Doctoral Dissertations

Date of Award

5-1997

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Economics

Major Professor

Paul Davidson

Committee Members

Jean A. Gauger, Dan I. McLemore, William E. Cole, Robert A. Bohm

Abstract

This dissertation traces out the origins, development, and articulations of the theory of money endogeneity and the real bills doctrine policy prescription. The links in monetary economic thought pertaining to the theories of money endogeneity and policy among Lav, Steuart, Smith, the Antibullionists, the Banking School, Laughlin, Anderson, Schumpeter, Keynes, Myrdal, the British Radcliffe Committee, Minsky, Davidson, Moore, Rousseas, Ray, et al. are descibed. Whereas the connections between Smith and members of the Banking School, such as Tooke and Fullarton, comprise a familiar story, the comparison of Law and members of the modern American Post Keynesian, Neo-Banking School, is a novel interpretation.

This study is empirical in the sense that it involves an investigation and analysis of the texts of extant documents. In order to determine and understand more clearly what Law's theorizing was about and why he developed it, this dissertation benefits from the daedal template provided by Hans E. Jensen, a particularly serviceable engine of discovery within a doctrine- historical framework.

The significance of this study is that it confirms that John Lav vas the innovator who developed the theory of money endogeneity and real bills doctrine couplet. Law's analysis integrates the theory of value and the theory of money in a way that demonstrates that there were some truly modern macroeconomic anticipations in Lav's work. Furthermore, this dissertation sheds new light on Law's monetary economics to describe his conception that money running after goods is what makes the maximum production of real wealth possible.

Whereas the monetary economics of the modern American Post Keynesian's have at times been denounced as merely a critique of the orthodox tradition, Post Keynesian monetary economics can now be seen, in light of this study, as an extension of a richer heritage. Indeed, this dissertation shows that the Post Keynesian approach is the most recent incarnation of a particular way of thinking about monetary economics that has a distinguished legacy. Moreover, this study provides extensive evidence to support the notion that Lav's theory of money endogeneity and real bills doctrine couplet has served monetary economists as a research program.

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