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and money and credit are semantic. Are they not different terms for the same thing? Surely, common sense dictates that handing over a coin for goods is simultaneously exchange and payment. This imagery of physical – minted or printed – money persists in the era of ‘virtual’ money transmitted through cyberspace. We shall see that digital money causes much common sense and academic confusion. Bitcoins, for example, are represented by the image of precisely what they are not: a material ‘coin’. What will be the consequences if digital money replaces cash? If money is a medium of exchange, what is ‘exchanged’ when a card is ‘swiped’ across a terminal as a means of payment? Doesn’t this rather involve the use of a token ‘credit’, carried or transmitted by the card – which is retained – to cancel a debt incurred briefly by the purchaser?

      Finally, defining money by its functions raises further questions: does something have to perform all the functions to be money? In other words, is ‘moneyness’ constituted by all the functions? For example, there are better stores of value than money. If not all the functions are necessary to confer ‘moneyness’, do any take primacy? In commodity theory, money is essentially a medium of exchange on which all other functions depend. We shall see in the following chapter that two of the functions in Walker’s list – medium of exchange and means of payment – are integral parts of two radically different theories of money. On the one hand, intrinsically valuable material commodities can become widely used media of exchange in bilateral trades: that is, bartered. On the other hand, means of payment refers to a token of credit that can settle a debt incurred by the purchase of something because the value of both credit and debt is denominated in the same money of account. The numismatist Philip Grierson illustrates the difference between medium of exchange and means of payment, which he takes to be ‘money’, with the example of fur trappers in eighteenth-century Virginia who carried twists of tobacco to be exchanged for food and lodging on their journeys. The ratio of tobacco and food and lodging varied considerably in different exchanges and the tobacco only became ‘money’ when its value was denominated in a money of account: that is, at 5 shillings an ounce (Grierson, 1977).

We shall see in the following chapter that the two theories – ‘commodity-exchange’ and ‘credit theory’ – contain irreconcilable explanations of how the denomination of nominal face value of money – money of account/measure of value – originates. In this regard, Keynes was intrigued by the fact that circa 4000 BCE, Babylon did not have a circulating currency of material ‘things’, but used a nominal money of account to measure the value of stocks of commodities and to denominate contracts and wages. The first known circulation of material forms of coined commodity money came some 3,000 years later in Lydia around 700 BCE. One of the questions to be explored in the following chapters is whether ‘moneyness’ – that is, the specific and distinctive quality of money – is conferred nominally by its designation in the money of account or materially by the precious metals’ ‘intrinsic’ value or the pre-existing value of commodities in the ‘real’ economy. The era of precious metal money has gone; none the less, we shall see that the opposition between ‘nominalist’ and ‘materialist’ theories continues to lie behind academic disputes on the nature of money.

      A preoccupation with narrow economic functions diverts attention from a range of important questions for which the two theories also provide further ‘incompatible’ answers. First, how can money perform its functions? Orthodox economics infers that the rational individual uses money for the self-evident advantages of the functions in Walker’s list. However, these functions are only fulfilled if everyone else simultaneously sees the advantage, but this cannot be explained in terms of individual rationality. It may be rational to hold the things that fulfil the functions if they are intrinsically valuable commodities but not token credits. As we shall see, money’s functions require a different explanation.

Second, money is not only a ‘social technology’; it is also a source of power – ‘infrastructural’ and ‘despotic’ power. Obviously, the accumulation of money confers power; but the power to create money is of more fundamental importance. Money-creating power is an essential element of state sovereignty; yet we shall see that in modern capitalism this power is shared with the banking system. Here, the dual nature of money’s power as an ‘infrastructural’ public resource and a means of ‘despotic’ domination becomes apparent. We have noted that modern money can be produced by the creation of debt, which necessarily entails an inequality of power between creditors and debtors (Graeber, 2011; Hager 2016). A central theme of the book will follow the lead given by the great sociologist Max Weber, who interpreted modern capitalism as ‘the struggle for economic existence’, in which money is a ‘weapon’ wielded by conflicting interests to achieve their aims and strengthen their position as much as it is a public good for pursuing our collective welfare (Weber, 1978, 93).

      Today, we are encouraged to believe that the questions of who creates money and for what ends and in what quantities are technical matters to be decided by experts; but they are political questions. As we have noted, the control of money creation lies behind major political struggles in the representative democracies. Those in favour of monetary expansion to finance employment and consumption – the broad Keynesian camp – are opposed by those who place the avoidance of inflation as the main priority of monetary policy. Furthermore, there is no single definitive rational means of deciding between them. Whichever route is taken depends on which school of economic theory and conception of money is chosen, which, in turn, is related to different interests in society: for example, debtors versus creditors; possessors of accumulated money wealth (rentiers) versus those dependent on the employment of their intellectual and physical labour – ‘Wall Street’ versus ‘Main Street’, as the question was posed during the Great Financial Crisis in 2008. Most academic theories of money – especially those held in most orthodox and mainstream schools of economics – fail entirely to address the question of money and power: that is, to register that money is a question of political economy.

The following chapter explores these astonishingly persistent intellectual disputes and their impact on the conflict over who should create money and control how it is used. Chapter 3 draws the theoretical discussion together in a summary of a social theory of money which is used to frame a brief account of Weimar Germany’s severe hyperinflationary crisis, where money’s social and political foundations are ‘unveiled’ (Orléan, 2008). Chapter 4 continues the twin themes – theories of money and struggle for its control – in an account of the development from the sixteenth century onwards in western Europe of the distinctive system of shared money creation in capitalism created ‘exogenously’ by states and ‘endogenously’ by private banks.

      Chapters 5 and 6 examine how this dual monetary sovereignty and capitalism’s private contract law have resulted in complex and fragmented monetary systems comprising state-issued currency and bank credit money mediated by central banks; myriad ‘near’ moneys issued as IOUs by financial institutions; local community ‘complementary’ and ‘alternative’ currencies; and crypto-currencies such as Bitcoin. In chapter 7, we see that proposals for monetary reform raised by the Great Financial Crisis of 2008 remain informed by the unresolved intellectual disputes which mask and obfuscate the essentials of the money question: who should control its creation and how it is to be used. Some tentative observations are offered in the concluding chapter.

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