Toward a Feminist Expansion of Macroeconomics: Money Matters1

Abstract

Orthodox economics has long been confident that money is of minor importance in life. From Adam Smith onward, we have heard that it is real goods, not money, that determine well-being and that economic scarcity refers to scarce goods and scarce real resources. Though values are expressed in money terms, and money facilitates the circulation of goods, many economists continue to believe that it is both nominal and neutral in exchange relationships. In standard microeconomics, now dominated by the barter models of Walrasian general equilibrium, money plays no role whatever [Minsky 1990]. It is simply a mathematical convenience for avoiding the price permutations of barter. In standard macroeconomics, now dominated by monetarism, the situation is largely similar. Monetarists assert either that money does not matter or that it is all that matters. This reflects the Walrasian foundations of current monetarism: under normal circumstances, money is irrelevant [Minsky 1990]; but, in the closed and timeless Walrasian hermeneutic, nothing ever happens except when the essentially alien force of money is interjected. Orthodox Keynesianism, now in retreat, does include exogenous money as an variable, but it neglects Keynes's [1936] preeminent concern with monetary factors in business cycles.