Book Review. What’s it about money?

The old joke begins with a question: when does it rain money? Answer: when there’s change in the weather. For a select breed of Wall Street bankers, it rained money for years on end, until the weather finally changed for the worse in the fall of 2008. The financial crisis was one great body blow not just to the global economy, but to the very idea of old-school, laissez-faire capitalism. It elicited a total rethink, from economic theories to government policies. And it sent even those who excelled in the subject of money back to basics.

As the author and Wall Street executive Kabir Sehgal tells us in Coined: The Rich Life of Money and How Its History Has Shaped Us , the financial crisis, and his attempts to understand it, was the main impetus behind this book. He writes that his investigations into the “root causes” of the 2008 crash provoked him “to ask a more sweeping question: what is it about money that we can’t master?” It is indeed a sweeping question and an anodyne one at that.

But then, a few passages later, Sehgal also says that “the world didn’t need another book on the 2008 financial crisis.” Some would disagree with that rather sweeping assertion, which is equivalent to saying that the world didn’t need another book on the Great Depression or World War II. There’s never any closure to be had when it comes to world events.

At any rate, Coined is a work of history that aims to enrich our understanding of money’s absolute centrality to human affairs since the dawn of civilisation. The book acquaints us with the historical argument between the Metallists (those who believed that money’s value should be determined by its intrinsic worth) and Chartalists (advocates of ‘soft’ money that is made of paper, with only symbolic value).

It presents the case going back to Adam Smith, that money may actually have not originated from a purely barter economy. Paraphrasing the anthropologist David Graeber, Sehgal writes that “debt predated or at least developed simultaneously with money”.

A book of history, if it is to succeed, should be an amalgam of gripping narrative and interesting nuggets of factual information. There’s much historical trivia concerning money in Coined . We learn here that the word ‘salary’ derives from the Latin term ‘salarium’ — a salt ration that soldiers were paid in the Roman Republic. Also, Sehgal writes, “Buckskins were used as currency in the American frontier during the 18th century, which led to the word buck being used as a synonym for dollar.”

The author later devotes a chapter to the possible future of money. In this regard, Sehgal argues, a lot would depend on the way our worldly future pans out. If things go bust — if, say, there’s an asteroid strike or a nuclear war (“a bear case”, as Sehgal calls it) — we are more likely to return to “hard” money, like silver or gold. Conversely, “a bull case” may lead to money becoming more abstract, causing an accelerated shift from paper money to credit and mobile banking. And finally, a science-fiction dream scenario may have us queuing up to get “neural wallets” installed inside our skulls by brain surgeons.

All this is good fun, but it’s when we judge this book as a work of narrative that it fails to measure up. That is partly because the subject — “my quest to understand money”— in itself is so challenging. One might as well write the history of life.

The vastness of scope is always difficult to manage, and the writer is left to think about where to begin, what to include and how much to leave out. In tracing the origins of life, for instance, does one start with the primordial soup, or as Darwin did, begin with a journey to the Galapagos Islands?

Sehgal’s history of money does in fact begin at the Galapagos. Of the three parts that Coined is divided into, one deals with the emerging field of neuro-economics. This, arguably, is the weakest part of the book, for here the author dwells needlessly long on showing how symbiotic exchange — the evolutionary precursor to money — is essential for all forms of life to survive. “The zooxanthellae supply the coral with food. The coral provides the zooxanthellae with shelter.” In a book on economic history, we could do with fewer of those sentences.

Later on in the same chapter, however, Sehgal makes an important point about the role that the subconscious plays in all our financial decisions. The bedrock of conventional economic theory, pre-2008, was the Homo Economicus — a largely self-interested, though highly rational actor. But that’s passé. Proponents of modern neuro-economics and behavioural finance now say that all too often, we choose to make or spend our money like irrational fools, just as the great American banks did at the turn of the millennium.

Sehgal’s book takes up the philosophical aspects of money in its final part, addressing the question of how much is too much. The brief chapter — for an historical account of money, this is a really short book — is given to a comparative study of world religions and their lessons on the subject of money.

As an example of the socialistic leanings of the Abrahamic faith, Sehgal quotes the famous line by Jesus of Nazareth: “You cannot serve both God and money.” In his 1936 novel on the influence of class in British society, Keep the Aspidistra Flying , George Orwell wrote the inverse of that. “Money,” Orwell wrote, “is what God used to be.” And with God being dead, greed becomes good.

Here, we return to the defining event in recent economic history — the financial crash and the ensuing Great Recession. In the introduction to this book, Sehgal says that he “made it a personal project to learn about the financial crisis and its root causes.”

He then writes about having soon realised that “busts are as much a part of the financial system as booms.” Yet the 2008 crash can’t be explained away that easily by invoking the principles of cyclical economy.

What culminated in the great money slump of 2008 was caused by the stupidity and greed of large investment banks. And having failed disgracefully, these banks were rescued on the public dime. Sehgal, who is a vice-president at JP Morgan in New York, cites the titles of a few books he read on various financial crises while preparing for this project.

A book that doesn’t make it to that list is Gillian Tett’s Fool’s Gold , where she tells the story of JP Morgan’s role in pioneering credit derivatives and securitisation, two of the most essential ingredients for what many even in the 1990s saw as an impending disaster.

Sehgal would do well to read that and, maybe, he can then give us a story of the banking sector’s unravelling from the inside. But that would be asking for another book on the financial crisis, something that Coined isn’t, and doesn’t purport to be.

The reviewer is a freelance writer based in Delhi