Geoffrey Ingham

G Ingham Nature of Money
Ingham capitalism


In “The Nature of Money”,  Geoffrey Ingham draws on neglected traditions in the social sciences to develop a theory of the ‘social relation’ of money.

  • Genuinely multidisciplinary approach, based on a thorough knowledge of theories of money in the social sciences
  • An original development of the neglected heterodox theories of money
  • New histories of the origins and development of forms of money and their social relations of production in different monetary systems
  • A radical interpretation of capitalism as a particular type of monetary system and the first sociological outline of the institutional structure of the social production of capitalist money

A radical critique of recent writing on global e-money, the so-called ‘end of money’, and new monetary spaces such as the euro

“This excellent book reveals a sounder grasp of credit-money than many contemporary heterodox economists and almost all orthodox monetarist economists.”
Ann Pettifor in OpenDemocracy (see below)

I agree. This is one of the best books about money I have read. And I have read a few. Like one of my previous favourites, Nigel Dodd’s“The Social Life of Money”, it is written by a sociologist and way beyond the intellectual radar of your average “money is neutral” economist (see Pettifor below on Krugman)  But whilst Dodd surveys the field far and wide Ingham goes wide and deep, especially into the intellectually embarrassing history of economics’ pronouncements on money.  Dodd’s  presentation of Ingham serves as a good introduction but arguably suffers from Dodd’s “Simmelian bias”. Reading Ingham as just a prominant neochartalist does not do justice to the magisterial scope and interdisciplinary originality of his work. (see Dodd and Jakelja below).   Quibbling over the “correct” conceptualisation of money versus currency looks like the sort of  debate banks would be happy to sponsor as it detracts from the issues of real power in the real political economy.  Much more relevant is the critique that in “… his analysis of the money market and the production of credit-money, Ingham, surprisingly, argues a straightforward orthodox case…” just as he effectively endorses the absurdly paradox “credit doesn’t matter” consensus on the causes of inflation in the 1970’s.  (see Pettifor below)   CAW 01/2020

various short ratings and reviews by  amazon / goodreads

Nigel Dodd  on G Ingham   see eg  ch3 p108 “Social Life of Money” , also eg “On Simmel’s Pure Concept of Money: A Response to Ingham”

Jens Beckert 

” …. The Nature of Money is a theoretically rigorous and well-informed book in economic sociology. The reader not familiar with the theoretical debates on money and its historical development will find a concise and very well argued introduction to the lines of debate on the issue. For the reader familiar with the subject, the presentation of the theoretical and historical material becomes remarkable through the lens of Ingham’s basic thesis of seeing money in the context of economic and political conflict. With its emphasis on the development of capitalism, The Nature of Money helps to position findings from mesolevel studies of institutional development in economic sociology within the broader economic and political context of a theory of capitalism. This applies to the debates on the performativity of economics, changes in the  organizational form of corporations, and the role of trust in the economy. Making money a core field of study is crucial to the advancement of the sociology of economic
life.”   read whole review by Jens Beckert here 

A pertinent and constructive critique can be found in  Ann Pettifors’s  excellent review article on Ingham’s “Capitalism” :

“Geoffrey Ingham is one of a handful of academics not blinded by the smoke and mirrors of today’s monetary ‘alchemists’. His excellent The Nature of Money  reveals a sounder grasp of credit-money than many contemporary heterodox economists and almost all orthodox, monetarist economists.

Just as with The Nature of Money, Ingham’s Capitalism adds a great deal to our understanding of the systemic nature of capitalism.  Like the distinguished sociologists on whose shoulders he stands, Ingham draws on those theorists whose work he “found to be most valuable”. They are Adam Smith, Marx and Weber, but also Joseph Schumpeter and John Maynard Keynes – who are included he writes,

“not only for their seminal heterodox contributions to the economic analysis of capitalism, but because this heterodoxy is implicitly ‘sociological’ ”. (ibid. p.2)

This book is therefore a must-read for both sociologists and economists; indeed for anyone wanting to deepen their understanding of the systemic nature of today’s global financial crisis.

However, while Ingham’s review of heterodox analyses is illuminating, it is, by his own admission, not comprehensive and, I will argue, includes a number of flawed analyses which are the subject of current debate, and discussed in some detail in this review.

First while acknowledging that capitalism’s hallmark is the “elastic production of money” he then retracts, and suggests that private credit-creation is constrained by the practice of ‘fractional reserve banking’ – a form of commercial banking probably not practised since the founding of the Bank of England in 1694.  Again this is the subject of heated debate within the economics sphere, so more on the subject below.

Second Ingham, like many economists, blames the inflation of the 1970s on the ‘the power of monopoly capital and their labour forces to mark up their respective prices’. (p.86)  This analysis appears to discount the role played by the City of London in creating excessive credit – ‘too much money chasing too few goods and services’ – after Chancellor Anthony Barber’s assault on banking regulation in 1971.

Third, by his own admission, Ingham arbitrarily excludes from his list of heterodox theorists a number of 20th century thinkers who have greatly illuminated our understanding of both the systemic nature of capitalism but also its dutiful hand-maiden, neoliberal economic theory. While I respect his right to choose the most influential, the inclusion of progressive 20th century thinkers would have added considerable value to this study of capitalism.

