An investigation of the social and credit theory of money, focussing on the contemporary situation of monetary sovereignty
Chikako Nakayama* and Manabu Kuwata**
*Tokyo University of Foreign Studies, 183-8534, 3-11-1, Asahicho Fuchu-shi, Tokyo, Japan. nakac@tufs.ac.jp
** Fukuyama City University, 721-0964, 2-19-1, Minato Machi, Fukuyama City, Hiroshima Prefecture,Japan. m-kuwata@fcu.ac.jp
Abstract
This paper explores the fundamental importance of sociality to monetary sovereignty, investigating the apparent contrast between the state and the market in theories of money. Sociality deserves attention given the recent increase since the 1990s of denationalised, regional and, more recently, crypto currencies, which are different from legal tender. First, we examine the classification of metalism and chartalism, that is, the commodity theory of money on one hand and the chartal theory of money on the other (Section 2). The former has been dominant in the history of economic thought, focussing on catallactics, or the function of money as a medium of exchange, while the latter lays more importance on the function of money as a means of payment and relies on literature in history and anthropology. We then concentrate on the meaning of the institution of payment and debt, with which a person can participate in the society to which he/she belongs (Section 3). People’s belief in the perpetual validity of this institution is indispensable for monetary sovereignty. Further, we investigate the idea of the social credit given a hundred years ago, when the trust in this institution and the state itself was severely lacking, as an important application of the sociality of money. In conclusion, we show that sociality among people, embodied in the existence of monies and currencies, cannot be reduced to the market nor to the state.
Keywords
chartalism, monetary sovereignty, means of payment, crypto currency, social credit
To cite this article: Nakayama, C. and Kuwata, M. (2020) ‘An investigation of the social and credit theory of money, focussing on the contemporary situation of monetary sovereignty’ International Journal of Community Currency Research Volume 24 (Summer 2020) 89-100; http://www.ijccr.net; ISSN 1325-9547; DOI http://dx.doi.org/10.15133/j.ijccr.2020.014
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