The classical economic theory (Debreu,

*Theory of Value*, 1959) is based on three elements: the

*utility function*, the

*production function*, the

*initial endowment*that divides ownership of the goods among actors. Starting from these elements one can deduce the vector of relative prices that, directing the exchange, guides the economy to a Pareto optimum.

The elegant simplicity of this model provides it a great power. The general equilibrium is detailed in partial equilibrium, each market being the scene of a supply and a demand. This can be completed by introducing the time: the production function is then modified by the investment.

In "A Suggestion for Simplifying the Theory of Money" (

*Oxford University Press*, February 1935) John Hicks proposed however to fill a gap in this theory. He noted that each agent has actually

*two*utility functions: one describes the satisfaction that comes from consumption, and the other one describes the satisfaction that gives him the possession of a patrimony.

Assets can be classified according to their liquidity. Money, which is the pure liquidity, is readily usable and implies no risk but provides no income. Illiquid assets provide an interest or a rent, but their price is changing: their possession presents a risk of depreciation.