The Ascent of Money

Niall Ferguson (born April 18, 1964, in Glasgow, Scotland) is a British historian who specialises in financial and economic history as well as the history of empire. He is the Laurence A. Tisch Professor of History at Harvard University and the William Ziegler Professor of Business Administration at Harvard Business School. He was educated at the private Glasgow Academy in Scotland, and at Magdalen College, Oxford where he was a Demy and graduated with first class honours in 1985, where he did completed both his undergraduate degree and PhD. After two years as a Hanseatic Scholar in Hamburg and Berlin, he took up a Research Fellowship at Christ’s College, Cambridge, in 1989, subsequently moving to a Lectureship at Peterhouse. He returned to Oxford in 1992 to become Fellow and Tutor in Modern History at Jesus College, a post he held until 2000, when he was appointed Professor of Political and Financial History at Oxford.  Mr. Ferguson taught at Jesus College Oxford for nearly a decade before he decided to cross the pond because the U.S. higher education system was doing things at his speed; a quicker more efficient way of doing things impressed him a lot. Niall was soon a professor at New York University in 2001-2002 and then 2 years later he accepted positions with Harvard University and Harvard Business School in 2004 he remarks Harvard took it’s time, but it’s one institution that attains the highest standards in higher education regularly and worth waiting for them do their homework. Dr. Ferguson is also a Senior Fellow of the Hoover Institution, Stanford University. Niall Ferguson is a regular contributing editor of the Financial Times and his latest book “The Ascent of Money” is on the New York Times Best Seller List.

He is now best known for telling the story of money and the history of money in all its lustre, lore and affect on humans since the beginning of commerce and trade. Outside of the academic world Ferguson is known for his revisionist type views that try to rehabilitate imperialism and colonialism. Within academia circles he is the champion of counterfactual history and is often times the subject of some considerable controversy.

I had the chance to sit down with Niall Ferguson for sometime and I let him know that I am personally a great fan of his work but at the same time I pointed out the fact that he has some critics out there that doubt some or a lot of your work as not more than sensationalism.

Ferguson goes on to respond ‘ I am only interested in one thing and that is historical truth only to understand the world better. Nobody gains if historians take liberties with the past so I use my best efforts to research widely as I possible can to make sure that I’ve read as much of the existing specialist literature as I can to try to use the archives but research in my own right. I am trying to draw conclusions that are as accurate as I am able to make them. Explaining the complexities of the past financial history is not easy because this is a technical subject and there is an enormous complexity to the international financial system. So for television particularly we try to make it simpler.  I think simplification is essential for teaching, as long as you don’t simplify to the point of distortion and misrepresentation, then it seems to me that it is indeed perfectly legitimate and most desirable.

The Intellectual Process; Ferguson goes on to sum up how it all works:  I think every serious historian wants to stimulate debate on a subject because the historical process is not like science, we don’t just sit around in laboratories re-running human history.  We offer our interpretations on the basis of the facts that we’ve been able to establish and then we discuss them and debate them intelligently.

Ferguson on the critics, fools and the nay Sayers: Throughout the time I have been publishing I have encountered critics of my work and feel it is an integral part of the historical scholarship that one’s work should be subject to criticism. I think it’s often through criticism that we progress closer to a better understanding of the past. There is no doubt in my mind the next book I write will find it’s own set of critics. I look forward to any errors or mistakes in accuracy to clarify for future editions or paperback to be better. The other form of criticism is to say there is nothing wrong with the evidence presented here but you or others interpret it differently than me. So I have my critics, and I don’t doubt that each new book I publish will find it’s own set of new critics. I don’t mind that as long as the criticism is fair. The kind of criticism you can point out like a mistake or an inaccuracy and if somebody does that, I hasten to correct the error so that the information in the paperback version or in future editions is better. The other form of criticism is to say, “Well there’s nothing wrong with the evidence presented here but I interpret it differently from Ferguson on the difference of opinions.” Well that’s fine but if somebody chooses to offer a different interpretation from me, there’s no particular reason why I should accept it. It would simply be a difference of emphasis. So those are the ways that historical criticism works and I think I’ve had my share of fair, and unfair, criticism over the years. It comes with the territory. If you said something that everybody agreed with, it probably wouldn’t be worth saying. You’d simply be restating the conventional wisdom. My aim is always to challenge that received view of thinking.

