At risk of seriously rejoining the ongoing downward spiral, let me simply note that the unit of account function of money may be based on a purely (or effectively) abstract entity, although it will likely bear a relation to the main medium (or media) of exchange. Until the monetary reform in the 1970s, one found prices in stores in Britain in guineas, which were curiously equal to one pound plus one shilling. Between 1999 and 2001, in the Eurozone prices for Eurobonds and international transactions were in euros, but within each nation their respective national currencies continued to be used for cash transactions, there being no physical euros until after Jan. 2001 (except in Belgium where those eurofans did print up some just for kicks). Many ancient societies have had such abstract units, although often derived from a physical unit. Certain societies where cattle are the principal source of wealth and store of value and used for such transactions as buying a bride use abstract measures of cattle for pricing that are not clearly tied to any particular ox, which vary in quality across each other. In rural areas of colonial US, there were essentially no British pounds in any form, gold or paper (they could be found in limited supplies in urban areas on the coast) with such items as tobacco receipts or coonskins being used as media of exchange, even as prices were in pounds. There are many such examples throughout history and across different societies.
-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of Bylund, Per L.
Sent: Thursday, February 20, 2014 9:30 AM
To: [log in to unmask]
Subject: Re: [SHOE] Ahiakpor on Wicksell
I realize this is not my debate, but I'd like to make a statement for the sake of clarity.
For whatever reason discussions on this list tend to consist of two sides completely missing the other's point(s) simply because they talk past each other and refuse to consider differences in definition of basic terms. Surely we cannot discuss the history of economic thought without first thinking about and trying to figure out what core terms mean?
This particular debate reminds me of a previous debate (in which I did take part) discussing money and whether money lending precedes savings or vice versa. It was then maintained by several people on this list that money is always created as credit and then followed by savings, and not the other way around. I'm sure this is how our present fractional reserve banking system under a central bank seems to work, but this doesn't by any means make it a universal (or even historic) truth about money. So I asked for a definition, and to illustrate the problem I suggested (as a thinking exercise) the term "money" was replaced by a specific money. I was dumb enough to exemplify this with "gold coins," to which I only received responses that gold is (to paraphrase a frequently cited economist) but a barbarous relic and cannot function as money. But that in no way addressed my question.
I fear the present debate is making the same mistake. Ahiakpor has already provided a definition for his use of the term "money," though perhaps it wasn't expressed clearly enough. There are also a bunch of quoted semi-definitions and statements of usage from great scholars floating around, which makes it difficult to figure out how we are to understand the term.
If I recall correctly, Ahiakpor has referred to some sort of commodity money - the good that has been universally accepted as a means of exchange and thus functions as a unit of account - as an example of his usage of the term 'money'. This is a common definition in classical economics, to which Ahiakpor refers quite frequently. Using this definition, a check is not money but a claim on money. It follows that a dollar bill is also not money, but was in past times (under the gold standard) a claim to "real" money (gold). What the dollar "is" today is beyond my understanding.
However, I do understand that quoting the Bank of England should be at best irrelevant as a response to Ahiakpor in a discussion on pricing under a pure credit monetary system. Unless, that is, one first makes it a discussion on *the definition* itself. But the discussion doesn't seem to address the definition - only the use and implications of money, by scholars quite obviously using different definitions (perhaps several ones). As far as I understand of this discussion, the debaters are simply not talking about the same thing.
I cannot personally figure out what to make of the electronic and paper currency used in contemporary economies. Is it money? Is it credit? Is it neither? From the point of view of "classical" definitions (like the one above) it would seem the dollar, euro, yen, or whatever should not be money. But this only limits the possibilities and provides no real categorization.
As someone who has studied several of the Austrian scholars, I find Ludwig von Mises's 1912 book Theorie des Geldes und der Umlaufsmittel quite enlightening. Not only does it provide an Austrian theory of money, but it attempts to establish a typology of the different types of monies that might be helpful in this discussion. (I've attached an image of Mises's typology, updated from the erroneous translation by Guido Hulsmann at Universite Angers.) It may or may not suit the needs of the discussants here, but at least it provides some sort of road map. In my understanding, Ahiakpor is discussing strictly within the "money in the narrower sense" sub tree and is probably referring to the differences between the three nodes within it. It seems others are discussing from within the other sub tree, or "money substitutes" (a term I think I saw Ahiakpor use).
Again, you may or may not find this useful - and you may even dismiss Mises's typology outright - but it helps me guide my thinking about money and monetary issues.
PLB
_____________________
Per L. Bylund, Ph.D.
Baylor University
[log in to unmask]
(573) 268-3235
-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of Wells, Julian
Sent: Thursday, February 20, 2014 7:29 AM
To: [log in to unmask]
Subject: Re: [SHOE] FW: [SHOE] Ahiakpor on Wicksell
On 20/02/2014 05:47, "James C.W. Ahiakpor" <[log in to unmask]>
wrote:
>Alfred Marshall
>". . . 'money' is . . . all those
>things which are (at any time and place) generally 'current,' without
>doubt or special inquiry"
>Irving Fisher
> ła bank note is /generally/ acceptable in exchange"
Contrast these authorities with the Bank of England:
"Our advice is to remain vigilant at all times and check all banknotes being passed" (followed by advice about UV scanners and detector pens)
(http://www.bankofengland.co.uk/banknotes/pages/retailers/hintstips.aspx)
In contrast:
Ahiakpor:
>Money doesn't include checks; these don't pass from hand to hand
>without any special inquiry.
Wells:
They do (or did) when accompanied by a cheque card; so was cheque + card = money?
Similarly, these days when I make an electronic payment from my bank account, the only "special enquiry" that takes place occurs when *my bank* decides (or its computer decides) to issue the relevant amount.
n.b. my bank's decision to issue, NOT the recipient's decision to accept.
Julian Wells
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