3 - Distributing the Stock of Money

Summary

Moving to aggregate analysis, Del Vecchio's monetary theory must be read in light of the role that money plays in the self-organizing process connoting a changing economy. Money ‘contributes’ to organizing the price system of an economy, and to making the relationships between real and monetary variables work. While the mechanism of price formation is set by the characteristics of economic production and circulation, the trend of prices and expectations about them are the outcomes of a complex set of interactions involving both objective and subjective features, both real and monetary factors.

Money matters, not only as absolute quantity, but also if not mainly because it is canalized among the economic sectors or groups. The point was treated in original manner by Del Vecchio in his first articles, where acceptance that money can be demanded per se led him also to consider how money distributes itself among producers. Money distribution, a relative notion, more than the absolute stock of money, is the key feature because it embodies the essential relationships explaining the aggregate demand for money.

Del Vecchio grounded his analysis on the dynamic interrelation between, on the one hand, the distribution of money, i.e. how money is stored by some agents, and on the other, the circulation of money. Del Vecchio, in fact, presented his theory as a circulation theory, without directly relating it to money distribution.