Every year a slew of new economics books are published. But which ones are actually worth reading? We've picked out some of the books that have recently hit the shelves or are out in the next few months and explain what we like about them and why they're worth reading. (We've also included economics books that are new in paperback).
Economics in the Age of COVID-19
by Joshua Gans
"We are living in a moment of unprecedented crisis. The international spread of COVID-19 and the measures taken by governments to halt transmission of the virus are happening at a scale unlike anything seen in our lifetimes. As we grapple with the implications of social distancing and the tragic loss of human life, we need resources to help us make sense of this crisis. The MIT Press mission challenges us to meet the need for reliable information at such a time. In this spirit, we offer a new book, Economics in the Age of COVID-19 by Joshua Gans."
Capital and Ideology
by Thomas Piketty
"I find the study of belief systems to be a lot more fun than calculating ratios between deciles of income." —Thomas Piketty.
Following on from his bestselling (and often recommended on Five Books) Capital in the Twenty-First Century, Thomas Piketty turns his attention in his latest book to the grand forces of history and politics and how they underpin the global economy. Piketty argues for a new "participatory" socialism.
We interviewed French economist Thomas Piketty on the books that inspired Capital and Ideology.
Economics in Two Lessons
by John Quiggin
"If you understand opportunity cost—that the price of something really is what you have to give up to get it—you’re further along than the vast majority of economics graduates and quite a few professional economists" —John Quiggin.
In 1946, a book appeared called Economics in One Lesson by American journalist Henry Hazlitt. It's been in print ever since, and sold more than one million copies. Economics in Two Lessons is Australian economist John Quiggin's effort to explain what economics is about from a 21st century perspective. Hazlitt's one lesson, Quiggin argues, did not give the whole picture, "So, we need Economics in Two Lessons."
A highly respected academic economist, John Quiggin recommended the Best Books for Learning Economics for us.
Radical Markets: Uprooting Capitalism and Democracy for a Just Society
by E. Glen Weyl & Eric A. Posner
Glen, rather than going through the technical mechanisms that you set out in the book, I thought it might be better to approach things from a slightly different angle and just talk about some more general themes…
Just before we get started, I don’t know if you’re aware, but the book ended up launching a global social movement, and I’m now spending a lot of time doing that. I’ve moved on from being a researcher. I’m an advisor to Microsoft’s senior leaders about geopolitics and macroeconomics. So, my whole outlook has changed quite a bit as a result of that.
What I believe now is like fairly distinct from what’s in the book, even though, obviously, I still think there are some great elements of ideas and technologies in there. I don’t have the same perspective that I had when I wrote the book, I’m not quite that person anymore.
That suits us fine. Can you tell us a bit about RadicalxChange and your role at Microsoft? Are these two hats very different, or are they basically the same shape?
The first thing to say is that I’m really not an academic anymore. I do co-author academic papers because there are previous collaborators of mine who are still in the academic world and want to publish academic papers and I don’t want to cut them off at the knees, but I don’t care about publishing papers in academic journals anymore. I’m not really in the academy at all anymore.
The second thing to say is that all of my roles integrate with each other and they overlap and yet they also contrast. So, at Microsoft, my job is to advise the senior leaders about geopolitics, macroeconomics and the future of technology and I draw on a lot of the experiences and insights coming out of RadicalxChange to do that. But my perspective is to think about Microsoft’s goals and interests and mission, so it’s distinct. I also lead a team there of speculative design-futurist types, who try to imagine a different future for technology, that’s less about AI and human replacement and more about complementing and enhancing human creativity. That also has an overlap with Microsoft, and with RadicalxChange’s goals, but it’s certainly not at the core of RadicalxChange—it’s much more technologically oriented.
Do you have a vision of society that you would like to see? In the book you are trying to address particular things that are wrong with contemporary society. But do you have a vision about where you want to get to and what stuff will look like?
Well, I don’t think that one can ever perfectly design the future and attempts to do so almost always make it sterile and worse than it was before. But I do think that what you can offer is certain elements that you think will be important to the future shape of things. In the same way that I wouldn’t have wanted Steve Jobs to have said, ‘Here’s precisely what the iPhone is going to be doing for you in 10 years’, but he thought that it was an important platform on which other people could build interesting, complex and diverse things.
So, I certainly have a number of elements that I think are going to be critical, and maybe even necessary, if we want to have a hopeful future, but because that future will be pluralistic and diverse and bring in all sorts of different perspectives, it’s not one I can fully describe. I do love working with people on Science Fiction to imagine particular instantiations of one thing that could incorporate those elements.
I am very much focused on trying to give plausible, feasible, creative, positive visions of the future and not just critiques. My focus is mostly on that but, on the other hand, I don’t think we can be entirely prescriptive, either.
I do remember one thing very clearly from the book, which struck me. It’s when you’re talking about having property under constant auction through Common Ownership Self-Assessed Taxes. Part of the case you make is that it would be great to live in a world where private property cease to be of huge importance because it could always be bought by someone else. We would have to focus our energies on other, more important things. It’s a very radical, almost an anarchist vision of the future.
My basic view is that lots of people in the cultural-theory world talk about Hegelian synthesis and dialectics, but they almost never practice it. They spend all their time just denouncing neo-liberalism.
And what we actually try to do in RadicalxChange and in this book is genuinely practice Hegelian synthesis, to take very seriously both sides of the dialectic in many of these debates and actually to produce something that could be the seed of a new paradigm. And reducing the importance of private property is one element of that, but moving beyond the standard ways that democracy works is another element. One way I like to express it is that we tend to view democracy and markets as opposing, checking forces, based on opposite principles and RadicalxChange tries, instead, to say that, in order for democracy to be successful, you must incorporate markets in the core of how it operates. In order for markets to be successful, democracy must be at the centre of how markets are organized.
And can you talk a bit about your intellectual roots. You mentioned dialectics. I know you were a socialist for a while. I think you may even claim still to be one, I’m not sure. But you were also a devotee of Ayn Rand for a while. Are these the two poles of your own internal dialectic?
Yes. That’s one dialectic. There’s also a dialectic between the fact that I spent a lot of time as an on-the-ground political organizer, but also as an intellectual economist in an environment that has more scorn for politics than for just about anything else. I was a consummate technocrat and I was a rabble-rouser. I’ve been both of those things. The way we make progress is by seeing both sides of things.
Audrey Tang is someone very central to the RadicalxChange movement. She’s the Digital Minister of Taiwan. Someone recently asked her where Taiwan was going as a nation and she said, ‘Well physically it’s going up because it’s at the continental shelf between Asia and North America and the friction between those is constantly causing Taiwan to rise inches every year. It also causes earthquakes and Taiwan benefits from those earthquakes because it takes the best of the shelves, the best of the ideologies and it rises.’ And I think that that is what RadicalxChange is doing as well.
Could you tell us a bit about how RadicalxChange started and what it’s doing in terms of its advocacy and engagement?
RadicalxChange was inspired by the book. Basically, what happened was that there was just a bunch of people who had read the book and we’re coming to me for advice or thoughts about how they might use some of the ideas in business or even in government. And Vitalik Buterin, who is the founder of Ethereum, had gotten really interested in the ideas—that was part of the reason all these people got interested—and said, ‘You should really have a conference to bring all these people together.’
Once I got on to that idea I started thinking the problem was that, if this is just a bunch of tech people doing something, it was going to completely fail, as it was really a social thing. I decided we needed to get a much broader range of folks and we started to bring together a team. Then people started saying, ‘We should have local groups like this.’ And, so, local chapters started up. Anyways, it’s really snowballed. It was founded in late 2018. And now we have about a hundred local groups around the world. We’ve had two global conferences and we’re working with more than a dozen governments and political parties across the world.
The ideas have been used in everything from the way in which Taiwan has really become the most successful country in the world, not just in dealing with Covid, but with other recent crisis, to the way the State of Colorado is governed, to open source software funding, to the design of some of those popular video games. It’s really awesome to be doing something that is touching an increasing range of aspects of the world’s life.
Could you elaborate a bit on what on what you’ve done with Colorado and perhaps just touch on how Taiwan’s Covid response has been influenced by your work?
In Colorado we’ve done several things. First, the state legislature used quadratic voting to allocate its discretionary budget last year. And this year it moved into the executive branch, so the executive is now using quadratic voting to resolve disputes among different parts of the executive about how to allocate their resources. We have also been working locally in Colorado to disperse economic aid money using something called quadratic funding, which is related to quadratic voting, but developed after the book came out.
We’re also starting to work with them on using what was called in the book COST [Common Ownership Self-Assessed Taxes] what we’re now calling Self-Assessed Licenses Sold at Auction, or SALSAs to give out marijuana licences. Anyway, we’ve got a variety of engagements there.
In Taiwan, we’ve come to work extremely closely with Audrey Tang, their digital minister who’s just a remarkable person and, honestly, a much more interesting subject than me. She has been using quadratic voting for administering national hackathons—where people get together and try to create technological solutions to social problems.
Audrey has used quadratic voting to score those competitions and she’s also used another idea that we’re very into, called ‘data coalitions’ or ‘data cooperatives’—they’re sort-of data labour unions—to organize those services. Taiwan’s response to Covid was, to a large extent, driven by these civic-technology developments and they were the most successful country in the world. They had the lowest infection and death rate and the smallest impact on their economy. A lot of that was related to their harnessing of these civic-technology approaches.
And have you worked with mainstream parties in Europe, the US, Australia or Japan or anywhere else, at a national level?
Yes. We’re starting to. Probably the closest collaboration we’ve had has been with the Canadian Conservative Party. There’s a woman named Michelle Rempel Garner, who is the most popular Member of Parliament for the Canadian Conservative Party. She represents a part of Calgary, Alberta, and—it’s ended up actually getting really slowed down by the whole Covid thing—she proposed legislation for data labour-unions in the Canadian Parliament and has been working with her party on trying to use quadratic voting.
We’re also working with the Swiss Green-Liberal Party and the Liberal Party, with the German Christian Democrats, as well as the Free Democrats and with some Democrats in the United States, with the center-left party in Colombia, which is the called the Green Party, and with the D66 party in the Netherlands—they’re like the Liberal Democrats in the UK, I would say. So, we’ve really been working with quite a range of political actors across much of the world.
Are there particular areas of your work, or ideas, that they tend to be particularly interested in?
Quadratic voting is probably the one that gets the most consistent interest, then the data stuff, then probably some of the antitrust-type things and probably the one that is the trickiest, but we have been making some progress on it, is the stuff about property.
That last one doesn’t surprise me much. Are you happy with that politically-driven sequencing of things? Or do you feel there will be limitations to what you’re trying to achieve if these things are not introduced collectively or in a particular order? Is it a problem if the stuff around property and monopolies is sent to the back of the queue?
I don’t think property and monopolies have being sent to the back of the queue. The monopolies are pretty near the front and the property stuff may come later. I don’t know that it’ll come that much later, because I actually think that the urban crisis that’s happening right now because of Covid-19 may really change the dynamic there in some important ways. My general view—and this has become even stronger since the book came out—is that these are technologies and that, in a democratic society, the appropriate way for technologies to be developed is not through technocracy, where someone designs from the top down an alternative social arrangement and engineers it for everyone else. Rather, the role of a designer is to offer, humbly, designs to be deployed by the social sector, which then actually finds the recombination of them that is most valuable.
I’m quite confident that that will eventually incorporate the ideas around property as well, because I think they have great merit. I may not have presented them in the most effective or compelling way and my own views about the precise ways in which they would be most useful have evolved as well.
When you say that you’ve moved on from the book in terms of your own thinking, specifically, where are the major areas where you’re thinking has shifted?
Fundamentally, I think that the book tries to take really seriously and take further some of the ideas that have grown out of economic theory, related to questions of public goods, and collective value. But the problem is that economics, at a fundamental level—in a way that I didn’t fully incorporate when I was thinking about writing the book—is really premised on ignoring collective value. That’s really central to the whole structure of economics. So, the mechanisms that come out illuminate what’s missing from the standard framework. And they are themselves really interesting technologies, but they ultimately call into question their own foundations.
Let me try to give you an example. Quadratic voting is all about public goods. It takes the sum of the square roots of the tokens that an individual contributes, which is to say that it views all individuals as equally spaced atoms, each making some monetary contribution and then that becomes a collective thing. But the thing is that, of course, if public goods are prevalent in life, that will never be the case. Me and my wife are not two equally spaced atoms, spaced as far apart from each other as I am from you, or I am from someone in South Africa. We are not quite the same person, but we’re much closer to being the same person than we are to being completely distinct entities. You know what I mean?
So, once you take public goods really seriously, you have to recognize that public goods account for most value and, as a result, the actual nature of conflicts that arise between people is not about reconciling all self-interest with the public good, but rather about reconciling the pluralistic interests of different groups of people, which end up constituting individual interests in a partially overlapping way, with other people who have different sets of interests. The mechanisms in the book don’t do that. I think they’re a very important and concrete and powerful step beyond capitalism and the nation-state and that silly dichotomy, but they’re really just a start in a process of trying to move towards social systems that are truer to the richness of our shared lives.
The inequalities of contemporary societies is one of your targets in the book. I’m assuming that’s still a target.
Let me nuance that. I’m not sure that inequality the way it’s usually constructed is the best thing to focus on. Increasingly, my view is that the fundamental problem is that most value is collective. And I don’t mean globally collective in a vague way—that it’s all contained in the whole world. I mean that there are lots of groups where it’s actually the group, not the individual involved, that creates the value and that most of the problems of inequality are not fundamentally problems about some sort of economic inequality, but problems of treating that collective value as being the private property of some individual, which it’s not. What that ends up creating I don’t think of, even primarily, as economic inequality because money itself, the whole basis of talking about and measuring income, is fundamentally missing a lot of what’s going on, which is that people have to have more equal voices in, and more collective governance of, the collective value that they create.
I’m not saying I don’t think inequality is pointing at something, but I increasingly think that the standard ways in which economic inequality is thought of and measured is not a very helpful way to frame things.
And when you’re talking about value being more of a collective thing are you thinking about the growth of enterprises like Facebook, where the customers for services are also the suppliers of valuable data, or are you thinking just as much about traditional businesses where employees don’t earn something commensurate with their own contribution? Or are you thinking about activities altogether less business-related and more societal?
All of the above. The really fundamental principle we should always keep in mind is what I would call self-government, which is that when there is a collective value, or a collective need created, the people whose needs that addresses have to be the ones who govern the way in which those are addressed. It’s not enough for them to just choose among options determined by others. They have to actually be able to shape the options that serve them. Corporations violate that principle because they make private property the collective world we live in. On the other hand, I also believe that nation states violate that because nation states assign to a fixed and historically arbitrary polity control over a range of issues that usually concern only a subset of that polity, or often a superset of that polity. And, as such, they also stand in the way of self-government. So, I think we need to move, understanding both the strengths and limitations of existing institutions, towards a world where we supersede those very limited mechanisms.
You’ve achieved extraordinary things over the last couple of years with RadicalxChange. What will you be focusing on in the next two years?
There’s a really critical opportunity that we have at RadicalxChange—or maybe I should even say ‘calling’ rather than ‘opportunity’, as it’s not necessarily something we would want—which is that the western liberal democracies really had a catastrophic experience with this pandemic. They lost huge numbers of their population. They lost a huge amount of GDP—the latest projections suggest that the US may lose 20% of its GDP over two years. It really is a catastrophic outcome. East Asia and Australasia did far far better. They basically lost almost no one and suffered very limited economic damage. The narrative that that’s going to lead to is one that the Chinese government is going to be very happy with.
But, I think that there’s an alternative narrative and I think it’s our mission increasingly to tell that, which is that, within Asia, the most successful country by far was Taiwan. Taiwan lost a hundred times fewer people per capita than China did—and that’s even assuming that you believe the Chinese statistics. And they lost less than half as much of a fraction of GDP as China did. And they did it using these types of ideas. And, by the way, within Europe the country that did the best is the country that’s closest to our ideas, which is Estonia.
So, I think that there’s a very clear lesson here, which is that we have been incredibly arrogant in the West in how we think about ‘the end of history’, that we don’t have to keep evolving our social systems. And there are models out there that actually work and that have actually been making the kind of progress that we need to make. We need to learn from those. And we need to evolve the way we govern ourselves because, if we don’t, the alternative is bureaucratic authoritarianism in the style of the Chinese Communist Party. So, our focus is on telling that story and showing the world that there is a better way and that there is a way to formalize and transfer it to other geographic locations.
It’s a story I really believe can appeal across the political spectrum because the right is very upset about China and, to a certain extent, about Russia. And Estonia and Taiwan are on the bleeding edge of those conflicts and they’ve been incredibly successful in resisting. The left is all about Occupy and Taiwan’s digital democracy emerged from their version of the Occupy Movement, except Taiwan’s actually worked. And it’s led by Audrey Tang, who’s a leftist anarchists. And the story appeals to the center because they’ve actually managed to conquer the real issues we face, like Covid and misinformation and global warming. So, I think we have a very compelling story to tell about how we’re missing the boat on real growth in our social systems, and we need to fix that urgently.
Excellent. I think that’s probably a great place to end. Thanks a lot.
Open: The Progressive Case for Free Trade, Immigration, and Global Capital
by Kimberly Clausing
Kimberly Clausing makes the progressive case for free trade and globalisation, arguing that free trade is overwhelming beneficial. She advocates particular measures to equip workers and business to meet the challenges of a globalised economy.
“Carl’s work is about what the impact of this new wave of technology and automation is going to be on everybody’s jobs and standards of living. He does that by taking a historical perspective and looking at the Industrial Revolution. The fact is that for quite a long period there wasn’t any increase in average standards of living and indeed, as we know from literature, there was a period of great misery for lots of people as they moved from the countryside to work in the mills and so on. The question he’s asking is, ‘Is it going to be the same this time? Is history going to repeat itself?’ and ‘Are there things we can try and think about in terms of policy that will stop history repeating itself?’” Read more...
The Best Economics Books of 2019
Diane Coyle, Economist
Human Compatible: Artificial Intelligence and the Problem of Control
by Stuart Russell
Human Compatible is a book about AI written for the layperson by Stuart Russell, a professor at Berkeley and the author (along with Peter Norvig) of the top-ranked computer science/AI textbook (according to the Open Syllabus Project).
“This book is about the philosophical origins of neoliberalism in 1930s Vienna and logical positivism and how it spread globally, particularly into Anglo-Saxon and American universities, and also about the way it underpinned the philosophy of globalization that we have seen take over the world since the 1980s. It’s really interesting to understand that the ideas that we think of as ‘natural’ actually have very specific historic and cultural origins. They spread through actual social networks and institutions. The book therefore also offers insight into how you can change that public philosophy.” Read more...
The Best Economics Books of 2019
Diane Coyle, Economist
“This book is a series of rip-roaring tales about what you might classify as ‘informal’ economies in different contexts and the way that some of them work really well and some of them work really badly. The compare and contrast gives you real insights into what perhaps makes a formal, official economy work very well or very badly.” Read more...
The Best Economics Books of 2019
Diane Coyle, Economist
“This is about what social scientists call ‘social capital’, so the social assets or strengths that any community has to draw on in delivering economic improvements or quality of life etc. It’s about libraries in particular, but also other social infrastructure that enables people to meet and understand each other and have safe and inviting ways to help each other. He talks about how these are being eroded through things like library closures or parks not being maintained, or just the design of public spaces in modern cities.” Read more...
The Best Economics Books of 2019
Diane Coyle, Economist
Euro Tragedy: A Drama in Nine Acts
by Ashoka Mody
Professor Ashoka Mody, a former deputy director of the IMF's Europe department, charts the history of the EU's single currency from the birth of an idea in the 1960s, to its creation at the end of the century and the 2008-13 financial crisis, which brutally exposed the currency's weaknesses.