Ferguson the passionate historian and author not a businessman: If one was interested in making money, one would have become an investment banker in 1985 when I graduated from Oxford and I never considered that for a moment. I dedicated my working life to understanding the way the world works, the modern world since around 1700. And the research I’ve done is a quest on my part to understand that better and then to explain it. And so if I run out of questions that I want to ask about the past then I’ll retire from history. But there are always new questions and so there are always new projects. Right now I’m just putting the very last touches to a biography of an eminent banker in many ways the most important figure in London after the Second World War—Siegmund Warburg.

I asked Mr. Ferguson if he knew much about the war of 1812, The Plains of Abraham and Canada in general.

Ferguson: Well of course! A historian of the British Empire would surely know and understand a lot of about what pivotal things happened in upper and lower Canada to shape the entire world.

I asked Ferguson what he thinks of Canada as a nation and are we on the global radar?

Certainly, I mean the work I did on the British Empire that produced the book, Empire, was in part homage to Canada. I have longstanding family ties to Toronto and, indeed, to Saskatchewan. I have traveled widely in Canada and for me the history of North America is just not the history of the United States, as it often seems to be.

For me the history of North America is the history of two, if not three, major experiments: the experiments, of course of the republican form of government, after 1776 and 13—and subsequently more—colonies. But the other experiment was the experiment with constitutional monarchy within the British Empire that endured right the way through into the 20^th century. And still retains I think a real importance in Canadian life and then within Canada, of course, you have at least two different cultures co-existing.

Ferguson goes on about Canada and it’s Language Culture: Anglophone and the Francophone.  It seems to be very, very interesting subjects for a historian of the modern period. I constantly try to remind my US-born students that if you compare the performance of Canada and the United States in economic terms, or in social terms, that it doesn’t seem as if the, the choice of new political institutions in 1776 in those 13 colonies had a huge amount of difference. It’s not like Canada’s a desperately impoverished backwater. On the contrary, by some measures today, Canada is quite a way ahead of the United States. So this is a tremendously interesting field for historical study.  Comparative history of North America is something we need more of. Frankly too few North American historians do that. There are historians of Canada, and there are historians of the United States.  They tend to talk past one another and this seems to me to miss the whole point. The really interesting thing is that, despite a massive divergence in political institutions, these two societies have evolved in many similar ways. They’ve certainly remained materially, economically, on a par. But they’ve also developed some really profound institutional differences. And we see that very clearly in the current crisis, whether you look at banking regulation or healthcare. Canada looks to be in a stronger position than the United States.

It’s a global economy now and not just domestic. The G8 will meet in Huntsville, Ontario next year; where does Canada rank and how do you think we will fair amongst other world economies?

Ferguson: Well I think Canada is in the strongest position it’s been in, perhaps, internationally and in all of its history because I think Canadians can legitimately say that they’ve conducted financial regulation in a better way than the U.S.  Given Canada’s wealth in terms of resources, it doesn’t have the kind of fiscal problems that are going to attack nearly all the other members of the G8. Canada’s is the only public debt that isn’t soaring up towards 100% of GDP in the next ten years. So it’s a time when Canadians can perhaps legitimately put aside their historic inferiority complex and walk tall, because Canada’s institutions look like they’ve done quite well in the last ten years, better certainly than those of the United States. The problem of course is that the world is changing so rapidly that the G8 signifies less as an institution than the G20. And it’s striking that all the discussion in the American press is of the G20 in Pittsburgh rather than the G8.

Throughout history, time and the geography of the world we have been plagued by many wars. What is your opinion on war and in particular Afghanistan and Iraq?

Well I’ve written about American Empire and explored the question of the legitimacy of military action in a book called Colossus, which was published in 2004. I made it fairly clear that I don’t regard war as always an illegitimate evil. I’m not a pacifist in that sense. Sometimes war is necessary—necessary of course in the case of an act of aggression which must be resisted, but it can also be necessary where preemption or prevention is preferable to waiting to be attacked. The United States certainly had no alternative but to take military action in Afghanistan after 9/11. Where it had a choice, by contrast, in the case of Iraq. I think, with the benefit of hindsight, it might have made more sense to focus on Afghanistan and not to invade Iraq. The benefits of that invasion of Iraq seem at this point to be exceeded by the costs not only in terms of money but also in terms of human life.

