chapter  7
18 Pages

The invisible hand and the evolution of the monetary system

ByKevin Dowd

This paper re-examines the old question of the desirability of a monetary system devoid of any state intervention.1 However, instead of examining monetary laissez-faire by means of standard neoclassical analysis, with its emphasis on formal optimization, it examines laissez-faire from the viewpoint of conjectural history. It investigates how the monetary system might plausibly evolve from some initial primitive state, driven primarily by the self-interested behaviour of the parties involved, and without any form of government intervention.