Ingham and Keynes on the Nature of Money

In 1933, Keynes wrote of the need for a monetary theory of production — that is, a theory of production and value in a monetary economy (Keynes, 1933). He argued that the distinction between a barter and a monetary economy, traditionally made by economists, needed to be recast as one between a real-exchange economy (a fictional theoretical construct created by economists) and the monetary economy we actually observe. A real-exchange economy may use money as a means of exchange (the characteristic traditionally attributed to a monetary economy) but the role of money is neutral, a simple go-between in a relation between things, more efficient than barter, which drops out on consolidation when we consider the economy as a whole. Rather Keynes sought a theoretical conception of the observable market economy which recognises, as anything but neutral, the essential role of money in its operation. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.