Whence Money

In this chapter, we will attempt to give an answer to a perennial question. Professor Melissa Lane (2016), the director of Princeton’s University Center for Human Values, is right (of course): “Rising levels of economic inequalityEconomic inequality and social immobility raise a challenge faced continually in antiquity, with fresh force: how, and in what circumstances, if at all, can the rich and the poor be enabled to act as political equals?” Perhaps not even for the first time, this is precisely the thrust of the dialogue between Alcibiades and Pericles reported by Xenophon. Analyzing the essential elements of a long sweep of history, it becomes evident that Concordian economics offers a clear-cut set of answers. This chapter is divided into two parts: The first part offers a broad review of how major thinkers of the past have dealt with “money”; the second part presents a practical and intellectual understanding of money within the context of Concordian economics. Both parts analytically deny any validity to the “fractional reserve” theory of money, the assumption that money is created by bankers on the strength of money saved by depositors.