Invisible Hand Processes and the Theory of Money

Abstract

This paper explores, and rejects, the plausibility--advanced by a number of economists and recently re-affirmed by Robert Nozick--of employing an `invisible hand explanation' to account for the existence of money as a medium of exchange. It argues that money is not necessarily more efficient than barter as a means of effecting a multiplicity of desired exchanges, and that its use is not a dominant strategy under standard theoretical conditions of individual rational choice.