On the other hand, it’s quite hard to see a very good future for Iraq or, indeed, that region if, if the status quo with Saddam in power had simply been left in place. So there wasn’t an easy, happy alternative. It was a choice between two evils. But I must say that I think at this point, knowing what we know, this is not, on balance, a good decision, not least because overthrowing Saddam Hussein greatly strengthened the relative power of Iran. And I think the Bush administration underestimated that consequence of their action. Afghanistan is the simpler case as I think I’ve already said. It would be of course completely insane to abandon the effort that’s currently being made in Afghanistan to create a stable government there. To allow the Taliban to come back into power in Afghanistan would be a complete disaster and anybody who thinks that that’s an option must be suffering from some kind of amnesia.

You often speak of “Chimerica” referring to America’s relationship with China please explain:

Well China’s doing better than almost any economy in the world in terms of output. Its economy is one of the few that’s growing strongly this year.  China’s growth of course is still way down compared with the pre-crisis period.  It’s almost been cut in half, so one shouldn’t exaggerate the achievement. This still a very dramatic slowdown in relative terms and China faces at least three major problems. Right here and now the first problem is that by powering an economic recovery with a very large-scale state infrastructure program and very loose credit conditions, the Chinese have created something of a bubble in their own stock market which is now deflating rapidly. The second problem is that they’ve, by pursuing a strategy of export-led growth, accumulated 2 trillion dollars’ worth of international reserves, a very large proportion of them denominated in US dollars, which doesn’t look like the greatest investment in history. And the third problem that they have is that their rapid growth over the past 20 years has created a certain mismatch between their political system (still a one-party state) and their social system, which is changing very rapidly with the emergence of the middle class and indeed a super-rich elite. Historically that’s a pretty difficult combination: political stagnation and rapid social change. So I think China’s economic miracle is something that conceals at least three serious structural problems. Over the long run, they need to develop their own consumer society. They need to become less reliant on exports. They need to make their own income distribution more equal. But these things can’t be done overnight. In the long run they also have major demographic problems because of the one-child policy. And so over a 20-year timeframe, China’s prospects aren’t actually quite so rosy.

Using some of his own verbiage I asked Ferguson to tell me about “Chindia”:

He laughs on goes on to say: Well in some ways India resembles the tortoise in the story of “The Tortoise and the Hare” because China would represent the hare that zooms ahead in the early part of the race, but the tortoise, which moves more slowly, ultimately wins that race. And I think because India has a democracy, and it has the rule of law, and in many ways it relies less on government and more on the market. Its long-run prospects look more appealing. If India could address its infrastructural problem the way the Chinese have addressed theirs, they would be I think, a huge payoff.  But it’s hard to build a whole new system of highways, or high-speed rail links, if you have meaningful property rights. In China, you just tell the peasants, “Piss off, we’re building a new, new highway here.” You can’t really do that in India because the peasants say, “No, you piss off because this is our land.”  So there’s a big difference there. I have a relatively optimistic long-run view of India’s trajectory. I think over a 50-year time horizon, things are looking good. Short-run, it’s not going to grow, as fast as China and from that point of view, we shouldn’t expect the kind of returns of investment that may be possible in China now.

In 2008, Allen Lane published his most recent book, The Ascent of Money: A Financial History of the World that he also presented as a PBS Special in the United States and on Channel 4 in Great Britain. Google has also chose to broadcast the video throughout the Internet making the author and the well-authored book ‘The Ascent of Money’ all that much more popular.

Niall believes that television and Internet will have a more vast reach, but books are important; after all it’s just one way I can make a living by selling some books but getting the reach is as important; after all I am still just a Scottish professor who is only asking questions and learning more to teach better and sharing the wealth of that knowledge is what I do best.

“When I stop asking questions to satisfy even my self than that will be the day I stop learning and also seize being an historian and human, I suppose”.

The Ascent of Money is a new comprehensive four-part series presents like thee epic film about money and the history of the global economic system. Niall Ferguson says, “I want to reveal financial history as the essential back-story behind all history. From ancient Mesopotamia, right down to the present the day, the ascent of money has been an indispensable part of the ascent of man.”