THE ‘PURE SCIENCE’ APPROACH TO ECONOMICS AND MONETARY POLICY

Perceptions of money do influence monetary policy, and monetary policy does have an impact on the functioning of the economy. For instance, a high interest rate policy usually entails high levels of bankruptcies and unemployment. Also, given a loss of confidence in the issuing authority (monetary dislocation), paper money can and does fail in all its functions as a medium of exchange, a unit of account, and a store of nominal value. In a money economy in which nominal money is the medium of exchange, nominal money prices reflect the underlying exchange ratios of the various commodities that are produced and exchanged for nominal money. In the absence of monetary dislocation (monetary revaluation or devaluation), any change in the nominal price of a commodity reflects a change in its purchasing power (a change in its exchange ratio vis-a-vis other commodities). Monetary policy prescriptions, which ignore this reality, result in significant displacement costs to members of society. A ‘pure science’ approach to economic research engenders policy prescriptions based upon assumptions of the economic system which are not aligned with the empirical reality. Hence, to avoid severe social costs, the ‘pure science’ approach to economics needs to be modified to deal with social reality.monetary policy decisions; economic policy; federal funds target range; purchasing power uncertainty; interest rate targeting; reserves targeting; instruments for the prediction of observable phenomena.

The Theory and Empirical Credibility of the Commodity Money

The recent instability in financial markets demonstrated the inadequacy of the mainstream treatment of money and the underlying production base. This has stimulated interest in the possible role of a money commodity. I demonstrate that the fundamental function of monetary theory, an explanation of the general level of prices, is provided through only two analytical mechanisms, quantity-based valueless money or a money commodity. I show that the quantity-based explanation is unsound by its own logic. I then present the theoretical argument for commodity-based money, which is analytically consistent. Theoretical superiority of commodity-based monetary theory has little practical impact because the commodity money hypothesis is considered empirically absurd. The final section demonstrates prima facie credibility of a link between gold and aggregate prices in the United States since the end of World War II. This credibility should motivate Marxists and other critics of mainstream economics to treat seriously commodity-based monetary theory.

Economics in Relation to Sociology: Dualisms and Vilfredo Pareto's Pluralistic Methodology

Many economists remember the masters of Lausanne for their important contributions to general equilibrium and welfare economics, but Leon Walras and Vilfredo Pareto both pursued much broader social research agendas. Walras did this within the general framework of economics, by complementing his ‘pure economics’ with ‘social economics’. Pareto, in contrast, first isolated economic theory from the influence of other social phenomena and distinguished between the result of theoretical economics and the concrete economic phenomenon. He then developed a general theory of social equilibrium which, inter alia, provided for a synthetic reconciliation of economics with sociology to understand the concrete phenomenon. This paper investigates the relationship between Pareto’s economics and his sociology. Its main contribution is the clarification of the pluralistic character of his methodology. This is done by considering how dualistic distinctions became an important device for Pareto, with particular reference to Sheila Dow’s notion of dualism and Andrew Mearman’s categories of dualism. Pareto’s pluralistic approach is shown as a neo-positive blend of ‘temporary’ Cartesian and non-Cartesian elements, which is not consistent with Dow’s own Babylonian approach to economics. The paper also reveals the economic phenomena that Pareto considered were dominated by sociological influences and, therefore, not amenable to Cartesian analysis.economic equilibrium, pluralism, Vilfredo Pareto, social equilibrium

Study of the Quantity Theory of Money

This paper examines the classical theory of the relationship between the money supply, inflation, and output. The purpose of the paper is to determine empirically if the quantity theory of money holds true. Using regression analysis, one can observes if the theory is accurate. Taking data over time and from three separate countries, I used the ordinary least squares method to determine the correctness of the quantity theory of money. I used a large amount of other statistically methods to determine the preciseness of the theory

The substantive economy of money : Karl Polanyi in the tradition of "old institutionalism"

The purpose of this contribution is to suggest an interpretation of substantivist thought initiated by Karl Polanyi. An approach such as this is concerned with “historical economics”, in the precise sense that substantive concepts do not come from a retrospective projection of modern prejudgements, but rather from an attempt to apprehend universal categories of economic analysis in order to clarify the genuine singularities of different economic systems . In doing this I shall highlight the coherence of institutionalist thought founded by economists such as Mitchell, Commons and Veblen, into which the reflections of Karl Polanyi fit. In this way, Polanyi thinks of money as an institution that submerges the economy into social relationships. As an analytical result, stripping money of its institutional character and trying to reduce it to a commodity, can only create chaos. In order to give an account of Polanyi's project, I will show, in the first part of my analysis, how Polanyi wants to move away from the idea that economy is created on pure rational logic.As a result, economy owes its very existence to "institutionalised processes" which produce the very inflexibilities necessary for both collective and individual action. Taking this into account, it is impossible to presuppose the unity of “the cattalactic triad” i. e. external trade, money and markets. From this point on, it is possible, in the second part of this analysis, to specify certain interesting results for the economic history of money. From a transhistorical viewpoint, this institution sets the rules for the quantification and extinction of debts. However, in contrast to modern money, archaic money is characterised by a separation of functions which compel us to talk about “money uses”. Consequently, it is better to speak in terms of accounting and payment practises rather than using the single word of “money”. Furthermore, the independence of money in relation to market is a characteristic of numerous archaic societies. Nevertheless, in spite of their differences, both ancient and modern monies politically produce social integration.Money - Polanyi - Substantivism - Instititutionalisme - Historical Economics

