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The Significance of the Monetary Context of Economic Behavior

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  • Giuseppe Fontana
  • Bill Gerrard

Abstract

The dominant paradigm in economics views economic behavior as allocative activity in a neutral, C-M-C' economy. As a consequence, money is treated as a veil that is inessential to the real functioning of the economic system. This paper argues that one of Keynes's fundamental insights is the significance of the monetary context of economic behavior. This insight has been developed by the post-Keynesian theory of money as a "time-machine vehicle" that provides the causal link between uncertainty and unemployment. The Circuitist theory of money as the means of final payment provides a complementary radical perspective on the significance of the monetary context. This paper investigates the methodological and theoretical implications of these radical monetary theories and assesses their contribution towards the development of a general theory of a monetary production, M-C-M' economy.

Suggested Citation

  • Giuseppe Fontana & Bill Gerrard, 2002. "The Significance of the Monetary Context of Economic Behavior," Review of Social Economy, Taylor & Francis Journals, vol. 60(2), pages 243-262.
    • Handle: RePEc:taf:rsocec:v:60:y:2002:i:2:p:243-262
    DOI: 10.1080/00346760210146587
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    References listed on IDEAS

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    1. Paul Davidson, 1978. "Money and the Real World," Palgrave Macmillan Books, Palgrave Macmillan, edition 0, number 978-1-349-15865-2, December.
    2. Victoria Chick, 1983. "Macroeconomics after Keynes: A Reconsideration of the General Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530457, April.
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    Cited by:

    1. Hein, Eckhard, 2015. "The principle of effective demand: Marx, Kalecki, Keynes and beyond," IPE Working Papers 60/2015, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    2. Giuseppe Fontana & Bill Gerrard, 2006. "The future of Post Keynesian economics," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 59(236), pages 49-80.
    3. Bezemer, Dirk J, 2009. "“No One Saw This Coming”: Understanding Financial Crisis Through Accounting Models," MPRA Paper 15892, University Library of Munich, Germany.

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