Military Vs. Monetary
The use of the military fiat to back economic transactions is what a given theory of political economy actually justifies, e.g. in the political economy of capitalism, military force is justified by the protection of property rights (which are presumed to optimize economic outcomes). Adam Smith defined "defense, infrastructure, justice, education and a stable currency" as the role of government. All defined, in his time, 1776, strictly by a military fiat in most countries, although Britain had a nascent democracy. When the United States broke with the British Empire and its military hegemony in that same year, it was to establish a fiat of its own.
Smith wrote specifically against monetarism, where fiat would be exploited to protect favored industries, monopolize precious metals, and other goals that were not generally shared between the state and the more general public.
The later contributions of David Ricardo and John Stuart Mill led to the first theory of (classical) political economy.
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Famous quotes containing the words military and/or monetary:
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