“Not one man in a million understands the nature of money — and you meet him every day.” I imagine that this apocryphal quip from the Nobel Prize-winning economist Paul Samuelson will draw a few wry smiles from Financial Times readers. After all, they are probably as interested as anyone in money’s mysterious secrets. They are also likely well aware that there is never a shortage of authors promising to reveal them.
The last few years alone have seen the publication of 2022’s Money in One Lesson by Gavin Jackson; 2020’s Money: The True Story of a Made-Up Thing by Jacob Goldstein; and 2016’s Money Changes Everything by William Goetzmann, to name but a few. There was even an effort by some bloke called Martin. That’s before one gets to modern staples such as David Graeber’s Debt: The First 5,000 Years (2011) let alone classics like J M Keynes’s Treatise on Money (1930) or the granddaddy of them all, Georg Simmel’s terrifying and impenetrable The Philosophy of Money (1900).
Yet in defiance of Professor Samuelson’s cynicism, David McWilliams’s Money: A Story of Humanity succeeds in offering an enjoyable and insightful addition to this bulging canon. That’s partly because of McWilliams’s unusual background. A classically trained economist who has worked both as a central banker and on the financial markets, he is the founder of Kilkenomics — the world’s first festival of economics and stand-up comedy. But it’s even more to do with the book’s skilfully executed approach.
Money sits at the very core of human social and economic life. That is a boon to its historians, because it makes it of near-universal interest — but it also brings significant challenges. One is that money is so fundamental a part of our conceptual furniture that it is hard to get an objective view: misleading metaphors, conventional misunderstandings and the surreptitious special pleading of vested interests abound. Another is that any history of money must effectively also be a general economic history of humanity. In the wrong hands, the history of money can thus easily degenerate into a conceptually confused and unmanageably expansive mess.
McWilliams dodges these elephant traps. He establishes the Archimedean point of an accurate conceptual framework up front. Money, he explains in his introduction, is nothing more or less than a “wondrous technology” that “resides in our heads, representing value”, and which “humans invented to help us negotiate an increasingly complex and interrelated world.” He thus wastes no time on old canards such as the habit of confusing the tokens that have historically been used to represent money with money itself or the myth that money is a medium of exchange that emerges from barter. Instead, he identifies money clearly as a specific, but constantly evolving, collection of ideas and institutions — from numeracy and accounting through to coinage and the eurodollar market.
This clear conceptual map then enables McWilliams to spin a coherent global history of money out of an exceptionally colourful and wide-ranging set of yarns. Some of them — such as the stories of John Law and Alexander Hamilton — are mainstays of the genre. Others will probably be less familiar: for example, the fascinating speculations concerning the 20,000 year-old Ishango bone, a notched baboon bone that may represent the earliest extant evidence of accounting; or the protean career of the Versailles courtier turned “monetary mastermind of the French Revolution” Charles Maurice de Talleyrand-Périgord.
There is one important aspect of money that McWilliams’s account slightly underplays, in my view. The key concept around which all of monetary history revolves is the monetary standard: the real-world counterpart against which the arbitrary, abstract monetary unit such as the pound, the dollar or the yen is calibrated. The eternal questions are what this standard is, and who gets to decide. The answers — a certain weight of gold, determined by a private central bank, as under the classical Gold Standard; the rate of change of prices of a basket of consumer goods, set by a democratically elected government, as in today’s inflation-targeting regimes; a fixed number of digital tokens hard-coded by an anonymous programmer, as in the case of Bitcoin — are among the most momentous political choices a community can make.
Money has an excellent chapter on the debates over these questions in late 19th-century America, a stimulating section on the intrinsic tensions between public authority and private interest in the contemporary monetary system, and a neat discussion of cryptocurrencies. Yet I yearned for a more explicit analysis of how the monetary standard should be set, and by whom, based on the whole of its impressive historical survey.
McWilliams’s book is a hugely ambitious and very readable history of money, whose appeal will run well beyond just monetary cranks like me. And of course, if you don’t like it, you needn’t worry. There is sure to be another one along shortly.
Money: A Story of Humanity by David McWilliams Simon & Schuster £25, 416 pages
Felix Martin is the author of ‘Money: The Unauthorised Biography’
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