Rites of Exchange

Coined: The Rich Life of Money and How Its History Has Shaped Us BY Kabir Sehgal. Grand Central Publishing. Hardcover, 336 pages. $28.

The cover of Coined: The Rich Life of Money and How Its History Has Shaped Us

What is money? Most economists wrestling with this question will invoke the classical definition: medium of exchange, unit of account, and store of value. Kabir Sehgal wouldn’t disagree. But he’s also eager for people to move beyond such a narrow definition and consider the deeper meanings of money. Sehgal, a vice president at JPMorgan, is obviously no stranger to the stuff. But in Coined, he’s less interested in accumulating money than in reveling in its mysteries, its curious status throughout history, and its central place in the human imagination. In this highly readable book, he offers an enthusiastic romp through the history, philosophy, and even the neuroscience of money, broken up by firsthand accounts akin to a travelogue. The result is a frequently fascinating, occasionally platitudinous and loopy, but consistently entertaining account of the grand, pocket-size social contract that makes the world go round.

Sehgal’s eclectic approach to his subject defies easy categorization. As he concedes up front, much of what he writes isn’t all that original; it is, rather, a synthesis of other people’s work (which he scrupulously cites and quotes). Likewise, he notes that his book “does not advance a grand theory.” Coined is, as its name suggests, a somewhat improvisational collection of facts, theories, and anecdotes that, like the objects in a cabinet of curiosities, deliberately blurs the lines between the arts, literature, and natural science. “‘No boxes,’ became my mantra,” Sehgal notes by way of explanation. “My quest led me to examine money from cell to community, from life to death, from inner spirit to outer space.”

The idea that drives what could well have been an exceedingly diffuse, anarchic book is Sehgal’s definition of money: “a sign of something valuable and important.” This broad definition gives him an excuse to begin the book by wandering into the wilds of evolutionary biology. He advances the idea that money originated in our species’ penchant for cooperation. This trait, in tandem with our growing brains, paved the way for money. “The expansion of the brain gave rise to consciousness and symbolic thought,” writes Sehgal. “It’s this capacity that led to the creation of money.”

Well, yes and no. It’s one thing to argue that the human brain had to evolve to a certain level before it could even comprehend the sophisticated symbolic system known as money. But it’s altogether different to argue, as Sehgal seems to, that money was the direct, almost inevitable consequence of an evolutionary process that took place over many millions of years. Nor do the facts support this notion. After all, the human brain had been sufficiently large to conceive of a symbolic medium like money for hundreds of thousands of years. But within this evolutionary time frame, the human use of money to facilitate exchange is a fairly recent development. At times, Sehgal’s argument reads like a mash-up of evolutionary biology and Adam Smith’s claim about human nature’s “propensity to truck, barter, and exchange”—except that in this account, Homo economicus has been replaced by Homo reciprocans.

Still, even if we aren’t hardwired to create and exchange money, some of us certainly respond to it in strangely predictable ways. Sehgal chronicles experiments conducted by so-called neuroeconomists who use MRI machines and behavioral experiments to determine how the brain responds to economic incentives. One researcher found that the brains of those faced with the prospect of winning or losing money bear an uncanny resemblance to the brains of drug addicts given cocaine. Another equally suggestive experiment monitored people watching money be destroyed. This sparked activity in the temporoparietal portion of the brain, an area that often lights up when people make or use tools. This led researchers to speculate that money may, in our own minds, function as a tool as well.

Perhaps. But the same area of the brain is known to regulate moral thinking, and it’s equally plausible that witnessing the destruction of money may, in some fashion, stimulate us to contemplate the morality of the action. Or not. Indeed, the response would probably vary a great deal depending on the cultural baggage that someone brought to the study. After all, money can evoke very different sentiments in different people. A handful of study participants drawn from a more secular, Western industrial society are likely to view money distinctly from, say, individuals living on the fringes of the global economy.

To his credit, Sehgal recognizes this fact, and some of the strongest parts of the book delve deeply into the ways that human users try to fix the meaning of money. As Sehgal writes, it can function as a “symbol of our values and a test of our morality. How one handles money has many implications beyond saving and spending, and can demonstrate whether someone honors the moral code of a society.” Sehgal ranges widely across time and space to underscore this point, showing the myriad ways that money has become entangled in judgments about morality, from prohibitions against usury in Islam to Judeo-Christian injunctions against piling up too much of it.

