The nature of money

1 Dec, 2021 at 14:40 | Posted in Economics | 3 Comments

Money is a component of the community’s accounting system, formed by way of allocating some kind of thing to a money position … In short, a community’s money is identifiable as that kind of thing which is everywhere enabled to serve as a general means of payment, the latter property being its nominal essence or function; and money’s nature or real essence is the set of rights and obligations (of participants of the monetary community) in virtue of which the money so formed is enabled and oriented to serving this function.

What is money? Why do we use money? - Market Business NewsOf course, an occupant of the money position will usually be sought that is regarded as appropriate in some sense. The point, though, is that once a kind of thing is in place, then whether it is appropriate in some relevant sense or not, a money is formed. What kind of item might be sought to occupy the position? Basically, one that is expected to result in a money that flows easily and continually throughout a community …

Money, in short, is constituted and operates in much the same sort of manner as any other social phenomenon qua positioned item and community component … And as with these other items, in the case of money too, the adequacy of any instance of it to serve its associated function will depend on the nature of the particular kind of thing used to form it, that occupies the relevant (in this case the money) position.

Tony Lawson

3 Comments

  1. Most economists will find little of interest in Lawson’s verbose paper on ‘social positioning theory’, with the possible exception of his critique of MMT’s view that ‘taxes drive money’ in sections 7.3 to 7.5.
    .
    Sadly, after all his theorizing, Lawson merely ends up with the incorrect and useless conclusions that :
    1. In modern economies money consists of “private/commercial bank debt and central bank debt”.
    2. “Cash, comprising central bank notes and coins, is never money”.
    .
    In contrast, MMT makes a crucial distinction between:
    (a) Money supply = bank deposits (part of private/commercial bank debts) PLUS notes and coins in circulation.
    (b) Base money = bank reserves (central bank debts) PLUS notes and coins.

    This leads to the conclusion that Lawson’s ‘social positioning theory’ and more generally ‘Cambridge Social Ontology’ have little or nothing to contribute to modern applied economics.

  2. The above link euphemistically reports that the author’s “session has timed out”.

    • Thanx. Fixed!


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