Knowledge, Truth and the History of Economic Thought
Edited by Stephan Boehm, Christian Gehrke, Heinz D. Kurz and Richard Sturn
Chapter 11: New lines of research in monetary economics
Augusto Graziani FOREWORD Fisher and Keynes, the two giants of monetary thought in the first half of the twentieth century, followed two different lines of thought in analysing the nature and role of money. Fisher concentrated his analysis on money as a means of payment, while Keynes emphasized the role of money as a stock of wealth. Even before Keynes, the Cambridge tradition had pointed out the main function of money as that of being a stock of wealth: in fact, Marshall and Pigou had laid the ground for a similar interpretation (Marshall  1975, Vol. I: 165 ff.). When Keynes, in the General Theory, explicitly tied his analysis of unemployment to liquidity preference and the demand for money balances, the definition of money as a stock of wealth became generally accepted.1 It does not seem that Fisher ever discussed the Keynesian theory of interest and money, clearly at odds with his own. The silent controversy ended with the complete victory of the KeynesÐHicks definition.2 It is clear that the two views differ only in their different emphasis, since no one ever denied that money is at the same time a means of payment and a stock of wealth. In fact the essential prerequisite for money to be kept as a privileged stock of wealth is that of being liquid, namely readily convertible into goods, and therefore of being a means of payment.3 THE ADVANTAGES OF THE KEYNESIAN DEFINITION The Keynesian definition of money has several analytical advantages. 1....
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