Theories of money

Russian examiners of questions concerning the evolution of the essence and forms of money traditionally take the classic approach, on the whole understanding money to mean a particular type of goods. This approach dates back to the Marxist tradition, although these days it is experiencing significant modifications.

Researchers in other countries treat money on the basis of a whole range of theories, which should be categorised as follows:

on the influence of money supply on the economy:
- the quantitative theory of money;
- I. Fisher’s quantitative theory of money;
- the Cambridge version of the quantitative theory of money;
- modern/contemporary monetarism;
the functional theory of money;
the theory of the proper essence of money:
- commodity;
- metallic;
- nominalist;
- State, etc.

The aforementioned theories explore those aspects of money and money handling which are not examined in this study. Thus, the metallic theory of money (T. Men, D. North, A. Montchrestien, K. Knies) regard valuable metal money as the wealth of a nation. The quantitative theory of money (C. Montesquieu, D. Hume, J. M. Keynes, I. Fisher, M. Friedman et al.) dwells principally on the direct relationship between the growth of money supply in circulation and a rise in commodity prices. The informational theory of money regards money as information⁵

As the main challenge of this study is the complex theoretical analysis of the nature of contemporary money and securities as a category of economics, in order to show the contradictions between how they are treated economically and legislatively, a particular methodological approach is proposed.

The fact is that, on the one hand, money is an objective phenomenon originating and developing as a result of the natural evolution of commodity production, and on the other hand, its real forms are strengthened by legislation, which is a prerogative of the State. Money circulation and movement of securities is also regulated by the State.

In this study, an attempt is made to move away from the traditional approach, as not one of the theories listed above can, on its own, serve as a methodological foundation of analysis.

The first most important methodological principle is the pluralistic conceptual approach, in accordance with which principles and tools of exploration of several economic theories are used: the commodity, nominalist, State and functional theories of money, as well as a number of neo-institutional ideas.

In the commodity theory, money is regarded as a special kind of universal commodity, which is used as a universal equivalent, and through which the value of all other goods is reflected. Money is a commodity which performs a range of functions, and is, figuratively speaking, «the good of all goods».⁶

However, this is insufficient for a description of money, particularly its modern forms. It is impossible, using only the tools of the commodity theory of money, to discover the essence of financial money, such as shares and other stock. Furthermore, the essence of a phenomenon can never express the total wealth of its actual content and forms of manifestation. Therefore, our research is also based on the neo-institutional theory.