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The equilibrium problem in the monetary circuit approach: A critical assessment

By Guglielmo Forges Davanzati


PKES Working Paper 1101

January 2011
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Unrefereed papers are available to PKES members only, or on request.

The aim of this paper is to provide a critical reconstruction of the evolution of the so-called monetary circuit approach (MCA), with particular reference to the notion of ‘equilibrium’ and the capacity of a deregulated market economy to spontaneously achieve it. This topic will be dealt with by comparing three different views: the view that the MCA confirms Say’s Law; the view of the relevance of uncertainty in this theoretical context, and the Marxist interpretation of the MCA as the “cycle of money capital”.

Keywords: Monetary theory of production, equilibrium, uncertainty, Marx

JEL classification: B22 E12 E20