Daily Archives: December 19, 2013

Essays in Monetary Theory and Policy: On the Nature of Money

By Vincent Huang*

I. Introduction

The discrepancy between the orthodox (primarily neoclassical) and the heterodox (Post Keynesian, Chartalism, MMT, etc.) schools of thought rests fundamentally in their different perception in the way the capitalist economy functions.  Such discrepancy can be described in the contrast between C – M – C’ and M – C – M’.  The orthodox school holds the former view that depicts a barter economy in which the end purpose of production is consumption.  Individuals innately engage in production because of the urge to truck and barter.  Money merely facilitates the exchange of goods and services and cannot affect production decisions.  The heterodox school, however, asserts the latter view that depicts a monetary production economy in which production is always financed through money and would not take place unless more money expects to be realized through sale of goods and services.  Hence, the orthodox school asserts money neutrality (at least in the long run) since money is simply the medium of exchange.  The heterodox school rejects money neutrality since money not only finances production but also serves as its end goal.  The distinction between the barter and the monetary economy, as discussed above, thus necessarily implies a very different understanding of the nature, origin, and role of money between the orthodox and the heterodox school of thought.  The purpose of this paper is, through examining the nature and origin of money in a historically grounded context, to demonstrate that the orthodox school of thought has completely mistaken the nature of money and consequently misinterpreted the nature of the capitalist economy.  Such theoretical misunderstanding is devastating because it manifests wrong policies that continually fail to address economic and social problems threatening a capitalist society.  Based on the heterodox theory of money, the paper also intends to shed light on alternative guiding principles behind monetary and fiscal policies.

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The Kansas Regents’ (Unintentional) Honesty about Academic Freedom

By William K. Black

I published a column this morning about the Kansas Regents’ effective elimination of academic freedom of tenure.

In thinking about the rule I realized that I had failed to make in blunt terms five points about how radical a rule it was.  I circulated these five points about an hour ago to a number of my contacts.

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The Kansas Regents (Casually) End Academic Freedom

By William K. Black

Wednesday, December 18, 2013, the Kansas Board of Regents drastically curtailed tenure and academic freedom.  The state attorney general aided this action.  The Regents decided that when university faculty use common forms of modern communication (“social media”) they no longer have the protections of tenure and academic freedom.  The Regents’ policy change does not even mention tenure or academic freedom.  The Regents acted without consulting the faculty and without any open debate.

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