Rethinking Money as an Institution of Capitalism and the Theory of Monetary Circulation: What Can Modern Heterodox Economists/Institutionalists Learn from Karl Polanyi?

Abstract:

Modern heterodox theories of money reject the neoclassical conception of money as primarily a medium to facilitate exchange. These heterodox theories of money all have as common starting point an analysis of credit-debt relations in which production is a central feature, with these economies organized along capitalistic design. The Keynesian-Marxian framework describing the process of monetary circulation, traditionally referred to as the theory of the monetary circuit (TMC), perhaps best represents this comprehensive vision. This broad TMC analytical framework is compatible with institutionalist theories of money that also point to the importance of credit-debt relations. The question, however, is whether this more unified heterodox theory of money, which describes sequentially monetary relations under capitalism, can be used to understand pre-capitalistic monetary institutions. By conceptualizing money as a means of payment rather than medium of exchange, Karl Polanyi’s analysis offers social scientists crucial insights to understanding monetary relations in all types of societies in which credit-debt relations have emerged historically.

Keywords::

• credit-debt relations
• Karl Polanyi
• monetary circuit
• money as a means of payment

JEL Classification Codes::

• B52
• E42
• G21
• P51

Additional information

Notes on contributors

Seccareccia Mario

Mario Seccareccia is a professor emeritus in the Department of Economics at the University of Ottawa (Ontario, Canada), and Eugenia Correa is a professor in the Posgrado de Economía at Universidad Nacional Autónoma de México (Mexico City, Mexico). They thank David Zalewski and Paolo Ramazzotti for their very helpful comments during the AFEE session on “Money and Capital in Theory and Practice” in Philadelphia in January 2018. They are especially grateful to Orsola Costantini, Alain Parguez, Kari Polanyi-Levitt and John Henry for the many helpful written comments and encouragement. All remaining errors are the authors’ own.

Correa Eugenia

Mario Seccareccia is a professor emeritus in the Department of Economics at the University of Ottawa (Ontario, Canada), and Eugenia Correa is a professor in the Posgrado de Economía at Universidad Nacional Autónoma de México (Mexico City, Mexico). They thank David Zalewski and Paolo Ramazzotti for their very helpful comments during the AFEE session on “Money and Capital in Theory and Practice” in Philadelphia in January 2018. They are especially grateful to Orsola Costantini, Alain Parguez, Kari Polanyi-Levitt and John Henry for the many helpful written comments and encouragement. All remaining errors are the authors’ own.