As a system of recording obligations — Mason and Jayadev’s is a credit view of money — money is not just a social lubricant. As John Maynard Keynes knew, and the authors remind us, the price of holding money (the interest rate) influences economic growth and employment. If rates are high and the price of borrowing money is prohibitive, businesses are less likely to invest, driving employment and spending down. Greater access to money enabled by lower interest rates reduces the cost of borrowing and facilitates the expansion of an economy’s productive capacity.

The effects of easy money on productive capacity are clear if we look at China, where low interest rates have played a part in a manufacturing and export boom. (Rates are lower still in Japan and the eurozone but have not had the same effect.) China’s trade surplus has become a source of great geopolitical tension with the United States.

In the West, China’s manufacturing prowess is an obsession of pundits who have not tired of bemoaning what they call the country’s “excess production.” This takes the form of an extraordinary manufactured-goods surplus that is shipped overseas. But if we take a global perspective on what these pundits call Chinese “overcapacity,” a different story emerges. No doubt the dangers of excess competition in China’s industries deserve scrutiny, as do its spillover effects on the rest of the world, but in energy-impoverished economies, for instance, China’s “overproduction” of solar panels, batteries, and electric vehicles has engendered economic expansion through imports.

The main way that most people understand economic activity today is through a monetary lens. This carries with it a series of, often unquestioned, assumptions. For instance, within macroeconomics — the part of the discipline concerned with the economy as a whole — concepts like “capital,” “real output,” and “real interest rate” are readily employed, but little thought is given to the fact that they do not refer to real “things” in the world.

Mason and Jayadev are of course not the first to take aim at economics’ unquestioned assumptions. Others have taken issue with GDP for not capturing the value disproportionately created in the domestic sphere by women, for example. But Mason and Jayadev go for the jugular: they argue monetary concepts such as real GDP are inherently flawed. This is because mainstream economics treats money as little more than a rod to measure the production of disparate things in different industries.

But there’s little reason to think this approach makes sense. Can we simply add up the total value of shoes and skyscrapers into monetary aggregates such as GDP? When you stop to think about this approach, it seems quite peculiar. GDP is measured as the sum total of actual (and estimated) spending in the domestic economy. This is why imports are subtracted from GDP. But the sum of money payments in one economy (a distinct payments community) can’t fairly be compared to money payments made in another economy, or even across time in the same country. How individuals or governments spend, Mason and Jayadev point out, varies across space and time.

The inadequacy of measures such as real GDP has important ramifications for how we understand the economy as a complex and idiosyncratic ecosystem. Instead of comparing economic arrangements in China against those of the United States in simple monetary expressions, we’d be better off trying to understand how each economy works — or doesn’t — in its singularity or, as Mason and Jayadev gamely suggest, based on “directly observable quantities with their own natural units.”

There are other technical problems with notions like real GDP, and Against Money dedicates a lot of space to exploring these fine-grained issues. The larger point is a relatively straightforward one: when used as a measuring instrument, “money measures nothing but itself.” This is a simple message, but its consequences for the discipline are devastating.

Thankfully Mason and Jayadev don’t take us on an intellectual voyage only to leave us at sea. Instead of relying on real GDP, they assure us that we can still make do with nominal GDP when comparing national incomes across countries. The difference between the two measures is that nominal GDP counts the total value of all goods and services in an economy using current market prices, while real GDP holds prices at an arbitrary base year and adjusts for inflation.

Similarly, concepts like labor productivity — GDP produced by an hour of work — still have value, although they should only be used with caveats. Paul Krugman has just pointed out that the entire debate on declining European productivity rests on faulty premises. If European productivity is measured (as it should be) against US productivity in current prices, it shows no trend.

Money, write the authors, has been both misunderstood and misused by modern macroeconomics. Thanks to post-Keynesian and Marxian scholarship, the endogenous money view — the understanding that banks create loans from thin air — has done much to advance how public and private money creation works. The fact that money can be created ex nihilo dislodges the idea that it is akin to a scarce commodity such as gold. Instead, we are better off thinking of money as credit — loan contracts that can be tightfisted or generous. In capitalist regimes, there is an abundance of credit on easy terms for entrepreneurs and corporations. Credit is much more expensive for the general public. Under democratic socialism, credit may be reorganized to serve the common good rather than the speculative activities of financiers.

