Making Money: Coin, Currency, and the Coming of Capitalism

by Christine Desan

Money travels the modern world in disguise. It looks like a convention of human exchange - a commodity like gold or a medium like language. But its history reveals that money is a very different matter. It is an institution engineered by political communities to mark and mobilize resources. As societies change the way they create money, they change the market itself - along with the rules that structure it, the politics and ideas that shape it, and the benefits thatflow from it.One particularly dramatic transformation in money's design brought capitalism to England. For centuries, the English government monopolized money's creation. The Crown sold people coin for a fee in exchange for silver and gold. 'Commodity money' was a fragile and difficult medium; the first half of the book considers the kinds of exchange and credit it invited, as well as the politics it engendered. Capitalism arrived when the English reinvented money at the end of the 17th century. When itestablished the Bank of England, the government shared its monopoly over money creation for the first time with private investors, institutionalizing their self-interest as the pump that would produce the money supply. The second half of the book considers the monetary revolution that broughtunprecedented possibilities and problems. The invention of circulating public debt, the breakdown of commodity money, the rise of commercial bank currency, and the coalescence of ideological commitments that came to be identified with the Gold Standard - all contributed to the abundant and unstable medium that is modern money. All flowed as well from a collision between the individual incentives and public claims at the heart of the system. The drama had constitutional money, as itshistory reveals, is a mode of governance in a material world. That character undermines claims in economics about money's neutrality. The monetary design innovated in England would later spread, producing the global architecture of modern money.

Genres: Economics, History, Finance, Money, Nonfiction, Law, Politics

500 pages, Kindle Edition

First published August 13, 2014

Reviews

[Mehrsa · Rating 5 out of 5]

Absolutely essential history of money. Popular historians of money start with barter because that’s a useful place to start if you don’t understand that money is a state invention. Other anthropologists
And historians and theorists have tried to correct this history. Desan’s thorough evaluation of the creation of money is a must-read for anyone interested in law
Or economics. It’s not an easy read but it will come in handy when you have to explain to your bitcoin bro brother in law why bitcoin isn’t money and why
He’s wrong about everything. Don’t read it just for that though, read it so you can read more in this space—Mmt, positive money in the uk, graeber, Polyani, etc. Throw your Naill Ferguson history
Of money in the trash if it’s not already there

[Marks54 · Rating 5 out of 5]

This book by a Harvard Law School professor presents a history of the evolution of modern money as a social and political institution. Professor Desan focuses on the British experience, since that is obviously her specialty and because the evolution of money in the British economy was central to its development elsewhere in modern capitalism, including in the US. This is a carefully argued, richly detailed, and thoroughly documented work of scholarship. Those expecting popular HBS style trade books should go elsewhere. It would be foolish to attempt to simply summarize Professor Desan's arguments here. But I can address why I found the book fascinating.

Start with the question of how the current monetary system arose and you may well end up repeating some truisms from an introductory course in microeconomics or a course on money and banking. Money is a unit of measure, a store of value, a medium of exchange, or something similar. It obviously arose when it was needed out of earlier archaic systems, such as barter or early lotteries, which modern money replaced. The base explanation will see money as an economic rather than a political phenomenon and not credit government with a central role beyond that of maintenance and administration. As most subsequent variants of liberal economic theory have argued, government intervention with money should be minimized. Consider the German inflation of 1922-23 if you need details of why that is so.

It is at this point that Professor Desan's book is relevant. After just a little thought, it becomes fairly clear that money did not emerge bottom-up from primitive exchanges and barter arrangements and that even if such evolution was plausible on a small scale, the emergence of national and global monetary systems on a spontaneous basis would be a very low probability event. While it makes for good traditional liberal rhetoric, does this account of the rise of money square with the historical experience of Britain (or anyone else)? Professor Desan says no. Monetary systems were produced by states in the effort to efficiently tax their populations and then expanded to include private transactions to the extent possible and to the extent that doing increased tax revenues. The invention of money is not separate from the market but fundamental to it. Money and markets are not separate from the state but fundamentally tied to state activities. Once one can look at a monetary system as a social institution in service to the state, the analysis then can shift to understanding what it means for such a system to function effectively, how problems with money can be identified, and how the system can be improved. Professor Desan tracks this process in Britain from the end of the Roman period up through the seventeenth history with its mix of monarchy, rebellion, restoration, and revolution. Modern money developed after the longer term development of the fundamental practices and ideas. It came to be justified by Locke, Hume, Smith, and others, even while the developmental history of money failed to make it into the ideological account of British commercial and imperial triumph.

