IT IS AN INTRIGUING ASPECT of our daily life that intrinsically worthless bits of paper, which we call money, appear to possess value and are exchanged against useful objects. The purpose of this book is to examine the social arrangement underlying this fact. While this social arrangement is none other than the entire social arrangement underlying capitalism, there is a point in starting our investigation from the "money end:' This is because an important part of the overall social arrangement that may not always be apparent when we start from the concept of "capital" emerges with greater clarity when we take money as the starting point of our analysis; this part relates to the fact that capitalism cannot exist, and never has existed, in isolation as a closed, self-contained system, as has been commonly assumed in much of economic analysis. In other words, a better route for understanding the totality of the social arrangement underlying capitalism is to start with a simple question: What breathes value into these intrinsically worthless bits of paper? This question is in turn part of a more comprehensive question: What determines the value of money, irrespective of whether it consists of intrinsically worthless bits of paper or of precious metals?' To this question there have been two basic answers in economics.
The first proposition of this book is that one of these answers, the one given by what constitutes "mainstream" economics at present, cannot stand logical scrutiny. I therefore begin with a critique of "mainstream" economics and, in particular, the notion of "equilibrium" central to it.
