Pre-Keynesian Heteredoxy in Macromonetary Dynamics
ABSTRACT: On the theory of banking. There are two sides to the lending of money: the “micro” and the “macro.” Specifically, the microeconomic side comprises various routines performed by bankers in assessing the profitability of an investment. On the other hand, the macroeconomic side reflects the impact of such institutional banking routines on the rest of the economy. To wit, variables such as employment, investment, income. Not to mention the societal impact of such changes, in one direction or the other. Which is to say the productive or unproductive nature of investment (i.e., guns versus butter; hospitals vs. barracks).
This chapter examines the repercussions of a few generally accepted bank precepts on the overall dynamics of the economic system by unearthing the monetary theory of Silvio Gesell and applying it to three important “macro” scenarios: Schumpeterian innovation, Veblen’s absentee ownership and technically productive investment, and Malthus’s theory of market gluts. In conclusion, the chief problems and dysfunctions of our System appear to reside chiefly in the monetary mechanism. This is the banking network. A mechanism, i.e., by which the means of payment is injected in the form of interest-exacting debt. Namely, an exploitative device, which is irrespective of the very material and spiritual endeavors it is meant to set in motion.
In Annual Research in the History of Economic Thought and Methodology, Vol. 14 A, (2000): 1-41 (with J.E. Elliott)