Paul Vigna was a reporter at The Wall Street Journal and Dow Jones Newswires for 25 years, pioneering coverage of the cryptocurrency sector. He was one of the first mainstream journalists to take bitcoin seriously. With his colleague Michael Casey, he wrote The Age of Cryptocurrency, the first mainstream book about Bitcoin, and later, The Truth Machine. He has appeared on CNN, CNBC, MSNBC, Fox, and PBS.
What’s the big idea?
What is money? The simple answer is that money is an accounting system that allows society to keep track of who owns what and who owes who. But that doesn’t explain why money is so important. Nobody works three jobs or rigs Ponzi schemes or holds people up at gunpoint or starts wars over spreadsheets. Money’s utility is not what made it so valuable.
Below, Paul shares five key insights from his new book, The Almightier: How Money Became God, Greed Became Virtue, and Debt Became Sin. Listen to the audio version—read by Paul himself—below, or in the Next Big Idea App.
1. Money isn’t real.
Your father probably told you money doesn’t grow on trees, and that is true. It also doesn’t grow in fields or on farms. Money doesn’t grow at all. That’s because money isn’t real, at least in the sense of having an objective existence. Money is an idea that people made up to solve a problem.
In ancient societies, what constituted wealth were physical things, like land, crops, or animals. Money emerged as a uniform way of measuring these things and making them exchangeable. This allowed society to keep track of possessions. But there was no physical thing that was money. Lots of things could be represented by “money,” and lots of things can represent money: wheat, corn, gold, silver, coins, paper bills, digital entries in an online ledger, even cigarettes, in certain closed economic systems (and I hope you are never sent to one). But none of them is money.
Aristotle explained that money’s existence came from the law; it was essentially just an agreed-upon methodology. Much more recently, the philosopher John Searle argued that money exists because of a “collective intentionality,” which occurs when a group of people agree on a set of beliefs about something. In other words, money has value because—and only because—we believe it has value. Monetary systems don’t work because of the intrinsic value of gold, or dollar bills, or bitcoins. They work because of our faith in them. Imbuing money with faith has resulted in a world where money is the bedrock of society. It is the thing around which everything else is built.
2. Money is a product of religion.
Having a money system was initially important, in the ancient world, to one group specifically: temple officials. When money first appeared more than 5,000 years ago, it was used as a record-keeping system by temple scribes in the Mesopotamian city of Uruk. Uruk was the biggest, most powerful city in the world, and its massive temple was the biggest building in the city, visible for miles outside the city walls. Today, temples, churches, synagogues, and mosques are just places of worship. But it was different in the ancient world. The temple wasn’t just a place of worship. These ancient cities literally and figuratively revolved around the temple. There was no separation of church and state; the church was the state.
“The temple wasn’t just a place of worship.”
The entire purpose of the city was to create a suitable home on Earth—the temple—for the gods. The entire economic life of the city was aimed at this goal, and the temple managed it all. Taxes were paid to the temple. Crops and seeds for the next planting season were paid out by the temple. And the way it tracked this stuff was to employ a system of measurement that would become what we today call money. Money has been lashed to religion from its start. Eventually, money would carry with it an implicit understanding: the people who had it were blessed by the gods. The people who had money had it because the gods wanted them to have it.
3. Debt relief was common.
Not long after money was invented, something more powerful was invented: the loan. People realized the monetary system could be leveraged to allow for loans. Then, they discovered something even more powerful: compound interest. Money could give birth to more money. This practice spread across the ancient world, and private creditors became fantastically wealthy while common people became more indebted and impoverished. It created a severely unbalanced society. And because money carried with it the implicit approval of the gods, this system was allowed to grow. Who could deny what the gods ordained?
Eventually, a relief valve was created. Around 2400 BCE, a king named Enmetena issued an edict after he conquered a neighboring city: he erased all debts. People who’d lost their farms over debts had their farms restored. People sold into bondage were released. This debt-relief edict came to be called an amargi, and it was a way to restore balance and allow a society to get back to the important business of making things to satisfy the gods.
