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Digital Subscriptions > Prospect Magazine > April 2017 > Books in brief

Books in brief

The Production of Money: How to Break the Power of the Banks

by Ann Pettifor (Verso, £12.99)

Ann Pettifor’s new book is an excellent contribution to the growing body of thought exposing mainstream neoclassical economics’ poor understanding of money, banking and finance. Furthermore, she elucidates how its thinking has led to a financial system that we serve, instead of one that serves us. Drawing extensively on Keynes, she proposes: that bank lending should be regulated so that credit is guided into productive lending not speculative activity; that regulators should set different interest rates across a spectrum of lending; controls on international capital flows; and the adoption of a new Bretton-Woods system of managed exchange rates.

Why aren’t these important ideas taken seriously? Disappointingly, Pettifor takes the easy option of blaming vested interests, rather than getting into the detail of how interest rates and capital flows are misunderstood. Furthermore, her solutions don’t solve key problems, including ending “too big to fail, ” removing implicit bank subsidies, and protecting the payments system. For these to happen, banks should be stripped of their power to create money, which is what my organisation, Positive Money, proposes. But while Pettifor takes a whole chapter to criticise such ideas, she simply does not engage with their potential benefits. Her writing contains many misrepresentations and misunderstandings.

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In Prospect’s April issue: Ross McKibbin, John Curtice and Lisa Nandy examine the state of the Labour Party and question its survival at the next general election. McKibbin takes a long view and suggests that the party’s problems started long before Jeremy Corbyn, Curtice argues that breaking the party is unlikely to go as well as some may think and Nandy argues that tackling unaccountable power could help restore faith in the party. Nicholas Timmins says the NHS has always experienced financial crises so is this time any different? Lucy Wadham charts the rise of France’s Front National. Also in this issue: Owen Hatherley explores Edinburgh’s architectural conundrum, Freya Johnston on Jane Austen and Avi Shlaim on the tragedy of Yitzhak Rabin—the last best hope for peace.
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