A Restatement of Walras’ Theories of Capitalisation and Money¹

Abstract

The primary aim of this paper is not to comment on Léon Walras’ theories of capitalisation and money, but to restate them in a way that avoids ambiguities and inconsistencies. Two other groups of agents are introduced together with consumers and producers: the owners of fixed capital goods, who finance their purchases by issuing securities, and the owners of circulating capital goods, who finance their purchases by issuing money. The principal monetary implications are: there are two quantitative relations (which concern transactions during the period and transactions at the end of the period respectively); the theory of money is integrated with the theories of exchange, production and capitalisation; securities and money are a veil; bank deposits can be introduced in place of paper money; and the length of the period matters.