by Ann Pettifor
The Production of Money explains why we misunderstand the nature of money, and what we can do about it
In this accessible, brilliantly argued book, leading political economist Ann Pettifor explains in straightforward terms history’s most misunderstood invention: the money system. Pettifor argues that democracies can, and indeed must, reclaim control over money production and restrain the out-of-control finance sector so that it serves the interests of society, as well as the needs of the ecosystem.
The Production of Money examines and assesses popular alternative debates on, and innovations in, money, such as “green QE” and “helicopter money.” She sets out the possibility of linking the money in our pockets (or on our smartphones) to the improvements we want to see in the world around us.
Burke Stanton on Resilience wrote:
"Ann Pettifor’s The Production of Money, is a work in three parts. It provides an explanation of how money and credit are created in modern economies and of some of the problems that helped foment the financial crisis. The author, an economist, then sets out her views on how these problems should be fixed, including introducing controls on international capital flows. Finally, and less obviously from the title, the book strays into a critique of fiscal austerity. [...] One of her objectives is to 'simplify key concepts in relation to money, finance and economics, and to make them accessible to a much wider audience'. [...] Money creation is a complex and intangible concept in a world where it is no longer backed by gold bars held by the central bank, and Pettifor provides the most accessible and thorough explanation I have seen. [...] She strikes a revolutionary tone when setting out the problem. But many of the remedies Pettifor recommends are, as she acknowledges, fairly mainstream: monitoring the evolution of credit relative to national income, limiting loan-to-value mortgage ratios more strictly, imposing stronger regulation on banks and issuing government debt at low interest rates across the maturity spectrum. [...] This book will help the public 'develop a much greater understanding' of how banking and financial systems work. However, its confrontational style — criticising financial market players, most economists, politicians and ideas from other left-leaning economists — may put some readers off before they get to the meat of the argument. The characterisations of these groups’ views are selective and her criticisms are at times not well supported by the evidence she presents."
Diarmid Weir on personal blog 'Future Economics' wrote:
"At its core, the book’s guiding questions are: How does money currently facilitate a despotic regime of finance and how can it facilitate, as a fiat currency, socially beneficial activity to set us on a better path toward Just Transition and equality? [...] This is a perfect book for the layperson (and latent activist) because it demystifies the currently authoritarian function of central and commercial banks in our world and how they have a stranglehold over our collective ability to address the massive global crises we face. Even more importantly, it presents a winning narrative about how we can begin to tackle financial oligarchy, climate chaos, inequality, and sexism precisely by framing a realistic horizon of dramatically better life conditions for ordinary people. [...] Even though The Production of Money weaves in discussion about climate change and transition it doesn’t leave the reader with a list of immediate calls to action. The book, however, is a great resource for the climate movement because it explains the workings of global capitalism, the key driver of the crisis."
"The general thrust of Pettifor’s argument is that the ‘production of money’ by banks is of vital importance to a well-functioning economy but one that has been poorly controlled, allowing its benefits to be accompanied by great harms. I believe this to be correct and that many of her proposed solutions are eminently sensible. Yet I believe that some important aspects of the problem are partially obscured by some errors of detail in her account."
Videos on the Book
Ann Pettifor unravels the myths surrounding the creation of money, taxation, investment and government borrowing in this 12-minute video from Real Media:
More time? Watch this lecture by Pettifor on the book at the London School of Economics (70 minutes including Q&A).
Table of Contents of The Production of Money
- Credit Power
- The Creation of Money
- The 'Price' of Money
- The Mess We're In
- Class Interests and the Moulding of Schools of Economic Thought
- Should Society Strip Banks of the Power to Create Money?
- Subordinating Finance, Restoring Democracy
- Yes, We Can Afford What We Can Do
About Ann Pettifor
Ann Pettifor is the Director of Prime (Policy Research in Macroeconomics), an Honorary Research Fellow at City University, and a Fellow of the New Economics Foundation. She has an honorary doctorate from Newcastle University. She is known for her leadership of the Jubilee 2000 campaign, which resulted in massive debt cancellation for more than thirty countries. She has served on the board of the UN Development Report and in 2015 was invited onto the economic advisory board of the British Labour Party by Jeremy Corbyn. She is the author of The Coming First World Debt Crisis (2006) and co-author of The Green New Deal (2019) and The Economic Consequences of Mr Osborne (2010).