by On the nature of money and debt Perhaps we may elucidate the distinction between money and money-of-account by saying that the money-of-account is the description or title and the money is the thing which answers to the description. Now if the same thing always answered to the same description, the distinction would have no practical interest. But if the thing can change, whilst the description remains the same, then the distinction can be highly significant. The difference is like that between the King of England (whoever he may be) and King George. A contract to pay ten years hence a weight of gold equal to the weight of the King of England is not the same thing as a contract to pay a weight of gold equal to the weight of the individual who is now
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On the nature of money and debt
Perhaps we may elucidate the distinction between money and money-of-account by saying that the money-of-account is the description or title and the money is
the thing which answers to the description. Now if the same thing always answered to the same description, the distinction would have no practical interest. But if the thing can change, whilst the description remains the same, then the distinction can be highly significant. The difference is like that between the King of England (whoever he may be) and King George. A contract to pay ten years hence a weight of gold equal to the weight of the King of England is not the same thing as a contract to pay a weight of gold equal to the weight of the individual who is now King George. It is for the State to declare, when the time comes, who the King of England is.Now by the mention of contracts and offers, we have introduced Law or Custom, by which they are enforceable; that is to say, we have introduced the State or the Community. Furthermore it is a peculiar characteristic of money contracts that it is the State or Community not only which enforces delivery, but also which decides what it is that must be delivered as a lawful or customary discharge of a contract which has been concluded in terms of the money-of-account. The State, therefore, comes in first of all as the authority of law which enforces the payment of the thing which corresponds to the name or description in the contract. But it comes in doubly when, in addition, it claims the right to determine and declare what thing corresponds to the name, and to vary its declaration from time to time — when, that is to say, it claims the right to re-edit the dictionary. This right is claimed by all modern States and has been so claimed for some four thousand years at least. It is when this stage in the evolution of Money has been reached that Knapp’s Chartalism — the doctrine that money is peculiarly a creation of the State — is fully realised.
Sometimes when you follow the ongoing debate on debt and money you get the impression that for some economists — especially those following in Innes’ footsteps — money is nothing but a question of credit and debt. But that is not Keynes view. For Keynes it is the state that determines what kind of ‘thing’ will count as credit and service debts. It is only when the state decides that a certain piece of paper counts as legal tender, that bit of paper is money.