The Currency of Politics: The Political Theory of Money from Aristotle to Keynes

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A pathbreaking new intellectual history of monetary policy. In examining how key thinkers approached the economic crises of their respective times, Eich offers a map for navigating the politics of money today."—Daniel Steinmetz-Jenkins, The Nation Frieden undertakes careful examination of currency politics. . . . [M]eticulous [and] well-informed. . . . Recommended."— Choice

The first chapters introduce basic policy choices for managing the monetary system: exchange rate regimes, either fixed, floating or pegged to another currency, and a currency’s price level. The choice of regime depends on competing demands for stability and flexibility, while the price level is held in tension between supporting price competitiveness for exporters and the purchasing power of consumers. If you are interested in this review, you may also like to listen to a podcast of Professor Frieden’s LSE public lecture, ‘Lessons for the Euro from America’s Past’, recorded on 19 January 2016. A very good book. . . . Eich takes us on a fascinating journey."—Paul Sagar, Perspectives on Politics Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, Jeffry Frieden shows how each industry's characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. Frieden evaluates the accuracy of his theoretical arguments in a variety of historical and geographical settings: he looks at the politics of the gold standard, particularly in the United States, and he examines the political economy of European monetary integration. He also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil.

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The moment when you start to wonder what money is feels like pitching through a trapdoor into the void. This book is a marvelous aid to stabilizing that awful sense of cognitive vertigo. By examining several periods in the history of money, and showing how it has been used in each period to constitute power and the state, Eich brings us to the present with a much clearer sense of where we are, how we got here, and how we might seize money itself and use it as a creative political force for good.”—Kim Stanley Robinson, author of Ministry for the Future In the use of case studies and the inclusion of historical and contextual factors, Currency Politics introduces a meaningful narrative to the analysis. Pure economic analysis is typically deterministic and struggles to account for contingent factors. By considering social, institutional and historical aspects, the text succeeds in treating the economy for what it really is: a complex and interdependent phenomenon. It’s been a wild week in Westminster and it’s starting to look like the Tories are losing their grip. Ed and George chew over the Supreme Court’s judgment on Rwanda and what it means for Sunak. Could his new Foreign Secretary slam the brakes on some Tories’ hopes to leave the ECHR? Eich’s work is sure to be a landmark in political science. His argument is bold and ambitious; his writing clear and engaging; and his message timely, persuasive and imperative."—Erik Jones, Survival Change the plan you will roll onto at any time during your trial by visiting the “Settings & Account” section. What happens at the end of my trial?

In the wake of the 2008 financial crisis, critical attention has shifted from the economy to the most fundamental feature of all market economies—money. Yet despite the centrality of political struggles over money, it remains difficult to articulate its democratic possibilities and limits. The Currency of Politicstakes readers from ancient Greece to today to provide an intellectual history of money, drawing on the insights of key political philosophers to show how money is not just a medium of exchange but also a central institution of political rule. In Currency Politics, Frieden not only draws together beautifully the strands of his previous work, but he advances a new and entirely persuasive explanation of the euro project as an essential bulwark against competitive devaluations. Above all, he argues convincingly for the centrality of exchange rate policy to domestic politics, international relations, and macroeconomics in open economies."—Ronald Rogowski, University of California, Los AngelesEven though written clearly, this book is a challenging read; it surprises readers with sudden enlightenment on profound concepts like the impossible trinity, substitution and income effects of currency, the Mundell-Fleming-Dornush Framework, the Dornush overshooting model, and the optimum currency area theory, among others. As the author relates these concepts to historical events, the reader is compelled to continue reading the book until its conclusion."—Shishir Shakya, Review of Regional Studies With deftness, elegance, and intellectual verve, Eich paints a vivid and compelling picture of the whole history of political and economic thought as revealed through an interrogation of money. It is clear that this insightful book announces a new and important voice in the field.”—David Singh Grewal, author of Network Power The book is readable for both economists and political scientists. I recommend Currency Politics to both sets of scholars. Economists will learn about the political aspects of exchange-regime choice and political scientists about the economic aspects. ---Lawrence H. Officer, EH.Net With this framework in place, a set of case studies is used to test the relevance of political economy to currency policy at various stages in history: namely, the United States during the transition to the gold standard (1862-96); European monetary integration between 1973-94; and Latin American policy between 1970-2010. The individual elements of Frieden’s theories are tested empirically to understand how important the political economy of currency policy is to explain voting patterns and government policy choices. Jeffry A. Frieden, Professor of Government at Harvard University, has written a fine book on the determinants of decision-making regarding exchange-rate regime and, to some extent, exchange-rate level within the selected regime. The book is readable for both economists and political scientists. I recommend Currency Politics to both sets of scholars. Economists will learn about the political aspects of exchange-regime choice and political scientists about the economic aspects." -- Lawrence Officer, EH.net.

