Edited by Philip Arestis and Malcolm Sawyer
Chapter 5: Chartalism and the Tax-Driven Approach to Money
Pavlina R. Tcherneva* 1. Introduction Economists, numismatists, sociologists and anthropologists alike have long probed the vexing question ‘What is money?’ And it seems Keynes’s ‘Babylonian madness’ has infected a new generation of scholars unsettled by the conventional accounts of the origins, nature and role of money.1 Among them are the advocates of a heterodox approach identiﬁed as ‘Chartalism’, ‘neo-Chartalism’, ‘tax-driven money’, ‘modern money’, or ‘money as a creature of the state’. The Chartalist contribution turns on the recognition that money cannot be appropriately studied in isolation from the powers of the state – be it modern nation-states or ancient governing bodies. It thus oﬀers a view diametrically opposed to that of orthodox theory, where money spontaneously emerges as a medium of exchange from the attempts of enterprising individuals to minimize the transaction costs of barter. The standard story deems money to be neutral – a veil, a simple medium of exchange, which lubricates markets and derives its value from its metallic content. Chartalism, on the other hand, posits that money (broadly speaking) is a unit of account, designated by a public authority for the codiﬁcation of social debt obligations. More speciﬁcally, in the modern world, this debt relation is between the population and the nation-state in the form of a tax liability. Thus money is a creature of the state and a tax credit for extinguishing this debt. If money is to be considered a veil at all, it is a veil of the historically speciﬁc...
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.