I have long been impressed with the young guard at George Mason University. Now two of them – Alex Salter and Will Luther – is out with a new Working Paper – “Synthesizing State and Spontaneous Order Theories of Money”. It is very interesting stuff and I highly recommend it to anyone who is interested in monetary theory. Here is the abstract:
“What role does government play in determining the medium of exchange? Economists weighing in on the issue typically espouse one of two views. State theorists credit government with the emergence and continued acceptance of commonly accepted media of exchange. In contrast, spontaneous order theorists find little need for government, maintaining that money emerges and continues to circulate as a result of a decentralized market process. History suggests a more subtle theory is required. We provide a generalized theory of the emergence and perpetuation of money, informed by both approaches and consistent with recent theoretical and empirical advances in the literature.”
PS Will is now an Assistant Professor at Kenyon College, while Alex is a PhD fellow at GMU.