International Money and the Real World

International Money and the Real World explains why orthodox economic policies have often failed to achieve their objectives and if they work they do so only by inflicting high costs on society. The civilized policies developed in this volume, on the other hand, can achieve society’s goals while enhancing the many benefits of an entrepreneurial economy.

Introduction:

This volume is a logical sequel to Money and the Real World, and as such is a response to the 1978 suggestion of the Economic Journal reviewer’s request for theoretical extension. It is, however, not sufficient to focus on the closed v. open economy dichotomy. It is also essential to analyse the bifurcation of economies into Unionized Monetary Systems (UMS) and Non Unionized Monetary Systems (NUMS), where the latter use different monetary units (in the absence of the institution of fixed exchange rates) in specifying contractual obligations among trading partners at home and abroad.

These contractual agreements affect and control the production and purchasing flows among and within nations. The existence ofNUMS introduce complications which, in appropriate circumstances, make economic growth and purchasing power stickiness over time even more difficult to achieve than in the simple closed UMS model of Keynes’ General Theory or my Money and the Real World. Having already placed the theory of employment, money and prices on the proper track via the closed UMS model, it is now essential to expand our theoretical analysis to a NUMS world which is more descriptive of the real world in which developed economies have chosen to live since the collapse of the Bretton Woods agreement.

This volume attempts to deal head on with the complex and difficult questions of international liquidity, money, contracts and financial institutions. The analysis will not provide the unique optimal equilibrium solutions which, though so dear to the hearts of neoclassicists, are irrelevant to the problems of real world economic processes incessantly moving through time towards an uncertain and unpredictable future.

Instead, it adopts a taxonomic approach which analyses the directional effects of various factors on first one and then another set of circumstances. This volume presents a catalogue, so to speak, which does not claim to resolve the issues with the delusive exactness of a solution to an algebraic model. This classificatory approach (which is the system of Marshall, Keynes and Shackle) permits economists to be roughly right rather than precisely wrong.

Contents:

• Solving the Crisis in Economic Theory
• The Conceptual Framework
• Definitions for a Closed Economy: Illustrated via the Shortage of Saving Hypothesis
• The Taxonomy of International Money
• Trade, Money and International Payments
• International Money and Liquidity
• Finance and Trade in NVMS v. VMS
• The Stability of the Purchasing Power of Money
• Can We Have an International Standard when there is an OPEC Cartel?
• Can Wages be Fixed in Terms of an International Standard?
• Euromoney
• Multinational Corporations and International Transactions
• Gold: The ‘Barbarous Relic’ for Enforcing Coordinated International Incomes Policies
• Freely Flexible Exchange Rates
• Coordinating International Payments and Incomes