The theory of money or monetary theory is an economic theory that studies the impact of money on the economic system.
Historically, there are three main theories of money
metal money theory
purchasing power monetary unit determines the metal from which the coin is made. Accordingly, banknotes are not recognized by the metal theory of money. The most valued are coins made of precious metals (gold and silver). They have a high value due to their natural properties, and not the development of exchange relations.
nominalist theory of money
The purchasing power of a monetary unit is determined by its face value, that is, the amount indicated on a coin or banknote. That is, money is purely conditional nominal signs, the value of which does not depend on the material content.
Quantity Theory of Money
The most successful was the quantity theory of money. It is claimed here that purchasing power the monetary unit and the price level are determined by the amount of money in circulation.

C is the amount of money, S is the sum of the prices of goods, V is the velocity of money
Gradually, the quantitative theory of money was transformed into the monetaristic concept of modern economic theory.
.Metal theory of money.
Early metalism arose during the period of primitive capital accumulation in the 16th-17th centuries. This theory appeared in the most developed country of that time - England. One of the founders of the metal theory was W. Stafford (1554--1612). The early metal theory of money was characterized by the identification of society's wealth with precious metals, which were attributed to the monopoly performance of all the functions of money.
2. Nominalistic theory of money.
The first representatives of early nominalism were the Englishmen J. Berkeley (1685-1753) and J. Stuart (1712-1780). Their theory was based on the following two provisions: money is created by the state, and the value of money is determined by their face value.
The main mistake of nominalists is the position of the theory that the value of money is determined by the state. And this means the denial of the theory of labor value and the commodity nature of money.
3. Quantity theory of money. Monetarism.
The founder of the quantitative theory of money, which arose in the 16th-17th centuries, was the French economist J. Bodin (1530-1596). This theory was developed by the Englishmen D. Hume (1711-1776) and J. Mil (1773-1836), as well as the Frenchman C. Montesquieu (1689-1755). D. Hume, trying to establish a causal and proportional relationship between the influx of precious metals from America and the rise in prices in the 16th - 17th centuries, put forward the thesis: "the value of money is determined by their quantity." Supporters of the quantity theory see money only as a means of circulation, erroneously asserting that in the process of circulation, as a result of a collision of money and commodity masses, prices are allegedly set and the value of money is determined. Another mistake in the quantity theory of money is the idea that the entire money supply is in circulation. In fact, there is an objective economic law that determines the required amount of money in circulation.
The quantity theory of money ignored the role of the treasure as an elemental regulator of metallic circulation. However, it should be borne in mind that the early quantitative theory arose under the conditions of circulation of not paper, but metallic money.
As for the modern quantitative theory, which is based on credit money and paper money circulation, it is described in the works of such economists as L Marshall, I. Fischer, G. Kassel, B. Hansen, M. Friedman.
There are two versions of this theory:
1) "transaction option" by I. Fischer and monetarists led by M. Fridman;
2) concept " cash balances»of the English Cambridge school headed by A. Pigou, and after the Second World War - by D. Patinkin.
4.Quantitative theory of money by I. Fisher.
The American economist I. Fisher (1867-1977) denied labor value and proceeded from the "purchasing power of money." He identified six factors on which the "purchasing" power of money depends:
M -- the amount of cash in circulation;
V -- velocity of money circulation;
R -- weighted average price level;
Q -- quantity of goods;
M1 -- the amount of bank deposits;
VI - the speed of deposit and check circulation.
Assuming that the amount of money paid for goods is equal to the number of goods multiplied by the level of commodity prices, Fi-scher deduced the "exchange equation":
MV=PQ.
From the functional dependence of the equation, which has the same value for the left and right parts, Fisher concludes that the prices of goods P are directly proportional to the amount of money in circulation M (Fischer's velocity of their circulation is taken as a constant value) and inversely proportional to the amount goods Q (Fischer's value is almost constant).
5. Modern monetarism.
The supporters of the "transactional version" of the quantitative theory of money include monetarists led by M. Friedman, K. Brunner and A. Meltzer.
The concept of M. Friedman is expressed by a formula that differs only outwardly from the formula of I. Fisher, but in essence is designed to justify the same one-sided causal relationship between the money supply and prices:
M=KRU,
where M is the amount of money,
K is the ratio of money supply to income,
P - price index,
At - the national income in constant prices (or its physical volume).
From here it is concluded that a change in the money supply (M) can be accompanied by a corresponding change in any of the three values ​​of the right side of the equation, i.e. an increase in the money supply can either lead to an increase in prices (P), or to an increase in real national income (U), or to a change in the coefficient reflecting the ratio of the money supply to income.
6.Cambridge version of the quantity theory of money.
The founders of this concept are the British - economists A. Marshall, A. Pitou, D. Robertson and D. Patinkin. If in I. Fischer's "transactional variant" money acts only in the functions of a means of circulation and a means of payment, then A. Pigou attached special importance to the functions of accumulation. At the same time, both versions of the quantity theory of money ignore function of money as measures of value and their role as a universal cost equivalent.
Another difference was that, if I. Fisher's quantitative theory of money proceeded from an analysis of the supply of money, then the Cambridge school put the demand for money at the head of the study, which she considered on a par with the demand for goods and services. Moreover, if for I. Fischer the determining factor is the presence of money in circulation, then for the Cambridge school the main thing is that there is a special demand for money and they remain out of circulation with individuals and enterprises in the form of “cash balances”. Unlike I. Fischer, who analyzed the global values ​​of all social capital and the general price level, A. Pitou focused on individual capitals and the behavior of their owners, on “relative” prices, and not on their “absolute” level.
A. Pigou refers to cash balances as cash and balances on current accounts, i.e. he defines the amount of money as the sum of the cash balances of the population and enterprises.
Although the approach of A. Pigou differs from the approach of I. Fisher, but, in essence, it remains within the framework of the quantitative theory of money, since it establishes a direct connection between money and prices. This is also confirmed by the formula of A. Pigou: M = RPQ or P = M / Q, which is close to the “exchange equation” of I. Fisher, since in it:
M - money supply,
P is the price level,
Q -- commodity weight (or the physical volume of trade,
K is the share of annual incomes of individuals and firms that they are willing to keep in cash.
The difference in the formulas of I. Fisher and A. Pigou lies in the fact that the first formula uses the rate of circulation of the monetary unit V, and the second uses the coefficient K, which is the reciprocal of the indicator V and, if we replace the coefficient K in the Pigou formula , then the Fisher formula is obtained.
Since the mid 50s. there is a revival of the neoclassical direction and the Cambridge version of the quantitative theory of money based on it.
The most prominent representative of this theory is D. Patinkin. In his works, he proceeds from a causal directly proportional relationship between the mass of money and prices. At the same time, he considers "cash reserves" as the most liquid form of investment, followed by investments in securities, and then in real capital.
D. Patinkin connects the use of income for three purposes (consumption, investment and "cash reserves") both with the establishment of "relative" prices and with the general level of prices. Thus, he complicated the simple formula for the proportional dependence of the money supply and prices by introducing the demand for money as for "cash balances." As a result, the active role of the money supply began to be determined not only by the issue, but also by the change in "cash reserves". "Cash reserves" D. Patinkin considers as the most liquid form of investment, followed by investments in securities, and then - in real capital.

