The Monetary Circuit in the Recent History of Economic Analysis

Marcello Messori

International Journal of Political Economy, 2025, vol. 54, issue 3, 322-337

Abstract: The scheme of the monetary circuit, specifically as a sequence in a single period (Graziani), is one of the most original attempts to offer a different representation of the economic process elaborated in the last 50 years. This scheme has addressed several important problems left unresolved by great authors in the past and neglected by recent economic theory. The main problems are: (i) the endogenous introduction of means of payments into the economic system, based on market contracts between banks and firms; (ii) the determinants of the production decisions and the related demand for and supply of labor units; and (iii) the relation between the execution of production processes, income distribution and equilibria in the goods markets. Unfortunately, the lack of analytical foundations has prevented the achievement of a satisfactory analysis of these problems within the monetary circuit approach. This article aims at justifying the last statement and suggesting a few possible improvements.

Date: 2025
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DOI: 10.1080/08911916.2025.2534748

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