The Ontology and Function of Money: The Philosophical Fundamentals of Monetary Institutions.

• Author: Salsman, Richard m.
• Position: Book review

The Ontology and Function of Money: The Philosophical Fundamentals of Monetary Institutions

By Leonidas Zelmanovitz

Lanham, Md.: Lexington Books, 2016.

Pp. xix, 447. $120 cloth.

The Ontology and Function of Money is a terrific source for scholars wishing to delve more deeply into the history of the philosophy of money and to consider how influential philosophies may be shaping present-day monetary institutions, including central banks and their increasingly esoteric policies. The book is a rarity because there hasn't been a professional work on this topic since Two Philosophies of Money (1978) by S. Herbert Frankel and before that Philosophy of Money (1900) by Georg Simmel. Those books were much less comprehensive.

Beyond its rarity, this book will illuminate and expand any mind that is aware of how contemporary monetary policy is assessed primarily in formal or technical ways, with arcane models and analyses of such matters as bounded rationality, inflation targeting, quantitative easing, the zero lower bound of interest rates, "market monetarism," and the Taylor Rule. It is also fruitfully interdisciplinary--no easy thing to execute. If we can learn more of the philosophy of money, the author suggests, we can learn more also about extant monetary institutions and whether they are ideal or even remedial.

Leonidas Zelmanovitz is an avowed classical liberal who accepts (albeit not uncritically) the main premises, insights, and principles of the heterodox Austrian School of economics. Accordingly, his approach may be unfamiliar to some neoclassical economists (especially the technicians), although not to Marxists, Institutionalists, or Keynesians (especially the philosophically minded). The latter might be uncomfortable with the book's overtly liberal, pro-market leaning. Nevertheless, it should be a worthwhile read both for technicians wishing to check their roots and for market critics willing to widen their horizons.

Zelmanovitz does a nice job of describing the Austrian theory. This theory contends that all economic value (including the value of money) is "subjective," reflecting a subject's feeling of the utility of a thing rather than something intrinsic to the thing (or object) alone, apart from the subject. The theory further holds that money serves mainly as a common denominator and medium of exchange, facilitating production, saving, and investment in a decentralized, division-of-labor society. With money comes a price system and signals that help producers and...