The classical quantitative theory was formed in the 16th-17th centuries. and became the basis for the development of monetarist theory. The quantity theory of money, which states that the prices of goods are determined by the amount of money in circulation, belongs to the oldest doctrines in the history of economic thought. The first representatives of this theory were Aristotle, Xenophon, Plato, J. Bodin, Montesquieu, D. Hume, J. Mill. The period of origin dates back to the 16th century, when the rapid growth of commodity prices in Europe insistently demanded an explanation of the causes of this phenomenon. In addition, it was a period of domination in economic treatises of the ideas of mercantilism with its reverent belief in the special properties of precious metals as an important element of social wealth.

Boden put forward a hypothesis about the dependence of the price level on the amount of precious metals. PI. Montesquieu, D. Hume, J. Mill made generalizations based on a misunderstanding of the "price revolution" that took place in Europe. This theory got its name quantitative because its founders explained the influence of money on economic processes exclusively by quantitative factors, primarily by changing the amount of money in circulation.

According to the most common in the XVIII-XIX centuries. version of the quantity theory, provided that other conditions remain unchanged, the level of commodity prices, on the average, changes in proportion to the change in the quantity of money. This provision was first applied to metallic (gold and silver) money, and after the publication of the works of D. Ricardo - to paper (non-changeable).

At its inception, the quantity theory did not claim to explain the causes of price changes. Its main task was to substantiate the point of view that money is fundamentally different from other representatives of the commodity world due to the fact that they have no intrinsic value. And only with time in the quantitative theory began to dominate the thesis about the relationship of the state monetary circulation with price movements.

The first to suggest that the price level depends on the amount of precious metals was the French philosopher Jean Bodin. However, he did not put forward a statement about a direct, much less proportional relationship between changes in the amount of money and changes in prices.

Separate provisions of this theory were formulated in general terms by J. Locke (1632-1704). It was expounded in a more detailed form by J. Vanderlint (died in 1740), PI. Montesquieu (1689-1755) and D. Hume (1711-1776). D. Ricardo (1772-1823) was also a supporter of the quantitative theory.

Thus, the early quantitative theory was characterized by three postulates:

Causality (prices depend on the amount of money)

Proportionality (prices change in proportion to the amount of money)

Universality (changes in the amount of money have the same effect on the prices of all goods).

So, the leading place in the theory of money was occupied by the quantitative theory, the main methodological principles of which were the following:

The purchasing power of money and the prices of commodities are established on the market, which contradicted the theory of value, but explained the changes in the prices of commodities depending on the amount of money in circulation;

All money is in circulation, which ignored the function of accumulation and its role in regulating the money supply;

The purchasing power of money is inversely proportional to its quantity, and the price level is directly proportional to the quantity of money;

The concept of the value of money is purely conventional, since money receives it only in the process of exchange * 195.

* 195: (Yaremenko O.R. Money and credit: lecture notes / A.R. Yaremenko. - X .: KhGZU Publishing House, 2002. - 64 p.)

At the same time, it is obvious that as the forms of money develop, the structure of the money supply becomes far from homogeneous, since it attracts not only cash, but also bank deposits. The prices for various groups of goods, which grow unevenly, react differently to an increase in the money supply. Further development of the quantitative theory of money is associated with the inclusion of the apparatus of econometric analysis and elements of the microeconomic theory of price.

The neoclassical version contains two theories of development: the transactional and the Cambridge versions.

Modern supporters of the transactional version of the quantitative theory of money were I. Fisher and M. Friedman.

