The Theory of Money and Credit - Ludwig von Mises [224]
Thus until recently the claim analogy led a precarious existence in the expositions of monetary doctrine, without having any greater significance—as was imagined—than that of a means of expression that could easily be understood by all. Even in the writings of Bendixen, who would have been glad to see his obscure arguments designated a claim theory, the claim concept has no greater significance ascribed to it. But very recently an ingenious attempt has been made by Schumpeter to arrive at a real theory of the value of money starting from the claim analogy, that is, an attempt to construct a catallactic claim theory.
The fundamental difficulty that has to be reckoned with in every attempt to construct a theory of the value of money starting from the claim concept is the necessity for comparing the quantity of money with some other total, just as in the ticket illustration the total number of tickets is compared with the total amount of room available. Such a comparison is a necessity for a doctrine which regards money as "claims" whose peculiarity consists in the fact that they do not refer to definite objects but to shares in a mass of goods. Schumpeter seeks to avoid this difficulty by starting, in elaboration of a line of argument first developed by Wieser, not from the quantity of money, but from the sum of money incomes, which he compares with the total prices of all consumption goods. [10] There might be some justification for such a comparison if money had no other use than to purchase consumption goods. But such an assumption is obviously quite unjustifiable. Money bears a relationship, not only to consumption goods, but also to production goods; and—the point is a particularly important one—it does not serve only for the exchange of production goods against consumption goods but very much oftener for the exchange of production goods against other production goods. So Schumpeter is only able to maintain his theory by simply putting out of consideration a large part of that which circulates as money. He says that commodities are actually related only to the circulating portion of the total quantity of money, that only this portion has an immediate connection with the sum of all incomes, that it alone fulfills the essential function of money. Thus "to obtain the quantity of money in circulation, which is what we are concerned with," the following items, among others, have to be eliminated:
Hoards
"Sums that are unemployed but awaiting employment"
Reserves by which we are to understand those sums of money "below which the economic agents never let their holdings fall; in order to be prepared for unexpected demands."
But even the elimination of these sums is not enough; we must go still farther. For the total incomes theory is "not concerned even with the total quantity of money in circulation." In addition we must exclude "all those sums that circulate in the 'income-distributing' markets, in the real estate, mortgage, security and similar markets." [11]
These limitations do not merely serve, as Schumpeter thinks, to demonstrate the impossibility of dealing statistically with the notion of money in effective circulation; they also cut away the ground from beneath his own theory. All that needs to be said about the separation of hoards, unemployment sums, and reserves, from the remaining amount of money has already been mentioned above. [12] It is inadmissible to speak of "sums that are unemployed but awaiting employment." In a strict and exact sense—and theory must take everything in a strict and exact sense—all money that is not changing owners at the very moment under consideration is awaiting employment.