Consequently, the conceptual framework Patnaik establishes starts with the following question: It is at this moment that Patnaik operates his analytical tour de force and states his thesis: Moreover, in modern economies storing wealth in the form of money is unimportant as it is done in the form of interest-bearing securities.
Money serves as a medium of exchange and facilitates the buying and selling of goods, thereby eliminating the need for double coincidence of wants as under barter.
According to Patnaik a cogent economic theory that seeks to understand the laws of capitalism necessarily stems from a coherent theory of money due to the central place money plays in a capitalist mode of production.
However, I would like to raise two points he deliberately or involuntarily ignores: This is the main subject matter of monetary economics. The following table clearly shows the various functions of money.
As Patnaik argues, propertyism can best explain capitalism, since it is able to shed light on the inherent capacities of the capitalist system to generate crises.
Money is a matter of functions four, a medium, a measure, a standard, a store. Money as a standard of deferred payments is performing useful function enabling the current and present transactions to be discharged in future. Money makes the distribution of joint production, amongst various factors easy and paves the way for economic progress.
Moreover, money gives liquidity to various forms of wealth. The core of propertyism relies on three propositions: It is a factor around which the theory of investment is constructed and investment expenditure is one of the key determinants of income and employment.
Standard of Deferred Payments: The economy is supply determined, it functions under a beneficent equilibrium system and market forces clear perfectly.
Thus, we find that money performs many functions—a medium of exchange, a measure of value, a store of value, a standard of deferred payments and serves as a basis for credit and distribution of national income. View freely available titles: Is there only one theory, or are there two?
Thus, they considered capitalism as a system functioning at full capacity and ruled out demand-constraint crises. To them, money is no more a veil, a medium to facilitate exchange of goods: Monetary theory is that branch of economics which aims at discovering and explaining how the use of money in its various forms affects production, consumption and distribution of goods.
Agents — whether they are capitalists or workers — do not spend all of their income and as a consequence save. Further, a concept like utility is measured in terms of money. They hence play the role of a shock absorber of the capitalist system: This increasing demand from the metropolis gives birth to inflationary processes that threaten the value of money.
A borrower who borrows a certain sum in the present undertakes to pay the same in future.
A person by keeping his wealth in the form of money renders it most liquid. Here we can distinguish two trends: A theory may be replaced by fundamentally different ones: Thus, the economy is never demand constrained. A man who wants to sell wheat in exchange for rice can sell it for money and purchase rice.
On the other hand, there is the monetary sphere in which the economic forces at work are those centering around the demand for money.the role of marginal utility, he criticized several aspects of Walras’ work.
Walras got angry at the criticisms, which he judged totally mistaken, but. Start studying GRE A discussion on the role of money according to walras Subject Test: Literature the positives and negatives of marijuana in English Notes. “Our role is to widen the field of discussion, not to set limits in accord with the prevailing authority.” Edward Said, Orientalism () This blog post aims to introduce Patnaik’s theory of imperialism – as developed in The Value of Money () - and its relation to economic theory.
(Carl Menger’s letter to Léon Walras, February ) Abstract Recent works on Walras have underlined a part of this author’s theory that had passed unnoticed, i.e.
the role he gave to money as a device allowing the decentralised allocation of goods. Walras also considered his general theorem of maximisation of utility inapplicable to new capital goods because of the difference between income and capital.
Thus there was a need for a special analysis that took on board these issues. Walras considered these three issues fundamental in his equilibrium theory. Patinkin stands as the last major contributor to a Walras-Hicks-Patinkin tradition based on an attempt at introducing money into the agent's utility function.
More in Hicks than in Walras' footsteps, Patinkin gives a clear priority to money as a store of value over an assumed function as a means of exchange.Download