These disagreements are not new, and I am not the first to raise them. However given the extent to which society, political parties and progressives have a ‘blind spot’ for the admittedly opaque role played by private bankers in the economic life of nations, I believe it important to raise further discussion about ‘fractional reserve banking’ and the causality of inflation.

My high regard for Ingham’s work meant that these disagreements provoked a response in the form of this long review essay – to stimulate debate on the issues he has illuminated so clearly in his study of contemporary capitalism.   …

So while Ingham’s book provides us with an incisive analysis of capitalism and its fundamental ‘hallmark’: the ‘elastic production’ of ever-expanding and inflationary credit money, it suffers by falling back at points on neoliberal analyses and assumptions. Thereby – though this is certainly not his intent – he reinforces some of the flawed thinking that lets the finance sector off the hook, and allows financiers to continue escaping both scrutiny and regulation while they flagrantly confiscate public assets.
But Ingham raises important issues: with a deeper understanding of capitalism’s ability to create ever expanding amounts of credit-money, how does a democratic society once again rein in, regulate and subordinate the private finance sector to the wider public interest? How does society regain control over the public good that is credit and a sound banking system, and use both for financing society’s most important needs – including the need to tackle the threat of climate change?

Second, as Professor Vogl asks: “how can public goods (including liquidity) avoid being confiscated by the finance economy?” And how can they be restored to public accountability?  If we can move on from Adam Smith’s 300 year-old flawed analytical system to a proper understanding of the powers and public goods we have, due to ignorance, outsourced to the private banking sector – then perhaps as both economists and citizens we might finally be able to understand the creation of money – by both central and private banks – ‘out of thin air’. Only with this understanding will it be possible to devise policies, regulation and strategies to tackle and once again subordinate global finance to the interests of society and the ecosystem. That is why Ingham’s work is so important: it helps us move on beyond Adam Smith towards a fuller understanding of the public good that is credit.”

The above is the introduction and conclusion of Ann Pettifor’s review article

download and read as GaiaMoney odt    or    read on line

“Ingham and Keynes on the Nature of Money” by  M G Hayes : is interesting not least on the new and neo “Keynsean “betrayal” of Keynes 

Abstract : This paper compares and contrasts the thinking of Keynes and Geoffrey Ingham, focussing mainly on The General Theory and Ingham’s The Nature of Money (2004). Two points in particular are addressed: first, the relevance of Ingham’s insistence (following Keynes, among others) on the primacy of money of account to an understanding of Keynes’s own insistence that income is intrinsically monetary and upon the importance of the wage unit as an analytical tool; and second, the subtle contrast between Keynes and Ingham in their understandings of the source of interest as a genuinely monetary and not a ‘real’ phenomenon. Where Keynes identifies uncertainty as the source of interest within a methodologically individualistic framework of analysis, Ingham offers a sociological case in terms of the struggle between the debtor and creditor interests that inevitably emerge as a result of the creation of bank money under capitalism. Taking both points together, Ingham’s work not only underpins the crucial distinction between money and ‘real’ wages for the theory of employment but also develops Keynes’s recognition of the potential opposition between the interests of  finance and industry.

download full M G Hayes article as PDF

Luka Jakelja       review article of “Nature of Money” auf  deutsch – excerpt

Ingham review deutsch L Jakelja.jpg

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Wolfgang Streeck   review of Ingham’s “Capitalism”

“… Ingham’s book … is not just an excellent summary of key themes and the literature on capitalism, but also a highly instructive first approach to the contemporary issue of all issues, the global financial crisis. … ‘Capitalism’ is organized in two parts, the first presenting ‘classical theories’ on the subject and the second reviewing capitalism’s ‘institutions’. Among theories, we are treated to the usual suspects: Smith, Marx, Weber, Schumpeter and Keynes. While Ingham tries to distribute his favours evenly, his sympathies clearly lie with a combination of Schumpeter and Marx, closely followed by
Keynes. On the basis of his reading of the classics, Ingham suggests that a capitalist economy consists of three ‘fundamental elements, or institutional clusters’ (p. 53): ‘a monetary system for producing bank-credit money; market exchange; and private enterprise production of commodities’ (ibid.). He emphasizes that the three do not stand alone and by themselves, but rather interact with and depend on two crucial supports, the state and a modern, capitalist culture.

Part II, then, reviews what Ingham considers the five core institutions of capitalism, money, market exchange, the enterprise, capital and financial markets and the state  The
book ends with 20 or so pages of concise and highly readable conclusions. The chapters this reviewer liked most are those on ‘Money’ and ‘Capital Markets’ (although the others are to be highly recommended as well). This is not surprising, not just because of the current political–economic circumstances but also since Ingham, a sociologist at Christ’s College, Cambridge, has in the past established himself as an authority on the subject, among other things with his book The Nature of Money (2004). Most sociologists, or socio-economists, working on political economy concern themselves with labour or culture, and a few with the environment, usually in relation to politics and the state, while leaving the intricacies of money and the financial system to the specialists. More often than not, however, these researchers have a stake in hiding their knowledge, if that is what it is, in unintelligible jargon so as to keep it to themselves, or they go native altogether in the strange but bountiful lands that they once set out to explore. As it now turns out, leaving money to the money-makers in the banks and their associated university departments of finance was a big mistake, and we must be grateful to scholars
like Ingham for having made the considerable investment required in order to enter this difficult field armed with the necessary expertise.

