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What is Political Economy? series
Bruce Pietrykowski, Work
Suzanne J. Konzelmann, Austerity
Geoffrey Ingham, Money
Money
Ideology, History, Politics
Geoffrey Ingham
polity
Copyright © Geoffrey Ingham 2020
The right of Geoffrey Ingham to be identified as Author of this Work has been asserted in accordance with the UK Copyright, Designs and Patents Act 1988.
First published in 2020 by Polity Press
Polity Press
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All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher.
ISBN-13: 978-1-5095-2685-7
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Names: Ingham, Geoffrey K., author.
Title: Money / Geoffrey Ingham.
Description: Medford : Polity, [2019] | Series: What is political economy? | Includes bibliographical references and index. | Summary: “Few economic phenomena provoke as much confusion as money. In this accessible book, Geoffrey Ingham cuts through this tangled web of debate to examine the fundamental debate over the nature of money and trace the import of these competing views for how we understand our contemporary monetary systems”-- Provided by publisher.
Identifiers: LCCN 2019023996 (print) | LCCN 2019023997 (ebook) | ISBN 9781509526819 (hardback) | ISBN 9781509526826 (paperback) | ISBN 9781509526857 (epub)
Subjects: LCSH: Money.
Classification: LCC HG221 .I524 2019 (print) | LCC HG221 (ebook) | DDC 332.4--dc23
LC record available at https://lccn.loc.gov/2019023996 LC ebook record available at https://lccn.loc.gov/2019023997
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1 Money’s Puzzles
The modern world without money is unimaginable. Most probably originating with literacy and numeracy, it is one of our most vital ‘social technologies’ (Ingham, 2004). Obviously, money is essential for the vast number of increasingly global economic transactions that take place; but it is much more than the economists’ medium of exchange. Money is the link between the present and possible futures. A confident expectation that next week’s money will be the same as today’s allows us to map and secure society’s myriad social, economic, and political linkages, including our individual positions, plotted by income, taxes, debts, insurance, pensions, and so on. Without money to record, facilitate, and plan, it would be impossible to create and maintain large-scale societies. In Felix Martin’s apt analogy, money is the modern world’s ‘operating system’ (Martin, 2013).
However, despite money’s pivotal role in modern life, it is notoriously puzzling and the subject of unresolved – often rancorous – intellectual and political disputes that can be traced at least as far back as Aristotle and Plato in Classical Greece and the third century BCE in China (von Glahn, 1996). Many of the innumerable tracts and treatises on money begin with lists of quotations to illustrate people’s bewilderment (see the fine selection in Kevin Jackson’s The Oxford Book of Money [Jackson, 1995]). With characteristic whimsy, the great economist John Maynard Keynes (who knew a great deal about money) said that he was aware of only three people who understood it: one of his students; a professor at a foreign university; and a junior clerk at the Bank of England. The banker Baron Rothschild had made a similar observation a century earlier (quoted in Ingham, 2005, xi), adding that all three disagreed!
We shall see that one of the most puzzling and counterintuitive conceptions of money lies at the core of mainstream economics. We experience money as a powerful force; it ‘makes the world go around’ – and sometimes almost ‘stop’. Governments stand in awe of monetary instability, constantly monitoring rates of inflation and foreign exchange, and levels of state and personal debt. Central banks strive to assure us that they can deliver ‘sound money’ and stability; but – like their predecessors