Tuesday evening isn’t always the most appealing night to go out, but David McWilliams and WORD Christchurch managed to convince a sold-out concert hall at The Piano otherwise. This should come as no surprise to those familiar with McWilliams' work - he’s dubbed as being to economics what Brian Cox is to physics, or what Mary Beard is to history. A former economist for the Irish Central Bank, UBS and Banque Nationale de Paris, McWilliams has translated his extensive experience into demystifying economics for us laypeople. He’s achieved this in just about every format possible, be it documentaries, articles, radio, podcasts, an economics stand-up comedy festival (yes, you did read that correctly), and last but certainly not least, books. This talk was discussing his latest publication Money which explores the relationship between humans and money throughout history.
Facilitated by RNZ’s Anan Zaki, the conversation was kickstarted with McWilliams' quintessential humour, remarking that a) he was surprised it turned out not to be his mum buying up all the tickets, and b) it seemed that instead, of the 17,816 or so Irish people in Aotearoa, half of them were here tonight.
Zaki commented that whilst economists are “high priests” of a new religion, McWilliams had questioned this at times - is that what prompted him to write the book? McWilliams replied it stemmed from a “weird revelation” that “I had never met a rich economist”, to many chuckles throughout the audience. After decades in the profession, McWilliams reflected that like almost all of us, economists don’t really understand money. I mean REALLY understand money, not just where it goes. McWilliams did recognise the need to prioritise, I mean a plumber needs to know where water goes, but you can’t expect them to know why water is essential for life. That does leave us with some questions though- where did money come from? How did it change us?
McWilliams sought to shed some light on this in his book, exploring how money became a figment of our collective imagination. As it turns out, McWilliams had to trace it all the way back 5000 years, when money evolved as a technology out of us becoming ‘domesticated’, switching from hunter gatherers to part-time gardeners. Money isn’t a technology in a “technical” sense, it’s what’s referred to as a “social technology”, you could lump it in a basket with the legal system or organised religion. Five millennia later, money is still crucial to our society, and our bordering on blind acceptance of this is a measure of its success.
You would be forgiven for wondering how on earth a fundamental part of civilisation can be essentially a figment of our imagination. How much do we rely on that belief? How do we maintain it? Zaki saved me from that existential void suddenly yawning beneath me by putting such questions to McWilliams. Money, ultimately, is a gelling agent – like the one responsible for your slickbacked hair, money does the similar job of sticking the tenets of civilisations together. So, once we all started living together, money provided an alternative way of trading that didn’t involve killing each other - excellent. The other useful characteristic of money is that you can’t truly hoard it, it relies on everyone using it to remain of value. Say you lived in twelfth century France, and you tried to be clever by hoarding all the money in the village. People would probably stop caring about your stash, wouldn’t they? They’d just return to the barter system, so if you suddenly wanted their goat, you’d have to swap it for however many sacks of millet. But, if money was moving freely and enough people had some, they could simply sell you their goat.
Furthermore, money holds the promise of upwards social mobility, so you in your French village could stop trading your millet, sell it instead, use that money of yours to open a bakery and if there’s one thing your fellow peasant mates love to eat, it’s bread. So, you make way more money, expand your bread empire and PROSPER, as long as pestilence / battles / the local lord doesn’t interfere too much. Just think, all you might've done is trade for more goats! So, however you feel about money, you cannot deny that it has acted as a propulsive force throughout history.
My faith in all that is decidedly restored, Zaki moved on to the subject of money turned weaponry. Like any tool, money can be used for good or for ill, and like any piece of technology, it may be turned into weaponry (yes this applies across the board, including to wooden spoons if you tried hard enough). That aside, instead of whacking someone with a wooden spoon to harm them, harming people through money works because we all believe in it, allowing it to mess with our sense of stability and give us anxiety. McWilliams spoke about an example of this in his book, delving into how Nazi Germany sought to hyperinflate Britain’s economy. The plan was to drop approximately 196 million pounds (about 9 billion pounds in today’s money) to collapse the British economy. Of course, that money needed to be forged, so artists, bankers and other skilled workers imprisoned in concentration camps were forced to create millions of these intricate artworks.
These notes were shown to clerks in the Swiss Bank and the Bank of England, and all were fooled by their legitimacy. That gave the German forces the go ahead to drop the cash, there was just one main problem. After the Battle of Britain, the Luftwaffe simply did not have enough aircraft to drop all the forged notes. So, instead of inflating other people's countries, the SS started buying up loads of art and funding other intelligence operations. Unsurprisingly, these forged notes floating around Europe became so painful for the Bank of England to mitigate, that they released a new design after the war. Thus, whilst the original plan was mostly unsuccessful, it did show that when you want to destroy social cohesion, you undermine money.
Zaki asked if this remained relevant today, receiving a resounding “Extremely” in reply. That’s why sanctions are being employed by so many different countries at pretty much any given time. This will ever be so, because the power of the state is so intertwined with money. Principally, through minting, which solders finance to state power. Minting has been successful throughout history, such as through the Florin, a symbol of Florentine power whose integrity none could undermine. Unless, that is, you were forger, which was looked upon so disdainfully that in his epic The Divine Comedy, Dante saved the eighth out of nine circles of hell for Adam the Counterfeiter. That’s deeper than murderers, heretics and all manner of deadly sinners. Cryptocurrency, in some respects, also acts like a counterfeit, but McWilliams says it will never truly work. This is because the state will never give away the power of minting as it is such an effective mechanism of rule.
The other issue Crypto faces is that like language, money relies on cooperation at scale. There’s a reason so many people learn English, and no one learns Esperanto, despite it being touted as the ‘perfect language’. People like technological advances that aren’t too inconvenient and don’t require starting from scratch. Likewise, the future of money will need to link to the existing body of banking more closely. Advances in money must arise from problems looking for solutions. McWilliams illustrated this with his time working in Nairobi. At the time, cash transfers in Kenya were insecure and inefficient. However, something everyone could understand as having value was phone credit. So, a parallel currency emerged, where people would text M-PESA phone credit to one another. This system remains, 68% of the Kenyan economy still relies on M-PESA. Thus, for money to evolve, it needs to solve a problem. Crypto is coming from the wrong direction - it is a solution looking for a problem. One thing is for sure; these social technologies do not occur in a vacuum. Humans will rise to challenges as they present themselves, developing solutions as quickly as we must. If that means the march of money will evolve gradually, so be it - many of our greatest human achievements have been relatively unhurried. Not everything has to be revolutionary.
More about Money and David McWilliams
- Read David's book Money: A story of humanity - available in book, eBook, and eAudiobook formats.
- Visit David's website
- Listen to the David McWilliams Podcast
- More books on the history of money.
- Visit our Business and Money pages for information tailored for small businesses and business studies as well as resources on personal finance, budgeting and managing your money.
WORD Christchurch
- WORD Christchurch website
- Follow WORD Christchurch on Instagram, Facebook and TikTok
Catherine
He Hononga | Connection, Ground floor, Tūranga
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