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George Selgin Reviews Steil and Hinds

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There are only very few scholars — and even fewer economists — whose every word is worthwhile to read.  George Selgin is in that elite group.

Here’s Selgin’s review [2] of Benn Steil’s and Manuel Hinds’s wonderful, if flawed, book, Money, Markets & Sovereignty [3].  The opening paragraphs of the review set the tone well:

Economists generally take for granted, if only tacitly, a teleological view of money’s historical development, according to which it first takes the “primitive” form of mundane commodities such as cowrie shells and cacao seeds, and then advances through various stages, culminating in the national fiat monies most economies rely upon today.

Money, Markets, and Sovereignty offers a spirited rebuttal to this naively “whiggish” perspective. Instead, its authors — Benn Steil and Manuel Hinds, senior and former fellows, respectively, of the Council on Foreign Relations — argue that the principal effect of national monies consists, not in their contribution to economic prosperity, but in their capacity to assist national governments in their efforts “to extract wealth from their population and to exercise political control over them.” The combination of national fiat monies and global markets results, moreover, in “a deadly brew of currency crises and geopolitical tension” that in turn supply “ready pretexts for damaging protectionism.” Steil and Hinds thus see national fiat monies, not as an essential basis for economic progress, but as an imposing barrier to such progress — one which threatens to “throw globalization into reverse.”

And this editorial in today’s Wall Street Journal [4] provides yet more evidence of how national governments use their control over the money supply “to extract wealth from their population and to exercise political control over them.”