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Single-Period Analysis: Financial Markets, Firms’ Failures and Closure of the Monetary Circuit

  • Chapter
The Monetary Theory of Production

Abstract

The seminal contributions of Augusto Graziani (1982; 1984) to the monetary theory of production make it clear that the realisation of monetary gross profits of firms at the macroeconomic level represents the most intricate and awkward puzzle in the circuit approach. The analytical reason for this puzzle is simple: assuming a single macro period, isolated from those that precede and follow it, and a private pure credit economy, closed to foreign exchanges, the quantity of means of payment introduced into the economy at the beginning of the period coincides with the total debt of firms and with the wage bill; hence the total monetary revenues realised by the set of firms at the closure of the period will at most be equal to their initial debt and cannot account either for the existence of monetary profits or for the monetary payment of bank interest.1

We wish to thank Riccardo Bellofiore, Duccio Cavalieri, Mauro Gallegati, Adriano Giannola, Marc Lavoie, Alain Parguez, Domenico Scalera and Gennaro Zezza for comments and criticisms.

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Authors
  1. Marcello Messori
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  2. Alberto Zazzaro
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Editor information

Editors and Affiliations

  1. University of Leeds, UK

    Giuseppe Fontana (Senior Lecturer in Economics, Associate Professor) (Senior Lecturer in Economics, Associate Professor)

  2. University of Sannio, Italy

    Giuseppe Fontana (Senior Lecturer in Economics, Associate Professor) & Riccardo Realfonzo (Professor of Theories and Methods of Political Economy) (Senior Lecturer in Economics, Associate Professor) &  (Professor of Theories and Methods of Political Economy)

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© 2005 Marcello Messori and Alberto Zazzaro

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Messori, M., Zazzaro, A. (2005). Single-Period Analysis: Financial Markets, Firms’ Failures and Closure of the Monetary Circuit. In: Fontana, G., Realfonzo, R. (eds) The Monetary Theory of Production. Palgrave Macmillan, London. https://doi.org/10.1057/9780230523074_8

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