Orthodox versus heterodox approaches to money

L. Randall Wray ()

Chapter 1 in Understanding Modern Money Theory, 2025, pp 1-13 from Edward Elgar Publishing

Abstract: This chapter offers an introduction to orthodox and heterodox approaches to money. The key distinction is that, except for transitory effects, money doesn’t matter in the orthodox approach. On the other hand, the three main heterodox traditions—Marxist, Institutionalist, and Keynesian—adopt a monetary theory of production, in which production is undertaken to end up with more money. Money cannot be neutral in an economy in which it is the ultimate goal. The underlying logic of the capitalist economy is based on the nominal accumulation of capital in money form. Moreover, while orthodoxy insists that money originated to reduce the transaction costs of markets based on barter, heterodoxy rejects this as logically flawed and historically false.

Keywords: Monetary theory of production; Neutral money; Barter exchange; Capitalism; State money; MMT; Modern money theory (search for similar items in EconPapers)
Date: 2025
ISBN: 9781800375147
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