Although Keynes provided some of the building blocks for this view of the radical role that credit plays, he didn’t go far enough. This is one of the questions that Mason and Jayadev pause over in Against Money. How could it be that the grand master of macroeconomic theory perspicaciously grasped that low interest rates are the “best cure for excessive debt” yet thoroughly failed to see the role that money could play as credit or liability in his magnum opus, The General Theory? Instead, Keynes described the demand for holding cash as simply “liquidity preference,” which necessarily involves a trade-off. (The opportunity costs of holding cash are the forgone interest payments that could be earned if the cash was in a bank account. The higher the interest rate, the greater the opportunity cost of liquidity.)

This view makes sense if one has the mindset of an entrepreneur looking to maximize returns — the idea is that the return on investment should be greater than the revenue generated by a bank deposit equivalent to the initial investment. But nation-states aren’t profit-maximizing entrepreneurs; and, unlike individuals, sovereigns can simply create money to generate public investment.

There are, Mason and Jayadev imply, political assumptions underlying the economic ones we make, and part of Against Money’s task is to drag these uninterrogated views into the light. Theorizing matters not simply for the sake of clarity but because economic concepts aren’t simply hypothetical. Knowledge, as the saying goes, is power and knowledge is manipulated by economists.

The much-used concept of aggregate production — a measure used to describe how capital and labor inputs are transformed into output — is also questioned and found lacking by Mason and Jayadev. The concept combines idiosyncratic and discrete forms of capital equipment (from stone ovens to earth-moving excavators) and differentiated labor (bakers and construction workers) into real GDP measured in dollars.

It’s not that trained economists don’t understand, for example, that the aggregate production function is “extremely unlikely to exist at the sectoral level, let alone for the economy as a whole,” as Jeremy Rudd emphasizes in A Practical Guide to Macroeconomics. Aggregate production functions also assume that capital and labor are perfectly mobile across industries — that machines, money, and workers can be moved around and combined freely.

Economists, however, tend to view “production” in abstraction from the underlying social and technological innovations through which it serves to generate a surplus. Most serious economists regard production functions with skepticism. Yet these flawed concepts continue to be the basis of powerful growth accounting exercises, which seek to predict future growth, and are the basis for projections of a macroeconomy’s productive potential. However, there is little reason to think that such models tell us much about what actually drives economic growth.

The larger problem is that economics is practiced far and wide, without openness about these leaps of faith. Economic practitioners, of all stripes, uncritically adopt flawed concepts and put them to use in economic models that go on to inform economic policy. The result is a skewed understanding of the world: a proliferation of what Mason and Jayadev brilliantly call “anti-knowledge.”

Anti-knowledge produces strange intellectual habits, like assuming causality where there is none in ways that are consequential. One much discussed example is global imbalances of trade flows between nations. I mention this example because trade imbalances between the United States and China have, in the last decade, gone from a niche issue to a bipartisan obsession that, in its most extreme forms, risks inciting both great powers to war. The causes of these inequalities are often multifaceted, yet analysts tend to rely on GDP accounting to explain why, for instance, China runs trade surpluses while the United States runs trade deficits.

These days, the section of the public that reads about economics has become familiar with the idea that differences in national saving and investment within countries are the root source of global imbalances, largely thanks to Donald Trump’s former trade representative Robert Lighthizer.

What underpins the narrative put forward by Lighthizer and those who share his views is the assertion that in the United States, there is too little saving (relative to investment); and in China, there is too much investment (relative to saving). The solution to these imbalances is “fiscal consolidation” in the United States (read: Department of Government Efficiency cuts) and a reduction in the investment and consumption share of GDP in China. This accounting-based analysis is deceptively simple. For one, both countries create money out of thin air to fund business investment. (As Keynes tells us, spending — which depends on access to liquidity and is determined in part by the interest rate — is key.)

GDP accounts are superficial scrims over complex and idiosyncratic economic systems. If instead we understood the two economies from a materialist, as opposed to the usual monetary, lens, the well-worn analytical ground on which the global imbalances debate takes place crumbles quickly. This may be discomfiting for economists (like myself) trained in the “high-level” or “helicopter” approach to studying economies but thrilling for those who know how to do fieldwork.

Let’s start by rejecting the standard economic diktat that saving drives investment. Doing so opens a portal into a postcapitalist landscape where money doesn’t reign supreme, where its price can be managed, and where planning and coordination of credit and industrial policy occupy more prominence. What new forms of economic experimentation would this entail? The horizons for public policy where the metrics aren’t monetary are wide open. (Such metrics already exist: for instance, a recent plan to increase the tree canopy in New York City begins with a target of 30 percent canopy coverage.)

