I picked this up in a sale from SCM Press, the title appealing to me mainly because I am a christian who works in finance. So I bought it on the basis of the title alone. I had never heard of the author nor had the book been recommended to me. In hindsight, I think I approached it with a fairly fixed expectation, based on the title. What I thought I would be reading would be an exposition of the idea of wealth, property, exchange and society within a biblical context, drawing out principles and then trying to apply those to either fitting around modern economics or proposing a fundamental shift in the very basis of the latter. In other words, I was expecting a fair bit of theology and have that applied practically to money.
If that’s the sort of book you want to read, then Theology of Money will be a great disappointment to you. In truth, there is not much theology in it; it is mostly a treatise on economics with a spattering of vague references to theology which might well be just enough to deter non-christian economists from it, if the title hadn’t already done so.
So what exactly is it all about? Well, Goodchild has adopted the style of Adam Smith (who seems to be mentioned more than any other economist) in looking at the very nature of money. It’s not about macroeconomic policy, but something far more fundamental than that. One could characterise the bulk of the book as being an answer to the question, ‘what is money?’ In style, it reads less as a book for the educated layman, more a thesis for the expert. It is a very tightly argued piece, with the analysis coming very thick and fast. This tended to prompt one of two reactions in me: I ether read it quite slowly, going over each paragraph a couple of times, or else I glossed over slightly, reading a page and at the end of it being none the wiser what the point was that was being made.
So what of the argument that is made? Well, Goodchild’s main premise is that money as we currently know it fulfils a variety of different roles that need necessarily be measured by the same unit. For example, money is the promise of things in the future. i.e. if I have some savings, then this is the promise of a deposit on my own home. Yet it also has the function of being the measure of past transactions, as in accountancy, the field of finance in which I work. I could critique his particular take on accountancy, as it doesn’t really give a true and fair view of the profession, describing it as a ‘reasonable fiction’ citing the example of debtor on one’s balance sheet as being a made-up quantity, as the debtor has not paid. Yet no mention is made of the accruals principle.
An interesting thing to note about the book is that it was published in 2007, a year before the crash that triggered the global financial crisis. So how we might think about money and credit has had a sea change since Goodchild wrote this. At several points then, I saw him to be somewhat prophetic in his assessments. For example, “On the one hand, bankers are placed in a position of power in relation to other classes, since they appropriate their property through interest. On the other hand, bankers remain susceptible to the fortunes of other classes, since a default on a loan may lead to a loss of reserves and a contraction of credit.” Yet just as one might think he was really onto something, little more than a page later, he carries on, “Misfortune can lead to significant losses; yet such losses may be controlled and limited by an effective money management strategy and automated stop orders. Since the risks can be limited in this way, it is possible to take out highly leveraged positions with limited risks.”
In his final proposal, he suggests that credit needs to be evaluated by a separate kind of bank, though he then goes on to describe the operations of this bank as being the same as a normal bank, only that it must be highly profitable and it must do so by engaging heavily in speculation on the markets. Given what we know now, I wonder if Goodchild would stand by this or if he would opt to have a radical revision.
I struggle to think of those to whom I might recommend it. Perhaps those who are heavily involved in finance and would like to read a different take from that of Smith, Marx or Keynes (interestingly neither Friedman nor Hayek are referenced, the closest to these extremists he comes is Niall Ferguson). While I could not agree with some of his assessments or proposals, it is a book that, if taken seriously, makes you think. For that alone, it is worth reading, but I won’t be rushing to urge anyone to push it to the top of their reading lists.