Whether we swipe our credit card at the supermarket checkout, leave a tip on the restaurant table or scrutinize our pay slips – most of us are in a constant dance with money every day. It’s an ever-present force, influencing our decisions and shaping our futures, often referred to as the very thing that “makes the world go round.”
Except that money is not a thing. Or, as Samuel A. Chambers, Professor of Political Science at Johns Hopkins University, puts it in the title of his new book, “Money Has No Value.” In this work, he unfolds a fresh perspective on the nature of money – one that underscores more than ever the fundamental claim that all money is credit, a marker of the social relationship of credit and debt between two parties.
We wanted to learn more about the enigma surrounding money, so Patricia Trutescu, Books Marketing Manager at De Gruyter, conducted an interview with Samuel A. Chambers. During the conversation, he shared insights about the origins of his intrigue with money, the obsolescence of conventional textbooks on the subject, how to deal with its complexity, and why every member of a capitalist society should want to know at least a little about it.
Patricia Trutescu: You have written two books about money and economics over the span of five years. Would you say that this new book is an extension of “There’s No Such Thing as ‘The Economy’” and “Capitalist Economics”?
Samuel Chambers: It’s funny: I had a colleague read an earlier draft of the new book and his first comment was to say, “This book on money appears to form a trilogy with the previous two books.” The honest truth is that I hadn’t really considered it that way, and I certainly didn’t set out to write anything like a “trilogy.” I have never planned ahead like that, and usually I don’t know what book I’m writing until the material itself tells me.
That said, the connections to the recent prior works are quite obvious: all three are efforts to make sense out of economic, social, and political forces as they interact within the strange creature that is a capitalist society. Under capitalism, money is both absolutely essential and yet somehow totally mysterious. I’ve actually been working on this larger question of capitalist society for over 15 years, and money has always been an enigma – the hardest thing to make sense of, but also the thing that seemed most compelling and important.
PT: As a lecturer and professor in politics, what got you interested in writing about economics and money?
SC: The true answer is possibly banal, and it means that any sort of sophisticated intellectual biography would be disingenuous. I should say first, as background, that while I did my PhD in political theory, and my first five books were directed to central questions in contemporary political theory, I did study economics and political economy as an undergraduate, so my interest in economic forces and relations dates back a long way. But the turning point for me was simple: my partner and I bought a house at the very peak of the housing bubble, in September 2006; and then in early 2008 we were forced to sell it, just as the market was crashing. At that time, I started reading housing market blogs, and developed a whole new perspective on capitalist value.
“Along the way, money was always a magical topic: both the most interesting and important thing to understand, but also the hardest.”
When I took up my post at Johns Hopkins, I started teaching classes on the history of economic thought, on Marx, and on the big questions of capitalism. Much of the early seeds for all three of these books were planted in an advanced undergraduate seminar I taught repeatedly, titled “How to Be a Capitalist.” I also taught numerous graduate seminars on Marx, at a time when there was just a massive resurgence in trying to understand and develop a critique of capitalism. Along the way, money was always a magical topic: both the most interesting and important thing to understand, but also the hardest.
PT: Why was it important for you to examine the concept of money and the myths surrounding how we assign it value?
SC: Readers of this answer will instinctively accuse me of oversimplifying, but it really comes down to a basic fact about the paucity of our knowledge when it comes to money. For most topics in the humanities and social sciences, there is an overabundance of excellent, rigorous work. That is, there is a basis of knowledge, which students can learn as the fundamentals, and from which scholars can begin their investigations.
When it comes to money, nothing could be further from the truth. Rather, the common wisdom and standard textbook teachings about money for over 100 years have been absolutely dead wrong. Up until extremely recently, the basic teaching about money in economics was a completely bogus theory. It would be as if Physics in the 21st century were still adhering to the theory of phlogiston, as if classes in Astronomy taught astrology as truth.
“Up until extremely recently, the basic teaching about money in economics was a completely bogus theory.”
And this is not just a matter of academic debate. Money is absolutely central to the lives of everyone who lives under global capitalism. In one sense we all know what it is, but in many other senses we really have no idea. And this explains why false theories of money continue to orient economic policy, and how something like the crypto boom could happen. If we lived in a different type of society, structured by a different economic order, money might be a minor or ancillary concern. But we live in capitalist societies, in which money is both the measure of value, and the necessary form that value must take. Every citizen of such societies should want to know a bit about money.
PT: What do you hope readers will take away from your book?
SC: It depends on who the readers are. That is to say, this book was written with a broad audience in mind; it is intended to speak to a number of different constituencies.
For general readers who haven’t really studied or thought much about money or political economy, the book will give them a clear and concise conceptual apparatus that will let them understand what money is, what it is not, what it does (and can) do, and what it does not (and cannot) do. It connects that basic understanding of money to the history of theories of money, to contemporary debates about money, and to specific contemporary “money problems.”
For those who know the standard teachings about money, the book will prove to them why those arguments are false, show them how prior understandings of money (especially in the late 19th and early 20th centuries) are far superior as resources for grasping money, and give them a whole new perspective on contemporary debates and issues.
