On the Institutional Theory of Money: Learning from J. R. Commons’ Institutional Economics
Journal of Economic Issues, 2020, vol. 54, issue 4, 975-986
I collect and organize the essential elements of ITM (institutional theory of money) from Commons’ Institutional Economics (1934) and compare them with STM (sovereign theory of money), to make the book more accessible for Japanese researchers. After introduction, I examine how money is treated in Commons’ analysis of Capitalism. Then I examine Commons’ critical interpretation of Knapp's work, and compare ITM with STM (or Hypothesis of “debt of life”). Finally I consider two research theme related to ITM. The conclusions obtained from the above are as follows: (1) Commons inherited the basic idea of ITM (the whole of “releasable debts” and payment-means should be treated as an institution), from Knapp. Commons’ originality consists in his consideration of the historical variability of debts, and in his relativization of Knapp's “state theory” relative to selection of means of private payment. (2) Commons gives detailed explanation to the sequential structure (i.e., power—authority—sovereignty—believes and needs) that supports stability of the money as an institution. (3) In STM's works of social cohesion, study of debts is expanded to non-western and non-modern societies, and central bank moneys in our times. So I find such ITM genealogy as Knapp-Commons-STM.
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