Tribute to Augusto Graziani by John Smithin

Professor Augusto Graziani, 1933-2014

 

Introduction:

Hello, my name is John Smithin and I am the Executive Co-Director of the Aurora Philosophy Institute in Aurora, Ontario, Canada, and Professor Emeritus and Senior Scholar at York University, Toronto. It is an honour for me to be able to contribute these remarks to the Memorial Conference for Professor Augusto Graziani, taking place at the University of Sannio from May 9th to 10th 2024.

Augusto Graziani was an international scholar of the first rank, the highest rank. And also, so I gather, a personal inspiration to all those who knew him well, such as yourselves.

Question I:  How did you first meet Augusto Graziani and come across his writings?

This must have been at a conference in England in the early 1990s. I can’t remember exactly where or when, probably in London or at Cambridge University. What I do remember is being impressed by the paper he gave, and then having the good fortune to be seated next to him at the conference dinner. I learned a good deal that evening.

It must have been around that time, Giuseppe, that I started to be in fairly close touch with you? In fact, it was from you that I then gained a much more detailed understanding,

As for his writings, very important was a pamphlet he wrote in English around 1990, later published as a journal article. This was called  ‘The theory of the monetary circuit’. Then there was a short book length treatment in 2003, The Monetary Theory of Production.

I would also like to mention a series of articles he wrote for the journal Economic Notes, which is actually an Italian journal published in English, starting in the 1980s. In particular, the article on ‘Keynes’s finance motive’.

Question 2: In your writings, you often refer to the nature and the origin of money in the Monetary Circuit Theory. What has been the impact, if any, of Graziani’s works on your way of thinking about the functioning of modern economies? 

Well, the theory of the monetary circuit, and the notion of endogenous money, is fundamental for the correct understanding of the Keynesian and Post Keynesian approaches to macroeconomics. In particular, of course, I refer to the role of credit creation (and hence money creation), that is necessary for the generation of the monetary profits - on which the whole system depends.

By the time I met Graziani, I was already familiar with the various French versions of circuit theory. Omar Hamouda and I had invited Bernard Schmitt to the Keynes and Public Policy conference in Toronto in 1986. That was the 50th anniversary of Keynes’s General Theory and the 75th birthday of Keynes’s student and our York University colleague, the late Lorie Tarshis. Shortly afterwards, I got to know the late Alain Parguez (I think that conference was the first time I heard his name). Alain was a frequent visitor to Canada, and Ottawa in particular.

So, when I encountered Graziani, that was a fresh approach to me, and I was struck in particular by the clarity of his exposition, which helped me to further develop, and solidify, if I can  put it that way, my own ideas on the topic.

I think that one of the most important questions to be resolved is what are the differences between Graziani’s approach and that of (say) Alain Parguez. Maybe this is one of the issues that will be debated at your conference? If so, I would be fascinated by the results that emerge.

If we think of the monetary circuit in terms of Marx’s M – C – C’ – M’ , then what is the ontological status of the M terms (standing for money) as compared to that of the C terms (commodities). I am using the English symbols, of course. (Once, I had a 3 hour conversation with a francophone person that was very much at cross purposes. M stood for commodities, ‘matière’, ‘materiel’, or something like that and A ‘argent’ for money -very confusing). Anyhow, should we, in fact, also think of money as a commodity itself, as in Marx. Or, is it a social relation in its own right with ‘a separate and relatively autonomous monetary sphere’ as Geoff Ingham, for example, has put it.

As I understand it, correct me if I’m wrong, Graziani continued to favour the former conception? In any event, his ideas live on and are still important to us today.