Money

Ancient Greek (Peripatetic)

Money arose by convention to overcome the limits of barter, serving as a medium of exchange, a measure of value and a store of it. Aristotle distinguished natural household provisioning from 'chrematistics', the unnatural pursuit of money for its own sake, and condemned usury as the breeding of money from money since coin is barren. His analysis set the terms — functions, convention, and moral limits — for two millennia of debate.

Nicomachean Ethics, Book V; Politics, Book I.

Scholasticism

Following Aristotle, Aquinas held that money is a measure instituted for exchange and that charging interest on a loan is unjust because it sells time, which belongs to God, and demands payment for a thing already transferred to the borrower. To take usury is to sell what does not exist, since money is consumed in use. He allowed licit compensations, laying groundwork later Scholastics would expand toward permitting some return on capital.

Summa Theologiae, II-II, q. 78 (on usury).

Medieval scholastic economics

Oresme wrote one of the first treatises devoted to money, arguing that coinage belongs to the community rather than the prince, who is merely its trustee. Debasement — secretly reducing a coin's metal content — he condemned as a fraudulent, hidden tax that ruins trust and drives good money away. His work anticipates both sound-money doctrine and what would later be called Gresham's Law.

A Treatise on the Origin, Nature, Law and Alterations of Money (De moneta, c. 1355).

Classical liberalism / empiricism

Locke held that money originated by tacit consent when people agreed to accept durable, scarce metals that would not spoil, allowing legitimate accumulation beyond immediate need. In the recoinage debates he insisted that silver's value is intrinsic and that the state must not devalue the currency, since a coin's worth lies in its metal weight. He also linked money's value to its quantity relative to trade, an early statement of quantity reasoning.

Second Treatise of Government (1689); Some Considerations of the Consequences of the Lowering of Interest (1691).

Scottish Enlightenment

Hume gave a clear statement of the quantity theory: money is not wealth itself but the oil of commerce, and doubling the money stock ultimately doubles prices without enriching a nation. His 'price–specie flow mechanism' shows how trade surpluses raise domestic prices and drain gold abroad, automatically correcting imbalances. In the interval, however, rising money can stimulate real activity — a nuance later economists prized.

'Of Money' and 'Of the Balance of Trade' in Political Discourses (1752).

Classical political economy

Smith treated money as the 'great wheel of circulation' — a costly instrument of commerce, not wealth itself, whose maintenance diverts resources that paper credit can partly economize. He explained how money emerges to solve barter's double coincidence of wants and warned against confusing gold and silver hoards with a nation's true riches, which lie in productive labour. Well-run banking, in his view, turns 'dead stock' into active capital.

The Wealth of Nations (1776), Book II, ch. 2.

Historical materialism

For Marx money is the universal equivalent, a commodity (classically gold) in which the value of all others is expressed, evolving through forms until it can function as capital in the circuit M–C–M′. As capital, money is not spent but advanced to return with a profit, subordinating production to endless self-expansion. Money also embodies commodity fetishism, cloaking human relations as relations between things.

Capital, Volume I (1867), Part I, ch. 3.

Austrian School

Menger explained money as a spontaneous, unplanned social institution: it arose because individuals seeking to trade gravitated to the most 'saleable' goods, and this self-reinforcing process converged on a common medium of exchange. No state decree or social contract was needed — money is the classic example of an institution that is the result of human action but not of human design. Its essence is marketability, not legal fiat.

'On the Origin of Money' (1892); Principles of Economics (1871).

German Historical School / chartalism

Against commodity theories, Knapp advanced chartalism: money is 'a creature of law', its value resting not on metal content but on the state's power to name the unit of account and to accept the token in payment of taxes. What makes something money is that the authority declares it valid tender, so paper and base metal serve as well as gold. This state theory deeply influenced Keynes and modern debates on fiat currency.

The State Theory of Money (Staatliche Theorie des Geldes, 1905).

Sociology / philosophy of culture

Simmel treated money as the purest form of a social interaction and a symbol of modern life's abstraction: by making all qualities commensurable as quantities, it dissolves personal bonds while vastly extending individual freedom and the range of exchange. Money is objectified trust and the perfect means that threatens to become an end in itself, breeding a calculating, blasé mentality. It is thus both a liberator and a solvent of value.

The Philosophy of Money (Philosophie des Geldes, 1900).

Modern macroeconomics

Keynes stressed money's role as a store of value under uncertainty: people hold it out of a 'liquidity preference' for the security it offers, so money is never neutral and can depress spending and employment. The interest rate is the price of parting with liquidity, not merely of saving, and a monetary economy can settle at a slump. Money, for Keynes, is a bridge between an uncertain present and an unknowable future.

The General Theory of Employment, Interest and Money (1936).

Heterodox / 'free economy'

Gesell argued that money's ability to be hoarded without cost gives it an unfair advantage over goods, which decay, letting rentiers extract interest and starving circulation. His remedy was 'free money' (Freigeld) that steadily loses value if held — a carrying tax on cash — to keep it circulating and drive interest toward zero. Keynes called him an unjustly neglected prophet, and his ideas resurface in negative-interest and demurrage schemes.

The Natural Economic Order (Die natürliche Wirtschaftsordnung, 1916).

Monetarism / Chicago School

Reviving the quantity theory, Friedman held that 'inflation is always and everywhere a monetary phenomenon', produced when the money supply grows faster than output. He argued the Great Depression was worsened by the Federal Reserve letting the money stock collapse, and urged a steady, rule-based growth of money over discretionary management. Money matters decisively for nominal magnitudes, though it is roughly neutral for real output in the long run.

A Monetary History of the United States (with Anna Schwartz, 1963).