David McWilliams’ latest book, Money: A Story of Humanity, is fast earning recognition as a worthy successor to Niall Ferguson’s The Ascent of Money: A Financial History of the World. This meticulously researched work delves into the history, uses, and abuses of money, offering a fresh perspective on a concept most of us take for granted.
Where Ferguson’s book focused predominantly on Europe and the US, McWilliams broadens the scope, addressing key events and figures from across the globe. Money not only revisits historical milestones but also offers a critical look at the future of money, especially in the face of technological advancements and economic uncertainties.
The Origins of Money: A Journey Through Time
McWilliams begins by exploring the ancient roots of money, tracing its evolution from Mesopotamia, where early forms of trade were established using goods like grain as a standardized unit of exchange. Over 5,000 years ago, the Sumerians formalized this system with the shekel, marking the beginning of money’s journey from a physical commodity to a tool for complex financial transactions. As McWilliams explains, it took “breathtaking levels of abstract thinking” to conceive money as a value measure, setting the stage for the financial systems we know today.
The book emphasizes the importance of money’s relationship with time, illustrating how the Sumerians introduced the concept of interest—essentially putting a price on time itself. This early step in the evolution of finance set the groundwork for the future of entrepreneurship and commerce, making money not just a medium of exchange but a generator of value.
The Historical Figures Who Shaped Money
One of the most engaging aspects of McWilliams’ book is his use of vivid biographical sketches. He brings to life historical figures such as John Law, a Scottish gambler and murderer, who went on to become a key figure in 18th-century French monetary policy. Law’s vision of a rapidly expanding economy driven by paper money—untethered from gold—was a revolutionary but ultimately flawed concept. McWilliams’ exploration of Law’s ideas helps readers understand the origins of monetary economics, despite the ultimate collapse of his schemes.
The book also touches on the French Revolution, where Talleyrand, a bishop-turned-politician, conceived the assignat—a paper currency backed by land confiscated from the Church. Talleyrand’s actions demonstrated the complex interplay between money and power, and McWilliams underscores the political maneuvering behind revolutionary financial decisions.
The Global Impact of Money and Its Dark Side
While McWilliams offers a thorough analysis of the triumphs and pitfalls of monetary systems, he does not shy away from the darker consequences of money. One poignant example is the brutal history of King Leopold II’s exploitation of the Congo in the late 19th century, driven by the rising demand for rubber. While McWilliams does not delve into the genocide that accompanied this exploitation, he highlights the horrors wrought by money’s darker side.
Yet, despite these significant contributions, McWilliams’ focus on Europe and the US leaves some gaps in his global narrative. Notably, he bypasses crucial episodes like Zimbabwe’s hyperinflation in 2008, where prices doubled every 24 hours, and the Weimar Republic’s hyperinflation in the 1920s, which played a significant role in the rise of Nazism. These omissions highlight an area where Money could have offered a broader and more nuanced view of money’s impact worldwide.
The Future of Money: A Digital Revolution?
In the final chapters, McWilliams turns his attention to the 21st-century financial system, questioning the future of physical currency and exploring the rise of digital payments. While acknowledging the growing influence of cryptocurrencies, McWilliams remains skeptical about their viability as true fiat currencies. He argues that, despite their growing popularity, cryptocurrencies have largely failed to live up to their promise, serving more as speculative investments rather than stable forms of exchange.
McWilliams raises pressing questions about the role of central banks, the global financial architecture, and the potential obsolescence of physical money. As digital payments and mobile transactions become the norm, he foresees a future where coins and banknotes might no longer exist—replaced by a fully digital economy.
A Critical Look at Modern Monetary Economics
McWilliams’ critique of modern monetary systems is particularly insightful. Drawing from his experience as an economist with the Irish Central Bank, he discusses the limitations of central banks in controlling inflation and credit. He argues that the global financial system is too complicated and unpredictable, often driven by “the madness of crowds” rather than rational economic principles.
Ultimately, McWilliams concludes that money is one of humanity’s greatest inventions—a technology that has driven transformative change throughout history. However, in the face of modern challenges, including digital currencies and global financial instability, its future remains uncertain.
In Money: A Story of Humanity, David McWilliams offers readers a fascinating exploration of the history and future of money. While it may not cover every corner of the globe, it provides a thought-provoking look at how money shapes societies and economies, past and present. For those interested in understanding the power and pitfalls of money, this book is an essential read.