A Natural Value Unit - Econophysics as Arbiter between Finance and Economics

Foreign exchange markets show that currency units (= accounting or nominal price units) are variables. Technical and economic progress evidence that the consumer baskets (= purchasing power units or real price units) are also variables. In contrast, all physical measurement units are constants and either defined in the SI (= metric) convention or based upon natural constants (= "natural" or Planck units). Econophysics can identify a constant natural value scale or vaue unit (natural numaraire) based upon Planck energy. In honour of the economist L. Walras, this "Planck value" could be called walras (Wal), thereby using the SI naming convention. One Wal can be shown to have a physiological and an economic interpretation in that it is equal to the annual minimal real cost of physiological life of a reference person at minimal activity. The price of one Wal in terms of any currency can be estimated by hedonic regression techniques used in inflation measurement (axiometry). This pilot research uses official disaggregated Swiss Producer and Consumer Price Index data and estimates the hedonic walras price (HWP), quoted in Swiss francs in 2003, and its inverse, the physical purchasing power (PhPP) of the Swiss franc in 2003.Comment: 19 pages, 1 table, Appendix with 2 tables, RevTex4, APFA5 200

Polanyi on institutions and money

The purpose of this contribution is to suggest an interpretation of the substantivist thought initiated by Karl Polanyi. An approach such as this is concerned with « historical economics », in the sense that substantive concepts are the result not of a retrospective projection of modern bias but of an attempt to apprehend universal categories of economic analysis in order to clarify the true particularities of different economic systems1. The point is to show that the coherence of institutionalist thought founded by economists such as Mitchell, Commons and Veblen are in agreement the reflexions of Karl Polanyi who thinks of money as an institution that embeds the economy into social relationships. In this analytical framework, stripping money of its institutional character and trying to reduce it to a commodity is bound to create chaos. It is important to note that, rather than focusing on facts, the paper concerns the history of ideas. Certainly, Polanyi's writings on ancient economy can no longer be wholly accepted, if the evolution of the work of historians is seriously taken into account. But this is not the real issue according to Duncan, Tandy (1994 : 23)2. The history of ideas is the history of problems, which can suggest new interpretations that do not depend substantially on facts. It is interesting to remark that Ian Morris's (1994 : 54) attempt to combine Finley's thesis and Polanyi's insights constitutes a recent attempt to escape from the fallacy of the primitivism/modernism dichotomy3; such a solution has surely been an objective of Polanyi.Money;Polanyi,Institutions;Veblen;Commons;Mitchell,Substantivism

ON THE HISTORICAL VALIDITY OF NOMINAL MONEY AS A MEASURE OF ORGANIZATIONAL PERFORMANCE: SOME EVIDENCE AND LOGICAL ANALYSIS

In the literature, nominal money has been decried as a reliable measure. However, before condemning money as a defective measure, it is necessary to examine in a historical context the nature and the role of money in a money economic system, and the changes over time in the types of money (commodity money versus paper money). Using historical evidence and logical analysis, this paper attempts to establish the validity of nominal money as a valid device for the measurement of organizational perfor mance. This paper reveals that: (1) the deficiencies of commodity money (and the historical arguments associated with it) are attributed to paper (fiat) money; (2) in a historical setting, there are very restrictive conditions under which paper money would be a defective measuring device; and (3) under general economic conditions, paper money is a reliable measure.organizing economic activities; commodity money; representative paper money; transaction cost reduction; extrinsic and intrinsic values; uncertain nominal value; non specified purchasing power; individual preferenc;stored entitlements.

FECES STANDARD MONEY: BEYOND TRANSACTIONS

Department of Urban and Environmental Engineering (Convergence of Science and Arts)Feces Standard Money (fSM), is a complementary currency that is different from other currencies in a number of ways. It is the first currency to adopt feces as its standard. In a world where objects and people are thought of as "goods and services," reality is compressed into conceptions of "use value" or "utility???. However, in the fSM system, feces and food waste that have traditionally and culturally been classified as ???human waste??? are used to produce biogas, creating value. Feces then becomes a representation of a new conception of value - one based on abundance instead of scarcity. This study aims to explore how the use of fSM can facilitate a redefinition of sustainable wealth. It begins by exploring neoclassical and modern theories of money and their relationship to the current state of money. It argues that economics??? failure to adequately account for the role of money as a basis of social relations contributes to the current unsustainable economic system. Building on the background and philosophical underpinnings of fSM, it postulates that money based on a feces standard might be a possible solution to developing a monetary system that can serve as the basis of social relations and facilitation of exchange as a means of instigating social change in attitudes towards global challenges like inequality and climate change. Social network analysis is used to investigate the social footprint of fSM in a game simulation of the fSM system. It is found that the mechanisms of fSM has the potential to imbue the network with tight knit connections -knots- that can contribute to a more inclusive monetary system.clos