Political aspects of tax-driven money: redefining the common good to include everyone

Esteban Cruz Hidalgo, Stuart Medina Miltimore and Agustín Mario

Chapter 13 in Central Banking, Monetary Policy and the Common Good, 2026, pp 246-264 from Edward Elgar Publishing

Abstract: This chapter explores the need for interdependence between monetary and fiscal policy to achieve the common good, challenging the orthodox view of money neutrality and central bank independence. It argues that the adopted narrative of money determines the scope and limitations of monetary policy, despite its role in increasing inequality, the persistence of economic scars that hinder growth, and maintaining financial stability. Contrary to the neoclassical view of money as a mere veil over real economic transactions, we discuss the implications of the tax-driven money approach in reshaping the role and scope of monetary policy. This leads us to advocate for monetary-fiscal coordination to achieve social balance, as proposed by Galbraith, through policies such as the Job Guarantee policy. Maintaining a balance between private wealth and public goods emerges as a common good with significant democratizing political aspects, affecting rentier dominance, labour market management, the socialization of investment, and the allocation of real resources.

Keywords: Fiscal policy; Job guarantee; Modern money theory; Monetary policy; Public good; Social balance (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035348299
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