Capitalism, money and banking: a critique of recent historical sociology

A conception of money as a 'neutral veil' masking a 'real' economy was adopted by orthodox economic theory after the Methodenstreit, and is also to be found, in a different form, in Marxian political economy. Both derive from an erroneous functionalist and anachronistic 'commodity' theory of money which, as Post-Keynesian economists argue, cannot explain the distinctive form of capitalist credit-money. Orthodox economic theory and classic Marxism have tacitly informed and flawed historical sociology's understanding of money's role in capitalist development. Mann and Runciman, for example, consider the 'economy' exclusively in terms of the social relations of production and imply that money is epiphenomenal and is to be explained as a response to the needs of the 'real' economy. They do not recognize the structural specificity of capitalist money and banking nor its importance. An alternative account of the autonomous historical conditions of existence of the specifically capitalist form of bank and state credit-money and its role in capitalist development is outlined.