The Measure of Everything: David McNally’s Materialist History of Money


David McNally’s new book, Blood and Money, is a devastating and brilliant account of money and its role in historical and current processes of class and state domination. A model of Marxist historical scholarship, it’s a must-read for Marxists and other anticapitalist activists and thinkers, speaking both to our current moment and to more enduring questions class, power, dispossession, and the potential of working class movements from below to transcend these.

100-dollar bills

David McNally’s Blood and Money: War, Slavery, Finance, and Empire from Haymarket Books, is a must-read, not only for economic historians or Marxists, but for anyone wishing to demystify the phenomenon of money and to understand its role in facilitating ruling class power and state control. 

According to McNally, accounts of the emergence of money have been, problematically, centered on barter and trade. What these ignore is the decisive role of the state, war, and slavery in money’s emergence, and its continued centrality to warfare, violence, and exploitation. This tendency to dematerialize money has been prominent in postmodernist writers such as Derrida and Baudrillard, who McNally subjects to a deserved thrashing, but also more generally in our financialized culture. Similarly, as McNally points out, “there has been a widespread tendency, especially since the onset of global financialization in the 1970s, to treat finance as the prime mover of capitalist development […] Such perspectives miss the vital sources of capitalist growth in labor, exploitation, and accumulation of means of production.” In opposition to this, McNally offers an “actual”, i.e., materialist, history of money, which exposes the entwinement of credit markets, the banking system, the nation-state, public debt, and international finance with slavery, class exploitation, and war. 

Blood and Money is a tour de force. It demystifies some of the most complex political economic processes to which we are subject in our current moment. The product of McNally’s deep engagement not only with economic history but with anthropology and philosophy, Blood and Money covers millennia of history with such care and detail that a thorough summary of the text is beyond the scope of this brief review. In this  article, I highlight the sections of the book that, to my reading, are of most direct interest to Marxist activists organizing study groups and party schools or who want to ground their political organizing on firmer materialist analysis. 

War, the State, and Money

Blood and Money focuses on the Athenian owl of the 6th century BCE, the notes of the Bank of England in the 18th and 19th centuries, and the American dollar after the First World War. These three “modal forms” of money achieved that rare status where a currency unites the functions of means of payment, exchange, and measure of value, especially in interstate contexts. In other words, it serves as “world money.” Further, the “exercises in destruction and domination, war and empire,” engaged in by Greece, Britain, and the United States, “were underpinned by monetary innovations that became generalized.” McNally explains how the Athneian owl’s value was based on the purity of silver it contained, silver that 40,000 slaves extracted at the mines of Laurium, “the largest concentration of enslaved people to be found in the Greek world.” The notes of the Bank of England were backed by gold but their value was also “futural.” It rested upon the ability of the British state to extract tax revenues which, in turn, were based on processes of primitive accumulation: slavery and settler-colonialism. The dollar, especially after World War I, became a world currency because of the US Treasury’s hoarding of gold and the flooding of European markets with American  exports. In 1971 the dollar became “imperial fiat money” — in spite of the dollar crisis at the time — because of the global dominance of US capital and US militarism after World War II.

The Measure of Everything 

The origins of money are obscure, but we know that its roots go back to deep antiquity. Many societies had been using various forms of currency for centuries before Classical Greece (6th century BCE) became the “the first extensively monetized society in history.” However, in other ancient societies where money existed, such as Egypt or Mesopotamia, money was simply a unit of account, a reference point to facilitate trade. For example, a trader in Egypt’s New Kingdom (1550 – 1070 BCE) who wanted to acquire a barrel of wine worth 50 units of copper could pay for it using only 5 units of copper, with the remainder made up by other commodities such as oil, barley, clothing, etc. For Greeks of Homer’s time, cattle served as a unit of measure, never as a means of exchange. These societies lacked a currency that functioned as a “general equivalent” which united the functions of means of exchange, means of payment, and measure of value. By the time of “classical” Greece, unified coinage issued by the state had become essential, transforming not only economic behavior but fundamental conceptual categories. Money (nomisma), according to Aristotle, was now “the measure of everything”: it made everything “commensurable.”

