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 29: Interest and Money: The Property Explanation

Gunnar Heinsohn and Otto Steiger


Gunnar Heinsohn and Otto Steiger 1. The property-induced economy versus possession-based production systems An economic theory deserving that name is wanting because economists have never come to terms with property but always confused it with possession, which they mislabelled ‘property’. What is the difference between these two concepts? The rules of possession, individual and/or collective, determine who, in what manner, at what time and place, to what extent and by exclusion of whom, may physically use a good or resource and change its substance and form. It is not possessory rules, existing already in animal systems, that bring about economic activity, but the man-made institution of property. Propertyinduced activities can only endure if they are followed by a legal system safeguarding them. Since sooner or later the civil law required for this task is guarded over by institutions, which form a major sphere of the state’s operations, it may appear as if the state itself is the progenitor of the economy and everything that comes with it. The property operations encapsulated in law comprise the rights: (i) to burden property titles in issuing money against interest; (ii) to encumber these titles as collateral for obtaining money; (iii) to alienate or exchange, including sale and lease; and (iv) to enforce. Property rights do not replace the rules of possession but are added to them, thereby transforming traditional rules into codified rights too. Thus individual rules become private rights subject only to law but no longer to seigniority. Taking the...

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