3/13/2009
Niall Ferguson, “The Ascent of Money,” Penguin Press, 2008
It's way past time to utter the dread G word about the
economy, the G word being "Godzilla." The economy as we now
experience it, is like the monster in the 1998 American remake: it rises from
unfathomable depths before marching through Manhattan kneecapping skyscrapers
with casual flicks of its tail. That movie was criticized for making Godzilla
too big for the screen. It's true that rarely could the extent of the creature
be squeezed into a frame. But that's just what makes American Godzilla such a
good image of current crisis, the extent of which continues to defy efforts to
frame and contain it.
If you'd like a somewhat more nuanced and informative guide to the crisis than pondering the ways of supersized Godzilla, it's worth considering Niall Ferguson's, "The Ascent of Money." He writes: "It is not too much to say that in mid-2008 we witnessed the. . . symptoms of a world war without the war itself." In a war a people gives of itself completely. Is nothing short of warlike effort what it takes to salvage the current economy? Ferguson doesn't answer that pressing question. But he does provide an absorbing history of financial institutions, and of money.
If there is one thought to take from this book it is that
financial institutions, per se, are not the enemy. Banking is not opposed to
the developments of industry and technology that we credit for the modern
world; it is an equal among those developments. The goal that Ferguson set for
himself with this book was to, "break down that dangerous barrier which
has arisen between financial knowledge
and other kinds of knowledge."
He's done well in that effort.
And it is a
dangerous barrier. I suspect that many of us are undertaking to break it down
on our own as best we can. Walter Benjamin once remarked that in the twentieth
century we were all compelled to act like detectives (Benjamin himself had a
pronounced weakness for detective narratives). Maybe, in the twenty-first
century we are all, similarly, compelled to be economists.
Another virtue
of Ferguson's book is that it deals with gold, the gold standard, and the gold
bugs who advocate it as the only inherently valuable form of money. Ferguson
treats the issue historically. He shows that the Spanish empire, which amassed
gold, nevertheless, because it lacked financial institutions, borrowed from the
Dutch, who may not have had much in the way of gold but had created banks. He
writes, as he describes the evolution of credit, that: "What the
conquistadors failed to understand is that money is a matter of belief."
In response to those who may still believe that gold is the
only — as in Platonically — rock solid money, he concludes: "Money is not
metal. It is trust inscribed." It's true, of course, though Ferguson
doesn't delve into the question — he's not your financial advisor — that when
economies flounder, individuals often revert to gold.
If there is a
weakness to the book, it is that Ferguson insists, in a long chapter, on giving
a Darwinian cast to the evolution — the creation, destruction, and survival —
of financial forms. Perhaps it would be best in books of this sort to spare the
reader that kind of prolonged exegesis and stipulate in advance: Darwinism assumed.
Do it yourself.
Ferguson's is
a useful, mostly well-written book. He does at times fuss in his prose like the
professor he is (Harvard, Oxford). But the book is better than the BBC show
which will be out on DVD in April. That show, as seen on public television,
cuts out key sections of his argument, rendering it puzzling and fragmentary.
That's television for you. However, the show, like the book, does convey that
Ferguson, who is avowedly politically conservative, makes George Soros, who is
anything but, the hero of the piece.
Enough said
Back to
Godzilla.
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