A significant contribution to the modernization of the quantitative theory was made by I. Fischer (1867-1947), an outstanding representative of the mathematical school in modern economic theory, one of the founders and the first president of the International Economic Society (1931-1933). In "The purchasing power of money, its definition and relation to credit, interest and crises" (in 1911) he tried to formalize the relationship between the mass of money and the level of commodity prices.

Equation of exchange is an equation relating the statistical quantity of money in economic system with its other parameters (price level, level of real production or goods in circulation, velocity of money circulation) * 196:

* 196: (Ibid.)

where (Money) - the average amount of money in circulation in a particular society during the year;

(Velocity) - the average number of turnovers of money in their exchange for goods;

(Price) - the average selling price of each individual product purchased in a particular company;

(Quantity) - total quantity of goods.

It follows from the equation of exchange that any change in the static (i.e., unchanged) quantity of money must lead to corresponding changes in the price level, real output, velocity of circulation, or a combination of these variables.

Fisher's formula is incorrect for the terms of the gold standard, because it ignores the intrinsic value of money. However, when applying paper money, fiat for gold, it acquires a certain rational content. Under these conditions, a change in the money supply affects the level of commodity prices (although, of course, he somehow idealized the price mechanism, because he had in mind the absolute elasticity of prices). Fisher, like other neoclassicists, started from the model of perfect competition and extended his conclusions to an economy in which monopolies existed and prices had already significantly lost their elasticity. There are other flaws in Fisher's concept that are characteristic of quantity theory, in particular, the exaggeration of the influence of money on commodity prices. From his formula it follows that the money supply plays an active role, and prices - a passive one, and only the money supply is an independent variable, while in fact there is a corresponding relationship. In conditions of monopolistic pricing, the growth of commodity prices is often the cause of the expansion of money circulation.

Many modern economists characterize the equations of exchange as the equality MV = PQ, which, in their opinion, expresses the act of exchange "M - C" over the entire mass of goods, that is, the amount of money with which the goods are bought is equal (identical) to the sum of the prices of the goods bought. However, this is a tautology, so the exchange formula cannot be an explanation for the aggregate (absolute) price level (Fig. 9.2). The exchange formula, according to quantity theorists, explains the absolute value of EQo, while the mechanism of supply and demand determines only relative deviations from it.

Rice. 9.2. Absolute price level from the point of view of quantity theory

Based on the equation of exchange, inflation has next view: violation of the laws of monetary circulation turns out to be an excess of money supply in circulation compared to the real needs for it or in the depreciation of money, which is accompanied by an increase in commodity prices without any improvement in the quality of products.

In I. Fisher's equation, there is a dependence in which the amount of money in circulation is the cause, and the price level is the effect. This is money supply inflation. Thus, it can be seen from the Fisher equation that the balance between the money supply and its commodity coverage occurs due to changes in prices. Prices are higher, the more money in circulation and the smaller the supply of goods.

I. Fischer represented inflation in the form of a simplified concept, according to which the fall in the purchasing power of money occurs in proportion to the growth of their quantity in circulation * 197.

* 197: (Yaremenko O.R. Money and credit: lecture notes / A.R. Yaremenko. - X .: Publishing House of KhGEU, 2002. - 64 p.)

One of the mistakes of I. Fisher is that, considering long periods of time, he conditionally accepted the variables V and Q as stable, after which only two remained dependent variables - the amount of money and prices. Although in fact the quantity of goods and the velocity of circulation of monetary units change and significantly affect the circulation of money and pricing.

The concept of M. Friedman is expressed by a formula that differs only outwardly from the formula of I. Fisher, but, in essence, is called upon to substantiate the same one-sided relationship between the money supply and prices * 198:

* 198: (Money and credit: textbook / M.I. Dump, A.M. Moroz, M.F. Pukhovkina and others; under the general editorship of M.I. Savluk. - M .: Finance, 2001. - 604 p. .; Demkovsky A.V. Money and credit: study guide. / A.V. Demkovsky. - M.: Dakor, 2005. - 528 p.)

where is the price index;

Amount of money;

The ratio of money supply to income;

National income at constant prices (or its physical volume).

A change in the money supply (M) can be accompanied by a corresponding change in each of the three values ​​​​of the right side of the equation, that is, an increase in the money supply can lead either to an increase in prices (P), or to an increase in real national income (), or to a change in the coefficient reflecting the ratio money supply to income (K).

Fisher and his followers sought to explain that the velocity of money (V) and the level of production (Q) did not depend on the amount of money (M) and the price level (P). The speed of circulation of money, in their opinion, depends primarily on demographic (population density, etc.) and technical and economic ( public division labor, availability natural resources, development of transport, etc.) parameters. The level of production is determined mainly by the conditions established in the labor market, and does not depend on the level of prices and the amount of money in circulation. Obviously, under the conditions market economy such references are unrealistic. Appearance credit money contributes to cost savings.

The founders of the Cambridge version of the quantity theory of money are economists A. Pigou, D. Robertson and D. Patinkin.