The price of money, of course, is the interest rate — as Walter Bagehot and Keynes long understood. In mainstream economics, the interest rate is described as some kind of intertemporal trade-off between spending and saving. In the real world, central banks shape short-term interest rates in the economy. In the United States, changes in the benchmark interest rate are set by the Fed’s federal open market committee.

Yet central bankers like Jerome Powell, note the authors, describe their fine-tuning of monetary policy by appealing to a natural interest rate, as if economic variables were as unchangeable as stars in the night sky. (Paul Volcker, who was responsible for tightening the US money supply that led to skyrocketing unemployment in the early 1980s, also had a penchant for drawing examples from astronomy.) Yet claims about the natural interest rate as well as the natural rate of unemployment — the nonaccelerating inflation rate of unemployment, in economics lingo — are purely ideological.

As Anwar Shaikh wrote in his magnum opus, Capitalism: Competition, Conflict, Crises, Karl Marx himself opposed the idea of a natural interest rate — unlike Adam Smith and David Ricardo for whom the interest rate was proportional to the economy’s general rate of profit. Powell’s call for monetary fine-tuning with the “natural” interest rate as some kind of North Star joins systems (the intertemporal trade-off in orthodox economic theory and real-world liquidity conditions) that don’t necessarily cohere.

Against Money is at its best when pulling the rug out from underneath these kinds of orthodox economic claims. In some ways, the authors’ arguments echo earlier interventions such as those of the late-nineteenth-century German-speaking historical economists, who expressed discomfort with dematerialized visions of the world economy offered up by the British classical liberals. Quite unlike the abstractions of value and price of the great classical economists Smith, Ricardo, and even Marx, the German Austrian economists’ mapping of the world economy was informed by history, geography, and demographics.

There have been serious debates in economics over the nature of capital (e.g., “Cambridge, MA” vs. “Cambridge, UK” controversies). But Mason and Jayadev’s vision is entirely fresh and newly relevant thanks to a whole host of contemporary issues, such as the economics of the energy transition and the present commodity crisis. Of course, the current crisis that centers on the blockaded Strait of Hormuz is about real commodity shortages — but because of the financialization of commodities, it has led to a currency crisis in countries like Turkey. (Importers of oil and gas have been hit by much higher energy costs. The surge in inflation has destabilized the lira, driving the central bank to spend its monetary reserves on defending the currency.)

The authors remind us of the long struggle for monetary sovereignty in Turkey and even Europe. At present, as the gilt market is pummeled by bond-market vigilantes, the Bank of England, cloaked in the mantle of central-bank independence, stands by passively despite the immensely violent economic consequences. But if financial markets limit the political horizon for households and governments (and they aren’t alike), when regulated and retooled, credit can be a powerful source of expanding economic possibilities.

What would economic policy look like if it weren’t solely defined and circumscribed by a scarcity mindset? In modern monetary theory, real resources are the constraint, not money. For Mason and Jayadev, real resources aren’t the fundamental constraints on productive activity; the capacity to make (monetary) promises is. Theirs is a radically capacious view.

In the book’s closing pages, which began as a conversation between Mason and Jayadev in a Japanese curry house on New York City’s Lower East Side and ends at Prospect Park, the authors urge us to turn our backs on the “anti-knowledge” of mainstream economics and step into the sunlight, as it were. It is a radical proposition but one that this book has equipped us to consider seriously.

It takes courage and skill to write about money in accessible and nontechnical prose. The authors use of historical examples is brilliant. Their treks through monetary history can sometimes be long-winded but, in most instances, are enlightening. Good books teach us new ways of seeing the world. And this is such a book. As a specialist in the field, I see myself returning to it in my attempts to teach students how economic theory is constructed.

But Against Money isn’t just for economists. It will find audiences among historians, sociologists, and all those interested in looking at economics with a critical lens. This book is bound to appeal not just to scholars and students but also to a broader audience, just like Thomas Piketty’s Capital in the Twenty-First Century did. Unlike Piketty, who seeks to understand “the deep structures of capital and inequality” by imputing wealth estimates across centuries (with questionable assumptions about the value of both land and capital), Against Money begins by observing buildings and streetscapes. In a world in which economics is often misused, ground-up approaches to the discipline are needed now more than ever.