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The ontology of fractional reserve banking

Published online by Cambridge University Press:  22 November 2016

MICHAËL BAUWENS Open the ORCID record for MICHAËL BAUWENS [Opens in a new window]
MICHAËL BAUWENS*
Affiliation:
Institute of Philosophy, KU Leuven, Leuven, Belgium
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*Email: [email protected]
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Abstract

The recent economic crisis has re-ignited the debate over the institution of fractional reserve banking (FRB) and its possible adverse economic effects. This paper brings a so far neglected aspect of the problem to the table, namely social ontology. After addressing the scope of social ontology in relation to social metaphysics, social science and FRB, a general ontological framework for money and banking is sketched and applied to the debate between Austrian opponents and proponents of FRB. It shows that the oppositions reflect metaphysical and ontological positions on the reality of powers and dispositions, namely that a realist position in the metaphysics of powers and dispositions tends to a critical position toward FRB, whereas a sceptical position on powers and dispositions leads to a favorable position toward FRB. A final section gives further examples of how these ontological presuppositions shape other arguments in the debate.

Type
Research Article
Information
Journal of Institutional Economics , Volume 13 , Issue 2 , June 2017 , pp. 447 - 466
Copyright
Copyright © Millennium Economics Ltd 2016 

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