Money and Markets: A Doctrinal Approach, edited and introduced by Alberto Giacomin and Maria Cristina Marcuzzo, contains fifteen papers presented at the 8th ESHET conference, held in Treviso and Venice in 2004. They are organized under four thematic heads: (1) alternative representations of market and monetary relationships (C. H. Goodhart, J. Davis, G. Israel); (2) history of monetary ideas in the light of modern theory (G. Heinsohn and O. Steiger, J. Cartelier, S. Rossi, A. Simonazzi and F. Vianello); (3) the origin of monetary ideas (J. Blanc, H.-P. Spahn, A. Murphy, A. Giacomin); and (4) neglected contributions to monetary theory and policy (C. Dangel-Hagnauer and A. Raybaut, C. Nardi Spiller and M. Pomini, M. Desai). This relatively eclectic collection is a delight for the history of monetary thought. We will present the arguments of the various papers in an order distinct from that in which they actually appear in the book.

In their paper “Money, markets and property” Gunnar Heinsohn and Otto Steiger cite Polanyi (1957), who argues that a market economy presupposes “property rights” and creates relations of indebtedness; “property rights” are exchanged and guarantee the debts that serve as means for transactions. The authors are here especially interested in Steuart's (1767) analysis of bank shareholders’ funds. It would be worth comparing this analysis with those of Potter (1650), Smith (1776), and Thornton (1802). “Money as a social bookkeeping device” by Heinz-Peter Spahn suggests that we consider Galiani's (1751) treatment of monetary circulation as a system of debts, an approach that Schumpeter (1930) also proposed and can be found in Ostroy and Starr (1990). This gives us a vision of money representing an alternative to the traditional approach that regards money as a means introduced to resolve the problems of transactions in a barter economy (compare the lack of double coincidence of wants). However, short of having at its head a clearing house as proposed by Debreu (1959), such system of debt requires a credible means of payment. In this respect Jérôme Blanc's paper, “A reappraisal of Jean Bodin's monetary ideas,” is well timed. Having first of all noted that we should not attribute the first statement of the quantity theory to Bodin (1568, 1578), the author demonstrates in a quite original manner that the question of sovereignty is critical to Bodin's monetary writings. There is an apparent paradox here, for Bodin (1578, 1593) argues that, if sovereignty is to be consolidated, politics has to abandon an excess of sovereignty with respect to the monetary domain; it must cease manipulating coin, and end the separation of money of account from coined money. We can add that the arguments announce Locke (1695) and that the success of Thomas Gresham's monetary reform under Elizabeth I contrasts with the failure of the French experience during the period 1577 to 1602.

Antoin Murphy's “Death in Venice—John Law” highlights the modernity of Law's dual system (1716–1720) where the Bank was mixed with a financial company. The author's sympathy for Law, whom he dubs the “father of corporate finance,” does not prevent him from noting the excesses that led to the collapse of the system, most notably the rapid rise in value of the Mississippi Company and the monetization of the shares that led the Royal Bank to issue notes for quite extravagant amounts. We can note that the equilibrium of the system was based on an interest rate of 2% as against 4% in London, and that Law thought that the liquidity of the Bank (which had never been capitalized) could be secured by manipulating the price of coin in livres tournois. The monetary situation was different in London; the price of the guinea in pounds sterling was stable and the Bank of England issued notes for an amount that was less than its shareholders’ funds. Furthermore, we cannot follow the author in claiming that John Law anticipated Keynesianism, or that the Royal Bank prefigured the Fed.

David Hume (1752) countered mercantilism with the price specie flow mechanism and the quantity theory. Adam Smith countered mercantilism with his theory of value and capital. These are not the same things. In his “Reassessment of Adam Smith's views” Alberto Giacomin emphasizes that Smith did not share Hume's hostility to banks, and did not adhere to the quantity theory. But according to Smith, if banks were useful it was because of the economy in the employment of capital that they offered and not, like Law, because they added to the supply of money, that is, a supplementary means of finance. These banks neither extended long-term credit, nor engaged with financial markets; the liquidity of their notes depended on discounting real bills and on cash balances provided by the banker. It was likewise the solvency of the government that explains the “Pennsylvania case.”