The book is well written and fascinating. It is also filled with lots of odd details. I never knew there was so much to know about the penny, for example. I also never realized the difference between the pound and the guinea. This is a read that requires attention, but if you are interested in money and finance, this is a wonderful history book and well worth reading.

[Winmonroe · Rating 5 out of 5]

9/10

A superb work of historical and legal scholarship about the origins, formation, and transformation of money. Desan deconstructs conventional origins stories of private barter exchange and provides detailed historical records and evidence regarding money's development by sovereigns as part of their governance. The middle section of the book provides an intricate history of medieval monetary systems before the book turns to the development of the modern money and banking system with the creation of the bank of england and private, money issuing banks. Desan shows how changes in the monetary system change the economy and how modern monetary systems give rise to modern capitalism as an 'institutionalization of self-interest in money production.' A dense and incredibly informative study, compellingly argued and evidenced. Highly recommended.

[teohjitkhiam · Rating 4 out of 5]

From the very start, the author clearly makes the case that money was & still is a constitutional project imposed from the top. Its origin does not conform to the fairy-tale told & retold in classical economic textbooks. Money's role was & is intended by rulers, past & present, as a tool & later as a catalyst to marshal resources on a far wider scale. The irony is that the very success of money, by the end of the 18th century, enabling the ascendancy of capitalism gave rise to the original fairy-tale of a free market, stymied by a free-wheeling barter trade system, that innovated a medium of exchange capable accounting for & storing of value.

[Jeremy Punnett · Rating 4 out of 5]

A history of money creation and the shift to the gold standard from the medieval period. Very interesting... but maybe only for economic historians.

[Felix · Rating 5 out of 5]

Un excellent livre qui gagnerait à être davantage vulgarisé. Je vais donc essayer de présenter certains éléments qui mettent en perspective plusieurs enjeux modernes qui pourraient simplifier la lecture d’un futur lecteur.

L’histoire que nous raconte Christine Desan est celle de la création de la monnaie en Angleterre suivant la chute de l’Empire romain qui fit disparaitre son utilisation pendant 400 ans. La monnaie n’ayant pas émergé naturellement de manière significative, cet épisode fait naître un doute concernant la théorie classique d’émergence naturelle d’une monnaie suivant une coïncidence de besoins individuels sans présence d’État.

Ainsi, Desan entame l’histoire d’un projet de gouvernance aux racines politiques, sociales et légales qui selon ses recherches n’est finalement pas vraiment compatible avec la théorie classique.

La monnaie semble fondamentalement « fiscally engineered ».

Une variable qui semble toujours indispensable peu importe le processus de créations ayant émergé dans l’histoire et son épopée en Angleterre en est un bon exemple.

Comment émerge une monnaie? Pour la suite : https://felixleblanc.com/2023/08/20/c...

[David Gillette · Rating 5 out of 5]

Very full of interesting tidbits, which is all I really read nonfiction for anyway. This book is part of the ongoing wave of chartalist and nominalist scholarship on economic history. It is very interesting and full of good references for further reading; it is also pretty dense and stylistically academic. Some readers may find that grating.

This book will absolutely ruin fictional currencies in fantasy novels for you. Her discussions of the fiat reality of money and the problems of commodity money make “Dungeons & Dragons”–style gold standards, with no apparent political authority exacting obligations so denominated, seem pretty dumb. So if that is a concern, be aware.

[Neo_classical · Rating 4 out of 5]

again sue me but i haven't read this *whole* book, but i have read about half of it for university and it's fascinating and made me consider money in completely new ways and see the world very differently

[Randy Allred · Rating 5 out of 5]

Money history and theory researched by Harvard law professor Christine Desan.

[Konstantin Matveev · Rating 2 out of 5]

Heavy language makes reading a hard labor. Throughout the book I had a feeling that the author had written it for herself and not for readers.

[Stephen]

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