| Money |
| Eric Lonergan, Acumen Publishing, 2009, 160 pages, £7.99. |
| An asset, originally prized for its usefulness but then, more and more, for aesthetic qualities, becomes a tradable commodity. It becomes the centre of a mania, as people do anything to obtain money to pay inflated prices. In the aftermath, gender was seen as a factor, with maleness identified as a culprit for the mania. The housing bubble? No. In Eric Lonergan’s daughter’s school, as in my son’s school, this was the Pokemon card mania of 2007 (although his daughter’s claim that Pokemon card trading wouldn’t have been banned at school if the boys hadn’t got involved might have come from Harriet Harman only yesterday). It’s funny how money works. |
| An economist might summarise the functions of money as a unit of account, a store of value, a means of exchange and a mechanism for deferred payment. As a technologist, I have spent many years trying to understand each of these functions in order to ‘digitise’ them properly, and still haven’t managed it entirely. Lonergan attempts to get to the bottom of the topic by rewriting these economic functions as what he calls the philosophical functions: measurement, allure, interdependence and control of the future. He then explores them in a variety of valuable ways, each of which shines a concise but intellectually satisfying light on elements of the financial system. |
| Central to the book is the principle that money is not neutral: it influences economic activity all round and not just prices. Much of the book is therefore about the financial system, rather than the narrower topic of money. At first, I was slightly disappointed by this, because I found Eric’s reflections on money itself thought-provoking. But the more I read, the more I appreciated the way that he had used these reflections as the basis for the exploration of aspects of the financial system. Challenging preconceptions from an informed position, he made me reassess my own attitudes, something I did not anticipate in the first few pages. |
| Although the book was written last year, the value of the analysis appears to have grown as events have unfolded. At one point, Lonergan talks about “politicians lending other people’s money to other politicians”, and suggests that this has dubious merit without strong institutions. As I write, the BBC was informing me that the German parliament has voted to lend several billion euros to the Greek parliament. Hmmm. |
| The simple tale of Pokemon mania is only one of the varied and accessible stories Eric Lonergan uses to make key points. Just as I finished reading the book, I came across the Bank of England’s response ( http://bit.ly/9uQGDE ) to a Freedom of Information Act request from a chap asking ‘where does money come from?’ which says, in essence, that it’s all a bit complicated, and you can learn more by reading a variety of historical sources, but in the end money is created by central banks. They might have done better to have directed the interested member of the general public to Lonergan’s informed, readable and timely work. |
| David G W Birch |
| Co-founder of Consult Hyperion, chair of the Digital Money Forum and co-editor of the Digital Money Reader |
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