In the meantime, here are interesting videos where David Graeber talks about his work in the book on money and debt, and, above all, the debt origin of money.
Graeber’s anthropological work on the debt origin of money is a very interesting confirmation of the modern Chartalist view on this subject: that money is essentially an IOU, that debt has played a major role in the historical origin of money, and that the neoclassical pure barter origin of money is a myth (or, at least, requires substantial revision). Money’s role as an abstract unit of account/money of account (often arising from weight units, wergild-like social practices, and even planning and design as in ancient Mesopotamia) has been neglected in modern scholarship. For the opposing Austrian and neoclassical view on the origin of money from barter spot transactions, see Menger (1892) and Kiyotaki and Wright (1989; 1991; 1992).
I will end with a brief digression here on Chartalism, since Graeber mentions this theory. Chartalism as a theory of money was developed by Georg Friedrich Knapp (1905; English translation 1924), was taken up by Keynes in his Treatise on Money (1930), and was revived by economists in the late 20th century associated with Post Keynesianism, like L. Randall Wray (1998) and mavericks like Charles A. E. Goodhart (the work of Alfred Mitchell-Innes 1913 and 1914 on credit money is also highly relevant).
The macroeconomics we call Modern Monetary Theory (MMT)* appears to have been independently developed by Bill Mitchell and Warren Mosler (who called his theory “soft currency economics”), and chartalist ideas were mixed in as MMT subsequent developed. I quote Warren Mosler:
“The origin of MMT is 'Soft Currency Economics' .... I had never read or even heard of Lerner, Knapp, [Innes], Chartalism, and only knew Keynes by reading his quotes published by others. I 'created' what became know as 'MMT' entirely independently of prior economic thought. It came from my direct experience in actual monetary operations, much of which is also described in the book.”But Chartalism clearly was a later important influence on Modern Monetary Theory (MMT), and the latter goes well beyond the original theories of Knapp or Mitchell-Innes. Some leading proponents of MMT hold that it is now an independent macroeconomic theory (others like Mark Hayes regard MMT as a sub-branch of Post Keynesianism). At the very least, Post Keynesianism can be regarded as the important macro-theory that stands behind MMT as one of its intellectual fathers, so to speak.
* L. Randall Wray states:
“... somehow [sc. Chartalism] ... got the name Modern Money Theory. We think the first time those exact words were used might have been in a comment to Bill’s blog in 2007; if anyone can find that comment or a previous use, please send it along. It also looks like Bill used the term “modern monetary theory” in an academic paper in 2008.”
L. Randall Wray, “MMP Blog #30: What is Modern Money Theory?,” January 1, 2012.
“Debt: The First 5,000 Years,” C-span Interview (by Doug Henwood), August 23, 2011.
Kiyotaki, N. and Wright, R. 1989. “On Money as a Medium of Exchange,” Journal of Political Economy 97: 927–954.
Kiyotaki, N. and Wright, R. 1991. “A Contribution to the Pure Theory of Money,” Journal of Economic Theory 53: 215–235.
Kiyotaki, N. and Wright, R. 1992. “Acceptability, Means of Payment, and Media of Exchange,” Federal Reserve Bank of Minneapolis Quarterly Review 2–10.
Knapp, G. F. 1905. Staatliche Theorie des Geldes, Duncker & Humblot, Leipzig.
Knapp, G. F. 1918. Staatliche Theorie des Geldes (2nd edn.), Duncker & Humblot, Munich and Leipzig.
Knapp, G. F. 1921. Staatliche Theorie des Geldes (3rd edn.), Duncker & Humblot, Munich and Leipzig.
Knapp, G. F. 1973 . The State Theory of Money (trans. H. M. Lucas and J. Bonar), Augustus M. Kelley, Clifton, NY.
Menger, C. 1892. “On the Origin of Money,” Economic Journal 2: 238–255.
Mitchell-Innes, A. 1913. “What is Money?,” Banking Law Journal 30.5 (May): 377–408.
Mitchell-Innes, A. 1914. “The Credit Theory of Money,” Banking Law Journal 31.2 (January–December): 151-168.
N.B. There seems to be some confusion about whether Alfred Mitchell-Innes had a double-barrelled surname or not.
Mosler, W. 1995.“Soft Currency Economics,”
Mosler, W. 2010. The Seven Deadly Innocent Frauds of Economic Policy, Valance Co., St Croix, U.S.V.I.
Wray, L. R. 1998. Understanding Modern Money: The Key to Full Employment and Price Stability, Edward Elgar, Cheltenham.
Robert Murphy responds:ReplyDelete
David Graeber responds to Robert Murphy:
Robert Murphy adds a rejoinder to David Graeber's response: