Need to read
So many books, so little time. Economics correspondent Adam Creighton is here to help with 10 books you need to read to cope with the dismal science.
Adam Creighton's 10 best-ever economics books
Lords of Finance: The Bankers Who Broke the World
Liaquat Ahamed, Random House, 2011
The global financial crisis generated a library of books on economics and finance aimed at dissecting the biggest recession since the 1930s. Ahamed shows how the controversial methods employed by central banks today – injecting unprecedented sums of newly created money into financial systems – were informed by the series of disastrous decisions taken by the central bankers in Britain, France, Germany and the US in the 1920s. The obsession of both the Bank of England and fledgling US Federal Reserve with returning to the gold standard after the destruction of World War I caused great financial instability and at least exacerbated, if not caused, the Great Depression.
The Power of Gold: The History of an Obsession
Peter Bernstein, John Wiley, 2012
Among the most useless of metals, gold has captivated mankind from ancient times. Bernstein’s erudite and eloquent history tracks the precious metal’s transition from monarchs’ jewellery of choice to the bedrock of the global financial system by the late 19th century. The obsession has had a profound impact on the course of history outside monetary affairs, being the crucial impetus for European conquest of the Americas and even the economic development of Australia. After the GFC and the loss of confidence in paper money, the book’s analysis of the pre-1971 gold standard has taken on renewed relevance.
The Wealth and Poverty of Nations: Why Some are So Rich and Some So Poor
David Landes, WW Norton, 1999
This masterly work uses the historical record rather than theory to try to answer the most important question in economics: why do some nations grow rich and others remain poor? Taking a broadly chronological and thematic approach, the book explains why European civilisation ultimately prospered and came to dominate. China started out as a leader, but became insular and sclerotic. Different attitudes to innovation, the competitive tension of nearby countries, and a coastline conducive to exploration were all in Europe’s favour. Landes includes fascinating details on Switzerland’s journey from farmers’ backwater to watchmaker to the world, and Japan’s trenchant resistance, then embrace, of foreign trade, among many others.
The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers
Robert Heilbroner, Simon and Schuster, 2011
This is the most famous collection of biographies of the great economists, from the French physiocrats and Adam Smith in the late 18th century, to John Maynard Keynes and Joseph Schumpeter in the middle of the 20th century. Published originally in 1953, the book misses the economic giants of the latter 20th century, and its selection of economists is a little biased towards those who advocate a larger role for the state, such as Karl Marx. But the quality of Heilbroner’s prose, the level of scholarship and the fact no book has emerged to replace it, make it essential for anyone interested in the history of ideas.
The Bankers’ New Clothes: What’s Wrong with Banking and What to do About It
Anat Admati and Martin Hellwig, Princeton University Press, 2014
The authors make a powerful case for further reform of the global financial system. Their book exposes the fallacies put by banks in the wake of the GFC to prevent any reduction in financial leverage (the ratio of bank assets to shareholders’ equity). Admati and Hellwig show that the steady increase in leverage since the 1980s has led to greater bank profits and boosted banker’s pay but continues to expose taxpayers to massive losses in case asset prices fall. It is depressing but fascinating to learn how the lobbying power of financial institutions has so successfully stymied changes in the public interest and captured regulators.
A Shorter History of Australia
Geoffrey Blainey, Random House Australia, 2014
This is, perhaps, the best short general history of Australia from pre-white settlement to the present. It is eloquent and accessible, focusing on how the lives of ordinary Australians have changed rather than the minutiae of politics. Blainey is part of a generation of historians who started to give more weight to the impact of economic forces on political developments. He tells how the gold rush of the 1850s, the great depressions of the 1890s and 1930s, the disruption of the two world wars and the great waves of subsequent immigration are the most formative economic events in Australian history.
Economics in One Lesson
Henry Hazlitt, Crown, 1946
Hazlitt was a renowned American journalist after World War II. He was highly sceptical of government and a champion of free markets in an age increasingly dominated by bureaucracy, even in the relatively free-market US. This book summarises the damage even well-meaning public policy can cause to fairness and efficiency. Inspired by 19th century French economist Frederic Bastiat’s pamphlets, but still highly relevant today, Hazlitt debunks arguments in favour of corporate welfare, minimum wages, Keynesian pump-priming, tariffs, and the superiority of spending over saving.
In Defence of Global Capitalism
Johan Norberg , Cato, 2001
Norberg’s primer on the benefits of free markets is, perhaps, the best of the past 20 years. and probably the most influential. He shows how free enterprise has lifted billions out of poverty, and led to the liberation and education of women from their earlier positions of servitude. Written before the GFC, in hindsight his book evinces (understandably) a little too much confidence in the efficiency and efficacy of the global financial system, but it still blasts a hole in leading left-wing arguments that seek to restrict trade and extend the scope of government and taxation.
Vienna & Chicago, Friends or Foes? A Tale of Two Schools of Free-Market Economics
Mark Skousen, Capital Press, 2005
“Right-wing economist” is a term of derision among antiglobalisation, anti-free market commentators. Skousen’s book shows how little meaning it contains. The principles developed by thinkers such as Gary Becker and Milton Friedman at the University of Chicago after World War II often conflict with those that emerged in Vienna, associated with other “rightwing” economists Frederick Hayek and Ludwig Mises. Both schools champion free markets but Vienna is even more sceptical of government, bureaucrats, and banks propped up by implicit guarantees. “Austrian”economics has enjoyed a renaissance since the GFC.
Capital in the Twenty-First Century
Thomas Piketty, The Belknap Press, 2014
Piketty’s magisterial mix of economics, statistics and history is an unlikely bestseller, detailing the ebb and flow of income and wealth inequality from 18th century France to 21st century America. It will become the economic manual for 21st century progressives, as Marx’s Das Kapital was for socialists in the 19th century. Piketty’s simplistic proposition – that the rate of return on wealth is permanently greater than the growth rate of the economy – foreshadows a world of rising inequality that makes a mockery of equality of opportunity. However undesirable or unrealistic his policy suggestions – such as a global tax on wealth – his empirical analysis is compelling.