If in the transactional version of I. Fischer money performs only the functions of a means of circulation and a means of payment, then A. Pigou attached special importance to the functions of accumulation. At the same time, both versions of the quantity theory of money ignore the function of money as a measure of value and their role as a general cost equivalent. If I. Fisher's quantitative theory of money was based on the analysis of the money supply, then the Cambridge school put the demand for money on a par with the demand for goods and services as the basis for the study. Moreover, if for I. Fischer the determining factor is the presence of money in circulation, then for the Cambridge school money is in special demand and they remain out of circulation in individuals and enterprises in the form of "cash balances". A. Pigou refers to the latter as cash and balances on current accounts, that is, he determines the amount of money, since he sees a direct connection between money and prices. This is confirmed by the Pigou formula * 199, which is close to Fisher's "exchange equation" MV = PQ:

* 199: (Demkovsky A.V. Money and credit: textbook. / A.V. Demkovsky. - M .: Dakor, 2005. - 528 p.; Shchetinin A.I. Money and credit: textbook / A. I. Shchetinin - 2nd ed., Revised and complete - M.: Center for Educational Literature, 2006. - 432 p.)

M = PRQ, or P = -, (9.3)

where M is the money supply;

R - the share of annual incomes of individuals and firms that they are willing to keep in cash;

P - price level;

Q - commodity mass (or the physical volume of trade, included in the final product).

The difference in the formulas of I. Fisher and A. Pigou is that the first one uses the rate of circulation of the monetary unit (V), and the second one uses the coefficient R, is the opposite in value to the indicator V, and if replaced in the formula by A. Pigou coefficient R, then we get the formula of I. Fisher.

The similarity of the two equations lies in the fact that I. Fisher relied on the constancy of the indicators V and Q in the analysis of long periods of time, and A. Pigou considered the constant indicators R and Q, that is, both economists substituted the same variables M and P and derived causality of price increases (P) by changes in the money supply (M) * 200.

* 200: (Borinets S.Ya. International monetary and financial relations: textbook / S.Ya. Borinets. - 4th ed., Revised and complete. - M.: Knowledge, 2004. - 409 p.)

The main aspects of the problems under consideration are summarized in Table. 9.1*201.

* 201 (Demkovsky A.V. Money and credit: study guide. / A.V. Demkovsky. - M .: Dakor, 2005. - 528 p.)

Fisher's concept of quantity theory	Cambridge variant
Dynamics cash flows in the Fisher equation is considered at the macroeconomic level	Focuses on the motives for the accumulation of money by specific individual participants in the production
Methodological basis of the equation of exchange - money as a means of circulation	Money is not only a means of circulation, but also of preservation and accumulation
The emphasis is on the objective principles of money circulation	The psychological reaction of the enterprise to the use of cash is taken into account
The transaction equation only deals with the supply of money.	The central issue is the demand for money.

In add. D in the table. D1 shows the main characteristics of the theories of money.

One of the first who realized this need and subjected to a significant revision the basic theories of money, including the quantity theory, was the Ukrainian economist M.I. Tugan-Baranovsky.

M.I. Tugan-Baranovsky (1865-1919) - Ukrainian economist, a native of the Kharkiv region, who at the age of 23 graduated from the Kharkov University course in two faculties at once: natural and legal.

However, the scope of M.I. Tugan-Baranovsky chose political economy. U1894 p., By publishing the work "Industrial crises in modern England, their causes and impact on people's life", he became the first Ukrainian scientist with a worldwide reputation (the book was translated into German in 1901, and then into French). For this work, M.I. Tugan-Baranovsky in 1894 was awarded a master's degree from Moscow University, and in 1895 he became a private assistant professor at St. Petersburg University and was accepted as a member of the Imperial Free Economic Society.

As a representative of "legal Marxism" M.I. Tugan-Baranovsky participates in the editing of Marxist journals, such as Novoye Slovo, Nachalo, Mir Bozhiy. U1898. The scientist publishes the book "Russian Factory", where he develops ideas about the development of capitalism in Russia, which became the basis of his doctoral dissertation, which he defends in the same year.

In the XX century. M.I. Tugan-Baranovsky, known as a disgraced scientist, was expelled from the capital for participating in student unrest. With the permission of the authorities, he returned to St. Petersburg in 1905. During this period, he was interested in the problems of the development of the cooperative movement. Since 1908, he became a member of the "Committee of Rural, Credit and Industrial Societies". In 1909 M.I. Tugan-Baranovsky began publishing the journal "Bulletin of Cooperation", and in 1916 his work " Social Foundations cooperation" and published a number of works on socialism, and in 1918 - one of the most famous - "Socialism as a positive doctrine."

Before the revolution, the work of M.I. Tugan-Baranovsky was published repeatedly, in particular his work "Fundamentals of Political Economy", where he most fully outlined his economic views. Also known is his work "Paper Money and Metal", published in 1916, in which the author argued submits his views on monetary problems.

M.I. Tugan-Baranovsky wrote that the theory of marginal utility and the labor theory of value are not mutually exclusive, but, on the contrary, complement and confirm each other * 202. He formulated the famous law according to which the marginal utilities of freely reproducible goods are proportional to their labor values. Considering these questions, the scientist proved that the correctly understood theory of marginal utility not only does not refute the labor theory of value of D. Ricardo and K. Marx, but is also an unexpected confirmation of these economists' doctrine of value. Like most Russian economists, M.I. Tugan-Baranovsky did not confine himself to a one-sided opposition of utility and cost as the two main factors of value. Considering that Ricardo's theory emphasizes objective factors of value, and Menger's theory emphasizes subjective ones, the scientist tries to prove that Ricardo's theory does not exclude, but only supplements the theory of marginal utility.

