Below, Arjun Jayadev and J.W. Mason share six key insights from their new book, Against Money.
Arjun is professor of economist and director of the Centre for the Study of the Indian Economy at Azim Premji University in India.
J.W. is associate professor of economics at John Jay College, City University of New York. He is also a fellow at the Groundwork Collective.
What’s the big idea?
The economy is not a natural system governed by timeless market laws. It is a socially constructed system of money, debt, property rights, institutions, and collective planning. Once we recognize this, alternative ways of organizing economic life become imaginable and achievable.
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1. Money is simultaneously an abstract unit of measurement and a concrete physical thing.
As a unit, a dollar is like a meter or a second: a pure abstraction, a way of comparing everything to everything else. But as a means of payment, a dollar is always this dollar in this account held by this bank or in this pocket. That difference between money as idea and money as thing matters enormously.
Money must be both scarce and elastic at the same time. It must be scarce enough that workers need to sell their labor to get it, but elastic enough that entrepreneurs can borrow it to start new ventures before they’ve earned a penny. A business owner wants money to be easy to borrow at the start of a project but rigid and hard enough that they can get people to coordinate around it.
This tension can never be resolved. It is baked into what money is. These paradoxes are not puzzles to be solved. They’re the signature of something genuinely strange—social technology that does things no other human invention quite does.
2. Barter never happened.
A few years ago, while walking to a Japanese-Korean restaurant in New York’s East Village, we noticed a handwritten flyer on a lamppost. Someone was offering to exchange lessons in French, Italian, and Renaissance-style drafting for help with computers and cell phones—a simple trade of skills between strangers.
To an economist, strangely enough, this kind of exchange is supposed to represent the original form of economic life. According to the standard textbook story, going back to Adam Smith, before money existed, people bartered. Then money emerged to make trade more convenient. It’s the founding myth of economics. The problem is it never happened.
Anthropologists have spent decades looking for societies that organized their economic lives through barter before the existence of money. They have never found one. Wherever barter does appear in history, it is almost always people improvising after being suddenly deprived of the money they are accustomed to using—such as in prisoner-of-war camps or post-Soviet Russia.
“What came before money was not barter.”
Barter is a modern curiosity, not an economic primitive. What came before money was not barter. It was gifts, obligations, tribute, communal sharing. The historical record shows that debt—the tracking of obligations between people—existed before coins or tokens. We can see this in clay tablets from ancient Babylon that recorded debts in a unit of account long before the widespread use of commodity money.
Even in a sixteenth-century Frisian village, a local pastor’s ledger recorded obligations between neighbors in transactions where actual coins were rarely used. The accounting came first.
If the economy is not fundamentally about trading real things, and if money creates a world of its own, then the tools most economists use to understand it may be built on the wrong foundation.
3. Debt has a life of its own.
In 2010, the European debt crisis erupted. Country after country was told that its borrowing had been reckless. Greece was the most dramatic case: interest rates on Greek bonds shot from about four percent to over 30 percent in two years. Harsh austerity was imposed as the verdict of the markets.
The standard story was that Southern Europe had overspent and was now paying the price. Debt as moral reckoning. But what actually happened is that in July 2012, the president of the European Central Bank, Mario Draghi, gave a short speech. He said the ECB would do whatever it takes to preserve the euro. That was it. Within months, the crisis was largely over. Nothing about the fiscal position had changed. No spending had been cut; no taxes had been raised. The central bank had simply decided to back the bonds.
This was not an anomaly. It is how debt works. Once debt exists, its burden is determined not primarily by what was borrowed in the past, but by what is happening now: interest rates, economic growth, inflation, and the central bank. J.W. and I spent years tracking the data on household debt in the United States and found that the dramatic swings in debt-to-income ratios of the past century—including the crisis of the 1930s and the debt boom of the 2000s—were driven mostly by these background monetary conditions acting on existing debts, not by new borrowing decisions. Debt is not just yesterday’s choices catching up with you. Once it’s there, it lives and breeds on its own.
4. Capital is not a stack of machines.
In our book, we tell the story of a labor lawyer who once took a business-school professor friend to visit a steel mill on Chicago’s South Side, shortly before all the mills shut down.