The way in which more and more aspects of life, including relations between human beings and relations between humans and non-human entities, were made to be commensurable conceals an actual history of violence, in particular slavery. Consider that nonmonetary societies tend to look down upon the commodification both of humans and of nature. In such societies, which encompassed basically all of humanity until Classical Greece (and many if not most until capitalism became a global system), trade was often seen, like plunder, as an anathematized activity, to be engaged in only with those outside the community. Intra-communal relations were generally based upon bonds of reciprocity, “generalized exchange” in anthropological terminology. Commodity exchange, by contrast, originated between strangers. This was partly because the main commodity exchanged between foreigners — as was the case when Greeks were settling the Mediterranean world in the 8th and 7th centuries BCE — was enslaved people. This was especially true of long-distance trade, and money was the means for conducting such trade. Ironically, in Greece as well as other societies of antiquity, enslaved people also functioned as, themselves, money, or at least as measures of value. It seems that once money facilitated the dispossession of certain humans of their humanity, human bodies could then be used to drain all other things of spirituality and social depth, normalizing exchange value. 

Colonialism and Primitive Accumulation: The Origins of Capitalism

The global crisis that opened the way for the emergence of capitalism was the liquidity crisis of the first half of the 15th century. Attempts by the Ming state, then the center of Eurasian trade networks, to resolve the crisis through military expansion proved too expensive and triggered austerity and the retreat of China from the international economy. The center of the global economy shifted to Europe, in particular Iberia and then the Netherlands, followed by England and France. European Atlantic colonization, involving the plunder of American mines and the enslavement both of indigenous Americans and Africans, propelled the new capitalist epoch. 

Paradoxically, the emergence of modern money — the credit instruments of the Bank of England — stems from the exceedingly fragmentary nature of medieval European sovereignty, when compared to centralized premodern states such as the Roman Empire, Persia, and China. By around 700 CE, the warlords of Europe had settled into a pattern of systematic plunder, in the form of the panoply of obligations to which they subjected the peasantry. Once this system entered a period of sustained crisis, “militarized state building became the dominant political dynamic.” This occurred during and after the “Great Medieval Depression” between the mid 13th and the mid 15th centuries: agricultural production declined, feudal surpluses shrank, diets deteriorated. Then the Black Death (1346 – 1353) struck, wiping out tens of millions. Over the next century, as much as 70 percent of manorial revenues evaporated. 

To mitigate the crisis, the lordly class devised a strategy of “political accumulation,” as Robert Brenner has called it. This strategy intensified one of feudalism’s central features: the investment in military arms and men. Lordly competition and conflict intensified, leading to yet more heightened needs for military resources.  War became a “semi-permanent state of affairs” in late feudalism. In this context, establishing a stable system of war finance would confer a huge advantage. 

By the latter half of the fourteenth century, the English peasantry was splitting in two, with a privileged stratum, the so-called yeomen, benefitting from a rise in proletarianization among the lower peasantry.  But ultimately the true beneficiaries were the gentry and aristocracy, who by the 17th and 18th centuries  began enclosing and engrossing land on a scale much larger than the yeomen had done earlier. These aristocrats were the agrarian capitalists, who began to invest in the productivity of the land to attract tenant farmers — in fact, wage laborers — to produce for the market. Masses of peasants were thrown off the land and deprived of access to the commons. By the mid-17th century, England was a predominantly agrarian capitalist society, characterized by “profound” monetization of relations between people and between individuals and land. The proletarianized peasantry, however, was not passive: the rebellions of 1549 were the “closest thing Tudor England saw to a class war.” The rebels’ defeat paved the way for the capitalist class to initiate “the first great wave” of English colonization, specifically, the settler colonization of Ireland and the Americas. 

The Critique of Metal Fetishism and The Wealth of Nations

European colonialism in the Americas was a ruling class project in two senses: it was an externalization beyond the boundaries of Europe of feudalism’s permanent state of war, and, as in the case of the rebellions of the 16th century, it was a strategy to suppress an embryonic movement of the proletarianized. The foot soldiers and indentured laborers of English settler colonialism were, in the main, dispossessed peasants dragooned into colonial service.   