Finance, as we have seen, is also central to the anti-globalization diatribe of McMurtry, written almost a decade before Ingham’s introductory text. As indicated, this reviewer finds it remarkable that the two are not all that far apart in diagnosing the origin of a crisis that unfolded only when their books were already out. To both, notwithstanding the technicalities with which ‘finance theory’ tries to scare away innocent citizens, the core of the matter is a newly developed capacity of a newly global financial system to make money out of money, avoiding the old-fashioned and tiresome detour through the production of useful goods and services …

Ingham, in particular, explains how the politics of deregulation and internationalization, together with computer-based finance mathematics, finally extricated the capacity to produce money by credit from public control—which to some extent at least had tied it to the production and consumption capacities of the real economy. Central to Ingham’s argument is his observation that it was always a ‘defining characteristic of capitalism that private debt can be readily transformed into money’ (p. 66), a capacity that continues to be capitalism’s ‘dynamic engine of growth’. Money, in other words, is fundamentally ‘constituted by a social relation of credit-debit’ (p. 69), i.e. by private promises that private debt will eventually be repaid. This implies that modern capitalist money ‘can only be made scarce by the rules and norms that govern the contracting of debt by the state and the private sector’ (p. 75). Globalization and deregulation, as McMurtry also notes, have eroded those rules and norms and thereby made possible privatized money production on a hitherto unknown scale. In the narratives of both Ingham and McMurtry, this represented a response to the general stagnation of growth and profitability that became a problem for Western capitalism after the end of
post-war reconstruction and with the rise and consolidation of the socialdemocratic welfare state in the 1970s.

Fresh money engineered to enrich the rich had to find debtors willing to take it, in return promising to repay it in the future with interest. The inevitable result was a rapidly growing debt pyramid vastly in excess of the real economy’s ability to pay, one that became increasingly liable to collapse as it was losing its grounding in the much more limited world of marketable use values. Ingham refers to Minsky’s theory, today so popular, that capitalist development is permanently at risk of being ended by either the Scylla of price inflation or the Charybdis of debt deflation. In 2009, it was the latter that forcefully emerged. Taking into account the fact that money is essentially a public good, even in a capitalist economy with private banking, national states had no choice, short of fundamental reform, but to deploy their authority in order to restore economic confidence. The way this was done was by procuring new credit from future generations unable to object to being drafted for bailing out today’s merchants of debt and dealers in what ultimately could not but turn out to be empty promises. “

The above is an abridged version of : Wolfgang Streeck : REVIEW ESSAY : Four books on capitalism : Christoph Deutschmann Kapitalistische Dynamik: Eine gesellschafts-theoretische Perspektive.  Geoffrey Ingham Capitalism.  John McMurtry The Cancer Stage of Capitalism.  Frederic L. Pryor The Future of U.S. Capitalism.

read whole article here

Nature of Money book excerpts

Ingham, Geoffrey  Article  2004  The nature of money

In a series of papers over the past five years or so and now in a forthcoming book (The Nature of Money, 2004), I contend that the methodology of orthodox economics is quite unable to explain the existence of money. Furthermore, sociology has failed properly to build on the superior alternative explanations – for example, seventeenth and eighteenth century ‘credit theory’ and the nineteenth century Historical School’s ‘state theory’ which influenced Weber and Simmel. As Randall Collins perceptively remarked, it is as if modern sociology has neglected money because it was not thought to be ‘sociological enough’ (Collins 1979). Since this observation, there has been a revival of interest (Dodd 1994; Zelizer 1994; Carruthers and Babb 1996; Leyshon and Thrift 1997; Hart 2000). But there is a considerable way to go. In the first place, money is still given scant treatment in representative economic sociology texts; for example, Carlo Triglia’s Economic Sociology (2002) devotes only three pages to it. In contrast to the other economic institutions covered in this important textbook, the author had very little in the way of sociological material on which to draw. Neil Fligstein’s The Architecture of Markets: An Economic Sociology of the Twenty-First Century Capitalist Societies (Fligstein 2001) – another exemplary work – does not contain any discussion of what is, arguably, the pivotal institution of modern capitalism. There is not even an entry for ‘money’ in the index. Apart from a ritual reiteration of the obvious importance of ‘trust’, sociology has not been concerned with the social and political production of money. With a few notable exceptions (for example, Carruthers and Babb 1996), modern sociology is almost entirely concerned with very general descriptions of the consequences of money for ‘modern’ society (Giddens, 1990), its ‘social meanings’ (Zelizer 1994), and, more indirectly, with the Marxist problem of ‘finance capital’. Money’s existence has been taken for granted.

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