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Synthesizing State and Spontaneous Order Theories of Money


Alexander William Salter


Berry College

William J. Luther


Kenyon College

September 1, 2012

Advances in Austrian Economics 18 2014

Abstract:     
What role does government play in determining the medium of exchange? Economists weighing in on the issue typically espouse one of two views. State theorists credit government with the emergence and continued acceptance of commonly accepted media of exchange. In contrast, spontaneous order theorists find little need for government, maintaining that money emerges and continues to circulate as a result of a decentralized market process. History suggests a more subtle theory is required. We provide a generalized theory of the emergence and perpetuation of money, informed by both approaches and consistent with recent theoretical and empirical advances in the literature.

Number of Pages in PDF File: 24

Keywords: chartalism, Knapp, medium of exchange, Menger, money, search, spontaneous order, state theory of money, unit of account

JEL Classification: B53, E41, E42


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Date posted: September 3, 2012 ; Last revised: March 1, 2015

Suggested Citation

Salter, Alexander William and Luther, William J., Synthesizing State and Spontaneous Order Theories of Money (September 1, 2012). Advances in Austrian Economics 18 2014. Available at SSRN: http://ssrn.com/abstract=2140208 or http://dx.doi.org/10.2139/ssrn.2140208

Contact Information

Alexander William Salter
Berry College ( email )
Mount Berry, GA 30149
United States
William J. Luther (Contact Author)
Kenyon College ( email )
Gambier, OH 43022
United States
HOME PAGE: http://www.wluther.com
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