The Contributions of Knapp and Innes to the Chartalist Theory of Money

Vitor Guidorzzi Girotto and Eduardo Strachman

MPRA Paper from University Library of Munich, Germany

Abstract: The relationship between money and credit is analyzed differently between schools of economic thought. Orthodoxy, in general, analyzes it using the commodity money approach; heterodoxy, in large part, adopts the Chartist approach. The crucial difference between them lies in the fact, as put by Schumpeter, that orthodoxy postulates a monetary theory of credit; the heterodox, a credit theory of money. For the latter, money is, by nature, credit, and it can take different forms, tangible or not. The State uses it sovereignty to delimit the monetary system by defining what will (or will not) be accepted as money in the payments of transactions due to itself. Thus, Knapp’s contribution in structuring a theory of state money meets Innes’s credit theory of money and, together, these contributions offer a solid theoretical and historical framework for the formulation of an alternative theory of money, the Chartist theory.

Keywords: Money; Chartalism; Credit; Knapp; Innes. (search for similar items in EconPapers)
JEL-codes: E12 E42 E51 (search for similar items in EconPapers)
Date: 2024-01-16
New Economics Papers: this item is included in nep-ban, nep-his, nep-hme, nep-hpe, nep-mon, nep-pay and nep-pke
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