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This chapter critically examines the Post Keynesian horizontalist theory of money from a Marxian perspective. Horizontalist analyses are criticised from three angles. First, monetary theory should be historically specific. Second, credit money is an advanced form of money, created mostly as liabilities of financial institutions, and its supply is endogenous in a more complex and profound sense than Post Keynesian analysis allows. Third, although credit money is endogenous, the quantity supplied is not always compatible with the needs of the sphere of circulation. Consequently, pronounced instability and inflation are possible for purely monetary reasons.

This chapter starts from the issue of debt in the context of a national economy by contrasting two opposed views: policy prescriptions based on the Washington Consensus prioritize low public debt and a limited role of the government in the development process whereas a more heterodox view considers debt as logical, necessary, and helpful in order to allow the government to pursue an ambitious growth and development strategy. However, things change when the economy is considered in its international context: foreign debt is different from domestic debt and while the same heterodox analysis still rejects the Washington Consensus' demand for trade and financial liberalization, its own ambitious development strategies for the domestic economy get constrained by trade deficits, the threat of capital flight, and exchange rate instability. The question arises how the government can still significantly contribute to economic development beyond the limits of a purely private sector–driven approach. This is why this chapter reviews proposals to relax or overcome the balance-of-payments constraint. Finally, it considers a reform of international payments, which can be implemented by a single country unilaterally, and which enables it to stabilize its current account, avoid foreign debt accumulation, and support domestic development strategies.

The anthropological literature on the gift has split the social and material world into a premodern realm of thick sociality where gifting is located, and a modern realm of thin sociality in which exchange occurs. It concedes the modern realm to neoclassical economists. This paper challenges both the premodern/modern split and the adequacy of neoclassical theory as a description of material life anywhere, drawing on Post Keynesian critiques of the neoclassical treatment of time. The heterodox Post Keynesian school provides a conception of the subject situated in time that is better fitted to non-reductionist theories of material life.

The Japanese economy experienced prosperity during the bubble economy and has suffered from a prolonged recession since the bubble economy collapsed. This paper examines how the interest-bearing debt burden, structural change, and instability of confidence affect dynamic systems. Moreover, it examines these factors in the Japanese economy by applying a recursive vector autoregression analysis. This paper emphasizes the interest-bearing debt burden, the economic structure resulting from the instability of confidence, and the instability of confidence resulting from debt burden play important roles in the instability of the economy. As a result, Japan’s economy was determined to be relatively stable from 1980 to 1996, but was unstable, thereafter.

The theory of the monetary circuit, as developed in its most powerful form by Graziani (1989), has made a significant contribution to the analysis of credit money in Marxian economics. A key issue is the extent to which circuit theory fails to take into account the relationship between sectors producing capital and consumption goods. In Marx’s reproduction schema, how much money do capitalists need to advance in order for exchange between sectors to balance, and for the circuit to be closed? The purpose of this paper is to address this issue by examining different models of the monetary circuit, each of which has a textual grounding in Marx’s often contradictory musings in Capital, Volume 2.

Alongside alternative conceptions of the circuit of money, different interpretations exist about the role of the multiplier, which can be nested in Marx’s reproduction schema. The problem, from a Marxian point of view, is that in the existing literature investment is usually confined to the capital goods sector. It can be argued that Marx, for the most part, viewed investment as involving accumulation in both departments of production. Using a multiplier framework, derived from input-output technology, this wider treatment of investment is considered as an alternative way of modelling the circulation of money. In addition to contributing to Marxian analysis of the money circuit, this approach could also be more accessible to a wider Post Keynesian audience, since a scalar Keynesian multiplier is employed.