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Commons Futurity pg. 487-500

  IV. Scarcity of Debt and section 2. Capital and Capitals In this section, Commons starts with a discussion of Anne Robert Jacques Turgot. Turgot was the foremost of the physiocratic economics in France in the 18th century.   Importantly, Turgot unraveled the issue of what was “interest”. It was not the “price of money” but rather it was “the price given for the use of a certain quantity of value for a certain time,” (Commons, 1934, pg. 487).  Commons then turns to the idea that capital yield is a key concept.  The yield is how income in money terms is produced by any asset. The Price paid for that assert is a numerical ratio over and above the regular monetary income produced by the capital asset. This price will vary according to demand and supply. It is important to note here that it is unclear whether Commons believes this statement or is ascribing this view to others. Turgot then moved forward with some important conceptions that predate Macleod.  He talke...

Commons Futurity pg. 483-486

 Today, we move on to section IV of the Futurity chapter  and the scarcity of debt. IV. Scarcity of Debt and 1. Scarcity of metallic money Commons starts this section with a discussion of Dave Hume and how he helped divide economics between commodity economists and monetary economists. Hume made a distinction between the stability of the metallic money supply and the change in the money supply.  However, economists did not have the tools to deal with this issue. They transferred labor as in the labor theory of value for their measure of economic value. This was a major problem as it mistook efficiency for scarcity. Hume was actually arguing to address the issue of mercantilism and the idea that a country could only succeed by hoarding gold and silver. Hume disagreed with this analysis and wanted to show why it was wrong. The ultimate concluding aprt of this section is that Hume’s argument, ultimately led to a very long 19th century debate between economists over whether m...

Commons Futurity pg. 472-483

  Here we start with section III, the creation of debt. The focus of Commons turns to Ralph Hawtrey’s thinking in 1919 and understanding the relationship between debts and commodities. Hawtrey was a British civil servant and monetary theorist who lived from 1879-1975. Hawtrtey wrote that money like all creations of human beings serves as a purpose, which may change over time but is artificial and not natural phenomena.  For Hawtrey as with Commons, the purpose of money is not as a store of value but rather as a measure of debt release in an unequal transaction. Critically, a debt is a portion of wealth that is owed to another in exchange for a promise or obligation.  Money is simply the measure we use to account for a transfer of wealth from one person to another to release the debt. Common writes that for Hawtrey, the economy is a system to produce and deliver wealth to another in the exchange process. This is a very different starting point from the individual liberty o...