Instant Genius - The hidden ways money has shaped human civilisation

Episode Date: July 27, 2025

If most of us were asked what we thought was meant by the word ‘technology’ chances are the first thing that would come to mind are inventions such as cars, medicine and computers. But economist and author David McWilliams would argue these are all physical technologies and that there’s also a whole world of social technologies out there that have shaped human progress in a similarly profound way that most of us are largely unaware of. Chief amongst these, he says, is the invention of money. In this episode, we speak to David about his latest book Money – A Story of Humanity. He tells us how the very reason that money has any value at all is based on our collective belief and trust in it as a concept, how money was much more deeply involved in turning points in human history than first meets the eye, and we need to see our relationship with money as an evolutionary process that progresses much like natural selection. To get the exclusive gift box from Shokz, order via this link: ⁠https://bit.ly/4kFt10l⁠ Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Combine handcrafted tradition with cutting-edge innovation and high-end materials, delivering digital precision with analogue warmth. So you can experience exceptional sound at home. Music just as the artist intended. Visit name audio.com to learn more. Hello and welcome to Instant Genius, a bite-sized masterclass in podcast form. Every Monday and Friday, you'll hear a world-leading scientist and experts talking about the most fascinating ideas in science and technology today. I'm Jason Goodyear, commissioning editor at BBC Science Focus. If most of us were asked what we thought was meant by the word technology,

chances are the first thing that would come to mind are inventions such as cars, medicine and computers. But economist and author David McWilliams would argue these are all physical technologies, and that there's also a whole world of social technologies out there that have shaped human progress in a similarly profound way that most of us are largely unaware of. Chief amongst these, he says, is the invention of money. In this episode, we speak to David about his latest book, Money, a story of humanity. He tells us how the very reason that money has any value at all is based on our collective belief and trust in it as a concept, how money was much more deeply involved in turning

point in human history than first meets the eye, and why we need to see our relationship with money as an evolutionary process that progresses much like natural selection. So welcome to the podcast. Thanks very much for joining us. Jason, it's lovely to be here. Thank you. So today we're talking about your book, Money. So one funny thing that you say is that so many of us, even economists, don't actually understand how money works. So I thought that's a really, really interesting statement. So can you unpack that for us? Well, Jason, I suppose I have been a monetary economist for about 30 years. And I started my career in the central bank of Ireland. That's where, you know, probably the most magical financial trick of all is conjured up, which is that paper comes in.

And in a sort of an almost religious type of ceremony, money comes out the far side, in effect, right? And coins. So what really struck me, and then I became an investment banker, traveled around the world and I came back to Ireland, did a lot of journalism, etc. And what really struck me over all these years explaining booms and busts and crashes, etc., is that economists, my tribe, who have taken it upon themselves over the last 50 years to explain money to the general public actually don't understand money. And by this I mean, for example, a plumber. If you have a plumber at home, a plumber will tell you, look, this is the way the water gets around the house. It's a combination of gravity and pressure, and if we turn this tap on, water will emerge out of this tap,

etc, etc, right? So they can tell you how water gets around the house. But if you sat that plumber down in the pub and you say, well, why is water essential for life? I think the plumber would be hard pressed to give you a proper answer. Similarly, economists can tell you, and we do tell you, maybe at nauseam, how money gets around the system, if you change interest rates, if you change the exchange rate, if you the government borrows at the central bank like the Bank of England issues currency, they can tell you how money gets around the system. So they're like plumbers. They can tell

you the plumbing of the international economy. But the really interesting question about money is, what does it do to us? What actually is this bizarre thing called money? And what I decided to do is look at humanity and our relationship with money over a 5,000 year period. Because it's about 5,000 years where money really first emerges. In fact, it emerges maybe, but there's evidence about 20,000 years ago, which we can talk about, but about 5,000 years ago. And what struck me was that humans are probably at the top of the evolutionary tree because we are amazing problem solvers. And at every iteration of human development, we have used technology to solve problems. Now, most people, when they think of technology, think of, and the car or the train, or the,

the steam engine or those sort of big moments, right? They're kind of physical technologies that humans use to make life easier and to progress. But there are other things, Jason, called social technologies. And social technologies are technologies that allow humans to coordinate better. And once we coordinate better, we cooperate. And it's basically the idea of two brains is better than one. We can cooperate at mass scale using social technologies. An obvious one would be the legal system, which basically sets.

