Strange New Music: The Monetary Composition Made by the Enlightenment Quartet

Abstract

Across Europe and the Americas, the Enlightenment brought intellectual and institutional tumult over that most basic attribute of the political economy – its medium. By the time the age was over, money operated according to a new design. It enabled a set of financial practices that were unprecedented: modern money worked synergistically with circulating public debt, capital markets, and commercial banking. Together, that quartet of innovations transformed the political economies of the West. The essay considers the themes of that change, including the depth of conceptual innovation on money and finance, the range of institutional experimentation, and the contentious nature of the debate. The essay takes a short tour of the Enlightenment quartet to suggest how interdependent was (and is) the development of those institutions.

Keywords: money, monetary design, monetary history, public debt, capital markets, commercial banking, constitutional approach, profit motive, liberalism, Bank of England

JEL Classification: BOO, B1, N00, N13, N23, N4, N43, W9, Z1