The Social Life of Money – Book Review

Cover of book “Social Life of Money” by Nigel Dodd

In 2014, Nigel Dodd published a ground breaking book, The Social Life of Money, questioning what money is, how it works, what we think it is and how currencies are created. Indeed, Dodd explains that one of the problems currently is that our understanding of what money is has not kept up with the reality of new types of money that come from different sources, or so says Princeton University Press, reviewing Dodd’s informative book. Nigel Dodd is a Professor of Sociology at London School of Economics.

The Social Life of Money is a book that raises many interesting questions such as:

 “What counts as legitimate action by central banks that issue currency and set policy? What underpins the right of nongovernmental actors to create new currencies? And how might new forms of money surpass or subvert government-sanctioned currencies.”

As the Princeton review of the Dodd book explains, the author attempts to address these difficult problems. What would happen if we would look at money as a “process”  ? as the result of a relationship ? One of the main focuses of the book is to understand how money can be removed from bank domination and mismanagement, and how it can be better managed. The book considers various utopian ideas based on the philosophical musings of people like Nietzsche, Benjamin, Deleuze and Guttari, among many others. As a result, the book comes up with and proposes new ways of thinking about money.

A review of The Social Life of Money by Kirkus takes a different perspective on the points that are made. For example, it is explained that following the backdrop of the 2008 financial crisis it is time to “reconsider the nature of money”. This is especially true, argues Dodd, given the fact that new forms and systems of money are being conceived of and set into place all of the time. Take bitcoin as just one example of such a new monetary system that is emerging. Indeed, Kirkus points out how Dodd explains that the 2008 financial crisis highlighted a “complex and dynamic configuration” of various different factors and relations on which our system of money depends. These include social factors, economic factors and political relations. Nigel gave the following lecture on his groundbreaking work, at the London School of Economics:

Dodd points out that the causes of the monetary crises that we have experienced can be found in the history of capitalism. Indeed, Dodd explains that central banks were finding themselves under pressure to engage in “currency wars”. These wars led to devaluing of currencies as an approach that was allowing countries to be able to deliver economic recovery, at least partly through boosting exports. Dodd argues that some believe that the financial crisis of 2008 was even responsible for the collapse of several governments around the world as well as the Arab Spring that occurred during the first part of 2011.

Dodd does not believe the problem to be exclusively a banking crisis, despite the way it was portrayed in the media to the general public. This suggests that all banks are the same and does not consider the complicated nature of different financial institutions that are fragmented in and of themselves and do not necessarily even work with one another very well. This leads Dodd to purport that:

“The financial system has grown absurdly disproportionate relative to the rest of the economy: distorting capitalism, widening inequality, damaging society and exposing its key public institutions to unacceptable risks.”

And Dodd argues that this has become accepted by political parties that are both left wing and right wing.

One of the main aims of the book overall is to review the actual nature of money, and specifically its social nature. This means that Dodd sets out to address how money and credit systems could be organized differently and realigned. As he explains, it requires looking at the relationship that money has with a range of different factors such as its own value, its connections with the community, its links with power and the state, its ties to ritual and religion and the way that money is also associated with  identity, self and culture. The need for all of this is brought about, according to Dodd, due to there being a tipping point for money that may have now been reached, and that this has been proven by the financial crisis. This leads to questions about who should produce money and how banks create credit.

Fans of Dodd’s work will also be pleased to know that this London School of Economics professor of sociology has penned other works in the past: The Sociology of Money and Social Theory and Modernity.