From the state theory of money to modern money theory: An alternative to economic orthodoxy

Arbeitspapier

This paper explores the intellectual history of the state, or chartalist, approach to money, from the early developers (Georg Friedrich Knapp and A. Mitchell Innes) through Joseph Schumpeter, John Maynard Keynes, and Abba Lerner, and on to modern exponents Hyman Minsky, Charles Goodhart, and Geoffrey Ingham. This literature became the foundation for Modern Money Theory (MMT). In the MMT approach, the state (or any other authority able to impose an obligation) imposes a liability in the form of a generalized, social, legal unit of account - a money - used for measuring the obligation. This approach does not require the preexistence of markets; indeed, it almost certainly predates them. Once the authorities can levy such obligations, they can name what fulfills any obligation by denominating those things that can be delivered; in other words, by pricing them. MMT thus links obligatory payments like taxes to the money of account as well as the currency. This leads to a revised view of money and sovereign finance. The paper concludes with an analysis of the policy options available to a modern government that issues its own currency.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 792

Classification and Topics

• Classification: Wirtschaft ; History of Economic Thought through 1925: Historical; Institutional; Evolutionary ; History of Economic Thought: Macroeconomics ; History of Economic Thought since 1925: Historical; Institutional; Evolutionary; Austrian; Stockholm School ; Current Heterodox Approaches: Historical; Institutional; Evolutionary ; Money and Interest Rates: General ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Fiscal Policy ; National Budget, Deficit, and Debt: General
• Subject: Modern Money Theory ; Chartalism ; State Money ; Knapp ; Innes ; Schumpeter ; Keynes ; Minsky ; Goodhart ; Ingham ; Sovereign Currency

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Wray, L. Randall
• Event: Veröffentlichung
• (who): Levy Economics Institute of Bard College
• (where): Annandale-on-Hudson, NY
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/110046
• Last update: 10.03.2025, 11:42 AM CET