The Elgar Companion to Social Economics, Second Edition
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The Elgar Companion to Social Economics, Second Edition

Edited by John B. Davis and Wilfred Dolfsma

Social economics is a dynamic and growing field that emphasizes the key roles social values play in the economy and economic life. This second edition of the Elgar Companion to Social Economics revises all chapters from the first edition, and adds important new chapters to reflect the expansion and development of social economics. The expert contributions explain a wide range of recent developments across different subject areas and topics in the field, mapping out possible directions of future social economic research. Social economics treats the economy and economics as embedded in a web of social and ethical relationships. It considers economics and ethics as essentially connected, and adds values such as justice, fairness, dignity, well-being, freedom, and equality to the standard emphasis on efficiency. This book will be a leading resource and guide to social economics for many years to come.
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Chapter 31: Banking, finance and money: a social economics approach

L. Randall Wray


This chapter will briefly summarize the orthodox approach to banking, finance and money, and then will point the way toward an alternative based on social economics. It will be argued that the alternative approach not only fits the historical record better, but also sheds more light on the nature of money in modern economies. While the orthodox approach presumes that money really does not matter (at least in the long run, when it is supposed to be ‘neutral’), the alternative stresses that money is perhaps the most important institution in an economy organized along capitalist principles. Further, rather than relegating money to a ‘thing’ that lubricates the market mechanism, a social economic perspective emphasizes social relations – credit and debt, power and sovereignty. Finally, the alternative view of banking, finance and money also leads to different conclusions regarding the appropriate scope for monetary and fiscal policy.

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