* 202: (Tugan-Baranovsky M.I. The doctrine of the marginal utility of economic goods as the reason for their value / M.I. Tugan-Baranovsky // Legal. Vestn. - 1890. - No. 10. - 24 p.)

The logic of M.I. Tugan-Baranovsky is as follows: "Marginal utility - the utility of the last units of each kind of product - varies depending on the size of production. We can either reduce or increase marginal utility by expanding or reducing production. The labor cost of a unit of product, on the contrary, is something objectively given, which does not depend on our will. From this it follows that in drawing up an economic plan, the determining moment must be the labor value, and the determinant is the marginal utility. If the labor value of the products is different, but the benefit received in the last unit of time is the same, then we conclude that that the utility of the last units of freely reproducible products of each kind—their marginal utility—should be inversely proportional to the relative quantity of these products per unit of labor time. In other words, must be directly proportional to the labor value of those same products." So, according to M.I. Tugan-Baranovsky, both theories are in perfect harmony.

The theory of marginal utility finds out subjective, and the labor theory of value - objective factors economic value. It was M.I. Tugan-Baranovsky substantiated the position that the marginal utility of freely reproducible economic goods is proportional to their labor values, which in the economic literature is called M.I. Tugan-Baranovsky.

A significant contribution was made by scientists to the theory of distribution, in which the process of distribution was seen as a struggle between different classes for a share in the social product, the growth of the product itself, i.e. all classes are equally interested in the development of production * 203. This approach was later developed in the works of many Western economists (J. Schumpeter and others).

* 203: (Tugan-Baranovsky M.I. Social distribution theory / M.I. Tugan-Bara-Novski. - St. Petersburg, 1913. - 114 p.)

Contribution of M.I. Tugan-Baranovsky into modern economic science is largely reduced to the creation of a modern investment theory cycles, which provides for the modern concept of "savings - investments" * 204. The main factor of cyclicality, in his opinion, is the disproportionate allocation of capital, which has increased due to limited banking resources.

* 204: (Tugan-Baranovsky M.I. Industrial crises in modern England, their causes and impact on economic life / M.I. Tugan-Baranovsky. - L, 1984. - 370 p.)

His work "Industrial crises in modern England, their causes and impact on people's life" influenced the development of this area of ​​economic science. In this work, arguing with the "populists", M.I. Tugan-Baranovsky proves that capitalism in its development creates a market for itself and in this regard has no restrictions on growth and development. Although he notes that the existing organization of the national economy and, above all, the rule of free competition, make the process of expanding production and accumulating national wealth extremely difficult.

M.I. Tugan-Baranovsky criticizes not only the theory of underconsumption as the cause of crises of overproduction, but also theories that explain crises by violations in the sphere of money and credit circulation.

In his theory, M.I. Tugan-Baranovsky took as a basis the idea of ​​Marx about the connection between industrial fluctuations and the periodic renewal of fixed capital and laid the foundations for the tendency to turn the theory of overproduction crises into a theory of economic fluctuations. Noting that the years of increased creation of fixed capital are the years of a general revival of industry, the scientist writes: "the expansion of production in each branch increases the demand for goods produced in other branches: the impetus for increased production is transmitted from one branch to another, therefore the expansion of production is always contagious and tends to cover everything national economy. During the period of creation of new fixed capital, the demand unambiguously increases for all goods "* 205. But the expansion of fixed capital has ended - factories have been built, railways carried out, etc., the demand for means of production has declined and their overproduction becomes inevitable. In connection with the dependence of all branches of industry on each other, partial overproduction becomes general - the prices of all goods fall and stagnation begins. M.I. Tugan-Baranovsky is convinced that if production is organized according to plan, then no matter how low consumption is, the supply of goods could not exceed demand.

* 205: (Ibid.)

With absolute certainty, we can say that M.I. Tugan-Baranovsky was the first to formulate the basic law of the investment theory of cycles: the phases of the industrial cycle are determined by the laws of investment. Violation of the rhythm of economic activity, which leads to a crisis, occurs, according to the scientist, due to the lack of parallelism in the markets of different areas during the period of economic recovery, disagreements between savings and investments, disproportion in the movement of prices for capital goods and consumer goods.

Researched by M.I. Tugan-Baranovsky and the role of loan capital in the process of cyclical fluctuations in the economy. He noted that the increase loan interest is a sign that there is too little free loan capital in the country for the development of industry, and concludes that the immediate cause of crises is not an excess of loan capital that is not used, but its lack. As you can see, in M.I. Tugan-Baranovsky there are many elements of the modern investment theory of cycles.

A lot of attention to M.I. Tugan-Baranovsky paid attention to the quantitative theory of money. First, he criticized its classic version, which was set out in the writings of I. Fischer. The scientist considered the correct formula "the equation of exchange", but believed that Fisher did not add anything new to the quantitative theory of money at all, but only "successfully completed the work and gave an accurate and concise expression of the quantitative theory in mathematical form."

First, he proves, contrary to I. Fischer, that the price level is affected not by one, but by all the factors indicated in the "exchange equation": the number of goods entering the market, the amount of money itself, the speed of their circulation, the number of instruments of credit and the speed their appeals as well. Since all these factors are rapidly changing and changing in different directions, the changes in prices and the quantity of money cannot be proportional. This conclusion had not only theoretical significance, but also practical value, as it expanded the search front in the course of studying such phenomena as inflation, monetary policy, tools to influence the price level, and the like.

