Book extract- David McWilliams Money: A Story of Humanity

Money is also the cause of inequality in society. For a society, a nation, to progress, equitable distribution of wealth is imperative.

Money is everything. It brings freedom and it takes it away. It inspires and corrupts us. But what is money? Is it the main thing holding us back from utopia or is it the one constant that’s driven us to success?

How does a piece of paper gain the precious value that it does? Or in today’s world, cryptocurrency. It is at the forefront of every adult’s mind. Or for that matter, an institution, business and even governments for whom budget day is an important part of their calendar. It is well-known that an economic base is the basis of every relationship. It exists everywhere. Yet, financial literacy is not even encouraged as a conversation for children wherein for some peculiar reason, talking about money is considered taboo. But as children become young adults, they are encouraged to be financially prudent thereby forcing them to unlearn principles learned at their parents’ knee and learn to be “adults”. Whether you like it or not, you cannot escape talking about money. Everything costs. Whether it is roti, kapda, makan, or even rituals performed at birth, marriages, and death, learning to talk about money, using it, and understanding it, is a basic life skill. As essential as learning how to cook and feed oneself.

Money is not a bad word or a concept. Talking about money, using it wisely, possessing it but not necessarily loving it, are mantras that are now being spun out on innumerable social media threads or reels. Self-styled “gurus” offer advice by the bucketloads on how to not only earn money, but become super rich. But what is money? What is its history? How did it come into existence? How does it attain value? How does it determine relationships at all levels of society? In the twenty-first century, when information and data is a precious commodity, how do you earn money from it? How do you transform IPR into a commodity and make it bankable?

Money is also the cause of inequality in society. For a society, a nation, to progress, equitable distribution of wealth is imperative. Persistent inequalities can become an obstacle to economic growth. Not everyone owns enough money to be able to afford a decent standard of living. According to the World Bank report, Poverty, Prosperity and Planet: Pathways out of the Polycrisis 2024, almost 129 million Indians are living in extreme poverty in 2024, on less than $2.15 (about Rs 181) a day, down from 431 million in 1990. However, with a higher poverty standard of $6.85 (about Rs 576) per day — the poverty threshold for middle-income countries — more Indians are living below the poverty line in 2024 than in 1990, primarily driven by ‘population growth’. Sobering facts.

In his illuminating book, economist David McWilliams charts the relationship between humans and money – from clay tablets in Mesopotamia to coins in Ancient Greece (the world’s first credit crisis at the time of emperor Tiberius in 31CE), from mathematics in the medieval Arab world to the French Revolution, and from the emergence of the US dollar right up to today’s cryptocurrency. While charting his historical narrative, he often talks about India too. Along the way, we meet a host of characters who have innovated with money, disrupting society and transforming the way we live. Like humanity, money is ever changing, adapting to its time and circumstances. The question is, over the last 5000 years, have we changed money or has money changed us?

As Joel Grey and Liza Minnelli sang in the Oscar-winning film, Cabaret (1972):

Money makes the world go around
The world go around
The world go around
Money makes the world go aroundIt makes the world go 'round.

Money tells an astonishing new story of our species. Taking the reader on an epic journey through the history of money, McWilliams reveals its fundamental role in our society.

The Financial Times referred to it as ‘A hugely ambitious, insightful and readable account of our relationship with money’. On the microblogging site X (13 Jan 2025), Prof. Kaushik Basu called it a “Brilliant book … A page turner on the history & mystery of money.”

David McWilliams is a global economist, writer and broadcaster whose unique ability to communicate complex societal and economic structures is unparalleled.

McWilliams strives to demystify economics and make the topic accessible to audiences worldwide. Economist, author, podcaster, journalist, he founded the world’s only economics and stand-up comedy festival “Kilkenomics”— described by the Financial Times as “simply, the best economics conference in the world”. He writes a weekly column for the Irish Times and hosts The David McWilliams Podcast, which aims to make economics uncomplicated. He is an Adjunct Professor at Trinity College, Dublin. In a previous life, David had a few “real jobs”, working as an economist at the Irish Central Bank, UBS and Banque Nationale de Paris. He's been described as being to economics what David Attenborough is to the natural sciences and Brian Cox is to physics.

The following book extract has been taken with permission from the publishers.