With the amargi, the kings could wipe the proverbial slate clean. But these amargi were bitterly contested by creditors. Over the course of millennia, there has been a back-and-forth between officials and creditors. In Sparta, a young king named Agis issued such an edict, going so far as to publicly burn all the debt records in the square. He was wildly popular with the people, but he was wildly hated by the city’s wealthy families (of which his family was one). Soon after this edict, he was betrayed and executed. They even hung his mother and grandmother, just to send a message.
“He was wildly popular with the people, but he was wildly hated by the city’s wealthy families.”
The creditors proved too powerful. Debt, loans, and usury became codified and amargis disappeared from the economic toolkit as a way to combat the problem of persistent, overwhelming debt.
4. Greed created capitalism.
I’m sure you all know the famous “greed is good” speech from the movie Wall Street. And while the line in that movie is delivered by the bad guy, that credo is the cornerstone of capitalism.
In the 1400s, a Florentine writer named Poggio Bracciolini wrote a dialogue called “On Avarice.” The dialogue weighs the many cons against some of the pros of avarice, or greed. Most of the dialogue’s characters are completely anti-greed: they rail on it, besiege it, see it as the root of all evil. But one of them makes a radical counterargument: greed is necessary. Greed is a part of us that you can’t get rid of. Greed is what drives men to create and accumulate enough wealth to support a city, such as Florence. Every society needs greedy, wealthy people who will bring in money and use it to support the city. “Avarice, sometimes, is beneficial,” he wrote. Does that sound familiar?
Bracciolini ran with an extremely influential group of Florentines that included Cosimo de Medici and the future Pope Nicholas V. The ethos of beneficial greed that Bracciolini outlined was adopted by these men and other influential people in the Italian city-states. Nicholas employed it to rebuild the church after decades of schisms that had weakened its powers. Using this concept of amassing wealth and spending it liberally, Nicholas and his successors elevated the church to new heights of power and decadence. Medici employed it through his bank, becoming both the most powerful man in Europe (a king in all but name) and the benefactor of artists, architects, laborers, contractors, and the clergy. He was wildly popular.
“Using this concept of amassing wealth and spending it liberally, Nicholas and his successors elevated the church to new heights of power and decadence.”
Medici wasn’t a noble or a royal. He was a commoner. And his example inspired other commoners to see that they, too, could embrace greed and pursue wealth for themselves. This idea upends a millennium of thinking in Europe, and it changes Europe permanently. This idea—that capital is a tool that can be pursued and employed by anybody—is the real start of what would come to be called capitalism.
5. Our problems can all be traced to this misunderstanding about money.
Over the last 600 years, the ideas that money is a sign of God’s favor and greed is good have fused and grown. The Protestant John Calvin argued that people had money because God wanted them to have money. The economist Adam Smith secularized this idea with his metaphor of the “invisible hand,” arguing that people working for their own selfish ends were actually serving the interests of divine providence.
As organized religion receded from the center of public life, what replaced it was this new religion of money. 6,000 years ago, religion was the literal center of society; people’s entire lives revolved around trying to please the gods. Today, money is the center of our world; our lives revolve around making money. You can’t live without money, at least not long or well. We have made money our godhead, and this misunderstanding about the definition of money is behind all of the world’s problems.
We could, today, as a global society, grow enough food for everybody. We do in fact grow enough food for everybody. We could build enough housing. We could provide enough education and healthcare. We could generate enough electricity with just renewables, to say nothing of fossil fuels. None of that is hyperbole. And that has been our reality for at least a century. We no longer live in a world of scarcity.
“We have made money our godhead, and this misunderstanding about the definition of money is behind all of the world’s problems.”
The reason we don’t even try to do those things is because we have centered our world around the pursuit of an unreal thing that we made up, rather than around taking care of each other. Every attempt at making our world better—at reducing our crushing debt load, at lifting up the less fortunate—will fail until we come to see money for what it is, and isn’t.
Money hasn’t been all bad, and greed is a part of us. We’ve made incredible strides as a species since we started using money and embraced greed. But if we could do all the things we’ve done based off one of our worst impulses, imagine what we could do if we started from a somewhat higher base.
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