English colonialism operated on a different logic than that of Spain and Portugal. Sixteenth century Iberian colonialism was fixated on obtaining gold. Adam Smith would later recognize this as fetishistic: wealth, he argued, was a result not of the intrinsic qualities of metal but of increasing the productivity of labor. This implied that the control of markets and not the accumulation of metal generated wealth. Smith offered two important insights here: first, into why England would soon eclipse the Iberian empires, and second, into why the enslavement of Africans became a pillar of English colonialism and capitalism. By the early 18th century, the monetary value of enslaved African workers began to exceed that of gold. 

In 1694, a century into the epoch of English settler colonialism, the Bank of England (BOE) was established. England desperately needed money to fund war with France. The key innovation of the BOE was in turning government debts into money. For the first time in history, loans to the state would be made in paper – banknotes and bills – rather than in gold or silver. The bank’s “subscribers” – those who bought bank shares – would be able to cash out at any time by selling their shares on the new stock market. The value of BOE notes would be linked to a gold reserve, but also – another innovation – to the expected future tax revenues of the state, revenues, it need not be mentioned, that were primarily generated through the labor of enslaved and proletarianized workers. The British war finance system was a system of “perpetual debt” in which investors received interest payments on a regular basis. By the early 19th century, the British state was taking in 32 times more in tax revenues than it had in the early 17th century, while military spending accounted for between 75 and 85 percent of total public expenditures.  

Because stock purchases were basically wagers that an investment will yield a dividend – a share of future profits – financial bubbles become endemic to the new credit system of the BOE. This uncertainty was why governments would begin to insist that banknotes be tied to gold, as the value of gold was perceived to be stable. During the “heyday” of the gold standard (1821 – 1914) the British pound came to represent gold, which enabled it to serve as world money and placed the BOE at the center of international financial coordination. As the monetary system became a modern credit money system, gold would no longer function as means of exchange or payment, but rather as a “legitimating device.” It began to project an image that the system rested on solid foundations. But also crucially the gold standard played the role of labor discipline: outside of war, when governments suspended the gold standard, the link to gold constrained borrowing and enforced wage deflation during depressions, in the process, disciplining labor.

Imperial Fiat Money

The third modal form that McNally discusses is “imperial fiat money,” money backed not by metal but only by a state’s claim about its value. This role has been played by the US dollar since 1971. McNally reminds us that the United States, from its earliest years as an independent country, was a uniquely monetized country, where paper money “reigned supreme” despite “official bullionism.” Further, the US’s agrarian pre-Civil War economy, unlike England’s before the epoch of agrarian capitalism, was always market-dependent. Nevertheless, it was out of the Civil War – and as one of its motivations – that a more highly centralized state and monetary system emerged. To fund the war, Congress passed two laws in 1862 which, respectively, established a national system of taxation and a national currency, “greenbacks.” The latter was fiat money: its value was not tied to “specie” (precious metal), but was, rather, backed only by the state’s promises to pay bondholders. In 1863, the US government would nationalize the banking system and impose a uniform currency.

The US monetary system would remain until 1879 a fiat money system. When Bismarck united the German state in 1871, he put its monetary system on the gold standard. France and other European states, as well as India, Japan, Russia, and Argentina all quickly followed. This was the era of inter-imperial competition. Governments were buying up armaments and industrial materials, especially iron, in an international financial system backed by gold. American capitalists did not want to be left behind, and the US would go back on the gold standard in 1900. 

In a mere six months in 1914, the US would displace Britain as the center of the international financial system, the dollar replacing the pound as world money. European states entering World War I had all delinked their currencies from gold. Soon, the belligerents would be starved for cash, and the US, which did not enter the war until 1917, possessed a great amount. Crucially, unlike its European counterparts, the US dollar remained on the gold standard. This set off a set of cascading events that would catapult the US past Britain to the center of world finance. With European states threatening to drain the US gold supply — by cashing out their US stocks — to fund their war efforts, the US government, under the leadership of the Treasury, shut down Wall Street to prevent a run on gold and flooded the European market with grain and cotton exports. By the time the US entered the war, “the dollar had now displaced sterling as the global currency of choice.”