out the rules of the game. Okay, what you can and cannot do. But I think the most impressive social technology that humans have ever invented is money. Because money allows mass cooperation, mass coordination. And once you see money as a technology that humans have deployed in order to get better at things, in order to get more organized, then you begin to see this extraordinary relationship between human development, maybe even human civilization, and the deployment of this technology. So the main point of the book, Jason, is that armed with this amazing technology, humans have changed the world for good and ill, but also changed ourselves. So if you look at, for example, evolutionary biologists and anthropologists make the point,

that for the first about 400,000 years of human life, we have been characterized by being a clever ape that used a technology fire to define ourselves and to actually organize the world and to make us into the creatures we are. So anthropologists call us a pyrophite species, a species that has adapted to and has been adapted by one technology of fire.

I think that if that was the case for the first maybe 400,000 years, I think for the last 5,000 years, humans have become a plutified race. And a plutified race or species is a species, Pluto, meaning money, is a speak. I actually made that word up, which I kind of like making words up. You know, for monetary, for some linguistic purists, you know, don't wince. It's just a makey-upy word. But it's the idea of plutified is that we are a species that has adapted to and been adapted by money. and we are consistently and constantly,

we're evolving all the time with this technology. So with that in mind, that's what I decided to look at the economy. And this is something that economists don't do. They won't make that extra leap to look at the relationship between us and money. And this is what the book is about, which is why it's called a story of humanity. So let's go right back at 5,000 years then.

What did the first form of money look like? Now, it's fascinating you say that. So we go back to about 20,000 years ago, there is evidence of the first, what would it call a ledger balance sheet accounting, which is quite extraordinary. It's in the Congo. It's a thing called Belgian archaeologists found a little bone,

which was actually the femur of a baboon called the Yashango bone, which is dated back to about 20,000 years ago. and this is a bone, they found it in deep in the Congo, and it's a bone with little notches in it. And it's thought that these notches are the first signs of numericism. And it's also thought that basically this was a tally stick. It was like a balance sheet that I owed Jason money at the end of a year or whatever the cycle was, the notches indicated I paid you back.

So it shows you the first idea of using trade. Money at the time was much more likely to be a combination of agricultural products and humans, slaves. But then if you go up to Sumerian civilization, so that's about 5,000 years ago, about 3,000 years BC, what you see is this co-evolution of money and other technologies that we would describe as being the foundational blocks of human civilization. So money co-e evolves with law, with organized religions, with writing, with mathematics, with numbers, all these sort of systems of communication that humans came up with. So what money, it's not so much what money looked like.

Fascinatingly, the Sumerians used a whole host of financial technologies that we still used today. They had balance sheets. They had accounting. They had the rate of interest, which is an extraordinarily sophisticated idea, because the rate of interest puts a price on money itself. So initially money would have been a symbolized value. And then by the time we get to the Sumerians, money had its own price.

So what we see is an amazing little detail, which is the first name ever written down in cuneiform, which was one of the very first alphabets, was the name of a guy called Cushim. And Cushim was a home brew merchant. He was a fellow who made beer, which is kind of satisfying that the first name ever written down was a fellow who made beer. And it was basically the contract that he had with somebody else to borrow money. and pay back in barley. Okay, so he borrowed barley and he'd to pay back later on at a rate of interest of 33%,

which seems quite draconian to us. So I think it's quite interesting that the very first evidence of writing wasn't some great novel or some romantic poetry. It was something as mundane as accountancy based on money. And what you see then is if you start there

and you look at the way money has evolved, what you realize is that money has been the hands. maiden of human progress for millennia. And that is the overall theme of the book. So we go from basically the Stone Age all the way up to Bitcoin. Yeah. So I think one thing that I find interesting is that the kind of psychology of trust that is baked into this whole idea, you know, because surely like say we've got bits of metal coins, if nobody respects that they have this universal value, then surely they don't have any value.

You're absolutely right. I mean, what money is, what is fascinated about money is money is an entirely human idea. It doesn't exist in the natural world. It is a force that humans have created. It's a humanly based force, but the most interesting thing is it's entirely invented. So money is a product of the human imagination. And as you say, the reason that money is valuable is that we all, elect to give it value.

