Martin Woollacott
WHEN little Paul Dombey asks: “Papa! What is money?” his father mentions guineas, shillings and halfpence. “I don’t mean that, Papa, I mean what’s money after all?”
“What is money after all!” Dickens has Mr Dombey reply, backing his chair a little, “that he might better gaze in sheer amazement at the presumptuous atom that propounded such an inquiry.” The presumptuous atom’s sense that money is a mystery and a problem is felt by everyone, if they are honest, except perhaps for a very few who feel they command it even if they do not entirely understand it.
What has happened in Albania, where a political crisis has developed in part because people there neither command nor understand money, is not completely special to that country or to the zone of former communist states where swindling schemes have recently been commonplace.
To imagine that in the real world an investment could pay 3 000%, which is what many Albanians did, seems to show a total lack of understanding of how things work. Yet in other countries, too, citizens entrust their security to instruments whose workings most do not understand, and expect gains which, while not as immense, are still substantial.
Those are regular, legal instruments. But pyramid schemes are common enough in the West. Thousands have come and gone, taking savings with them, in the last few years. Even in Switzerland, the country which above all others should understand money, whole valleys put their Swiss francs into a scheme which offered a 70% annual return on investment. Although 70% is not 3 000%, it is still hard to see how people can imagine it is realistic to expect it.
It is not only the manoeuvres of crooked financiers that threaten the money of ordinary folk. Life in more settled Western states rests on the assumptions that stocks will not crash, pensions will not be liquidated, that houses are valuable or, in Britain, will soon again be worth what they used to be worth, and that plans for a single currency in Europe will not significantly affect the value of what we have in our bank accounts.
Billboards put up by an insurance company in London proclaim: “The Lottery. The Pools. The Pension. One of them shouldn’t be a gamble.” Such appeals are effective because they trigger the insecurity never far below the surface even in countries whose economic life has usually been steady and even. In others, where the opposite is true, money is a lottery in itself.
In Mexico, reports suggest that the country’s indebtedness could lead to disaster. It is worse than it was 15 years ago when the country’s failure to repay set off the Latin American debts crisis. What would happen to the already devalued salaries and savings of the mass of the population in that event?
What, after all, does the plain man, east or west, see when he looks at money? On the one hand, he sees his own little store diminishing as it is pulled in by the tax official and eroded by inflation. On the other, he sees miracles of enrichment.
In Russia and other East European countries, a new class of bankers, importers, and financiers. In the West, a George Soros or a Richard Branson. More mysterious than such established Western figures, whose fortunes relate to some extent to their intelligence and hard work, are others whose wealth seems to stem from a single act of shrewdness, like the British railway businessman whose 110 000 investment will pay off in millions. Or those whose reward for difficulties at work is not the dole queue but, like Disney’s Michael Ovitz, $50-million in goodbye money.
Rich men may be able to absorb these figures or even laugh them off. One recalls Rockefeller’s reaction to the huge sum left by another tycoon: “And we all thought he was rich!”
But for most, these sums are not explicable: they are like a kind of magic.
The distinction in Albanian minds between the real world of small-scale exchange, which they understand and in which they are shrewd and sure-footed, and the magic world of “money”, is matched elsewhere, if not in quite such absolute terms.
In Russia, the vulnerability of citizens to schemes like the MMM pyramid, and the general Russian attitude to wealth has been put down to the lack of a Protestant work ethic. This connects wealth to hard work, entrepreneurial courage, and virtue; while in Russia it is seen as connected to qualities of cunning and criminality.
The plight of the average man in countries where inflation is high – Bulgaria, for instance, faces a rate of 300% – and wealth creation the preserve of a few extraordinary figures, is that savings dwindle or disappear if deposited in any “normal” way. How then to get into the same loop as the rich, that imagined place of money-laundering, export-import deals, drug cash, market-cornering? The pyramid schemes seem to offer a way into the loop, with often a hint that the huge returns are related to illicit and super-profitable activity by the larger-than-life operators in charge.
Yet it is arguable that the connection between work and wealth is fraying in the West as well. The money made out of Western privatisations has similarly been huge, while the citizen who, in theory, once owned the assets taken over, has, like his Russian equivalent, benefited hardly at all.
The transfer of more and more pensions to stock-related schemes, as in the proposals just put forward by the British government, removes the anchor of specific obligations.
Stock markets reflect, some experts argue, the over-valuation of equities in general and of real estate in particular. In Britain the astonishing sum of 500-billion has been added to the wealth of stockholders since 1990, a figure which might be be seen as cause for apprehension as well as self-congratulation.
The relation between stocks and the efficiency of firms at their core business is not as close as it once was, or as it should be. The great plan for a single money in Europe adds to these uncertainties.
East and West, there is a kind of parallel between the big money payoffs at the top and the lottery culture at the bottom. Being “smart” or just being lucky seems the only way to ride change.
Or, perhaps, by pumping Peruvian water. In Dombey and Son, young Paul is put into the not so tender care of a Mrs Pipchin, whose long-dead husband broke his heart in pumping water out of Peruvian mines – “not being a Pumper himself, of course … but having invested money in the speculation, which failed”.
In his case, the answer to the question of what is money was that it was something he no longer had. Speculation and desperation can be two sides of the same coin.