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Carl Menger's theory of the evolution of money: some problems

1992; Taylor & Francis; Volume: 4; Issue: 4 Linguagem: Inglês

10.1080/09538259200000026

1465-3982

Geoffrey M. Hodgson,

Economic Theory and Policy

The Austrian economist Carl Menger suggested that money, law and language may all evolve without state intervention. A preliminary task of this article is to clarify what is meant by ‘evolve’ in this context. It is further argued that there is a gap in the Mengerian argument: a neglect of potential quality variation in the emerging monetary unit. Attention to this factor suggests a role for intervention in the monetary system, by the state or another overarching authority such as a central bank, to police the currency against debasement, and to legitimate its value. Furthermore, the argument suggests why law is not an entirely spontaneous institution and may require state sanction that is not generally necessary in the case of language.