Locke on the Epistemology of Money and Economics

In the context of the crisis connected with the Great Recoinage (1696), Locke interprets money not only as a medium of exchange but also as a unit of account, a reserve of value, and a ‘commodity’ the price of which (interest) is determined by the market. Protection of the ‘intrinsic value’ of silver and of the real value of money responds to the need to preserve collective trust in the face of practices such as coin clipping and proposals for legal devaluation. For Locke, economics, language, and politics are part of a single structure regulating public credibility. This contribution aims to set these theories in the context of the contemporary debate. Newton brought about the technical implementation of Locke’s reflections, although he diverged on the issue of devaluation. In the background lies the methodological legacy of William Petty, while Joseph Massie (1750) offered an integrated reading of interest as the joint result of ‘real’ and ‘monetary’ factors. The concept of ‘natural’ interest, the linguistic function of money, and its conventional-institutional dimension, as well as Locke’s perspective on the gold standard and his theory of appropriation, are analysed in relation to twentieth-century economic topics.