By Satyajit Das

Rs 699

Would you sell your car to a near-bankrupt person by lending her nearly twice the price of the car, so that she can pay for it and clean up her finances at the same time? Lest you wonder about my mental state, this is more or less what India’s Croesus Mukesh Ambani did last week in his complexly engineered deal of selling Reliance’s ETV holdings to Raghav Bahl’s Network18.

Juicy financial rewards not visible even to media hawks must surely be tucked in there besides the obvious influence over public opinion the deal confers on India’s largest corporate entity, the real buyer. Satyajit Das, the celebrated writer of the book under review and a renowned finance expert settled in Australia, would have loved to dissect the deal and make it understandable to us mere
mortals.
Money, we understand, but what is extreme money?
Das says towards the end of his sweeping opus, “Extreme money, the idea of universal wealth and prosperity, engineered by financial alchemy, was immensely powerful and impossible to resist.” Das’ purpose is to place in perspective why all the financial wizardry in the early 2000s failed. Although he works on a vast canvas, tracing the concept of money from the very beginning, his main focus is on the last four decades when finance reigned supreme on the world economic scene. Nobel Laureate Paul Krugman (one of the few not quoted by Das) calls the period from 1980 onwards America’s “second gilded age” when finance became an ever increasing part of the gross domestic product of the world’s leading economy. New financial empires emerged whose heads drew humongous salaries. Not enough always, though, to buy love, as the Beatles had prophesied a generation earlier and, if Das is to be believed, management Maestro “Neutron” Jack Welch of the General Electric fame, and rockstar economic-historian Niall Ferguson found out to their chagrin!
Welch ended up in a messy divorce from his second wife Jane, whom he had earlier called a “perfect partner” over, you guessed it, money. Ferguson’s invitation to his wife for the lavish party for the 40th birthday of his paramour, the Somali-Dutch politician Ayaan Hirsi Ali, put his marriage on the rocks, or so said the tabloids.
The Das volume is a marvel of detail, with apt quotations from history, physics, literature and sometimes even economics, for every occasion, narrated with bemused wit that often turns mordant without ever missing a beat. Indeed, the many blurbs gracing the dust jacket and inside pages make it out that it is probably the best thing to have happened since sliced bread or the iPhone.

The book is divided into five sections, besides a prologue and an epilogue. The first section gives a bird’s eye view of money as it has evolved over time and those who manage or manipulate it, take your pick. The second deals with the evolution of economic and management theories of money and finance and its dramatis personae. The third, and critical, section deals with the minutiae of the instruments and derivatives now being used by money-men. We are then treated to how the system works — or, more likely, does not work. The last section deals with where we are at now, which may be on the edge of a financial abyss.
Das treats his task as nothing less than encyclopaedic. Every concept, every theory, every thinker, every policymaker, every law and its author, every institution, every mover and shaker, every scam and its perpetrator, all get a mention, some in passing, some at length. There are hardly any saints in this gallery of personages associated with greed; most are rogues and some outright villains. Reputations are skewered, some deservedly so such as that of the patron saint (or should I say demon?) of the financialists, Alan Greenspan, the long-time chairman of the US Federal Reserve who failed to see the sub-prime crisis coming. To condemn some others, notably Welch, is perhaps not fair.
Das travels at a truly break-neck speed. We proceed from Adam Smith in the 18th century to the present-day Ben Bernanke in mere 12 pages. We hurtle through a series of events, actions and outcomes, not always in a chronological order, without pausing for breath. No roller-coaster ride left you dizzier. Das tops this heady mix with quotes, quips, witticisms, anecdotes, asides and gossip. Tables, charts, boxes all make their appearance. All this razzmatazz makes the book exciting reading. But it also occasions a feeling of too much of muchness. One can safely count on finding at least five such garnishes on any given page. This shows off Das’ scholarship, knowledge, pizzazz of writing and on the whole being a jolly good fellow indeed. Yet the reader is so dazzled by all this verbal bling that she is literally blindsided and often doesn’t know what hit her.
Das concludes on page 391: “The global financial crisis that began in 2006/7... exposed the deep-seated problems in the ‘extreme money economy’... The economic and financial models were deeply flawed and had failed. The available tools and knowledge were insufficient to manage the crisis.” The jaded reader says, “Huh? How did we get there?” The question is, why did all the financial skulduggery not succeed in creating wealth, as expected? We need to revisit the concept of wealth to understand why.

What we consider “wealth” originates from our sense of well-being. Our feeling of wellness comes from what we eat or wear, where and how we live, what we drive and so on — in other words, something tangible. No amount of financialisation is ever going to increase the supply of tangibles, which happens only through good old-fashioned production of goods and provision of services.
The Masters of the Universe were wrong to expect that their innovation of extreme money would lead to greater prosperity. Sure, the dotcom and finance bubbles made many millionaires and some billionaires, but that was at the expense of other, gullible, folk. In the present instance that lot includes most of the world.
Reading Das is like a gastronomic romp through Mumbai’s Chowpatty or Delhi’s Bengali Market. Your taste buds are titillated by all the gorging, but you do not have the satisfaction of having eaten a full gourmet meal nor the nourishment. Raghuram Rajan (Fault Lines) and Liaquat Ahamed (Lords of Finance) provide such satisfying fare on the Great Recession through their seminal works.
I enjoy both Robert Ludlum and John le Carre. Ludlum’s Bourne exclaims, “Look! Plot twists! Action! Thrills! Gadgets! Babes!”; Le Carre’s Smiley mournfully murmurs, “Think of the human condition”, before slowly shuffling off. I have never re-read Ludlum and given away my copies when done. I hang on to my tattered Le Carres for dear life to run into Smiley’s tinkers, tailors, soldiers and spies yet one more time.
No prizes for guessing where I would place Extreme Money.

Shreekant Sambrani taught at IIM Ahmedabad and helped set up the Institute of Rural Management, Anand. He writes on economic and policy issues.