Money Changes Everything: How Finance Made Civilization Possible

"This book is about the history, often the ancient history , of all sorts of financial innovations, from the limited liability company (Rome) to paper money (China) to accounts (ancient Mesopotamia) to the money transfer service (Europe during the Crusades, courtesy of the Knights Templar). It has been a fantastic source for my own book, 50 Things That Made the Modern Economy , which is how I discovered it. It’s a totally global perspective and you’re constantly encountering stuff you had no idea about. What I also like about it is that economics is often taught in a very ahistorical way. There is this thing called ‘the economy.’ We don’t need to bother with the details of where it came from or how it’s grown. We just need to understand how it works now. That’s fine, but the story of where it came from is fascinating. Yes, poor guy. There are a couple of tragic gems in the book. One of the things I really enjoyed about writing 50 Things was that you could smuggle in economic ideas—some of them quite deep and quite abstract—under the guise of ‘once upon a time there was this person who invented this thing and this is what it did to the world.’ The ‘and therefore this happened’ is classic economics, but putting the story at the beginning just makes it much easier to grasp. It makes it more concrete but also more human. So Goetzmann tells the story of Babylonian cuneiform and trying to figure out what was going on with that. By the way, that’s also discussed in Felix Martin’s book, Money (2013) , which is another good book. Cuneiform is writing on clay tablets discovered in ancient Mesopotamian cities. It’s about 4,000 years old—so older than any previous writing that had been discovered. It was very hard to decipher. The thinking had been that early writing was hieroglyphic, so pictograms, but cuneiform seems to be purely abstract. So it’s a really old form of writing and no one could figure out what was going on. The other mystery was that, along with the cuneiform tablets, there were all these beads and baubles that look almost like playing pieces of some child’s board game. Nobody could figure out what those were all about, either, because they’re not particularly ornamental and they don’t seem to have any value. Both puzzles were simultaneously solved by a French archaeologist called Denise Schmandt-Besserat. She realised that the little tokens are designed to count stuff. So if your maths isn’t very good and you’re trying to count 10 amphorae of olive oil you’ve got one bead here shaped like a vase. That’s one vase of olive oil and there’s another vase of olive oil so now I’ve got a second and now I’ve got another one, and another one, and another one. It’s called correspondence counting. Now, although I can’t really count, I have managed to count how many amphorae of olive oil have come into the temple as taxation or tribute or—we’re not sure exactly why they were coming in. Get the weekly Five Books newsletter Then she realises that the cuneiform is the imprint, in soft clay tablets, of these hard clay baubles. So you can print this one, which is a sheep. This one’s wheat. This one’s wine. They’re different shapes. So they are kind of pictograms, but they’re not pictures of sheep. They’re pictures of tokens that represent sheep. They’re not pictures of amphorae of olive oil. They’re pictures of tokens of amphorae of olive oil. There is that extra layer of abstraction and, very quickly, they start realising they can make the same marks with a stylus. So she solves the puzzle about what this is all about. It’s counting the flows and stocks of products. So this is the first maths and the first writing. It’s also the first accountancy. It’s all wrapped up together—dealing with the struggle of trying to manage these increasingly sophisticated urban economies. The city of Uruk would have held maybe 5,000 people. It’s not big, but big enough that you need to start keeping track of things. Because there are these agricultural economies attached to cities, you start having to plan ahead. It’s great fun. It’s big and thick and it’s got small print and lots of footnotes—it’s an academic book, but by the standards of most academic books it’s incredibly lively."