Hostname: page-component-5cf477f64f-tgq86 Total loading time: 0 Render date: 2025-04-02T16:15:10.544Z Has data issue: false hasContentIssue false
  • English
  • Français

The ontology of fractional reserve banking

Published online by Cambridge University Press:  22 November 2016

MICHAËL BAUWENS Open the ORCID record for MICHAËL BAUWENS [Opens in a new window]
MICHAËL BAUWENS*
Affiliation:
Institute of Philosophy, KU Leuven, Leuven, Belgium
*
*Email: michael.bauwens@kuleuven.be
Get access Rights & Permissions [Opens in a new window]

Abstract

The recent economic crisis has re-ignited the debate over the institution of fractional reserve banking (FRB) and its possible adverse economic effects. This paper brings a so far neglected aspect of the problem to the table, namely social ontology. After addressing the scope of social ontology in relation to social metaphysics, social science and FRB, a general ontological framework for money and banking is sketched and applied to the debate between Austrian opponents and proponents of FRB. It shows that the oppositions reflect metaphysical and ontological positions on the reality of powers and dispositions, namely that a realist position in the metaphysics of powers and dispositions tends to a critical position toward FRB, whereas a sceptical position on powers and dispositions leads to a favorable position toward FRB. A final section gives further examples of how these ontological presuppositions shape other arguments in the debate.