Secondly, M.I. Tugan-Baranovsky proved that the influence of the amount of money on prices is not unambiguous, straightforward, as the supporters of the classical quantitative theory admit. This influence can be carried out not in one, but in three directions, different in nature, as a result of a change:

public demand for goods;

Discount percentage;

Public perception of the value of money (later this factor was called inflation expectations).

Thirdly, M.I. Tugan-Baranovsky proved that the influence of the amount of money on prices is differentiated depending on the duration and volume of the increase in the amount of money. By this, he essentially refuted the postulate of proportionality, proved that money is not a simple medium of exchange, and prepared the basis for abandoning the postulate of the neutrality of money.

Fourth, M.I. Tugan-Baranovsky revealed the mechanism of interdependence between the total amount of money in the country, the amount of money that is out of circulation in savings and the velocity of money circulation, proved that the speed factor can affect prices in the opposite direction of the quantity factor in the direction, neutralizing the effect of the latter.

In studies of money circulation and the value of money, in particular paper money, M.I. Tugan-Baranovsky widely used the practice of Austria-Hungary. He noted that one of the most important tasks of the state is to provide paper money with appropriate value stability.

All these ideas of M.I. Tugan-Baranovsky created the basis for studying the ways in which money influences the economy and the mechanism for the conscious regulation of this influence. By this, he laid the foundations of the so-called theory of regulated money, which prepared public opinion for the rejection of full-fledged (gold) money and their replacement with defective money, the value of which would be systematically supported by the state and with which modern monetarist theory appeared, primarily its Keynesian direction.

Thus, two trends were traced in the domestic political economy - religious and scientific thinking, which at different stages of the development of Russia and Ukraine interacted with each other in different ways.

The first period that can be distinguished is the beginning of the 20th century. - 1917 At that time, scientists were actively working, occupying not only Marxist, but also other positions. Among them were many major economists who received worldwide recognition.

The first direction was headed by P. Struve, who was supported by S. Bulgakov, S. Frank, N. Berdyaev. These scholars used the methodology of neo-Kantianism and empiricism. The classical school was criticized from such positions, in particular its fundamental idea of ​​a universal natural economic law * 206. It is easy to see that these scientists violated one of the most controversial, debatable problems of political economy - the ratio of the general and the specific in the development of the country's economy, and consistently agreed to the position German historical school.

* 206: (Singer L. Comparative characteristics banks and non-banking financial institutions in Ukraine / L. Spivak, I. Karakulev // Bulletin of the NBU. - 2006. No. 7. - S. 46-48.)

The second scientific political economic direction is associated with the names of M. Tugan-Baranovsky, A. Manuilov, V. Zheleznov, M. Sobolev, K. Pazhitnov, L. Kafengauz and others, who were characterized by a synthetic methodology that combines classical, Marxist approaches with elements marginalism.

At the beginning of the XX century. in domestic economics gradually increased Marxist influence. As you know, Marxism developed in Russia in two main forms - Leninist (Bolshevik) and Menshevik. The value of economic theories of M.I. Tugan-Baranovsky is difficult to overestimate, because they significantly influenced not only economic development Soviet society, but also on the world economic ideas of the whole world, of the entire world economy.

Keynesianism was formed at the turn of the 20-30s, when it was necessary to overcome a deep decline in production and unemployment.

One of those who advocated the need monetary regulation economic processes, was John Maynard Keynes (1883-1946) - an outstanding scientist and economist of our time, who studied with the founder of the Cambridge School of Economic Thought, A. Marshall.

A peculiar understanding of the consequences of a long, severe economic crisis 1929-1933 pp., Covering many countries of the world, was reflected in the completely extraordinary provisions of that period, published by John Keynes in London, the book "The General Theory of Employment, Interest and Money" (1936).

According to many economists, "The General Theory" by John Keynes turned out to be a turning point in the economic science of the 20th century. and largely determines economic policy countries today.

Its main idea is that the market system economic relations is by no means perfect and self-regulating and the maximum possible employment and the economic growth able to ensure only the active intervention of the state in the economy. The progressive public took this idea for granted and rightly conditioned, according to the contemporary American economist J.K. Galbraith, due to the fact that until the 1930s the thesis of the existence of competition between many firms, which are necessarily small and operate in each market, became untenable "because" inequality arises as a result of the existence of monopoly and oligopoly, extends to a relatively narrow circle people and can therefore in principle be remedied by the intervention of the state."

In many respects, the main idea of ​​the great work of J. Keynes and many other scientists, in particular M. Blaug, is regarded in a similar way.

John Keynes formulated the theory of macroeconomic analysis, in which the main concepts and categories are: market capacity, the principle of effective demand (multiplier concept), general theory of employment, marginal efficiency of capital, interest rates. This theory considers inflation as a phenomenon based on a combination of factors that interact.

John Keynes drew attention to such divisions as income, employment, demand, supply, savings, investment. He paid special attention to monetary factors and problems of money. His goal was to find out how the various variables that affect economic development are determined.

For John Keynes, the main factor in the functioning of the economy is the volume of national income, which appears in two aspects:

As the source of all the purchasing power of a society of aggregate demand;

How the basis, which is formed from the size of that part of the enterprise's expenses, is used to rationalize production, that is, depending on production costs, which decrease as entrepreneurs strive for profit. The larger this part of the expenditure, the greater the national income. At the same time, all expenses are divided into two types: both for consumption and for savings.