And if we suspend that notion of giving it value, then it disappears. So what you see is, this comes back to this idea of a social technology, it is a massive network of acquiescence in effect by not hundreds of millions, by billions of people, by billions all around the world that has bought into this absolutely ephemeral notion that a piece of paper can buy you, you know, lunch. Okay? And once you begin to realize that money is this extraordinary suspension of our critical faculties, it becomes a little bit more like religion.

You know, that, you know, if you are a Catholic, for example, and you believe that the body and blood of Christ is embodied in a little piece of wafer called a host, that is a suspension of your critical faculties, and you move into another world. And in a way, money propels us into another world because what we've done is we have all conceded to, in effect, a notion rather than a physical reality. And that gives it amazing power,

because once you do that, like organised religions, what you do is you can move huge masses of humans in certain directions. Like if you think it's impossible, It's inconceivable to imagine our modern world without money. It controls the flow of goods. It controls the flows of commodity. It controls the flow of people.

It basically sets the terms of engagement between the government and the government, the citizen and the state, the buyer and the seller, the innovator. I mean, everything we do is mediated through this extraordinary technology, so much so that it's impossible to imagine our world without money And the interesting thing is, money is a universal language in the sense that if you take, let's say, the poorest rickshaw driver in New Delhi and you take the richest investor in Silicon Valley, they might not speak each other's language, they might not understand each other's culture, they might not understand each other's religion, but they can be spoken to through the medium of money. They understand the notion of universal value. And this is a phenomenally powerful tool and technology. You said this place was steps from the water. We just haven't found the steps yet. How much did we save?

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and gives it emotional texture. Today, in partnership with French acoustic specialist focal, name audio creates systems that deliver exceptional sound and unforgettable listening experiences at home. Try it for yourself at a focal powered by name boutique. Visit focal powered by name.com for more information. You're talking about the concept of social technology and its relationship to money. But I think an interesting thing is sort of in parallel with this,

we have more sort of what we'd think of as traditional technologies. For example, the printing press that help facilitate this whole thing. So what can we say about that? Well, there's an interesting. So basically what I've tried to do in the book is take big moments in history and locate money in those moments. So one of the moments, as we know, is the printing press. So the printing press is, the great thing is what when you start to research and you realise that Gutenberg was a bounder, he was a total scoundrel. And he left a whole class of all sorts of legal problems behind him.

That's great because it's evidence. You know what sort of guy he was. But basically the printing press comes in because the greatest money-making racket that the church had was selling anything called indulgences, which basically said, you know, that Jason's being a bad boy and he's going to go to hell. but you know what, if you pay the church a hundred quid, we'll write a little piece of paper which gives you a free pass out of hell into heaven. It's a great racket.

One of the greatest shakedowns the world has ever seen. Now, of course, the only impediment to that shakedown was the speed of which they could write the indulgences, which are in effect letters of pleading to God. Guttenberg initially got his finance by convincing the Catholic Church in Germany that not only

could he had, a machine that could print, but this machine could print far more indulgences than waiting for a monk in a monastery with his quill. So suddenly it became a money-making operation. And then, of course, the big gig for him wasn't the indulgences, but the really big prize was Bibles, because really rich people bought Bibles from the church, right? So if he could actually print Bibles quicker, then the church could make money quicker. And the fantastic little detail is Gutenberg was also a jeweler by trade. So he was actually very much into design. And he created, if you see the Guttemberg Bible, I've seen one of the last remaining Guttemberg Bibles, they're beautiful. And so what

Guttemberg did was he understood a little bit like Steve Jobs and his iPhone that technology, i.e., the Bibles that he was producing, have to look beautiful. And so what Guttemberg did was he produced a Bible that looked so beautiful that a vain Pope who was in the papacy at the time, who actually didn't want to wear glasses. This is a very interesting backstory, okay? Because he's a bit of a lethario. This is a man who wrote

I think he's very, the, maybe the first-knownly Pope who wrote kind of pornographic letters, and he ironically he was called Pope Pius, the least pious, pious man I've ever met, but he commissioned Guttenberg's Bible simply because he didn't have to wear glasses

to read it, and he hate wearing glasses, because he kind of told himself as still as a bit of lethario in middle age. So what you see is then, money is the reason that Gutenberg innovated. It's the reason that most people innovate is for money, right? Patents and et cetera, okay?

