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Carl Menger’s “Money” and the Current Neoclassical Models of Money


  • Stefan W. Schmitz

    (ICE, Austrian Academy of Sciences)


The paper analyzes three neoclassical models of money with emphasis on the equilibrium concepts employed. It is argued that the neoclassical theories fail to analyze the emergence of the social institution of money. Instead, they focus on the consistency of individual decisions regarding the rational acceptability of intrinsically worthless objects given the social institution of money and the Pareto superiority of the allocations in monetary vis-à-vis barter economies. The equilibrium concepts employed by neoclassical theories are not suitable for the study of the emergence of new electronic payment systems. Instead, a theory of the emergence of social institutions, of institutional change is required: the Mengerian method of institutional analysis.

Suggested Citation

  • Stefan W. Schmitz, 2002. "Carl Menger’s “Money” and the Current Neoclassical Models of Money," Macroeconomics 0211001, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0211001
    Note: Substantially revised version will be published in M. Latzer, S. W. Schmitz (eds.), Carl Menger and the Evolution of Payments Systems: From Barter to Electronic Money, Edward Elgar, Cheltenham, Type of Document - pdf; prepared on wordfile on mac; pages: 35; figures: none

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    Cited by:

    1. Guang-Zhen Sun, 2005. "A Review Of Selected Literature In The Economics Of Division Of Labor From 5th Century To Wwii: Part I," Monash Economics Working Papers 01/05, Monash University, Department of Economics.

    More about this item


    Electronic money; monetary theory; Menger;

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • B - Schools of Economic Thought and Methodology
    • B - Schools of Economic Thought and Methodology

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