Money: The Unauthorised Biography
Felix Martin is a member of a small but growing band of heterodox economists who argue that mainstream "neoclassical" economics is seriously flawed.
Felix Martin is a member of a small but growing band of heterodox economists who argue that mainstream "neoclassical" economics is seriously flawed.
For the neoclassicists, money is of little interest, dismissed as just a mechanism to make exchange easier - an alternative to barter. But for Martin, money is a socially created system of keeping account of what people owe each other, while allowing them to transfer their various "IOUs" to others. Crucially, it is not just governments that create money - others can, too.
One of Martin's themes is the struggle between states and financiers for control over money. In 13th- and 14th-century Europe, kings and princes had most of the power, which they abused by debasing the coinage to pay for their wars. But by the late Middle Ages, the merchants were fighting back. An increasingly international network of financiers had created their own private money - of IOUs - which allowed them to abandon sovereigns' money altogether.
In the late 19th century, many governments and merchants agreed on the need to keep money stable by linking it to a rigid gold standard.
At the end of the second world war, the combination of a gold-based currency with a flexible state-run system worked for more than 20 years. But a host of crises in the 1970s destroyed the consensus that underpinned it. States were blamed for the inflation of the 1970s, and international financiers claimed to be the only people who could be trusted to run the global economy.