Two articles deal with little known aspects of pre-Keynesian neoclassicism. The paper by Cécile Dangel-Hagnauer and Alain Raybaut, “‘Incalculability’ and the heterogeneity of agents in Frederick Lavington's monetary theory of markets,” presents an analysis of the entrepreneur that prefigures Knight (1921) and an account of the speculator that is a partial anticipation of Keynes (1936). “Trade cycles” are explained by the heterogeneity of individuals within these two groups. “Profit rate, money and economic dynamics in Fanno's thought” by Cristina Nardi Spiller and Mario Pomini presents an analysis of the dynamic instability consequent upon the availability of credit and the anticipated profitability of investment compared with the interest rate.

It is well known that Keynesianism defines a continuum of equilibria, which depend on the real quantity of money, that is, the relation between the money supply and the money wage rate. The higher the quantity of labor that the money supply can command, the greater both income and employment! Nonetheless, as is shown by the very clear synthesis presented by Annamaria Simonazzi and Fernando Vianello in “The statics and dynamics of money-wage flexibility,” the General Theory does not present an argument that the fall of the money wage, through the pressure of unemployment, leads to full employment. For John Maynard Keynes, the rise of employment was linked to the fall in the money wage rate, but this is a property of comparative static not demonstrated by dynamic analysis. This merits attention. Charles Goodhart for his part explains in “Monetary and social relationships” how macroeconomic analysis has developed since the 1960s by progressively integrating the characteristics of the model of general equilibrium: representative consumer and firm, complete financial markets, no transaction costs, informational asymmetries, and coordination failures. This has resulted in theory entirely losing touch with the reality of contemporary monetary policy: where there are problems of liquidity arising from inadequate bank capitalization, of contagion, of governance and, in Europe, an absence of any link between monetary and fiscal policy. In closing, Goodhart invokes Thornton (1802) and suggests that it would be well to consider the writings of Shubick (1973, 1977).

John Davis analyses in “Complexity theory's network conception of the individual” the work of Granovetter (1973–1985), Kirman (1992–2007), and Tesfatsion (2001–2005) in which the interaction of individual behaviors contrasts with the hypothesis of atomized agents in general equilibrium. In “Does game theory offer a ‘new’ mathematical image of economic reality?” Giorgio Israel describes the challenge faced by game theory in seeking to escape the logic of the general equilibrium model, not only in the case of non-cooperative games, but also with cooperative games introduced by von Neumann and Morgenstern (1928, 1944). Even though they do not deal with monetary questions, the clarity of these two articles is very useful. Indeed general equilibrium theory does not succeed in integrating money, for reasons outlined by Jean Cartelier in the first part of “Money and markets as twin concepts?” He then puts forward an alternative market theory by introducing a rule—which he calls “Cantillon-Smith”—for the formation of money prices, from which relative prices can be derived. This reconnects the analysis of the formation of money prices to what Schumpeter called the income approach, inherited from Tooke (1844), which can be found in Wicksell (1898), Hawtrey (1919), and Keynes (1930). The originality here is that exchange takes place at relative prices distinct from those anticipated by agents; with the result that some of them are in deficit. At Bretton Woods Keynes put forward an international monetary system that imposed, symmetrically, an obligation on both surplus and deficit countries to manage disequilibria in the balance of payments. Sergio Rossi in his paper “The monetary relevance of an international settlement institution” lays emphasis on an “endogenous money paradigm” to analyze its limits.

Meghnad Desai's article that closes the volume, “Money and usury in the economics of Ezra Pound,” presents an anti-Semite and fascist writer who wrote in 1942 that “the war in which brave men are being killed and wounded, our own war here and now, began … in 1694, with the foundation of the Bank of England.” Certainly a “neglected author”! The editors, Alberto Giacomin and Maria Cristina Marcuzzo, provide an account of usury in their rewarding introduction. In conclusion, one can reflect on the fact that there is virtually no contribution to monetary thought between the American Revolutionary War and World War I.