The innovation of the economic doctrine of John Keynes in terms of the subject of study and methodological terms turned out, firstly, in the predominance of macroeconomic analysis over the microeconomic approach, made him the founder of macroeconomics as an independent section of economic theory, and, secondly, in substantiating the concept of the so-called effective demand , that is, potentially possible and stimulated by the state. Based on his own, "revolutionary" research methodology, John Keynes, in contrast to his predecessors and contrary to the prevailing economic views, argued about the need to prevent, with the help of the state, a decrease in wages as the main condition for the elimination of unemployment, as well as the fact that consumption, due to the psychologically determined inclination of a person to save, is growing much more slowly than income.

John Keynes did not object to the influence of the mercantilists on the concept of state regulation of economic processes that he created. His common judgments with them are obvious and are:

In an effort to increase the supply of money in the country (as a means of making them cheaper and, accordingly, lowering interest rates and encouraging investment in production);

Approval of rising prices (as a way to stimulate the expansion of trade and production);

Recognizing that lack of money is the cause of unemployment;

Understanding the national (state) nature of economic policy.

IN developed countries Two main interpretations of inflation have become widespread: Keynesian and monetarist.

1. Metal theory of money…………………………………………….page 3

2. Nominalistic theory of money…………………………………….... page 3

3. Quantity theory of money. Monetarism……………………………page 4

4. The Quantity Theory of Money by I. Fisher……………………………... page 5

5. Modern monetarism. …………………………………………….. page 5

6.Cambridge version of the quantity theory of money………………. page 7

Theories of money

There are three main theories of money - metallic, nominalistic and quantitative.

1. Metal theory of money.

Early metalism arose during the period of primitive capital accumulation in the 16th-17th centuries. This theory appeared in the most developed country of that time - England. One of the founders of the metal theory was W. Stafford (1554-1612). The early metal theory of money was characterized by the identification of society's wealth with precious metals, which were attributed to the monopoly performance of all the functions of money.

The disadvantages of this theory were the following provisions:

Firstly, they did not provide for the need and regularity of replacing full-fledged paper money.

Secondly, the ideas of its supporters about the wealth of society were limited, since they did not understand that the wealth of society does not lie in gold, but in the totality of material and spiritual goods created by labor.

Later, in the XVIII century. and the first half of the 19th century, the metal theory of money, which previously reflected the interests of the commercial rather than the industrial bourgeoisie, is losing its positions.

However, in the second half of the XIX century. the German economist K. Knies (1821-1898) not only reproduced the views of the early metalworkers, but modernized them in relation to new conditions. As money, he considered not only metal, but also banknotes of the central bank, since by that time credit had begun to play a significant role in the economy, which in turn served as the basis for the issuance of banknotes. Recognizing banknotes, at the same time K. Knies spoke out against paper money, not exchangeable for metal.

The second metamorphosis of the metal theory of money took place after the First World War, when adherents of metalism advocated the preservation of the gold standard in the so-called "cut down" form, namely the gold bullion and gold exchange standard.

After the Second World War, some economists advocated the idea of ​​restoring the gold standard in domestic money circulation, and in the 60s. in France, the third metamorphosis of the metal theory took place in relation only to international monetary relations. This theory, called neometallism, reinforced the political action of the French government, which turned most of its dollar holdings into gold.

2. Nominalistic theory of money.

The first representatives of early nominalism were the Englishmen J. Berkeley (1685-1753) and J. Stuart (1712-1780). Their theory was based on the following two provisions: money is created by the state, and the value of money is determined by their face value.

The main mistake of nominalists is the position of the theory that the value of money is determined by the state. And this means the denial of the theory of labor value and the commodity nature of money.

The further development of nominalism (especially in Germany) falls on the end of the 19th - beginning of the 20th centuries. The most famous representative of nominalism was the German economist H. Knapp (1842-1926). Money, in his opinion, has a purchasing power that the state gives them.

The evolution of nominalism manifested itself during this period in the fact that G. Knapp based his theory not on full-fledged coins, but on paper money. At the same time, when analyzing the money supply, he took into account only state treasury notes (paper money) and change coins. He excluded credit money (bills, banknotes, checks) from his research, which caused the failure of his concept as credit money spread.

The main mistake of the nominalists was that, having separated paper money not only from gold, but also from the value of the commodity, they endowed it with "value", "purchasing power" by means of an act of state legislation.

Nominalism played an important role in the economic policy of Germany, which widely used the issue of money to finance the First World War. However, the period of hyperinflation in Germany in the 20s. put an end to the dominance of nominalism in the theories of money.

Modern economists do not share the basic views of G. Knapp. Having retained from nominalism the denial of the metal concept of the theory of labor value, they began to look for the definition of the value of money not in state decrees, but in the sphere of market relations by subjective assessment of their "usefulness", purchasing power. As a result, the quantitative theory took the leading position in the theories of money.

Money - a specific product that is a universal equivalent of the cost of other goods or services. Since money is the most important attribute of the economy and a complex economic category, different economists define the functions of money in different ways.

Most modern researchers, listing money functions , they say that money is:

• means of circulation and payment;
• means of measuring value;
• a store of value and store of value.