In fact, for most of human history, the accumulation of money has not been viewed as a desirable end in itself. (When it comes to money, in other words, we moderns are the outliers.) Nor has it been a purely instrumental device for making a fleeting economic transaction. Rather, it has more often been a means of entangling people in webs of reciprocity that far outlast any single cash exchange. These ties, while ostensibly economic, are in fact emotional and personal. And while this is certainly true of premodern societies, in which the gift economy is strongest, it may also be applicable to places like Wall Street, where a rational monetary calculus is presumably dominant. In an amusing aside, Sehgal relates that his boss, Jamie Dimon, apparently keeps in his suit pocket a running list of “people who owe me stuff.”

These meditations on the many different meanings of money reflect a deeper ambition. As Sehgal writes at one point, the “purpose of this book” is to “coin a multiplicity of ways to think about money.” He wants to move away from the overly restrictive, bloodless definitions favored by economists. Money, in this book, is not some timeless medium of exchange but a shape-shifting creature that can take on new and ever more abstract forms, depending on the parties to the exchange and the kinds of societies they inhabit.

This is a provocative point, and Sehgal ably shows how two particular ideas about money have vied for influence over the years. The first holds that money must necessarily possess some kind of intrinsic value. Goldbugs and “hard money” types of all stripes fall into this category, and for most of recorded history it has been dominant. But an increasingly powerful tradition of “soft money” has steadily gained influence in our own modern and wired age; it maintains that money is merely a token or symbol with no value of its own. Milton Friedman put the thought behind soft money bluntly when he explained that “the pieces of green paper have value because everybody thinks they have value.”

This gradual shift from hard to soft money—from gold coins to dollar bills—obsesses Sehgal, who turns yet again to the brain to explain how it occurred. “As the human capacity for symbolic thought improved,” he declares, “we no longer had to see or touch the source of value. Money today is an abstraction of its evolutionary purpose of helping us obtain the resources we need to survive.” As part of this brain-driven conceptual leap, the larger society—what Sehgal likes to call the “super-brain”—also habituated itself to the more contingent idea of money as a collective symbolic abstraction.

All the pop neuroscience notwithstanding, Sehgal is onto something important. The growing abstraction of currency is one of the more intriguing developments of our era. As he notes, money in today’s world is increasingly “digital, intangible, and invisible.” A flimsy dollar bill looks downright tangible next to the electronic impulses that now make up this thing we call money. And yet we trust in it and abide by it. Governments, even entire nations, bow to the demands that they pay debts that have no “real” existence outside the flow of electrons, bits, and bytes.

Little wonder that, as Sehgal looks toward the future, he cannot help but speculate that even stranger things lie beyond the horizon than Bitcoin and other experiments in purely virtual currencies. “One day,” he suggests, “maybe man and machine merge as to eliminate the ‘middleman’ of physical money altogether, turning neural activity into a currency itself.” In a crowning irony, the human brain, which hatched the idea of money in the first place, may eventually find itself monetized.

But we’re still a long way from that point. In fact, we may already be pushing humanity’s tolerance for abstraction to dangerous heights. In the years following the 2008 financial crash, the world’s central banks engaged in round after round of “quantitative easing,” buying up unprecedented supplies of bonds and other assets with money created via keystrokes of a computer. This is what Sehgal calls “centralized alchemy,” and it is only accelerating money’s flight into the ether. “Money is becoming more electronic and invisible,” he warns. “It has become so abstract that we risk forgetting the concrete lessons of history”—the devaluations, the currency collapses, the debasements.

It’s hard to know what the future of money holds. But this book is as good a place as any to begin contemplating that question. You may be twenty-eight dollars poorer after the exchange, but you’re unlikely to look at money the same way again.

Stephen Mihm is an associate professor of history at the University of Georgia and the author of A Nation of Counterfeiters: Capitalists, Con Men, and the Making of the United States (Harvard, 2007).