For those who have been studying the best writings on money over the last twenty years, the book will make an incisive contribution to recent debates. First, by offering a critique of state theorists of money (neochartalists) of various stripes; second, by further developing and advancing the credit theory of money; third, by taking up the history and theory of money in relation to today’s money markets. That is, this book speaks to well-known debates, but it also talks at length about derivatives, bond markets, and crypto (something far less common in money theory debates.)
PT: In the beginning of your book, you talk about the money theories that have been established throughout history. For example, many readers might be familiar with Keynesian economic theories. You mention that “as much as Keynes helped his readers avoid the dead end of functionalism, he put many of them on the wrong track by suggesting that as long as we have the ‘title’ for money, we necessarily have a complete concept of money.” You conclude the chapter by writing “We need instead to grasp money in its complexity, which means both to get a sense of how complex it can be but also to provide some handholds for dealing with that complexity – for making sense of money as complex.” What is the benefit of readers for seeing money as something complex?
SC: Parsimonious answers are the best answers, but they are not always the right answers.
“To really understand money, especially under capitalism, the key is to see how money and commodities differ in their nature.”
There have been many simple answers given to the question, “what is money?” The dominant answer, still central to the orthodox theory of money and still taught in most introductory economics textbooks, says: money is a commodity. Economics is the trade of commodities for commodities, and money is just one commodity, a special commodity that we have set aside and decided to use in exchange for all other commodities. That’s not a complex answer; it’s easy to digest, and it has lots of direct implications. But it’s totally false. It’s wrong in theory and in practice. Money has never been a commodity in its nature. Indeed, to really understand money, especially under capitalism, the key is to see how money and commodities differ in their nature.
Keynes offered a famous, important, and also fairly concise (if not quite simple) distinction, that between “money proper” and “money of account.” Money of account is what Keynes called the “title” of money, its name. Money proper is the thing that “answers” to that title, i.e., what you actually hand over as payment. This means that “dollars” and a check I write for $47 are two different things: the first is “money of account” and the second is “money proper.” The distinction is valid, but sometimes Keynes implied, and often some of his followers concluded, that with this distinction we had another utterly parsimonious theory of money. The idea was that “money proper” would be what Keynes called the “primary concept” of money.
Some readers of Keynes took this to mean that we could ignore all the things that answered to the title (various forms of money proper – checks, notes, credit cards, bonds, etc.) and just worry about “money of account.” This leads folks to hypostatize “dollars” or “pounds” or “rupees” as somehow the true nature of money. As if money were some sort of magic incantation, and we just had to get people to speak it correctly. But while denomination is in fact essential to a proper conceptualization of money, it does not itself give us that full conceptualization. It’s just a name. I could write a note that says “I owe you 47 Fonables” and now we have an example of both money proper (the IOU from me to you) and a whole new money of account – Fonables, which I just made up 15 seconds ago.
“To say money is not simple does not mean that it has to be like quantum mechanics.”
Money has to be grasped in its complexity (conceptualized as complex) because in reality it is not one simple thing. It’s not a commodity. It’s not money of account. It’s not state decree (so-called fiat money, another parsimonious but incomplete theory of money.) I want to emphasize, however, that to say money is not simple does not mean that it has to be like quantum mechanics – something only a few people can understand. Everyone can understand money. I call it an array, but the point is just that money is a specific kind of relation, with four elements:
- A token of credit/debt
- A creditor who holds that token
- A debtor, on whom the claim is made
- A denomination, which means both the name and the quantity, i.e., $20
The money array is not “simple” in the sense that it’s not some basic, singular element, but it’s also not rocket science.
PT: How can some of the money and economic theories from within your book, be applied to what is happening within our cultural and political landscape today?
SC: From my two decades of work in political theory, I carry over into my writings on capitalism and money an understanding of theory (from the ancient Greek theoria) as a way of seeing the world. This means that a theory isn’t separate from the world, but a way that we engage with it, make sense of it, and do work in and on it. For this reason, and unlike the basic model of the “scientific method” taught to school children, theory isn’t really something we apply to the world, because it is itself a part of the world. We don’t then “test” a theory by predicting, we test it by trying to make sense of the world when we look at it through the lenses of our theory – by seeing if it can clarify and illuminate that world, and perhaps show us elements of it we previously couldn’t see.
I do that throughout the book, but particularly in the last two chapters where the book makes a significant pivot to looking closely at today’s money markets. The book answers a lot of basic but important questions there: What serves as world money? Did it use to be gold? Does money have a price? How does money get created or destroyed? What is the repo market and why does it matter? What’s a derivative? Is Bitcoin money?
PT: What did you find was the greatest challenge in writing the book?
SC: Keeping it under 200,000 words. When you combine the theoretical complexity of grasping money in its nature, with the tumultuous history of both money and theories of money, and then you add in the sophistication of today’s money markets (and the difficulty, for example, of concisely explaining what a derivative is and why it matters) – it makes it hard to contain everything in a single volume.
Learn more in this related title from De Gruyter
[Title image by Jonny McKenna via Unsplash]