Global Finance and Social Europe

Global Finance and Social Europe

New Directions in Modern Economics series

Edited by John Grahl

With global finance reshaping the world economy, this insightful new book provides a full account of the EU’s financial integration strategy, together with a critical assessment arguing the case for social control over global finance. Written by acknowledged experts in European finance, this book discusses key issues from finance to general social developments, encompassing social security systems, employment relations, household saving and borrowing, and the question of economic stability. Thus far, America has been pre-eminent both in global financial markets and international banking – so how should the European Union meet this challenge? Global Finance and Social Europe constructively argues that an active response is required and highlights the importance of an integrated European financial system.

Chapter 1: Money and Finance Today

Trevor Evans

Subjects: economics and finance, financial economics and regulation, post-keynesian economics, social policy and sociology, economics of social policy


Trevor Evans INTRODUCTION Money is such a pervasive feature of a capitalist economy that it is easy to take it for granted. Money, of course, did not arise with capitalism – the earliest surviving coins, found in Western Asia, date from the seventh century bc.1 Nevertheless, in the ancient world, as for much of the Middle Ages, monetary transactions were relatively confined, and the lives of large parts of the population were not dependent on them. In a developed capitalist country, by contrast, money is omnipresent. Households depend on obtaining some type of monetary income, in most cases by means of paid work. The principal dynamic of the economy is determined by firms which invest money with the aim of making even more money. And while the state has come to play a major role in the economy, its scope is dependent on raising money, generally either through taxes or borrowing. Although money is so widespread under capitalism, economists differ greatly on its economic significance. The mainstream or neoclassical approach to economics believes that money is like a veil in that it obscures what lies behind it. For this reason, it considers that it is helpful to separate economic analysis into a real and a monetary sphere. According to this view, by first focusing on the real sphere, where money is left out, it is easier to grasp the most important processes that take place in an economy. Neoclassical economists consider that money can then be added at a later stage...

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