In this major work Martin Shubik offers his vision of mathematical institutional economics, a term he coined in 1959 to describe the theoretical underpinnings needed for the construction of an economic dynamics that goes beyond general equilibrium theory.
Using an approach that is neither Keynesian nor monetarist, Volume 1 describes the role of money and financial institutions in binding the economy to the polity and society, Volume 2 will extend the analysis to specific financial institutions and to government, while a separate volume, coauthored with Pradeep Dubey and John Geanakoplos, will develop the mathematical aspects of the theory of strategic market games.
This work develops a process-oriented theory of money and financial institutions that reconciles micro- and macroeconomic theory using, as its prime methodological tool, the theory of games in strategic and extensive form. Shubiks approach to economic dynamics involves the search for minimal financial institutions that appear as a logical, technological, and institutional necessity, as part of the structure or rules of the game that define and give shape to economic life. In this approach money and financial institutions are revealed as means for transmitting the imperatives of sociopolitical purpose to the economy. The book stresses formal model building, but the level of the methematics used is relatively elementary.