Turnover of industrial capital, commercial and bank credit: modern Unoist approach 1 Introduction
1. Introduction Much of Marx’s theory of money and credit is based on gold money. It is therefore understandable that endogenous money supply theories (EMSTs), such as the Monetary Circuit Theory (MTC), criticize Marx’s approach as well as the neoclassical view, which they regard as a barter theory. EMSTs argue that money is created "from nothing" (ex nihilo) by bank credit. However, this argument has two problems. First, EMSTs assume not only that money is created from nothing, but also that banks themselves somehow emerge from nothing. Second, banks always assess the creditworthiness of borrowers, which is based on the commodity value of the borrowers’ assets. Since borrowers hold assets expected to be sold in the future, credit money is not issued from nothing—it is issued in anticipation of money returning from commodity sales. Kozo Uno explained the logical emergence of bank credit from idle money capital during the turnover of industrial capital (Uno 1980, 109). Bui...
