Money, Banks and Finance in Economic Thought

The Contribution of M.Bunge in the Ukrainian economic thought in the second half of XIX century: theory of credit

Lopukh Kseniia, Kyiv National Economic University named after Vadym Hetman

The financial crisis 2008 has shown fundamental problems in the performance of the financial system. One of them is an inaccurate understanding role of credit in the bank system security and stabilization of the economy. It is known that the crisis has started with unfair and unsecured real assets credit supply. In addition, customer loans became a base of expansion of credit and housing speculation, with the creation of derivative securities that were repeatedly resold. Thus, the “housing bubble” grew and collapsed in 2007. This retrospective analysis shows us that in the modern economy we need to remember the fundamental value of credit, which certainly remains the basis of economic development. Therefore, we have to appeal to the achievements of the famous economists of the past; the relevance of their ideas is important today. Credit as a system of relations between individuals is well known since ancient times. However, its role for the development of a market economy in the second half of the XIX century was particularly powerful and decisive in a number of countries, such as Great Britain, France, Germany, and the USA. Nevertheless, especially important was the credit for the establishing of market relations in Ukraine (Malorossiia in the Russian Empire). Therefore, political economists investigate the theory of credit as an important source for entrepreneurship. Among them – M. Bunge – Professor of St. Volodymyr Kyiv University, Minister of Finance of the Russian Empire in 1881-1886. In his book “Theory of Credit” (1852), there are two ideas that are extremely relevant for today. Bunge argued that credit is the external side of fundamental economic phenomena and processes. Today banks forget about that fact. The loan should be provided with real production! He considered credit as a way of exchange, where the subject of exchange is the value of a product or service that will be paid in the future. Trust is the most important thing here. Trust makes credit possible, and most importantly, it will receive payment in the future. Trust has a dual nature: it includes the economic side – movable and real property, labor, productivity and capital, and the moral side – honesty, precision, and protection of law. Bunge emphasized that the more important is the economic side of trust, and it is known as a loan guarantee.


Keywords: Theory of credit, economic trust XIX century, M.Bunge

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