Announcement: Money and Things

Arjun Jayadev and I are writing a book. The working title is Money and Things: How Finance Shapes the World. Here’s what it’s about:

Money is one of our most ubiquitous social technologies. It is also one of the most misunderstood.  Economics students in college are taught that money is just a convenience to avoid the clumsiness of barter – that prices and incomes depend on underlying “real” values, and money is just a veil. Academic economists insist that money is “neutral” – that the long-run development of the economy depends on “real” factors like population growth and technological progress, which have nothing to do with money or credit. Many people still have some vague notion that money is backed by something “real”, perhaps vaults of gold under Fort Knox, while those who do understand that money is nothing but an entry on bank ledger, often feel this is dangerous and unnatural, and demand that a sharp line be drawn between credit and money. For the vast majority of people money is simply the background hum of the world they live in, something that they pay attention to only occasionally, if perhaps with a sense of unease. 

This book seeks to open up the world of money as it really is and its relationship to the world. Dawing on the work of Karl Marx, John Maynard Keynes, Hyman Minsky, and other “heterodox” economic thinkers, the book argues that there is no real economy behind the monetary one. In economic questions, money itself is what is real.

This claim is developed through two related arguments. First, that money and finance are autonomous — that changes in money flows, assets and debt do not just reflect underlying activities of production and consumption but have their own independent dynamics. And second, that money does not merely facilitate economic activity, but reshapes it in far-reaching ways. This is a challenge to the conventional wisdom that money payments and quantities offer a transparent window onto the concrete, material world – that a certain amount of money must correspond to an equivalent amount of stuff. And it is a challenge to the economics orthodoxy that money is “neutral” in relation to the larger economy. On the contrary, monetary phenomena like debt and exchange rates have profound and lasting effects on the development of economies and the broader society.

The book is organized in three sections, moving from the abstract to the concrete.  The first section explores the rules and logic of money as a distinct social activity, starting with the most basic building blocks of economic units and payments and building up to balance sheets, interest, exchange rates, and other more complex features of money-world. It then explores how these money terms do — and don’t — match up to the material and social world around us, critically examining concepts like “real” GDP. While numbers like this are often thought of as measuring some physical quantity, this is logically incohenerent and practically misleading.

In the second section, the book turns to the institutions that operate at the interface between money-world and society. This section explores the links between money and society, the tensions and conflicts between them, and the ways that they are actively managed. It includes chapters on the politically contested questions of reforms to the monetary system, and the sustainibility of private and public debt. The section’s main focus is on central banks and corporations as two key actors that manage the tension between an economic world imagined purely in terms of money claims and payments, and the concrete human activities of production and reproduction. 

In the final section, the book explores how the tension between society and the world of money plays out politically.  With chapters on Europe in the wake of the euro crisis, the US, the developing world, and the problem of climate change, it shows how many political developments can be understood in terms of a fundamental conflict between enforcing the logic of money, on the one hand, and meeting the concrete needs of human societies on the other. Much of what is called neoliberalism can be seen as an effort to compel politics and society to conform to the logic of money. At the same time, these constraints provoke counter responses, and the institutions constructed to maintain the dominance of money can themselves become vehicles for collective action toward other ends.

The book is an attempt to build a more sustained argument out of various things Arjun and I have written, especially this and this. It will also incorporate material from a great many posts on this blog over the past decade, including these and these and these.

If all goes according to plan, the book will be out from University from Chicago Press in early 2022.