Jaya Bhattacharji Rose

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Money falling from the sky

Imagine money falling from the sky. Would you slip a tenner into your pocket before you told anyone? Chances are, most of us would trouser a few notes rather than inform the authorities. This was the reaction Hitler was banking on when he planned to drop millions of pounds all over Britain at the height of the Second World War. Hitler understood what happens when money loses value. He lived through the hyperinflation of the Weimar Republic and was aware that money is a weapon like no other. Money can destabilise a country, a view he shared with his ideological enemy Vladimir Lenin, who observed that the easiest way to undermine a society is to ‘debauch its currency’. In an interview with the Daily Chronicle in London published on 23 April 1919, Lenin is reported to have said that he had a plan to annihilate the power of money in order to destroy what remained of the old Russian state following the October Revolution of 1917:

“Hundreds of thousands of rouble notes are being issued daily by our treasury . . . with the deliberate intention of destroying the value of money . . . The simplest way to exterminate the very spirit of capitalism is therefore to flood the country with notes of a high face-value without financial guarantees of any sort. Already the hundred-rouble note is almost valueless in Russia. Soon even the simplest peasant will realise that it is only a scrap of paper . . . and the great illusion of the value and power of money, on which the capitalist state is based, will have been destroyed”

Hitler and Lenin may have been on opposite sides ideologically but they both understood the phenomenal power of money: undermine money and you undermine the fabric of society. The plan for the Luftwaffe to drop millions of banknotes over Britain was top secret, only known by a few senior Nazis. By bringing this counterfeit money into circulation all over the country, inflation would rip through the system, particularly as so much of Britain’s economic resources was directed at the war effort. Hitler hoped that the previously quiet and obedient British would experience a fire in the theatre moment. They’d freak out and the ensuing chaos would upend their Blitz spirit, compromising the war effort.

Hitler’s new weapon cranked into production. It was to be the greatest forgery the world had ever seen. A telegram was sent to the commandants of concentration camps calling for printers, engravers, artists, colourists, typesetters, paper experts and former bank officials. The operation also needed mathematicians and code breakers to decipher sterling’s numbering sequence. A most desperate cohort of traumatised, emaciated men limped into Sachsenhausen from camps all over the Third Reich. These 142 souls were tasked with breaking the Bank of England. The concentration camp forgers printed £132,610,945 of fake sterling notes, equal to about £7.5 billion in today’s money.

Dropping these notes over Britain would require squadrons of German bombers that were available to Hitler when the plan was hatched in May 1942, but by the time the forged notes were ready in 1943, the war situation had changed. Germany was losing on the battlefield, the Luftwaffe’s resources were stretched in Russia and the war effort couldn’t spare the planes to handle the mass air drop. Unlike Hitler, who was not in control of the Bank of England, Lenin was able to activate the official Russian mint to achieve the chaos he desired. Both men had similar aims: they wanted, as Lenin said, to shatter ‘the great illusion of the value and power of money’. Both dictators, two demonic observers of psychology, understood human frailty, crowd dynamics and the depths to which people can descend. Money can be more powerful than religion, ideology or armies. Mess with money and you mess with far more than the price system, inflation and economics – you mess with people’s heads. The story of Hitler’s forgery illuminates the power of money.

Economists’ blind spot.

The global discussion about money has been hijacked by my tribe. Like high priests of a new religion, we economists took it upon ourselves to explain the mysteries of money to the people. My career as a monetary economist began in the Central Bank of Ireland, the very tabernacle where money is magicked up out of thin air. In a similar way to a Catholic priest turning the host into the body of Christ in Holy Communion, central bankers take worthless paper and turn it into money. As miracles go, it’s an impressive one. We all believe in it, and therefore it must be real. But is it real? In fact, money is abstract and is only given value as long as the rest of us (or enough of the rest of us) believe in it. Money, like faith, is a product of the human imagination. From the central bank I moved to investment banking, where that money magicked up by the central bank is supercharged into another form of money, an incendiary promise that we call credit. Between them, central banks and commercial banks run the world of money, controlling how much money is out there, who gets it and at what price. These institutions are key to the mechanical story of money and can explain how it is pumped around the economy. Economists can tell you what to do if there is too much of it or too little. But understanding the plumbing – how money flows around the economic system – does not capture the interesting part of the story. A plumber might understand how water flows through the pipes but may not be able to explain why water is essential for life. The most exciting aspect of money is what it does to us: how it changes us, what it enables us to do, and how it brings out our deepest urges – some good, some appalling. Despite being a fully paid-up member of the economist tribe for many years, I’ve concluded that most economists do not really understand money.

Economists take the fun out of money.

