Synthesizing State and Spontaneous Order Theories of Money

Advances in Austrian Economics 18 2014

24 Pages Posted: 3 Sep 2012 Last revised: 1 Mar 2015

Alexander William Salter

Texas Tech University - Rawls College of Business; American Institute for Economic Research

William J. Luther

Florida Atlantic University; American Institute for Economic Research

Date Written: September 1, 2012

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.

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

JEL Classification: B53, E41, E42

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: https://ssrn.com/abstract=2140208 or http://dx.doi.org/10.2139/ssrn.2140208

Alexander William Salter

Texas Tech University - Rawls College of Business ( email )

Lubbock, TX 79409
United States

HOME PAGE: http://awsalter.com

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

William J. Luther (Contact Author)

Florida Atlantic University ( email )

5353 Parkside Dr
Jupiter, FL 33458
United States

HOME PAGE: http://www.wluther.com

American Institute for Economic Research ( email )

PO Box 1000
Great Barrington, MA 01230
United States

HOME PAGE: http://www.aier.org/staff/william-j-luther

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