Liquidity preference and dualism in monetary thought: Revisiting Victoria Chick’s legacy

Victoria Chick’s engagement with liquidity preference was deeply embedded in her effort to overcome dualistic thinking in monetary theory. Not only does liquidity preference emerge in her work as a key variable in interest rate formation, but also as a conceptual bridge between money, production, and uncertainty, challenging rigid separations between monetary and real variables. In this sense, her approach sought to resist simplistic dichotomies by emphasizing how a monetary production economy functions through continuous and evolving interactions. Despite these efforts, claims that liquidity preference is incompatible with endogenous money perpetuate dualistic tensions at the heart of Post-Keynesian monetary thought. This paper contends that Chick’s own writing still represents the most productive starting point for navigating these criticisms. Against an explicit conceptual background concerning the nature and role of money, we show that the charge of incompatibility rests on a conflation of categorically distinct monetary-theoretic frameworks, and that Horizontalist and Structuralist accounts of money endogeneity are complementary rather than mutually exclusive. From here, we revive and expand Chick’s line of analysis to illuminate how dualistic thinking in monetary thought may be overcome by tracing the historically determined liquidity conditions of specific contexts under analysis.