‘The Social Life of Money’, by Nigel Dodd

An alternative origins story offers to help us imagine a better world

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The standard story about the origins of money is intuitive and satisfying: exchange was once achieved through barter, and money evolved to overcome the difficulties associated with trading surplus squirrel pelts for scarce fish. Money is thus presented as a mechanical advance towards modernity – not unlike the wheel or the shipping container – that reduced logistical difficulties. This story appears everywhere from Wikipedia to Federal Reserve publications, and by explaining money’s origins, it speaks not only to where money came from but to what it is. The textbook origins story leads directly to the textbook definition of money as a “medium of exchange”.

In The Social Life of Money, Nigel Dodd takes issue with the standard story. A sociologist at the London School of Economics, Dodd argues that we lack evidence to support this narrow, exchange-oriented understanding of money’s origins, suggesting that it is at best incomplete and at worst a constraint on how we might imagine a better world.

Dodd does not offer a single alternative story but, instead, presents multiple narratives with varying levels and types of supporting evidence. For example, some scholars argue that early money evolved as a means of tribute to religious leaders, while others posit that it served the human need to give and receive gifts, to communicate in a standard language, or as a means of diverting violent rivalry. Money was not a mechanical instrument facilitating exchange among anonymous parties but, instead, served social purposes: money had a social life.

Once he has liberated the origins story from the exchange straitjacket, Dodd presents a wide-ranging and sophisticated review and integration of the academic work related to alternative conceptions of modern money. He draws on perspectives from sociology, anthropology, psychoanalysis, philosophy and literary theory, with contributions ranging from Marx, Derrida and Kant to the most recent technical scholarship. Dodd’s approach falls loosely under the “critical theory” umbrella emanating from the Frankfurt School, a neo-Marxist-inspired approach that combines explanatory theory with normative judgments regarding how systems might be changed for the better.

Dodd’s motivations are rooted in the real world rather than the academy. His 1994 book, The Sociology of Money, opened with the 1992 ERM crisis, and The Social Life of Money opens with the Greek bailout and 2008 financial crisis. Dodd suggests that recent financial market developments prove that the system is broken for families and businesses on Main Street, and goes on to marshal scholarship to support his argument that different social conceptions about money might lead to better outcomes.

For example, the “debt jubilee” that was practised in Mesopotamia and Babylon had social purposes, and Dodd suggests related policies that offered debt forgiveness to households during the recent crisis might have achieved better social outcomes, since anger and distrust of institutions continue to reverberate from the decision to bail out banks but not people. (Interestingly, mortgage debt relief is now gaining “hindsight” traction among mainstream economists as a preferred policy response.) Dodd is also sympathetic to the notion of “mutualism” in money: the bottom-up approaches of peer-to-peer lending – Kiva, Kickstarter, Bitcoin and other systems that bypass the hierarchy of states and banks have numerous parallels to the schemes espoused by various scholars over the past century.

The Social Life of Money is well-written but not easy reading; even with close attention, the intelligent generalist may get lost in complex argument. The lay reader may also be put off by occasional analyses that veer into the scholarly-arcane. For example, the discussion of the psychoanalytic literature linking money to neurosis, excrement and the Oedipal complex seems more suited to an academic conference of post-Freudians than it does to a book partly motivated by our crisis-prone financial system. To be fair, Dodd is exceptionally skilled at bridging the gap between scholarship and relevance but, at points, this bridge gets shaky.

Yet for readers willing to open their minds and invest the effort, this is a richly rewarding book. Those of us accustomed to thinking of money as something we exchange for beer and pizza will never again have such a simple story.

The Social Life of Money, by Nigel Dodd, Princeton, RRP£24.95/$36, 456 pages

Pietra Rivoli is professor of finance and international business at the McDonough School of Business at Georgetown University

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