Keywords: money, convention, real value, coin, commodity money, creditbank notes, currency, capitalism, Bank of England, monetary revolution, public debt, public finance, Gold Standard, neutrality, economics
amazon.com – google – goodreads.com – oup 2014 Making Money: Coin, Currency, and the Coming of Capitalism by Christine Desan
Money travels the modern world in disguise. It looks like a convention of human exchange – a commodity like gold or a medium like language. But its history reveals that money is a very different matter. It is an institution engineered by political communities to mark and mobilize resources. As societies change the way they create money, they change the market itself – along with the rules that structure it, the politics and ideas that shape it, and the benefits that flow from it. One particularly dramatic transformation in money’s design brought capitalism to England. For centuries, the English government monopolized money’s creation. The Crown sold people coin for a fee in exchange for silver and gold. ‘Commodity money’ was a fragile and difficult medium; the first half of the book considers the kinds of exchange and credit it invited, as well as the politics it engendered. Capitalism arrived when the English reinvented money at the end of the 17th century. When it established the Bank of England, the government shared its monopoly over money creation for the first time with private investors, institutionalizing their self-interest as the pump that would produce the money supply. The second half of the book considers the monetary revolution that brought unprecedented possibilities and problems. The invention of circulating public debt, the breakdown of commodity money, the rise of commercial bank currency, and the coalescence of ideological commitments that came to be identified with the Gold Standard – all contributed to the abundant and unstable medium that is modern money. All flowed as well from a collision between the individual incentives and public claims at the heart of the system. The drama had constitutional money, as its history reveals, is a mode of governance in a material world. That character undermines claims in economics about money’s neutrality. The monetary design innovated in England would later spread, producing the global architecture of modern money.
videos
youtube/HLS 2015 Library Book Talk – Christine Desan’s ‘Making Money’
articles, presentations, podcasts
papers.ssrn.com 12-2023 The Monetary Structure of Economic Activity: A Constitutional Analysis – by Christine A. Desan
Abstract – By revealing a community in radical transition, constitutional crises expose money’s relationship to the market. That essential dynamic is more easily disregarded in routine times. Modern commentators deflect analysis further by imputing a basic divide between real and monetary activity. This essay retheorizes that relationship using the Civil War experience as a setting. The exercise illuminates money as a practice that constructs the market architecture across crises and calms.
First, contriving a public unit of account creates commensurability in value and makes possible prices. That accomplishment is, at the same time, an arresting act of constitutional reorganization. To create a money, communities literally transmute political obligation into a unit and enable that entity to circulate: modern money is a sovereign liability that can offset individual indebtedness. Consonant with that faculty, the initiative expands public capacity and realigns private relations. Second, enabling money as a medium structures its operation. Money issues from public and private market actors who are advantaged by their ability to create it and it attracts users into its measurement system through their demand for that medium. Those features – discrete issue and particularized demand – are inherent to the phenomenon of circulation and, in turn, affect production. Third, a government curates exchange by enforcing those transactions in money that it approves. As it defines “commodities,” shapes contract, and develops property, the polity dredges the monetary channels of exchange. In the face of money’s sweeping effects as a unit of account, medium of exchange, and mode of payment, its disregard in modern economic theory is a major default. Analyzing money creation exposes it as the structure that configures economic activity.
Keywords > unit of account, medium of exchange, mode of payment, constitutional approach to money, monetary theory, credit theory of money, greenbacks, U.S. Civil War, real v. nominal economy, classical dichotomy
jstor.org 2005 The Market as a Matter of Money: Denaturalizing Economic Currency in American Constitutional History – by Christine Desan
Histories of the early American political economy present that world in fractured form, dividing political and constitutional dimensions from economic aspects. The fragmented approach reflects an old, oft-denigrated, but still powerful imagery, one that naturalizes economic activity as a set of myriad spontaneous and individuated exchanges, conducted with a conventional medium, money, and predictably composing a market sphere. The motif audits underlying assumptions in turn dissuade exploration of money and markets as territories of public decision, insulating by neglect the structural power of determinations made there. This essay traces the naturalization motif through a historiography of macroeconomic models of money. It then considers how money, recognized as a dynamics of value, would look if the law structuring it were approached as a complex set of relations that expressed, reiterated, and revised the distribution of authority in society. The early American political economy appears in a different light: money becomes a matter of value and governance at once, and therefore a crucial area of constitutional debate. Through that medium, the political economy of early America is transformed not once but repeatedly, from a mercantilist to a domestic paper to a liberal capitalist form.
hls.harvard.edu 2019 Money as a Democratic Medium – Two-day conference examines how can we design money so that it will inform and perpetuate democracy – By Brett Milano
Harvard’s recent two-day conference, “Money as a Democratic Medium,” challenged its participants to re-examine the history of money in America, and to redefine its future. The event was jointly sponsored by the Harvard Program on the Study of Capitalism, the Murphy Institute at Tulane University, the Harvard Law Forum and Harvard Law School, bringing a diverse group of lawyers, economists, academics and scholars to the HLS campus.