And with that, what the printing press does is it changes the world phenomenally. Why? Because it massively disseminates information in a way that was never disseminated. before. So for example, coming about 50 years after Gutenberg's discovery, a guy called Martin Luther emerges. And Martin Luther was, he would have been a Twitter lord of his time, right? He's the 140

characters God, right? Why? Because Luther realized that with printing, you could print pamphlets. And with pamphlets, you could actually communicate your message to many thousands of people. But more importantly, Luther never wrote anything. He wrote in bulletproof. points. He never wrote anything down. The way he actually communicated, it was in bullet points. So it was bullet points on a pamphlet all made possible by the printing press. The irony is, Jason, that the Catholic Church in Rome, the very people who sponsored Guttenberg's printing press, was the very institution that the fruits of Guttenberg's printing press attacked, which was Luther and his pamphlets and the Reformation. So what you see is that at all these turning points,

So it's the Roman Empire, whether it is the arrival of zero and this sort of financial technology, the emergence of Florence, Dante's Inferno, the Reformation, the Renaissance, all these have one technology knocking around in the background and its money. So say I've got a tenor in my pocket, you know, where does that come from? Because, you know, Theresa May famously said there is no magic money tree. and we all know that many governments in the world are in just huge debts. So, you know, how do we produce money? You know, what happens there?

We magic it up, okay? This is the really interesting thing, right? And I speak as a former central banker who was implicit in the magicing up of money in Ireland in the 1990s, right? So basically, money has two components, but there are the tenor in your pocket, which we call currency. And then there is probably the more interesting part of money which is called finance. Right? And finance is everything else. Only about 10% of the money in circulation is currency is the tenor in your pocket.

Okay. Are these days what you actually click on your phone, right? Digital money, okay? For day-to-day transactions. Where money becomes very, very sophisticated, complex and really a reflection of humanity is in the area of finance. And finance is what you do when you get a mortgage, what you do when you get a mortgage, what you do when you get a car loan, what you do when you get a house loan, what you do when you get a student loan, that's finance. So the fascinating thing about finances, finance allows you travel in time,

okay, because finance says, Jason, I want to buy a house. Banks is all right, Jason, you're good for the cash. What the bank has done, it's bought into your image of yourself in 30 years time. So when you're actually buying a mortgage, you travel in time, you create a person in the future and you borrow from that person to spend today, which is a phenomenally sophisticated thing when you think about it. You know, we don't travel in time in any other aspect of our day-to-day lives, yet with money, we do it all the time. And so where it comes from, it's issued by the central bank, but most interesting, and this is what people don't really understand, is that the real magic comes from commercial banks. So, Jason, if you wanted to buy a car tomorrow, and you say to the

guy, look, I'd like to buy a car and the guy, and I need, you know, 25 grand to buy a new car, whatever the price of a new car is, I don't have a car, I don't drive, so I don't know, but let's say 25 grand, right? And the guy says, all right, Jason, I give you 25 grand. Now, what happens is the next day you have 25 grand in your account. That was just made up. It didn't come from anywhere. The guy doesn't ring up the Bank of England say, listen, can I give this geezer Jason 25 grand? They don't look for permission. They just do it, right? So banks create money out of nothing. This is why they're both incredibly powerful and incredibly dangerous. Because the central bank, the Bank of England, is supposed to keep its eye on the system,

but in effect, it doesn't have any real control. It has notional guardrails, it has advice, but this is why we make these financial mistakes so often. This is why there's housing booms and busts and crashes and all that sort of thing, because in effect, the dirty little secret of international finance is nobody is really in control, because the bank itself creates the money. And, you know, the easiest way to rob a bank is to run one, okay?

Because that's what actually happens. because they take the bankers take money out and will take always have, bankers will always have an incentive to create more money, create more loans, to find more jasons to buy more cars, because their bonuses are dependent on that. So there's an internal inconsistency in the banking system. But I think the really interesting thing for your listeners,

which is maybe a little bit scary, is that in a world of trust, nobody is in control because everybody's in control. And when that breaks down, as it did in 2008, you get a rapid, almost viral contagion, because trust is a very ephemeral idea. I trust you based on what we would call in Ireland, or in the UK as well, good skinmanship.

Is he a good skin? That's in effect what we're doing. And if you turn out to be a bad skin, then the trust can become unraveled And then virally, you begin to lose trust in everybody else. And that's what you see when economies crash. So it's sort of tangentially related to that. So obviously during COVID, we were all at home, but like ordering things on the internet, etc.

