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Author(s): Martin Shubik
Publication Date: January 2018
Money is a mystery and ﬁnancial institutions are often regarded as guardians and promoters of the mystery. These sketches are designed to help an individual interested in, but not technically trained in economics, understand markets, money, credit and the evolution of a mass market system embedded in the rich context of its political environment and society.
The eﬀicient functioning of a dynamic economy requires the presence of money and ﬁnancial institutions. The great variety of ﬁnancial institutions in any advanced economy requires that a synthetic approach is used to understand what the whole looks like. Verbal description provides an overarching view of the mixture of history, law, philosophy, social mores, and political structure that supplies the context for the functioning of the economy. This has been vividly illustrated by Adam Smith, his teacher the Reverend Francis Hutcheson and his close friend David Hume.
There are two diﬀerent but highly allied themes in this single slim volume. Chapters 1, 2, and 3 supply the rich context of history, society, polity and law in which every economy is embedded. Chapters 12 and 13 sketch what might lie ahead given the current state of the world. These chapters require no symbols or technical depth. In contrast Chapters 4 to 11 oﬀers a reasonably nontechnical exposition of some of the considerable development in formal economic theory pertaining to money and ﬁnancial institutions as economics struggles towards emerging as a science, balancing quantitative measures with qualiﬁcations that help to explain what the numbers mean.
Evolution of money, Coordination, Division of labor
JEL Classification Codes: C70, D21