A fresh and splendidly clear guide to the intellectual history of monetary policy. . . . The Currency of Politics is an invaluable guide to why — and how to think about what comes next."—Felix Martin, Financial Times Meanwhile, Keir Starmer faced a huge rebellion of his MPs over the SNP’s ceasefire amendment. Ed explains why this isn’t as big a threat to the Labour leader as it first appears...Currency Politics: The Eurozone Crisis and the World's Financial Future,” the Alice Gorlin Memorial Lecture, Oakland University, April 8, 2015. [If your Flash plugins are not up to date, there is a lower res. version available here.] This excellent book is for anyone who has ever wondered about the origins of the Eurozone, the causes of the currency crises, and the importance of the classical gold standard. Frieden combines lively historical narratives with statistical analyses to show that currency politics are pretty much the same across time and space. No other author could bring out the common threads running through the book's cases so clearly." —J. Lawrence Broz, University of San Diego The appeal of this text to economists and political scientists alike is obvious; however, it also explains monetary economics with such clarity that it is unusually accessible – at least for the field of economics – to a more general audience. Think of it as occupying the middle ground between pop economics titles, like Freakonomics, and more formidable volumes, such as Thomas Piketty’s Capital in the Twenty-First Century. An intellectual history of money that theoretically grounds the works of others working on democratizing money. The Currency of Politics is a great addition to the philosophy of money."—Valerie Schreur, Oeconomia The book is readable for both economists and political scientists. I recommend Currency Politics to both sets of scholars. Economists will learn about the political aspects of exchange-regime choice and political scientists about the economic aspects."—Lawrence H. Officer, EH.Net

With deftness, elegance, and intellectual verve, Eich paints a vivid and compelling picture of the whole history of political and economic thought as revealed through an interrogation of money. It is clear that this insightful book announces a new and important voice in the field.” —David Singh Grewal, author of Network Power The chapters on currency policy in nineteenth-century USA are particularly illustrative: large-scale infrastructure investment acted as a catalyst for economic growth and geographical expansion across the new continent, leading to the emergence of two competing political blocs in the agricultural hinterland and urban centres of industry and finance. Railroad magnates funded new railways using foreign-denominated debt and had strong interest in moving away from gold to a floating exchange rate. Farmers and mining firms shared this interest and voted for lower price levels along with a floating exchange rate to guarantee competitiveness in export markets. Manufacturers went against expected behaviour for two reasons: import tariffs were relatively high, particularly after the Civil War, and the US was geographically distant from potential competitors. With high transport costs protecting firms from competition with European counterparts, they could easily pass-through the costs of currency fluctuations to consumers. The Latin American analysis conversely brings to light a tendency for currencies to appreciate in the lead-up to an election, boosting the purchasing power of consumers to support re-election for the incumbent government, but in some cases creating unsustainable price levels and precipitating a currency crisis. If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for 65 € per month. The Currency of Politics breaks the frame we use to understand money. More than an instrument or an institution, currency becomes a nerve center of political theory. Deeply in dialogue with the past, Stefan Eich compels us forward to conceptualize money as a medium for democratic agency—or its loss. A tour de force.”—Christine Desan, author of Making Money: Coin, Currency, and the Coming of Capitalism Currency Politics is an ambitious book on an important topic. Frieden is one of the best political economists and one of the best scholars writing on this subject." —Sebastian Edwards, University of California, Los Angeles and author of Toxic AidIn Currency Politics, Frieden not only draws together beautifully the strands of his previous work, but he advances a new and entirely persuasive explanation of the euro project as an essential bulwark against competitive devaluations. Above all, he argues convincingly for the centrality of exchange rate policy to domestic politics, international relations, and macroeconomics in open economies." —Ronald Rogowski, University of California, Los Angeles Identifying the motivations for currency policy preferences on the part of industries seeking to influence politicians, Jeffry Frieden shows how each industry’s characteristics—including its exposure to currency risk and the price effects of exchange rate movements—determine those preferences. Frieden evaluates the accuracy of his theoretical arguments in a variety of historical and geographical settings: he looks at the politics of the gold standard, particularly in the United States, and he examines the political economy of European monetary integration. He also analyzes the politics of Latin American currency policy over the past forty years, and focuses on the daunting currency crises that have frequently debilitated Latin American nations, including Mexico, Argentina, and Brazil. Eich’s book is ultimately a call to revive democratic debate about money…this excellent book…does not tell us what to do, but he does show us something can be done."—Geoff Mann, New Statesman While the fragility of exchange rate commitments has been known since the publication of a 1995 paper by Obstfeld and Rogoff, the question of why some central banks fix the value of their currencies and others do not is less well understood. Jeffry Frieden’s Currency Politics provides a thoughtful guide to the political economy of exchange rate policy. ... Jeffry A. Frieden, Currency Politics: The Political Economy of Exchange Rate Policy (Princeton: Princeton University Press, 2015).