Looking out over the massive industrial landscape, the professor said, “Wow, I’ve never seen so much capital just lying on the ground.” That reaction captures a very widespread misunderstanding. We see physical stuff—the blast furnaces, the cranes, the buildings—and think that this is capital. Capital, in this view, is the physical equipment that makes production possible, accumulated through saving and investment. It’s what rich countries have more of than poor countries.
“Capital is not a pile of machines or, at least, not only a pile of machines.”
This idea sits at the foundation of mainstream economic theory and is fundamentally mistaken. In 2014, Thomas Piketty published Capital in the Twenty-First Century, a landmark work showing that wealth relative to income has risen sharply across the rich world since the 1970s. But when you look closely at the data, this rise cannot be explained by new investment or the accumulation of new productive assets. In countries like the U.S., the UK, and Australia, saving rates were quite low over much of this period.
What drove the increase was rising asset prices—above all, rising house prices. The capital was not being built; it was being revalued. This is not a flaw in Piketty’s data. It is a clue about what capital actually is.
Capital is not a pile of machines or, at least, not only a pile of machines. It’s a legal claim: a right to prevent a production process from going forward until you have had your say. The blast furnace is a physical object, but capital is the ownership right over it—a right that can change in value for all sorts of reasons that have nothing to do with the physical equipment in the mill.
5. Interest rates are not the price of time.
The standard story about interest rates goes like this: when you save money instead of spending it, you’re making a sacrifice (giving up present enjoyment) for future return. The interest rate is your reward for that patience. It’s the price of time.
This story sounds intuitive. It’s also wrong, and Keynes showed why. Here’s the problem. When any individual household saves more, its bank balance goes up. But when everyone tries to save more at the same time, the result is not a giant pool of savings waiting to be invested. It is lower incomes, because your spending is someone else’s income, and when you spend less, they earn less.
Economy-wide, saving does not create investment. If anything, the reverse is true: investment creates the incomes that make saving possible. So, if the interest rate isn’t balancing saving and investment, what is it doing? Keynes’ answer was that the interest rate is the price of liquidity—the cost of tying up money in a long-term commitment rather than keeping it available for whatever comes next. A bond pays you a higher return than cash, not because you’ve abstained from consumption, but because you’ve given up the flexibility to meet unexpected needs.
Uncertainty about the future is what interest compensates you for. This has a striking implication. In 2008, corporate bond rates spiked from 6.5 percent to 9.2 percent seemingly overnight. The bonds issued in 2009 at those elevated rates went on to perform perfectly normally. They weren’t riskier. What changed was the financial system’s capacity to hold illiquid assets. The spike was a liquidity crisis, not a rational reassessment of credit risk.
Interest rates are set by the financial system and the central bank, not by how patient people feel about waiting. That means they are a lever of economic power, not a reflection of economic nature.
6. Half of capitalism is planning.
In 1842, the cotton industry in France was in crisis. Mills were running part-time, warehouses were full, and prices were falling. Then something unexpected happened. Prices fell so far that millions of people who had never been able to afford cotton cloth suddenly could.
As the historian Jules Michelet described it, the warehouses were emptied almost at once. The machines began to work furiously again, and chimneys began to smoke. He called it a revolution in cleanliness as underwear, bedding, table linen, and window curtains came to people who had never possessed them before.
“The possibilities of production and consumption are not fixed in advance.”
This story captures something important that standard economics misses. The possibilities of production and consumption are not fixed in advance. You cannot know what markets exist until you try to reach them. The economy is not a machine allocating known resources to known needs. It lurches from one unstable state to another, and at each lurch, entirely new possibilities come into view.
The engine driving those lurches is not the free market alone. It is planning. The firm—any large company—is internally a planned economy. It doesn’t organize its workers through prices and auctions. It relies on hierarchy, authority, and coordination.
Finance, meanwhile, exists precisely to allow investment to depart from what current market signals would dictate. Every startup that loses money for years before turning a profit is defying immediate market logic. Every long-term investment in infrastructure or science requires someone to make commitments about a future that cannot be known.
We are often told we must choose between markets and planning. But we already live in a mixed world, and always have. The question is not whether there will be planning, but who does it and for whose benefit. Once you see this, a world organized around different priorities—care, sustainability, and shared knowledge—stops looking like a utopian fantasy. It starts to look like a path we could really walk.
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