THE EMPIRICAL DEFINITION OF MONEY: A CRITIQUE

Authors

  • WILL E. MASON

    1. The Pennsylvania State University
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    • *The author gratefully acknowledges the helpful suggestions of the following relative to earlier drafts: Robert W. Clower, J. A. Galbraith, James B. Herendeen, Ira Kaminow, Herbert M. Kaufman, Joseph Kockelmans, Ronald Koot, Raymond E. Lombra, Terry Martell, Donald J. Mullineaux, Clark Warburton, Douglas Wion, and the editor's anonymous referees.


Abstract

Money talks, but it does not give itself away. Lately there has been much talk about money, and even less agreement than heretofore about what it is. Because of the growing immateriality of money, the difficulty of defining it has waxed rather than waned with increased knowledge. This, of course, has not made the development of monetary theory or the determination of monetary policy any easier. Milton Friedman and Anna Jacobson Schwartz (hereafter referred to as F-S) prefer an empirical definition of money to a priori definitions, such as the generally acceptable means of payment.1 However, they fail to demonstrate either that complete freedom from a priori conceptualization is possible or that such procedure can avoid circularity of reasoning.2 If there is no “right” definition of money (F-S, 1970, pp. 137, 145–146, 151, 197–198), there is no “empirical” definition in the absence of the “right” monetary theory.

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