Book contents
- Frontmatter
- Contents
- Preface
- Acknowledgments
- PART I A THEORY OF MONETARY INSTITUTIONS
- PART II THE UNCERTAIN PROGRESS OF MONETARY THEORY AND MONETARY REFORM
- 3 The classical theory of money
- 4 The quantity theory of money
- 5 The heyday of the gold standard, 1879–1914
- 6 The Great War, the Great Depression, and the gold standard
- 7 The Keynesian revolution and the Monetarist counterrevolution
- PART III A COMPETITIVE MONETARY REGIME
- References
- Index
4 - The quantity theory of money
Published online by Cambridge University Press: 16 September 2009
- Frontmatter
- Contents
- Preface
- Acknowledgments
- PART I A THEORY OF MONETARY INSTITUTIONS
- PART II THE UNCERTAIN PROGRESS OF MONETARY THEORY AND MONETARY REFORM
- 3 The classical theory of money
- 4 The quantity theory of money
- 5 The heyday of the gold standard, 1879–1914
- 6 The Great War, the Great Depression, and the gold standard
- 7 The Keynesian revolution and the Monetarist counterrevolution
- PART III A COMPETITIVE MONETARY REGIME
- References
- Index
Summary
Mr. Herbert Spencer … advanced the doctrine that, as we trust the grocer to furnish us with pounds of tea, and the baker to send us loaves of bread, so we might trust … enterprising firms … to supply us with sovereigns and shillings at their own profit. …
Though I must always deeply respect the opinions of so profound a thinker as Mr. Spencer, I hold that in this instance he has pushed a general principle into an exceptional case, where it quite fails. … In matters of currency, self-interest acts in the opposite direction to what it does in other affairs. …
There is nothing less fit to be left to the action of competition than the provision of the currency.
William Stanley Jevons, Money and the Mechanism of ExchangeUnlike physicists and chemists, economists cannot conduct decisive experiments to find out which of two or more competing theories best explains reality. So economists don't have any simple, straightforward rules to follow when choosing among rival theories. What determines their choices? A complex and subtle process in which advocates of rival theories try to offer their colleagues persuasive reasons to accept their theories. A persuasive reason for accepting a theory could be that the theory explains some well-known facts better than other theories do or that it casts light on some previously unknown facts that were unilluminated by the rival theories.
- Type
- Chapter
- Information
- Free Banking and Monetary Reform , pp. 69 - 91Publisher: Cambridge University PressPrint publication year: 1989