In her opening remarks, organizer and HLS professor Christine Desan contrasted traditional assumptions that money came into existence through social consensus with the more recent recognition that money is a medium engineered by governments out of sovereign debt (see sidebar). “If money is by nature democratic, that implies that the market is similarly democratic. But if money is sovereign debt, as it clearly is in the modern world, then we have some more thinking to do. Money was redefined after the Civil War, not once but several times. We created a national banking system, we established the Federal Reserve, we created institutions that determine how money enters circulation. So the issue is: How can we design money so that it–and the market it makes–will inform and perpetuate democracy?”
The ways in which money has failed democracy were discussed in a morning panel, “Financialization and Inequality.” The game has largely changed since the 1970s, said Financial Times editor Rana Foroohar. “Finance has taken a lot more of the corporate profit pie. The most striking figure I found in my research was where the financial flows went. Only about 15 percent of the money flowing out of [large financial] institutions was going to new businesses—The rest was a closed loop of the buying and selling of its own assets.” Thus, she said, the majority of corporate money is still held abroad, despite the Trump administration’s promises that its recent tax cuts would bring that money home for investment. “The solution is to change the narrative. We should be pulling back and asking, ‘What kind of financial system do we want to have? And how do we create a system to serve the real economy?’”
Foroohar noted that when the Dodd-Frank Act for Wall Street reform was passed in 2010, the government negotiated almost entirely with bankers. “I asked an Obama official how you could say the system is being fairly regulated, when 96 percent of the meeting is taken up by the banks being regulated. He looked at me with real befuddlement and said, ‘Who else should we be talking to?’”
Gerald Epstein, of the University of Massachusetts—Amherst, said that the rise of finance coincided with that of inequality, creating a system that favors some citizens over others. “Underlying all of this is a process by which wealth generates political power, to further this wealth and equality.” The country, he said, is now run by a “bankers’ club” that includes elected officials who get campaign contributions from banks, central banks that make decisions on whom to bail out, and regulatory authorities and lawyers “who do the bidding of these elites to try and rewrite rules.” Recent political upheavals, he said, display both the strength and the vulnerability of this club. “Trump manipulated the anger at the political elite. The first thing he did when he got into power was financial deregulation, and the anger is still there.” One solution Epstein offered was to reform campaign financing. “That would make money more democratic, since money could no longer be used to buy democracy.”
hls.harvard.edu 2019 Money as a Democratic Medium: A Q&A with Christine Desan
justmoney.org On this website, we approach money as a legal project.
Created to meet demands both public and private, money depends on law for its definition, issue, and operation. That legal structure of money – its design – matters deeply. In the words attributed to an early banker, “those who create and issue money . . . direct the policies of government and hold in the hollow of their hands the destiny of the people.” Our aim is to encourage discussion, debate, and scholarship on money’s design and its reform towards a world that is as just as it is (economically) productive.
Money, governance, and the public welfare are intimately connected in modern society. Most obviously, the way political communities make money and allocate credit is an essential vector of material life. It critically shapes economic processes – channeling liquidity, fueling productivity, and influencing distribution. At the same time, those decisions about money and credit define key political structures, locating in particular hands the authority to mobilize public resources, determining opportunities for individuals and industries, and delegating power and privileges to create credit and accumulate profit. Finally, modes of making money shape categories and strategies at the collective level, including the incentives we institutionalize, the assumptions we grow to share, and the possibilities we learn to recognize.
Despite the centrality of money’s design, it is marginalized as a public and academic concern. Most leave it to economists to explain. Economists do so according to their disciplinary terms. Those terms set aside issues of money’s legal definition, creation, and change over time. Banking and financial regulation scholars target the architecture of the current system and will, we hope, find much relevant material here. But an enormous territory remains outside the focus of those fields. We are interested in questions such as how:
- Societies configure governance as they build a sovereign unit of account
- Strategies to delegate credit creation to private financial institutions implicate democratic legitimacy
- The phenomena of instability and inequality relate to decisions about monetary design
- Public support in the figure of the payments system can perform both political and technical values
Those issues engage fields like constitutional law, civil rights, poverty law, and legal theory just as directly as fields defined as monetary or financial. More generally, the issues we hope to raise here cross disciplinary bounds to history, sociology, political science, anthropology, and the humanities, as well as economics. We hope that the website provides a frame to illuminate money as an essential dimension of governance. We welcome you to contribute to the site. Functions currently include:
- Posts to new scholarship
- Policy pages on current issues (“policy spotlights”)
- Invited forums on topics of special interest (“roundtables”)
- Archive of syllabi, course materials, and other teaching tools
- Conferences and talks: Archives, links, CFPs, and notices
- Other resources and media on money
reviews
reviews.history.ac.uk pdf 2015 Making Money review by Katie Ball
jstor.org 2015 Making Money Review by: Andrew David Edwards
academic.oup.com pdf 2015 Making Money Review by Leopold Specht
jstor.org 2016 Making Money Review by William Roberds
scholarworks.iu.edu 2018 Desan, Making Money – Review by Simon Middleton