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Does a Superior Monetary Standard Spontaneously Emerge?

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  • White Lawrence H.

    (University of Missouri – St. Louis)

Abstract

Israel Kirzner cautions us that, because commodity price arbitrage as such does not operate outside commodity markets, the logic of Pareto-improving entrepreneurship does not provide a "copybook example" for explaining the evolution of social institutions in general. He characterizes Menger's theory of the emergence of money as non-entrepreneurial; by implication, while it assures us that some monetary standard will emerge, it does not assure us that a superior monetary standard will spontaneously emerge. I argue that entrepreneurial opportunities for private gain do in fact drive the Mengerian evolution from barter to money, and systematically promote the emergence of superior monetary standards, though not necessarily the best conceivable standards. In choosing among potential exchange media (of equally widespread popularity) to accept and offer, a pre-monetary trader has a private incentive to choose commodities that have whatever properties (portability, divisibility, and so on) other traders prefer in their exchange media.Israel Kirzner nous met en garde sur le fait que parce que l'arbitrage des prix des marchandises en soi n'opère pas hors des marchés des produits, la logique de l'amélioration (au sens parétien du terme) de l'esprit d'entreprise ne procure pas un "exemple classique" pour expliquer l'évolution des institutions sociales en général. Il caractérise la théorie mengerienne de l'émergence de la monnaie comme étant non entrepreneuriale; l'implication en est que si cette théorie nous assure qu'un certain étalon monétaire va émerger, elle ne peut affirmer avec certitude que cet étalon monétaire spontané sera supérieur.L'article suggère que des opportunités entrepreneuriales de gains privés orientent en effet l'évoluti- on décrite par Menger d'une situation de troc vers une économie monétaire et promeuvent systéma- tiquement l'émergence d'étalons monétaires supérieurs, bien que pas nécessairement les meilleurs étalons concevables. En choisissant parmi les intermédiaires d'échange potentiels (tout aussi populaires) lequel accepter ou offrir, un négociant d'avant l'ère monétaire a une insitation privée à choisir les marchandises dotées de propriétés (que ce soient celle d'être transportable, divisible ou autres) que les autres négociants préfèrent dans le cadre de leurs échanges.

Suggested Citation

  • White Lawrence H., 2002. "Does a Superior Monetary Standard Spontaneously Emerge?," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 12(2), pages 1-15, June.
    • Handle: RePEc:bpj:jeehcn:v:12:y:2002:i:2:n:7
    DOI: 10.2202/1145-6396.1062
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    References listed on IDEAS

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    1. S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
    2. Daniel Klein, 1997. "Convention, Social Order, and the Two Coordinations," Constitutional Political Economy, Springer, vol. 8(4), pages 319-335, December.
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    Cited by:

    1. Horwitz, Steven, 2011. "Do we need a distinct monetary constitution?," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 331-338.

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