Constitution or Competition? Alternative Views on Monetary Reform

Pamela J. Brown of Auburn University published an excellent summary of free banking in the Austrian School tradition entitled "Constitution or Competition? Alternative Views on Monetary Reform" (Literature of Liberty, Vol. v, no. 3, Institute for Humane Studies, Autumn 1982).

About the Article

Money, for practically as long as it has existed, has been employed to realize two fundamentally different sorts of goals: production or plunder. In a market economy, private individuals routinely use monetary institutions in a cooperative way to achieve voluntary exchanges of goods and services. Political authorities, by contrast, use monetary institutions in a non-cooperative way to achieve involuntary transfers of wealth.

Table of Contents

• I. Money: Medium of Exchange or Policy Instrument?

• II. The Problem Plaguing Monetized Systems: Government Mismanagement of Currency Production

• III. The Proposed Remedies to Bureaucratic Corruption of Token Currency

• A. Gold: A Note on the "Classical" Solution

• B. Monetary Rules:

  • The Call for a "Constitutionally Constrained" Government Monopoly

  • Two Rationales for Rules

  • Suggestions Concerning the Rule's Content

  • Suggestions Concerning the Money Monopoly's Organization

  • The Anticipated Results of a Monetary Constitution

• C. A Free Market Money System: The Competing Currencies Alternative

  • From "Bitter Joke" to "Crucial Issue"

  • Earlier Advocates of Free Trade in Money: From Smith to Spencer

  • Recent Discussions of the Competitive Supply of Money

  • Hayek and the Denationalization of Money

  • The Competitive Process of Currency Production

  • Is a Free-Market Monetary System Stable?

  • Could Private Token Currencies Emerge? Would They?

  • Skepticism From Gold Standard Advocates

  • Rules and Commands: Their Confusion by the Constitutionalists

  • Monetary Constitutionalists as Entrepreneurs in Scientists' Clothing

• IV. Conclusion: Competition as the Proper Response to Ignorance

• Bibliography

• Footnotes