Money and Credit

Abstract

Underconsumption theories belong to the pre-Keynesian tradition in that they can be applied to a non-monetary economy. Mummery and Hobson, in rejecting scarcity of gold as a cause of depression in trade, even went so far as to claim that ‘money, while it obscures, in no wise changes the facts of barter’ (1889, p. 189). Hobson’s first and sole comprehensive work in the field of money and credit, Gold, Prices and Wages, with an Examination of the Quantity Theory, did not appear until twenty-four years after the publication of The Physiology of Industry, though a few of the ideas in it had already been put forward in the ‘Money and Finance’ chapter of The Industrial System. As noted in Chapter 1, the writing of Gold, Prices and Wages was prompted by the rise in prices experienced in industrialised countries from 1896 onwards, which Hobson regretted, mainly because he saw it as leading to greater inequality in the distribution of income.