Type
Research Article
Information
Journal of Institutional Economics , Volume 13 , Issue 2 , June 2017 , pp. 447 - 466
Copyright
Copyright © Millennium Economics Ltd 2016 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Bagus, P., Gabriel, A., and Howden, D. (2015), ‘Reassessing the Ethicality of Some Common Financial Practices’, Journal of Business Ethics: JBE, 136 (3): 471–480.Google Scholar
Bagus, P. and Howden, D. (2012), ‘The Continuing Continuum Problem of Deposits and Loans’, Journal of Business Ethics: JBE, 106 (3): 295–300.Google Scholar
Bagus, P., Howden, D., and Gabriel, A. (2015a), ‘Oil and Water Do Not Mix, or: Aliud Est Credere, Aliud Deponere’, Journal of Business Ethics: JBE, 128 (1): 197–206.Google Scholar
Bagus, P., Howden, D., and Gabriel, A. (2015b), ‘The Hubris of Hybrids’, Journal of Business Ethics: JBE, 1–10, doi: 10.1007/s10551-015-2884-x Google Scholar
Baker, L. R. (2015), ‘Human Persons as Social Entities’, Journal of Social Ontology, 1 (1): 77–87.CrossRefGoogle Scholar
Bauer, W. A. (2016), ‘Physical Intentionality, Extrinsicness, and the Direction of Causation’, Acta Analytica, 31 (4): 397–417.Google Scholar
Bird, A. (1998), ‘Dispositions and Antidotes’, The Philosophical Quarterly, 48 (191): 227–234.Google Scholar
Borghini, A. (2009), ‘Dispositions and Their Intentions’, in Damschen, G., Schnepf, R., and Stueber, K. (eds.), Debating Dispositions: Issues in Metaphysics, Epistemology, and Philosophy of Mind, Berlin: De Gruyter, pp. 204–219.Google Scholar
Bottani, A. (2014), ‘The Myth of the Distinction between Ontology and Metaphysics’, in Bacchini, F., Caputo, S., and Dell'Utri, M. (eds.), Metaphysics and Ontology Without Myths, Newcastle upon Tyne: Cambridge Scholars Publishing, pp. 1–15.Google Scholar
Cheng, K.-Y. (2010), ‘Intrinsic Finks and Attributions of Rule-Following Dispositions’, Grazer Philosophische Studien, 80 (1): 209–220.Google Scholar
Epstein, B. (2016), ‘A Framework for Social Ontology’, Philosophy of the Social Sciences, 46 (2): 147–167.Google Scholar
Evans, A. J. (2014), ‘In Defence of “Demand” Deposits: Contractual Solutions to the Barnett and Block, and Bagus and Howden Debate’, Journal of Business Ethics: JBE, 124 (2): 351–364.Google Scholar
Evans, A. J. (2015), ‘What is the Latin for “Mayonnaise”? A Response to Bagus, Howden and Gabriel’, Journal of Business Ethics: JBE, 131 (3): 619–623.Google Scholar
Fullbrook, E. (ed.) (2009), Ontology and Economics: Tony Lawson and his Critics, London: Routledge.Google Scholar
Groff, R. (2013), Ontology Revisited: Metaphysics in Social and Political Philosophy, London: Routledge.Google Scholar
Huerta de Soto, J. (2009), Money, Bank Credit, and Economic Cycles, 2nd ed., Auburn: Ludwig von Mises Institute.Google Scholar
Johnston, M. (1992), ‘How to Speak of the Colors’, Philosophical Studies, 68 (3): 221–263.Google Scholar
Keynes, J. M. (1936), The General Theory of Employment, Interest and Money, London: Palgrave Macmillan.Google Scholar
Knight, K. (2013), ‘Rules, Goods and Powers’, in Groff, R. and Greco, J. (eds.), Powers and Capacities in Philosophy: The New Aristotelianism, New York: Routledge, pp. 319–334.Google Scholar
Lawson, T. (1997), Economics and Reality, London: Routledge.Google Scholar
Lawson, T. (2003), Reorienting Economics, London: Routledge.Google Scholar
Lawson, T. (2009), ‘The Current Economic Crisis: Its Nature and the Course of Academic Economics’, Cambridge Journal of Economics, 33 (4): 759–777.Google Scholar
Lawson, T. (2016), ‘Social Positioning and the Nature of Money’, Cambridge Journal of Economics, 40 (4): 961–996.Google Scholar
Lawson, T. (2013), ‘Emergence and Social Causation’, in Groff, R. and Greco, J. (eds.), Powers and Capacities in Philosophy: The New Aristotelianism, New York: Routledge, pp. 285–307.Google Scholar
Lawson, T. (2014), ‘A Conception of Social Ontology’, in Pratten, S. (ed.), Social Ontology and Modern Economics, London: Routledge, pp. 19–52.Google Scholar
Lawson, T. (2015), Essays On: The Nature and State of Modern Economics, London: Routledge.Google Scholar
Lewis, D. (1969), Convention: A Philosophical Study, Cambridge: Harvard University Press.Google Scholar
Martin, C. B. (1994), ‘Dispositions and Conditionals’, The Philosophical Quarterly, 44 (174): 1–8.Google Scholar
Martin, C. B. and Heil, J. (1998), ‘Rules and Powers’, Nous, 32 (S12): 283–312.Google Scholar
Molnar, G. (2003), Powers: A Study in Metaphysics, in Mumford, S. (ed.), Oxford: Oxford University Press.Google Scholar
Place, U. T. (1996), ‘Dispositions as Intentional States’, in Crane, T. (ed.), Dispositions: A Debate, New York: Routledge, pp. 19–32.Google Scholar
Pratten, S. (ed.) (2014), Social Ontology and Modern Economics, London: Routledge.Google Scholar
Searle, J. R. (1995), The Construction of Social Reality, New York: The Free Press.Google Scholar
Searle, J. R. (2001), Rationality in Action, Cambridge: The MIT Press.Google Scholar
Searle, J. R. (2010), Making the Social World: The Structure of Human Civilization, Oxford: Oxford University Press.Google Scholar
Selgin, G. A. and White, L. H. (1996),‘In Defense of Fiduciary Media-or, We are Not Devo(lutionists), We are Misesians!’, Review of Austrian Economics, 9 (2): 83–107.Google Scholar
Smit, J. P., Buekens, F., and du Plessis, S. (2011), ‘What is Money? An Alternative to Searle's Institutional Facts’, Economics and Philosophy, 27 (01): 1–22.Google Scholar
Smit, J. P., Buekens, F., and du Plessis, S. (2014), ‘Developing the Incentivized Action View of Institutional Reality’, Synthese, 191 (8): 1813–1830.Google Scholar
Smit, J. P., Buekens, F., and du Plessis, S. (2016), ‘Cigarettes, Dollars and Bitcoins-An Essay on the Ontology of Money’, Journal of Institutional Economics, 12 (2): 327–347.Google Scholar
Tieffenbach, E. (2010), ‘Searle and Menger on Money’, Philosophy of the Social Sciences, 40 (2): 191–212.Google Scholar
Varzi, A. C. (2011), ‘On Doing Ontology Without Metaphysics’, Philosophical Perspectives. A Supplement to Nous, 25 (1): 407–423.Google Scholar
Witt, C. (2013), ‘Gender Essentialism: Aristotle or Locke?’, in Groff, R. and Greco, J. (eds.), Powers and Capacities in Philosophy: The New Aristotelianism, New York: Routledge, pp. 308–318.Google Scholar
Yeager, L. B. (2010), ‘Bank Reserves: A Dispute Over Words and Classification’, Review of Austrian Economics, 23 (2): 183–191.Google Scholar