Unoist contributions to the triangular debate on money theory in Japan

Abstract

The purpose of this paper is to summarize the triangular debate on money theory, or money reform, in contemporary Japan and to show the unique contribution of neo-Unoists to the debate. The debates on money theory in the socioeconomic context of Japan are chiefly between Reflationists (who hold to a kind of monetarist policy), Modern Money Theorists (MMT), and Marxists (neo-Unoists). As the policy arguments put forward by each school depend on their theoretical frameworks, the validity of their respective policies is closely related to the validity of the theoretical frameworks that support them. To unravel the Japanese debate on money theory, this paper sets the Marxian money theory, updated by neo-Unoists, as the analytical framework to examine the validity of each school’s theoretical claims, while acknowledging the presence of monetarism and MMT, and the internal debate within the Japanese Marxian school.

Keywords:

• Commodity theory of money
• Modern Money Theory
• money theory
• neo-Chartalism
• quantity theory of money
• reflationist
• Unoist

Acknowledgements

This work was supported by JSPS KAKENHI Grant Number JP22K01409.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The division between the old- and neo-Unoists follows Ehara (2022b, 181), specifically in whether a model of pure capitalism should be assumed as the basis for an analytical framework or adopt a polymorphic approach. Itoh (1988) also clarified the theoretical differences between the Uno school and Marxist orthodoxy. The main characteristics of the Uno theory are, first, its relative independence of the theories of circulation and the market system from the theories of labor and production. This enables an original analysis of the circulation and credit system. Second, the author reconstructed historical theory using empirical studies of capitalism while reserving historical materialism as a guiding thread. Although Itoh (1988) did not adopt approaches of pure capitalism and polymorphism, the idea that the commodity economy’s structure always constrains. Itoh and neo-Unoist share the modern state’s directionality.

2 Neo-Unoists are debating monetary reform in response to new social issues, such as de-growth theory and the empowerment of social minorities, via actively using monetary policy or several types of money reform (Yuki 2021), which Marxist orthodoxy has undervalued. The aim is to inform strategies for social reform aimed at reducing the degree of commodification of labor power, as explored by the Unoist welfare state theory and Esping-Andersen (1990).

3 “The reader may refer to chapters 10 and 37 of Capital, Vol. III, for Marx’s conception of a purely capitalist society” (Uno 2016, 10).

4 Shibasaki and Ehara (2022) articulated the relationship between the concept of commercial capital and stage theory.

5 See Obata (2009) for a polymorphic explanation of contemporary money.

6 Since Marx, the assumption that the generation of money results from commodity exchange has been a corrective force to the theoretical fiction that presupposes the state to explain the desire for money.

7 The historical development of the Unoists’ theory of money is detailed in Ehara and Imai (2023). See also Obata (2016).

8 Note that how each type of money works under the credit system cannot be fully explained by assuming the simple circulation of commodities. See Ehara (2024) for the developments into the theory of credit system under a capitalist market.

9 Popular textbooks on political economy by Itoh (1988) and Obata (2009) explain the logical problems with the quantity theory of money. Of course, Marx’s Capital is also a book based on a critique of the quantity theory of money. See also Kelton (2020, 273).

10 Yuki was one of the first to point out the theoretical problems of MMT in the media, and interview articles about MMT with Kelton and Yuki were distributed on the same day (The Asahi Shimbun Digital, July 19, 2019).

11 Even if the amounts of claims and debts match within a sector or society, the question of whether the debtor can pay the creditor in the individual claim/debt relationship is another matter. This logically commits the same error as Say’s Law, which holds that individual exchanges will also work if aggregate demand and aggregate supply coincide.

12 The author argued, “[the] Government never needs to sell bonds before spending and indeed cannot sell bonds unless it has first provided the currency and reserves that banks need to buy the bonds” (Wray 2015, 4). However, money is created twice by the government (in the inherent sense) and central bank in the purchase operations conducted in the MMT procedure, and both are combined as government functions. If the central bank’s balance sheet is considered independent of the government, the government does not need to supply money. The same is true when private financial institutions create liabilities.