A highly emotional substance, money can be transgressive, sexy, dangerous, mind-altering. Money is power, it is domination but it can also be liberation. Money buys independence. Money motivates us and releases human energy, and what we do with the energy once we have it is up to us. Some want to spread the possibilities of money around, others want to hoard it for themselves. Money doesn’t impose on human morals; it amplifies them. If a person believes greed is good, they will behave accordingly with money. If they believe in equality and human rights, they may use money to achieve these objectives. The point is that we imagine money into being, money changes as we change, and money changes us. Today, whether we like it or not, our entire world revolves around this strange, invented notion that Lenin described as the ‘great illusion’. Introduced thousands of years ago, money is at the centre of modern culture – a universal language understood by rich investors living in high-tech Silicon Valley and struggling rickshaw drivers in Old Delhi. People living thousands of miles apart, who don’t understand each other’s language or customs, understand money and speak to each other through it. Money is a force that dictates the flow of people, goods and ideas around the globe. Our efforts and talents are assessed by it; so too is the future. As we will see, one of the earliest characteristics of money was putting today’s price on tomorrow. What is the rate of interest other than the price of time, expressed by money?

Money defines the relationship between worker and employer, buyer and seller, merchant and producer. But not only that: it also defines the bond between the governed and the governor, the state and the citizen. Money unlocks pleasure, puts a price on desire, art and creativity. It motivates us to strive, achieve, invent and take risks. Money also brings out humanity’s darker side, invoking greed, envy, hatred, violence and, of course, colonialism, which was so often driven by the prospect of vast financial gain. Money is complex because humans are complex.

A magic tool

Money is an ingenious technology that humans invented to help us negotiate an increasingly complex and interrelated world. Imagining money as a tool or a technology is not how we usually think about it. It’s not that we don’t think about money; we do, and probably more than we’d like to. We need money to live and, because of this urgency, we rarely have the luxury of thinking about money in any other way. If you don’t have enough cash, you worry about how you might get more. If you have loads of it, you worry about making sure you don’t lose it. Most of us would like a bit more money, and if we could figure out an easy way of getting it, we’d probably go for that option. Money buys freedom: the essential promise which makes it so attractive is that, armed with money, you can change your world by gaining more control over your life. Given money’s central role in our lives, we rarely think more conceptually about it. We don’t stop to ask ourselves relatively simple questions such as: What is money? Where does it come from? Can it run out? Can we generate more of it? Maybe this absence of conceptual questioning is a measure of the true success of money. As long as it’s flowing, making the world go round, we are happy for money to exist without going into the details of how it came to be.

Each of us has heard the mantra that money is the root of all evil, yet money is also an instrument of peace. Rather than kill their neighbours for food and property, the newly sedentary farming societies learned to trade using money. Money provided an alternative to, as opposed to a reason for, war. When we can exchange with each other and with different tribes at negotiated prices, why bother fighting? Trade allowed an element of more peaceful co-existence between peoples, even complete strangers from different regions and cultures. We didn’t just exchange goods, but we traded and adopted ideas, norms and innovations. From the establishment of agriculture, humanity was set on a course of development that would eventually lead to towns, nations and empires with centralised power structures and social hierarchies. We came up with writing, geometry, astronomy, numbers, mathematics, philosophy, architecture and political theory – all the utensils we associate with something we call civilisation. The cogs of human civilisation turned with one technological advance after another: the domestication of animals; the cultivation and cross-cultivation of various plants; improved methods of food storage; the distribution and transport of goods via the sea. Money was one foundational technology, often overlooked, that underpinned and animated human flourishing.

Plutophytes

Over the past 5,000 years, money has profoundly altered humanity and our relationships with each other and with the rest of the planet. It is arguably the defining technology of Homo sapiens. We have co-evolved with money: we have shaped money, but money has also shaped us. Anthropologists often refer to humans as a ‘pyrophyte’ species, one that is shaped by fire. The thread linking the observations in this book is that in the course of the last five millennia we have become – and apologies to the linguistic purists as I made this word up – a plutophyte species, meaning a species that has adapted to and been adapted by money. This book is about the relationship between a curious ape and a wondrous technology.

In Greek mythology, Prometheus was punished by Zeus for giving humans fire, a technology so powerful that Zeus feared we would overwhelm the gods with it. The Greeks recognised that mastery of fire marked a profound shift in the relationship between humans and the rest of the planet. They imagined that humans were created from the four elements: earth, wind, fire and water. These forces shaped their universe. Around 5,000 years ago we invented another force, a fifth element: money. If fire was the Promethean force of the ancient world, money is the Promethean force of the modern world. The clever ape has shaped the world, for better or worse, in a way that I believe would have been impossible without money.

The story of money is the story of humanity itself.