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

Listed author(s):
  • Alexander Lasco


    (Russian Presidential Academy of National Economy and Public Administration)

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.

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Paper provided by Russian Presidential Academy of National Economy and Public Administration in its series Working Papers with number 35.

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Length: 66 pages
Date of creation: May 2013
Handle: RePEc:rnp:wpaper:35
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