Money, Taxes, Public Spending, and the State Within a Circuitist Perspective

Abstract

As it been discussed elsewhere (Seccareccia 1993), it was Keynes who most clearly pointed out that what is fundamentally at the origin of the great divide in macroeconomic policy is economists' own competing conceptions of money. Most mainstream neoclassical economists view as a commodity of which its intrinsic worth its utility is guaranteed by its relative scarcity and whose role, in merely greasing the wheels of trade, ensures its long-run neutrality. Neoclassical economists going back to Menger (1892) have argued that historically, precious metals emerged spontaneously (i.e., without the intervention of the state) as acceptable media of exchange because of their intrinsic characteristics of fungibility, divisibility, durability, and portability. Money, Menger wrote, has not been generated by law. In its origin it is a social [i.e., market], and not a state-institution . . . [state recognition and state regulation] have not first made of the precious metals, but have only perfected them in their function as money (1892, 255). Moreover, given the monetary commodity's