Jack Mosse has written a book about modern monetary theory (MMT) that ranges from conversations in a North London housing estate to elite financiers’ offices, to explain, without academic jargon, the central economic question of our day. For anyone who does not know about modern monetary theory, or who knows about it but wants to read a fresh and socially embedded take, this is a satisfying and engaging book, convincing in its key claim that modern monetary theory is an effective tool for governments who want to pursue progressive social and environmental goals.
‘Pound and Fury’ starts with how the economy is mythologised and portrayed as a ‘a pot of money’, reflected in how we talk about it in our everyday lives, and in how people with power want us to think about it. This perception of the finite pot of money is at root of the demand from many voters that we need ‘to take care of our own’ before we spend money on overseas aid. ‘The pot’ is at the root of the idea that immigrants and those on benefits bleed the economic system, and it underpinned acceptance of austerity, at least in the early days.
On the London housing estate, Mosse interviews people about how they would describe what ‘the economy’ was if they were speaking to a child. Over and over, we get the ‘pot’. But rather than ‘the pot’ being a misperception of the less educated, or of Brexit supporters, Mosse shows that the economy as pot is also prevalent among richer elites, even if more cynically deployed. He goes to three financial institutions; hedge funds, the Treasury and other departments in the Civil Service as well as a finance magazine headquarters. He describes these working environments and analyses how their inhabitants talk about the economy. The hedge funders are not the hard and technocratic experts Mosse had expected. They see their job as being to make relationships and appeal to emotion, in an environment with ‘a soft malleable logic where myth can thrive’.
The financiers and officials manufacture the second theme in the myth of the economy, that the economy is an objectified autonomous entity that is separated out from and in tension with society’s more morally edifying aspects. In this myth, the economy gets placed on one side of a binary definition, and is juxtaposed with socially benevolent causes like healthcare, workers’ rights or the green revolution.
Reification is at the core of the ‘economy’ myth. As financial journalist Aaron says, the economy is ‘this beast that we are incapable of understanding … this thing that is apart from us’. Tracy, a single mother living on a housing estate in north London, takes issue; ‘rich wealthy men decide what goes where, what we get, what we don’t get, what gets spent, where it gets spent and how it gets spent’. But Mosse’s key message about how most of us continue to see the economy as finite and also separate, is that it is in the interests of elites who are powerful; the reification and depoliticisation masks how unequal economic distribution is.
The financial elites claim they contribute to the productive economy because they help make decisions about how money from the pot is efficiently allocated. But they are not actually at the productive end of the economy, because they speculate in assets like property rather than small or medium sized business employing people. This leads Mosse to the final third of his book where he homes in on how, according to modern monetary theory, the economy is not a finite pot, but more of a circular flow.
Following the work of Richard Werner and others, he traces the history of our current monetary settlement, showing how private banks now create 97% of the money in our economy. He goes on to illustrate how the manner in which these private organisations distribute this money leads to asset price inflation, which, in turn, increases the wealth of the already wealthy and underfunds social overhead expenditure and green infrastructure. As such, he pinpoints the past three decades of rising inequality as being a result of legislation which has facilitated an economy which is now almost entirely dependent on the creation of private money.
However, following MMT, he concludes by pointing towards a way out, arguing that if governments start to take back some control over how money is created and distributed (as they have been forced to in the pandemic) they can use it for productive and socially beneficial ends. His most heartening examples are the German regional savings banks, which have a mandate to lend to productive small and medium sized firms and environmental initiatives.
Mosse convinces that modern monetary theory might be a (partial) way forward, because he does not overstate the case. But his greatest achievement is to have written a book about monetary theory that is so beautifully written and with such sympathetic and at times amusing insights from the people he has interviewed, that it is also accessible to readers new to the subject. As he says, when he was watching the 2008 financial crisis unfold, as a social science undergraduate, someone who should have been able to understand, he was pacing round the room saying ‘this is huge’, but not knowing what was causing it or how we could ever move on from it. When the next crisis hits, or the current system of money creation to benefit private banks and already wealthy asset owners finally becomes intolerable, this book will be to hand.
The Pound and the Fury: Why Anger and Confusion Reign in an Economy Paralysed by Myth is by Jack Mosse and published by Manchester University Press.