Money (Art of Living) [Paperback]

Money is one of the most heavily researched areas of modern economic theory. Can 160 pages of clear writing (no equations) really alter how both the professional economist and the intelligent reader think about money?...Definitively, yes.
Lonergan kicks off by re-considering the properties of money. He explains how money alters our character, how behavioural biases affect our saving decisions, how we use money to measure the value of nursing at our peril. In part 2, he focusses on applications in financial regulation and economic management. The compelling conclusion: money can costlessly solve recessions, if only we understood it better.
Provocative and witty. Well worth the money for Lonergan's perspective on 'further reading' alone.

Very easy to read, yet not over simplified, concise exploration of what money is, where it comes from and how it works. It is also a very enjoyable and entertaining read.

The author pursues a philosophical approach to understanding money. He moves beyond Economics to reveal some of the hidden and ignored dimensions of money. Particularly interesting are its foundational role in the division of labour, its use as a means for controlling the future, and its impact on our values.
After two introductory chapters, Lonergan structures the book into four thematic parts, each corresponding to one of the following four philosophical properties he assigns to money: interdependence, control of the future, measurement and allure. Curiously, he calls his Conclusions section "Interdependence II". He quotes 119 references, mostly books, and mostly from the field of Economics but there are some from Philosophy. Most of the references are from well established authors, mainly academics but also practitioners and journalists. Interestingly, he re-looks at several authors from the early 20th century, and even brings in Hume. He incorporates a "Further Reading" section at the end, which is very useful.
Lonergan states that money is very poorly understood. Economics dispels some of the issues, but not all, because it assumes money is an instrument that serves our objectives and never independently affects us. It gives a narrow description of money's functions: a store of wealth, a unit of account, and a medium of exchange. But this ignores many of the most important, though unintended, properties of money: how money and prices affect our beliefs, values and feelings. It affects our self-esteem, status and even how we value and treat others. (pp.2-3)
Two of the highlights of the book are the author's treatment of uncertainty and how money serves as an inter-temporal link with our own self. In the first case, the human disposition towards uncertainty is influenced by its effect on our self esteem and our interests. We are more content when we have a clear sense of purpose, and more comfortable having a defined identity. Hindsight is often a denial of uncertainty, which makes us feel cleverer and better about ourselves. With respect to the second, money does not just expand our relationship with others in a complex division of labour; it also helps us establish a relationship with our future selves and others in the future. (p.80). Religion in part reflects an attempt to find meaning and purpose in an uncertain world, while money serves our attempt to control and experiment with an uncertain future. The counter-cost of money has been to create surplus and worry.
Because money serves as a single homogeneous unit of measurement with no subtle distinctions, money and remuneration permit comparison of status, which is clearly an unintended consequence of money. In an ideal world, status would reside in character and money would serve only to price things, and never to value them.
I have some critiques, four of which are:
1. His texts are not always clearly linked to the references, as happens with Hume's quote on p.129. When he refers to books, he does not give the page.
2. Lonergan says that surplus is a precondition for care for others and the creation of independent institutions of law and government (p.24). This is a bold statement that needs substantiation. I don't have problems with the second part ("creation of independent institutions of law and government") but I have reservations with respect to care for others. There is evidence of collective action in the discovery in 20,000 year old fossils of toothless skulls and skeletons with arthritis deformities. These individuals would not have been capable of catering for themselves, so it can be inferred that the younger and healthier would have been helping them. This collective action precedes agriculture, and thus the earliest evidence of surplus, by some 8,000 years (Fischman,2005; Seabright, 2004).
3. "More things can happen than do happen, and what happen often surprises us" (p.69) in reference to that the unknown future gives place to invention. I am not senseless to the attraction of presenting in this way the opportunities that the future always offers, but I believe there is a technical flaw in this statement. My modest understanding of probability and statistics tells me that anything that can happen will happen, given enough space and time.
4. Lonergan says that monetary value is not determined by usefulness or importance, but by scarcity (p.90 and p.108). I do not agree; usefulness, sure, but scarcity, not necessarily. In my view it is really about desirability rather than scarcity. Think of a work of art. Scarcity influences, but is not a determinant. Desirability, in turn, depends on usefulness or aesthetics in conjunction with scarcity.

My interest lies in the area of knowledge building and intellectual capital so my fundamental motivation in studying this book is around the impact of money on division of labour and, thus, global increase in productivity. Also in the development of forethought, the advent of uncertainty, and the role of money as a means of "control" over the future. In those fields Money has helped trigger some useful reflections.

The book flows easily. It starts off at a great pace in the Introduction and Chapter 1 and then falls off a bit in the next couple of chapters; but keep going because it picks up again after that. One other merit to the credit of the author: He wrote 134 pages worth of ideas in 134 pages, and not 540 or so as one often has to endure.