchy. Together with Nevertheless, despite all the attempts to create a sound institutional structures for protection of confidential relations of the individual agents to money, their work is coupled with serious difficulties, which include the lack of guarantor of the High Court, the problem of infinite regress and general uncontrollability of complex monetary systems. These obstacles entail immediate and profound effect, leading to the destruction of structures which designed to support confidence in all three of the above-mentioned areas (Liquidity, acceptability and stability of money), which are critically important for the implementation of the normal circulation of money.

Suggested Citation

  • Alexander Lasco, 2013. "Money, Trust and Hierarchies: To the Question of the Maintenance of Confidence in the Complex Economic Institutions," Working Papers 35, Russian Presidential Academy of National Economy and Public Administration.
  • Handle: RePEc:rnp:wpaper:35
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    References listed on IDEAS

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    1. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
    2. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394 Elsevier.
    3. repec:eee:labchp:v:3:y:1999:i:pb:p:2215-2288 is not listed on IDEAS
    4. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    5. Grossman, Gene M. & Helpman, Elhanan, 1991. "Trade, knowledge spillovers, and growth," European Economic Review, Elsevier, vol. 35(2-3), pages 517-526, April.
    6. Pinelopi K. Goldberg & Nina Pavcnik, 2004. "Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries," NBER Working Papers 10593, National Bureau of Economic Research, Inc.
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    Keywords

    money; trust; hierarchy;

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