The Norms Guiding the Flows of Money

Money enables the exchange of goods and services in an exchange economy.  Payments of money enable the rectilinear work-in-process, production culminating in the final sale of goods and services.  Thus the flow of money is correlated and mated with the flow of goods and services.

These differences and correlations (in the productive process) have now to be projected into their monetary correlates to set up classes of payments. [CWL 15, 39]

There are norms for the flow of money.  It should flow to and from the real circuits and within and among the real circuits in such a way that makes possible continuity, equilibrium, expansion in the process, and constancy in exchange value over time.

Note in the next excerpt the sublation of the textbook’s a) “intersection of a static supply and a static demand” and b) “sudden price shock” to concomitance between two (velocitous) flows.  The case of the intersection of static supply and demand curves is sublated to a general dynamics of which statics is a single, not very interesting, case.

 (We) state the necessary and sufficient condition of constancy or variation in the exchange value of the dummy.  To this end we compare two flows of the circulation: the real flow of property, goods, and services, and the dummy flow being given and taken in exchange for the real flow….Accordingly, the necessary and sufficient condition of constant value in the dummy lies in its concomitant variation with the real flow….More briefly, if there is concomitance between the two flows, then the proportion in which dummies and goods exchange remains the same.  If there is lack of concomitance, then this proportion changes. But exchange value is a proportion. Therefore, the concomitance of the two flows is the condition of constant exchange value. [CWL 21, 37-39]

The flow of money is correlated with the flow of goods and services. Money is a dummy and a servant created for a purpose and not to have an independent existence or a life of its own.

These differences and correlations (in the productive process) have now to be projected into their monetary correlates to set up classes of payments. [CWL 15, 39]

The alternative to constant value in the dummy is the alternative of inflation and deflation.  Of these famous twins, inflation swindles those with cash to enrich those with property or debts, while deflation swindles those with property or debts to enrich those with cash; in addition to the swindle each of these twins has his own way of torturing the dynamic flows; deflation gives producers a steady stream of losses; inflation yields a steady stream of gains to give production a drug-like stimulus. [CWL 21, 37-38]

Essentially the financial problem consists in finding a stable and permanent solution for the monetary requirements of a long-term expansion. [CWL 21, 100]

“real analysis (is) identifying money with what money buys. … And that is the source of the problem in real analysis.  If you want to treat money that doesn’t make a difference, you can have a beautiful liberal monetary theory.  But it doesn’t say the way the thing works.” [CWL 21, Editor’s Introductionxxviii  quoting Lonergan]