Post Keynesian Fundism and Monetary Circulation

Abstract

Following the seminal writings of Sidney Weintraub, Post Keynesian economists have traditionally focused on the role played by wages and, more precisely, unit labor costs in both explaining inflationary pressures and in providing insights on the credit-driven nature of the money-supply process. Holding the view that money-supply growth is inextricably linked to the movement in money wages and employment, modern Post Keynesian writers, such as Basil Moore (1988, chapter 9), have made this Weintraubian view the cornerstone of their theory of endogenous money. Indeed, Paul Davidson (1988: 166–7) has gone as far as to suggest that this Post Keynesian theory of money can be interpreted as the modern counterpart of the ‘real bills’ doctrine widely espoused by the nineteenth-century endogenous-money theorists of the banking school.