Yet, US imperial hegemony would still not be realized until after 1945. This would be the result of a conjuncture of global depression, fascism, total war and the atomic bomb. In 1939, the US economy was about half the size of those of Europe, Japan, and the USSR combined. By 1945, it was larger than all of them combined and accounted for one-half of global industrial production while holding three-quarters of the world’s gold supply. It dominated the international economy, and the dollar reigned supreme as world money.

McNally explains that for a world money to work effectively, two conditions must be met: first, an  imperial hegemon must provide the monetary system with liquidity by spending overseas; and second, said hegemon must maintain an advantage in production of goods and services. This system, which prevailed between 1945 and 1970, began to unravel during the Vietnam War, during which began an era of sustained price inflation and decline in the value of the dollar. On August 15, 1971, recognizing the inevitable draining of the US’s gold supply, Nixon announced that the US Treasury would no longer convert dollars into gold. The Bretton Woods system of stable exchange rates between currencies fell apart. “Having abandoned a world money anchored in gold, capitalism found itself in a new era of floating exchange rates – which changed every day under the influence of massive flows of finance across global markets.” New financial instruments, “derivatives,” meant to stabilize the system by hedging against risks, paradoxically made things worse by making speculation more complex. The dollar after 1971 becomes imperial fiat money: unlike the Athenian owl or the British pound, it is purely futural, it’s value no longer linked to past labor in the form of precious metal but only to the state’s promises of future repayment of bond holders.

In spite of this, and also of Europe’s and China’s attempts to carve out their own currency zones, no other currency has yet to displace the dollar as world money. This is not simply because of “super-imperialism,” where the US forces others onto the dollar. Rather, this is because the US state serves a specific function in the reproduction of the international capitalist system: the dollar is crucial not only as a benchmark of profitability, risk, and value but also as an enforcer of monetary discipline over labor.  

The instability of the imperial fiat money system is one of its most striking features. McNally explains why: the basic logic of the system is that of “pre-validation,” where loans are treated as full-fledged money. It is more accurate to say “pseudo-validation,” according to McNally. Things go smoothly, until there’s a downturn, at which point much of the money supply is exposed as fictitious. This was what happened with the “mortgage backed securities” and “collateralized debt obligations” that provoked the 2007 – 09 meltdown. The behavior of central banks — exchanging central bank money for toxic assets — does not resolve the systemic contradictions of the fiat money system, quite the opposite. Because weak capitals are bailed out instead of allowed to disappear, investment suffers and profits are restored through austerity and by squeezing workers through unemployment, precarity, and speed up. A system “awash in cheap money” inevitably generates economic stagnation combined with repeated financial bubbles. 

“Our Old Friend, Our Old Mole, the Revolution”

McNally ends the book on a hopeful note: internationally, the working class is starting to resist. He mentions the uprisings that have been happening globally since 2011, such as Occupy, the Arab Spring, Istanbul’s Gezi Park uprising, the mass rebellions in Sudan, Chile, and Lebanon, and the Black Lives Matter, Women’s Strikes, and the climate justice rebellions. Increasingly, revolution looks to be on the agenda. Though the book appeared before the summer 2020 Black-youth-led rebellions in the United States, the revival of the Lebanese revolution after the huge explosion in Beirut, and the rebellion against Lukashenko in Belarus, McNally’s message strongly resonates with these latest manifestations. Blood and Money is a profound and brilliant book and one of those rare accomplishments that manages both to speak to the working class’s immediate contemporary struggles as well as to more enduring questions of power, class, and the state. It will be touchstone for left activists and thinkers for a long time to come. McNally’s invocation of Marx near the end of the book is apt: “in capitalist society, radical powers of subversion are always burrowing, often undetected, beneath the surface.” In them, “we recognize our old friend, our old mole, who knows so well how to work underground, suddenly to appear: the revolution.”  

Ahmed Kanna is an educator in anthropology and ethnic studies based in Oakland, California.

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