Money: The Unauthorised Biography by Felix Martin
Occasionally books are not exactly what they seem. When I picked this up, read the blurb and began the contents inside, I was expecting a kind of biography or history of money through the ages. The opening chapter, a brief sketch of the economy of the Pacific island of Yap and how it worked, seemed to confirm this. It tells us how in the late nineteenth century Yap, east of the Philippine Islands, had an unwieldy coinage consisting of stone wheels around 12ft in diameter, called fei. The population did not carry these around, let alone own them like we possess pounds and pence, as they were part of a sophisticated system of credit management.
| Money: The Unauthorised Biography by Felix Martin | |
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| Category: Business and Finance | |
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Reviewer: John Van der Kiste
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| Summary: The secret or not so secret history of money, explored partly through various financial crises through the ages. Despite the sub-title, this is first and foremost a work on economics. | |
| Buy? Maybe | Borrow? Yes |
| Pages: 331 | Date: July 2014 |
| Publisher: Vintage | |
| External links: Author's website | |
| ISBN: 9780099578529 | |
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After this good crisp beginning, the book becomes less clear cut. Martin examines the old time-honoured systems of coinage, medieval tally-sticks and barter, and then gives us an account of the six-month closure of banks in the Irish Republic in 1970, a consequence of the breakdown in industrial relations between the banks and their employees. Life and transactions went on, and cheques were exchanged as usual, apart from the fact that they could not be presented at the banks.
I had vaguely anticipated a light to moderate read about money in its various shapes and forms. What I found instead was for the most part a history of various financial crises, not necessarily a chronological one, culminating in the problems that almost led to meltdown early in the twenty-first century. There had been tremors like defaults in Russia in 1998 and Argentina in 2002, but these came and went without any major impact. As far as Britain was concerned, the government’s larger-than-normal overdraft provided to Northern Rock in 2007 and the collapse of US investment bank Lehman Brothers a year later were much bigger news. As the reverberations of these and the ensuing recession are still with us and as it would take a very brave (if not mad) person to forecast any end in sight, no concise or impartial assessment is yet possible and will not be for a good many years. Some kind of comparison with the crash and slump of the late nineteen-twenties onwards would have been useful, but the world of 2008 was a very different one from that of 1929, so any kind of like-for-like comparison might not mean very much.
Naturally there is far more to the ‘life’ of money than such events as these. As Martin weaves in and out, down the centuries, he analyses the ever-changing manifestations of money. Once it might have been a miser counting the contents of his chest full of sovereigns. Now we have banknotes, which are in effect nothing but tokens. It is estimated that around 90% of national money in the USA and around 97% in Britain has no physical existence at all, instead consisting of account balances held by our banks. The only tangible apparatus employed in most monetary payments today is a plastic card and a keypad. I cannot be the only one who can recall my parents and grandparents thinking that the only way to purchase goods at the shop or petrol at the forecourt was to hand over a fistful of cash in coins or banknotes.
One can approach the big question from so many different directions. What is money? Debts have often been used as money; is money a debt? Because we use credit accounts and a clearing system, does this make the credit and clearing system what we call money, rather than the change which we carry around in our pocket or purse which is the physical manifestation, or the balance in our bank account which we can access at the ATM or online every day? Or was it something in the abstract which was used by medieval rulers so they had a ready source of credit when they needed to devalue currencies by decree, more often than not to finance war against some foreign ruler or power which had been unwise enough to provoke them? There is no clear-cut answer.
The nearest that history came to finding one, it appears, was when the seventeenth-century philosopher and physician John Locke decided that the pound was identical with the amount of silver it contained, and that economic laws were basically on a level with those of physics. This led to the science of classical economics, as developed by Adam Smith and John Stuart Mill, and a philosophy that the economic system would always return to equilibrium. Sadly the result was a laissez-faire approach, a belief that monetary society could be left to regulate itself – a principle which was largely responsible for exacerbating the tragedy of the failure of the potato crop in Ireland during the 1840s and the subsequent famine.
At this point in time, we stand seven years or so into the Great Depression. Money and banking, Martin concludes, are what brought us here, and once correctly restructured will bring us out again. The concluding chapter takes the form of a semi-comic dialogue between two fictional characters – or one might say both sides of the author’s viewpoint – on money, revolution, capitalism and unaccountable bureaucrats, ending in the sign-off that if you want anything done, you have to do it yourself.
This is a very interesting, thought-provoking and thoroughly researched book. It does however, demand a great deal of concentration and also assumes a wealth of economic knowledge. A lighthearted historical ramble it is not.
For more about money, try What if Money Grew on Trees?: Asking the big questions about economics by David Boyle. You might also appreciate Merchant Account in Genome.
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