Money and State Theory

F9　—　Neighboring Disciplines

"Money circulates because the state demands it for taxes"—is this really true? We will test the core of Chartalism against historical facts, both those that support it and those that contradict it.

Supervised by: Mitsuru Hayama　／　Reading time (main text): About 6 min (3,105 characters of text at 500 chars/min; exercises and readings not included)　／　Beyond the text: 6 exercises · 2 coins · 4 readings

What this course teaches you to do

• Be able to accurately state the core proposition of Chartalism (the tax-driven theory of money).
• Be able to cite historical facts that support the proposition (monetization of tax payments, the practice of paying taxes in coin, the century of payment in kind).
• Be able to cite historical facts that contradict the proposition (rejected legal tender, money not mandated by the state).
• Be able to discuss the qualified conclusion that "taxes are one force driving circulation, but not the entire force."

Lessons (6)

1. Taxes give rise to money — supporting historical facts.The monetization of the land tax created a demand for yen in every corner of the villages. The form of taxation creates the demand for money.
2. Taxes Abandon Currency — Rome's Century of Payment in KindWhen currency collapsed, the state itself collected taxes in kind. The demanding party, too, abides by the laws of credit.
3. Taxes Organize Finance — The Middle Ages of the *Nōsenkata*The shogunate's pillar was the tax from moneylenders, and its collection was entrusted to the moneylenders themselves. Tax collection was the blueprint for finance.
4. The Day the State's Paper Is Refused — A Control Experiment for the PropositionThe officially supported Reichsmark was rejected, while unmandated cigarettes circulated. The limits of the power of taxation.
5. When Money Makes the State — The Reverse ArrowCurrency led to national integration. The arrow is not a one-way street from state to money.
6. Verdict — Compelling, with limitations.Taxation is a powerful force for circulating currency, but only within the scope of effective collection power and alongside other forces.

Readings (4)

• When temples were banks　Japan　the 1393rd century–the later 15th century　The shogunal Mandokoro, Kyoto
  Section 3. The most vivid scene of the co-evolution of taxation and finance.
• The coinage of the Roman province of Gaul　France　the later 3rd century　The field of Châlons and the mint of Trier
  Section 2. Taxes were collected in kind—the century when the state itself abandoned coinage.
• The country that threw away its coinage　Japan　the 10th–12th centuries　The provincial granaries and Ōshū
  Section 2. A record of the state itself providing a standard other than coin.
• When tobacco was money　Germany　1947–1948　A ruined city, the eve of the reform
  Section 4. A Controlled Experiment: The Rejection of State Paper Money

Assessment

6 exercises in this course (4 check, 1 compare, 1 written). Progress is recorded by self-assessment.