Alternative Institutional Strategies for Constructing Monetary Theories

The article discusses the new strategies for studying macro-economic processes and relationships between the monetary and real variables in light of the transformations of the modern economy. The research aims to describe the strategies of constructing monetary theories of mainstream economics and to develop an approach for studying endogenous institutional relationships in monetary processes. Conceptually, the study uses as a point of departure the idea that economic entities pursue value-based and economic motives. Such an approach reflects the intersubjective nature of the economy and helps overcome the extremes of methodological individualism and methodological holism. The study shows how the institutional characteristics of the strategies in question are determined by orthodox and heterodox versions of Keynesian economics. The paradigmal limitations of the given strategies may stem from the fact that methodologically they rely on individualism, which leads to exogenous interpretations of institutions and monetary phenomena. Therefore, it is impossible to explain the emergence of market prices as an institutional phenomena by drawing on the neo-classical versions of the theory of value. Macro-economic indicators in mainstream economics are exogenous aggregated variables. The study traces the development of the paradigmal framework of classical political economy and Marx’s institutional-evolutional theory of value and money, which were determined by the normative interpretation of the economic behaviour of economic entities. Following the above, it is shown that the proposed approach corresponds to the classical tradition and contributes to the research on the endogenous relationship between the nominal and actual parameters of macro-economic processes. This approach also demonstrates the need to consider money as an institutional variable characterizing work output and the corresponding part of GDP. The conclusion is made that in order to address the systemic problems of national economic development, it is particularly important to create an institutional model that would be adequate to the current reality and that would be suitable for constructing effective fiscal and monetary regulators of monetary processes.

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