The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay
by Emmanuel Saez and Gabriel Zucman
Saez and Zucman lay bare the tax avoidance of the rich and suggest ways to tackle the problem in the context of a globalised economy.
The Code of Capital: How the Law Creates Wealth and Inequality
by Katharina Pistor
Katharina Pistor looks at how the law shapes the creation of capital and how this affects the distribution of wealth.
The Great Reversal: How America Gave up on Free Markets
by Thomas Philippon
Thomas Philippon argues that the central problems of the US economy are the consequences, not of globalisation, but of the increasing concentration of corporate power across the economy.
Capitalism, Alone: The Future of the System That Rules the World
by Branko Milanovic
Branko Milanovic charts the global rise of capitalism and assesses the relative merits of liberal capitalism, as it exists in the "West" and political capitalism, as exemplified by China.
Winners Take All: The Elite Charade of Changing the World
by Anand Giridharadas
Does the philanthropy of the top 1% benefit society as a whole? No, by and large, it benefits the 1%, argues Anand Giridharadas.
Unbound: How Inequality Constricts Our Economy and What We Can Do about It
by Heather Boushey
Heather Boushey argues that inequality is bad for the economy, restricting the supply of talent and ideas, leaving it dominated by monopolistic corporations and prey to financial instability.
The AI Economy: Work, Wealth and Welfare in the Robot Age
by Roger Bootle
Roger Bootle argues that our AI-dominated future is bright. We will be better off and, although a lot of jobs will disappear, plenty more will be created.
99%: Mass Impoverishment And How We Can End It
by Mark E Thomas
Mark Thomas investigates why, for an awful lot of people, the economic outlook is increasingly bleak, even though the economy is growing. He suggests ways to remedy the situation.
Schism: China, America and the Fracturing of the Global Trading System
by Paul Blustein
Paul Blustein looks at the consequences of China's accession to the WTO in 2001. He explores the impact on the global economy and the dynamics of global trade.
The Narrow Corridor: States, Societies, and the Fate of Liberty
by Daron Acemoglu and James Robinson
Daron Acemoglu and James Robinson, authors of Why Nations Fail, explore the conditions under which liberty thrives and why some countries fail to establish a stable free society.
Markets, State, and People: Economics for Public Policy
by Diane Coyle
"It’s billed as a textbook and it’s built on a course that I developed myself and have been teaching for some years. But it’s not technical and I hope is well enough written that anybody could enjoy reading it...What I try to do is demonstrate that there are some problems and some circumstances in which there isn’t a single right answer about how you do things, and there are choices and trade-offs to be made."
Narrative Economics: How Stories Go Viral & Drive Major Economic Events
by Robert J Shiller
In this book Nobel-prize winning economist Robert J Shiller looks at the influence of popular story-telling (narratives) on economic activity and explores how research in this area could improve our understanding of financial crashes and other major economic events.
Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream
by Jonathan Gruber & Simon Johnson
Jump-Starting America is the ambitious new book written by two distinguished MIT economists, Jonathan Gruber and Simon Johnson. They examine why the US economy has stagnated over the past two decades, including in the innovation sector, because of the collapse in Cold War defense spending. They propose their nationwide plan to “jump-start” it again, creating more jobs and reducing inequality in the process.
As the full title — Jump-Starting America: How Breakthrough Science can Revive Economic Growth and the American Dream — indicates, this book is a call to action for strategic investing in science and technology. This would amount to reversing the federal cuts undertaken in the 1980s, and if orchestrated in the right way, returning (or even exceeding) postwar levels of economic prosperity.
Jonathan Gruber spoke to Five Books about the best books on public policy.
Simon Johnson spoke to Five Books about the best books on why economic history matters.
Straight Talk on Trade: Ideas for a Sane World Economy
by Dani Rodrik
Harvard Economist Dani Rodrik looks at how globalisation is not working in the way it should and suggests ways to overcome our current social, political and economic problems.
