Bookbuster Book Review
The Production of Money
How to Break the Power of Bankers
By Ann Pettifor
Published by Verso, available from Printed Matter Books, price £8.99
Review by Lee Humphries
Ann Pettifor is an economist best known for predicting the global financial crash and for her work with debt cancellation at Jubilee 2000. She is also an advisor to the Labour Party’s Economic Advisory Committee.
Whilst the book is presumably aimed at the layperson, there are many economic terms – an index of these terms and their meanings would have been useful, but you will need to look them up separately.
Ann is very vocal about how most orthodox economists (especially those who teach in our universities) ignore how money is created and money’s role within our economy, as well as debt and the banking system. It is not the central bank that prints most of our currency, it is the private banks (as the Bank of England have stated) that issue money in our economy. So while neoliberal thinkers take aim at how high public debt may be, those same people choose to completely ignore how much higher private debt is and thus perpetuate the ideology of ‘public bad, private good’.
The title of this book is taken from what John Maynard Keynes called ‘the elastic production of money’. As Ann writes: “there need never be a shortage of money to solve the great scourges of humanity; poverty, disease and inequality; to ensure humanity’s prosperity and well-being; to finance the arts and wider culture; and to ensure the ‘liveability’ of the ecosystem”. Credit is what enables an economy to work productively, if used correctly. If credit is only used for speculative means, such as in ‘casino banking’ (speculation) and inflating assets prices such as houses, then this poses a huge risk to any country’s economy due to causing systemic risk and deflation as witnessed in the crash of 2007-08. However, if credit is used for creating jobs in the real economy it helps to boost production, employment, by producing goods and services, spending in shops, thus enabling savings, and the public debt is repaid at the same time via taxation.
The Bank of England still controls the flow of notes and coins and also funds government spending. Our government can borrow what it likes to use for economically productive methods, on infrastructure, funding our NHS, creating employment, welfare payments etc. and this can be controlled by fiscal policy. Fiscal policy enables a government to control the supply and demand of money in circulation: e.g. it can stimulate growth during a recession, keep inflation low, stabilise our economy to avoid boom and bust cycles, and tax accordingly to reduce the money borrowed and reduce inflation.
Except for not knowing all the economic terminology, this book is much more accessible than others on economics in helping understand the nature of money, credit, debt and how it can be put to good use – that is, how it can help avert the mess we are currently in. Ann also addresses austerity, introduced by the coalition government, and illustrates what an ideological disaster it has been, and continues to be, and the knock-on effects this causes.
Ann concludes in her book that it is imperative that both women and environmentalists should learn more about how our economy works, and they should be leading the debates around it, as it affects them the most. However, I would go further to say everyone should read this book and then start to discuss how our economic system works, and can work – as our economy controls every aspect of our lives, from small and medium businesses struggling to stay afloat on the high street, to homeless people on the street, and encompassing the high costs of raising children, of public transport, of the destruction of our environment, and so much more…
• The Production of Money is available from Printed Matter Bookshop, 185 Queens Road, Hastings, TN34 1RG at £8.99, with 10% discount for 1066 Card holders and students.
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