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Money
Few economic phenomena provoke as much confusion as money. From the first measures of value and the physical coins that circulated at the dawn human civilization to the era of ‘virtual’ money transmitted through cyberspace, it is ubiquitous and hugely important, yet economists cannot even agree on what it is.
In this pithy, accessible book, Geoffrey Ingham cuts through this tangled web of debate to bring rare clarity. Ingham begins by examining the fundamental debate over the nature of is it fundamentally a natural, ‘neutral’ measure of pre-existing value produced by ‘real’ economic forces? Or is it a socially produced and politically manipulated force that creates new value? He proceeds to trace the import of these competing views for how we understand our contemporary monetary systems and their practical and policy-related implications, from their role in financial crises to proposals for reform.
Students of political economy, economic sociology and monetary economics will find this book an invaluable primer, as will general readers wishing to understand how money shapes their lives, from the cash in their pocket to the numbers on their computer screen.
In this pithy, accessible book, Geoffrey Ingham cuts through this tangled web of debate to bring rare clarity. Ingham begins by examining the fundamental debate over the nature of is it fundamentally a natural, ‘neutral’ measure of pre-existing value produced by ‘real’ economic forces? Or is it a socially produced and politically manipulated force that creates new value? He proceeds to trace the import of these competing views for how we understand our contemporary monetary systems and their practical and policy-related implications, from their role in financial crises to proposals for reform.
Students of political economy, economic sociology and monetary economics will find this book an invaluable primer, as will general readers wishing to understand how money shapes their lives, from the cash in their pocket to the numbers on their computer screen.
- GenresEconomicsNonfiction
180 pages, Paperback
Published January 21, 2020
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Displaying 1 - 4 of 4 reviews
October 23, 2021
All the record deficit spending in recent years has had me scratching my head and feeling like I don't even know what money is. My feeling was right. I only had the most limited understanding of money and the various tasks it accomplishes in our economy and society. The book is dense reading, and I found I could only take it in modest doses, which explains why it's' been in progress for so long. I'd hate to have to take a quiz on it, and there were times I wasn't sure I had the prior knowledge needed to get the most out of it; however, the concluding chapter--truly a summary--made sense. I recommend the book--or something like it--as almost a civic duty for the sake of better understanding the ongoing debates regarding government spending, inflation, and economic policy.
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November 25, 2020For anyone looking to understand what money is, how it might have originated, how it works in the modern capitalist system, as well as looking for answers on the legitimacy, democracy and justice of the monetary system, this book is a recommended and very engaging — even if quite complex — read.
July 27, 2024
Nice and concise, similar to his ‘nature of money’ but more accessible. Would recommend.
June 5, 2021
The book reviews the mainstream view of money and then compares this to heterodox theories. For whatever reason, simplistic theories of money have stuck around for a long time. What I was taught in intermediary economics courses is definitely not how the monetary system works in the real world. Yet in some ways the monetary system is also built around these old theories, through the central bank's role in influencing money supply and the price of money.
The monetary system is a social technology, and today most money is created through the formation of credit between two parties. When you get a mortgage the bank creates an IOU under your name, and buys a future stream of cashflows from you. We then transfer this IOU to others to in order to pay for houses or other things.
In that way anyone can create money, the problem is getting it accepted. When you think about money this way it's no surprise that monetary systems don't have to be associated with a country. The author describes a few other forms of non-state currencies. Where money gets its value, and probably also the growth in acceptance, is its ability to settle transactions. The most important of these are liabilities/debts. Modern Monetary Theory singles out tax liabilities but (in my opinion) it doesn't have to be just for that reason. It just happens that paying your taxes, and avoiding jail, is a damn good way to create demand for state money.
There where many instances in the book where I agree with the author on the mechanics of money but then disagree with his conclusions on its role in the economy. For example, he ridicules the mistaken belief that money needs to be backed by something 'natural' like gold and he seems to imply that independent central banking is equally pointless. I agree that a gold backed currency and independent central banking are kind of like a facade, but they do serve a purpose. They constrain government's ability to grow the money supply.
The author advocates lifting the facade of the independent central bank in order for governments to use the monetary social technology to achieve societal goals. This is a similar to arguments made by advocates of MMT derived policy. But it creates an inherent conflict. Since money is a social technology, created through personal credit relationships, the government cannot have a monopoly on money without sacrificing some democratic ideals. The author recognizes this flaw by pointing out that the only government controlled banking worked was during wartime, for which people sacrificed a lot. He ends the book by blaming capitalism or maybe society for not pulling together to achieve common goals, like it did during wartime. It was a disappointing way to end the book.
I have recently noticed that many people who know how money works gravitate to the idea of government monopoly on money creation. I think it's probably because of the numerous credit crises created by private bank credit booms. In my mind, the problem is in simultaneously trying to control the monetary system (through a government central bank), letting private agents make decisions on money creation, and then bailing them out when they make mistakes.
I will be doing a lot more reading and thinking about monetary and banking systems in the coming months. I think there is a solution to this monetary dilemma, and cryptocurrency will probably be where it starts (after the manic speculation dies down).
The monetary system is a social technology, and today most money is created through the formation of credit between two parties. When you get a mortgage the bank creates an IOU under your name, and buys a future stream of cashflows from you. We then transfer this IOU to others to in order to pay for houses or other things.
In that way anyone can create money, the problem is getting it accepted. When you think about money this way it's no surprise that monetary systems don't have to be associated with a country. The author describes a few other forms of non-state currencies. Where money gets its value, and probably also the growth in acceptance, is its ability to settle transactions. The most important of these are liabilities/debts. Modern Monetary Theory singles out tax liabilities but (in my opinion) it doesn't have to be just for that reason. It just happens that paying your taxes, and avoiding jail, is a damn good way to create demand for state money.
There where many instances in the book where I agree with the author on the mechanics of money but then disagree with his conclusions on its role in the economy. For example, he ridicules the mistaken belief that money needs to be backed by something 'natural' like gold and he seems to imply that independent central banking is equally pointless. I agree that a gold backed currency and independent central banking are kind of like a facade, but they do serve a purpose. They constrain government's ability to grow the money supply.
The author advocates lifting the facade of the independent central bank in order for governments to use the monetary social technology to achieve societal goals. This is a similar to arguments made by advocates of MMT derived policy. But it creates an inherent conflict. Since money is a social technology, created through personal credit relationships, the government cannot have a monopoly on money without sacrificing some democratic ideals. The author recognizes this flaw by pointing out that the only government controlled banking worked was during wartime, for which people sacrificed a lot. He ends the book by blaming capitalism or maybe society for not pulling together to achieve common goals, like it did during wartime. It was a disappointing way to end the book.
I have recently noticed that many people who know how money works gravitate to the idea of government monopoly on money creation. I think it's probably because of the numerous credit crises created by private bank credit booms. In my mind, the problem is in simultaneously trying to control the monetary system (through a government central bank), letting private agents make decisions on money creation, and then bailing them out when they make mistakes.
I will be doing a lot more reading and thinking about monetary and banking systems in the coming months. I think there is a solution to this monetary dilemma, and cryptocurrency will probably be where it starts (after the manic speculation dies down).
Displaying 1 - 4 of 4 reviews