All modern monetary systems are based on fiat (symbolic) money, but historically allocate four main types of money :

• commodity (natural) money - money, which is a commodity that has independent value and utility (cattle, grain, furs, pearls, as well as copper, bronze, silver, gold, platinum full-weight coins).
• secured money - money, in the role of which are signs or certificates that can be exchanged at sight for a fixed amount of a certain commodity or commodity money, for example, gold or silver.
• fiat money - money without self cost or it is disproportionate to the face value. Fiat money has no value, but is capable of performing the functions of money, since the state declares it legal means of payment on its territory. Today, these are banknotes and non-cash money in a bank account.
• credit money are future claims against physical or legal entities(specially executed debt), usually in the form of a transferable security, which can be used to buy goods (services) or pay your own debts.

Monetary theories - basic provisions, representatives, period of existence

The whole set of theories about money is based on two assumptions: which function of money is more important and determining the place of money in the economy. Let's call five main theories of money.

1. metal money theory (16-19 centuries - the period of primitive accumulation of capital). Main Representatives: Montchretien, Maine, North, Stafford, Knies. The essence of the theory: its representatives opposed the "damage" of the coin (adding other metals to the alloy), for stable, full-fledged money. The main function of money in this case is a measure of value. By the 18th century, this theory had lost its position, by the 19th century it was modernized: Knis considered not only metal, but also banknotes as money. Central Bank, but opposed paper money, not exchangeable for metal.

2. nominalist theory of money (in the 17th-19th centuries it was widespread in Europe). Main Representatives: Berkeley, Stewart, Knapp, Karamzin. The essence of the theory: money must perform the function of a means of circulation, money is created by the state and their value is determined by what is written on them (nominal value), that is, money is only conventional signs used as a means of payment. Representatives of this theory are adherents of defective money, they deny the role of gold as a monetary commodity. Nominalists denied the commodity essence of money and the function of money as a universal equivalent in calculations.

3. Monetarism - the classical quantity theory of money (16-19 centuries). Main Representatives People: Bodin, Hume, Montesquieu, Ricardo, Fischer, Friedman. The essence of the theory: the purchasing power of money, as well as the prices of goods, is set by the market, and all issued money must be in circulation (their main mistake). In the 19th century, Irving Fisher tried to mathematically substantiate the quantity theory of money using the equation of exchange: MV = PQ, where M is the amount of money in the economic system, V is the velocity of money (the number of revolutions per year of the same monetary unit), P is the weighted average price level of ready-made goods and services, Q is the volume of the national product, taken in real terms, here V and Q are constants (constant values).

played an important role in the development of monetarism Milton Friedman - Laureate nobel prize 1976 His article "The Role of Monetary Policy" had a great influence on the further development of economic theory.

4. Keynesian theory of money (Arose during the years of the Great Depression). Main Representatives: John Keynes, who developed his own method of regulating economic processes and outlined it in the scientific work "The General Theory of Employment, Interest and Money" (1936). The main provisions of Keynes's theory of money:

• the velocity of circulation of money changes along with changes in the level of income, the rate of interest, and other parameters;
• the rate of interest (discount rate, credit rate, deposit rate) is the main lever through which the conditions of money circulation affect output and employment;
• during an economic crisis, its regulation is possible only by administrative methods.

5. Modern Synthetic Theory of Money (70-80s of the XX century). Recognizing the need for state influence on the economy during periods of crisis (at this time, Keynesian theory is acceptable), its representatives insist on the need for free self-regulation money market after the liquidation of the crisis situation (at this time, the theory of modern monetarism is acceptable). This synthesis of monetarism and Keynesianism serves as a practical basis for regulating the economy based on a rational combination monetary And fiscal (fiscal) policy in civilized states.

In the classical theory, the demand for money is considered from the point of view of the quantity theory of money. As we found out in the previous lesson, the demand for money, or the required amount of money supply, directly depends on the level of commodity prices and vice versa - on the velocity of money circulation. The demand for money is calculated using the Fisher equation or a variant of it called the "Cambridge equation".

M- the amount of money supply;

To\u003d I / V, that is, the reciprocal of the velocity of money circulation:

R- the total value of commodity prices:

Q- the number of goods sold.

The k coefficient shows the share of nominal cash or cash balances in income. In this case, the value (P*Q), expressing yen for products sold, represents both the income and expenses of the society. The money spent on the purchase of these products acts as income for some business entities and an expense for others.

Cash balances are cash that business entities keep for everyday expenses. The value of cash balances depends on the price level. The higher the prices, the more cash will be needed. So the coefficient k represents the ratio between nominal income business entity and the cash he needs, or cash balances.

Prices, in turn, are greatly influenced by nominal income. The higher the income of business entities, the higher their costs. And an increase in costs (an increase in demand) leads to an increase in prices. This means that a change in the amount of money in circulation in a country leads to a change in prices in the country (Fig.).

Rice. Classical quantity theory of money

We plot the price level (P) along the vertical axis, and the volume of money supply (M) along the horizontal axis. The money supply represents a government-determined amount, so it has the form of a vertical line ( M S). Bisector ( M D) shows the trend in the demand for money, which is caused by a change in the level of commodity prices. That is, the higher the prices, the more money is required. This explains its positive slope.

The classical quantity theory of money makes two important assumptions.

First, the economy uses all resources, and there is no such thing as unemployment (at least long-term).

Second, the money supply is set by the government.

This model is in equilibrium when the lines of demand and supply of money have a common intersection point Ei (the value of demand for money is equal to or exceeds the segment OE0). When the price level falls, for example, to the level Pb, the quantity demanded will be equal to the segment OE]. Then the amount of money in circulation exceeds the required amount, which leads to inflation. The value of money falls and prices rise until they reach P0.