Forgotten titans of economic thought and the digital ruble

The article provides a critical analysis of the Arthur Cecil Pigou’s work, fundamental from the theory of money point of view, «The Value of Money» (1917), which most fully defined the position of Cambridge neoclassic school on the issue of the purchasing power of money and is known in the history of economic idea as cash-balance approach. The «exchange value of a monetary unit» is determined by Cambridge school by the market supply and demand balance, where the demand (for money), according to the school supporters (A. Marshall, A. Pigou), is formed by the society’s resources and the rate of liquidity preference «k», and the supply (of money) is set by the government as an indefinite amount of legal tender and is eventually expressed in a money commodity, i.e. in gold.

The authors argue that the scientist’s theoretical construction based on real money balance is an economic fiction, since it is based on an incorrect methodological approach, and obvious logical errors have been made in the scientist’s reasoning.