A Handbook of Alternative Monetary Economics
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A Handbook of Alternative Monetary Economics

Edited by Philip Arestis and Malcolm Sawyer

This major Handbook consists of 29 contributions that explore the full range of exciting and interesting work on money and finance currently taking place within heterodox economics. There are many themes and facets of alternative monetary and financial economics but two major ones can be identified.
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Chapter 6: French Circuit Theory

Claude Gnos


Claude Gnos Introduction The concept of the circuit was first used in economics by the Physiocrats of eighteenthcentury France. They viewed production as a cycle beginning with advances, that is, capital expenditure, and ending when the goods that had been produced were sold. To that extent, the late twentieth-century revival of the circuit concept, notably by Bernard Schmitt (1960; 1966; 1984), Jacques Le Bourva (1962), Alain Barrère (1979; 1990a; 1990b) and Alain Parguez (1975), was a salute to a French tradition. This is not the whole story, though. Circuitist thinking, although usually unsung, has underpinned many approaches to economics from Marx to Keynes by way of Wicksell,1 Schumpeter, Kalecki and J. Robinson.2 Indeed, today’s French circuit school owes much to Keynes, to whom Schmitt, Barrère and Parguez all referred extensively. And it is Keynes’s heterodoxy, as opposed to the conventional neoclassical view of Keynes’s economics, that was their source of inspiration. Hence the affinities of French circuitists with postKeynesians (for a detailed review of common ground and differences, see Deleplace and Nell, 1996; Arena, 1996; Rochon, 1999a). Circuit theory also counts an Italian branch which emerged in the 1980s on Graziani’s (1989; 2003) initiative and which explicitly focuses on Keynes’s monetary theory of production (cf. Fontana and Realfonzo, 2005). French and Italian circuitist approaches have also inspired post-Keynesians outside Europe, especially in Canada (Lavoie, 1984; Rochon, 1999a; 1999b and Seccareccia, 1996). This affinity between circuit theory and Keynes’s heterodoxy and now postKeynesian theory will...

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