And I remember the first time I went back into the office, I opened my office drawer. And there's like a few pound coins in there. And it felt like I was visiting a museum. I was just like, I haven't seen. I haven't seen actual physical money for several years now. So now, like, I buy things on my phone with my contact lists. Has that changed the way things work? Or is it just the same thing in a different form?

It's the same thing in a different form. So we have, economists have these big debates about digital currencies and whatever, but we've already moved there. You and I have moved there, you know, I'll go out this afternoon, I'll tap for a beer, I'll tap for whatever. and little zeros come and go on my account into somebody else's account. That's the digital world we live in, right? So we're already there.

It's not a big, you know, hear all this stuff about crypto and this. We're already there, right? And what is amazing, again, is think about how little resistance there was in your brain to a massive change in your actual habits, your daily habits, to go in from, as you said, having pound coins and tenors and fivers in your back pocket to tap in. So the fascinating thing about money is the way, in which humans embrace these really quite big shifts in the way we behave with money, and we do it very willingly and very easily.

So we are just moving into, it's exactly the same as any business. We are now in a digital world. In the old days, you and I would have had to set up a TV studio and a radio studio. I'd have to travel to England to do this sort of thing, right? So that's digitization there and then. Our images are digital, et cetera. So I think I come back to this idea that humans are. constantly adapting with money and constantly adapting money to solve problems.

We get back this idea. And this is why I think that one of the points of the book, which might be interesting to your listeners, as science buffs, is that what I want to do is to wrestle economics away from physics and back to biology where it belongs. Because what has happened, so this idea that we evolve, I've always felt the economy doesn't grow. It actually evolves.

And the reason it evolves is because new products come in, they elbow out old products, new products emerge, then they are facing an evolutionary battle for survival, and then they sometimes get elbowed out. And what you have is a constant regeneration of the economy all the time, not unlike the Darwinian process of evolution. And therefore, to look at the economy as an evolving, ecosystem of which money plays a fundamental accelerating evolutionary role is, I think, much more

descriptive and accurate than what economists, my own tribe, tend to do is look at the economy as a branch of physics with hard laws and hard rules. The problem with hard laws and hard rules is they tend to have one problem with economics, which is us, the human being that sits in the middle of the economy and makes all the decisions. And we are not hard and fast and predictable creatures. We are unpredictable creatures. And as a result of that, economic laws are squidgy and messy, almost like evolutionary laws. So one of the ideas in the book is to actually suggest that economists, I think, probably

around the 1950s, were struck with sort of physics envy, particularly academic economists. And if you think like biology was the science of the 19th century, So you have, you know, Darwin and Pastor and all these people, right? Massive changes in biology. Then the science of the 20th century is physics. Of course, emblematic being Einstein. Einstein was a superstar, right? And the men in the white coats and they could change the world.

They could give us these incredibly accurate tools to look at how the world worked. And I think that economists got sort of physics envy after the Second World War and decided, okay, well, how do we make mathematical and hard and hard. rigorous, this subject, which is a bit too squidgy and messy. So we, as a tribe, decided to apply models to human behavior. And when humans didn't behave as we wanted them to behave, we assumed away the very characteristics that made us human. So we said, assume that we are utility maximizing, assume that every man has all the answers, assume that there's free knowledge and everyone has all the knowledge. And in effect, what we did in economics is what we gained in precision,

we lost in relevance, which is why I think economics is lost a little bit. Academic economics has lost a bit. And if you look at money in the context of this evolutionary system, then I think it makes more sense to you. So, I mean, this is very much a call for the reinstitution of biology in the study of economics rather than physics. Thank you for listening to this episode of Instant Genius, brought you from the team behind BBC Science Focus.

That was David McWilliams. To discover more about the topics we've just discussed, Check out his book, Money, A Story of Humanity. If you liked what you just heard, then please do consider subscribing to Instant Genius on your preferred podcast platform. If you'd like to see our guests and hosts in person, then please also check out our YouTube channel at Science Focus. The current issue of BBC Science Focus magazine is out now.

Pick up a copy wherever you buy your favourite magazines, or download us on your app store of choice. You can also find us on Apple News or online at Science Focused. This podcast is sponsored by Name, Audio and Focal. The texture and emotional depth of music can be lost through digital sources or poor signal. Name Audio believes you can have digital precision with analogue warmth. Alongside French acoustic specialist focal, name creates high-end audio systems, combining innovation with craftsmanship, so you can listen to music, just as the artist intended.

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