How I wish every economist would read these books! British Economist John Kay’s five books recommendations are simply phenomenal. (Of course I have read three of the five so I may be biased). I’ve been meaning to follow up my earlier history book recommendations with my other favorite subjects, like Economics, so Mr. kay has given me a good opportunity to piggy back his recommendations and even add a few more of my own.
First off, stop reading this post and go read his interview. It’s suburb.
Welcome back. Kay’s first book, Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics by Eric D. Beinhocker, is simple brilliant. It’s a tour de force of clear thinking, and the best introduction to the modern science of economics around—or rather what the modern science should be if we would only step outside some of our 19th century neoliberal mindsets.
I had quite a chuckle when Kay stated he planned to do a hatchet job on it and then discovered that “it was actually quite good” I remember when I first picked it up from the stacks of Powell’s a few years ago and also thinking it sounded ridiculous, and then read a few pages and found myself fascinated. The book is brilliant and serves to bring you completely up to date with modern economic thought. In particular I found the discussion of computer modeled economies to be completely enlightening and damning proof of simplistic economic conceits.
Although Beinhocker’s book does a decent job of addressing current economic thought I do think it is important for a student to have a solid foundation of that thought from which to build from. For example it would be impossible to address modern economics without an understanding of the two most important–and influential–Economics book ever written, Adam Smith’s The Wealth of Nations, and Karl Marx’s Capital. Any serious student must be conversant with the originals; familiar with their key concepts and examples. But then one could make the same argument for Parson Malthus, Thorstein Veblen, John Maynard Keynes, or Joseph Schumpter. And I agree, which is why I strongly recommend Robert Heilbronner’s The Worldly Philosophers as a helpful reference book. A newer similar work, Todd G. Buchholz’s New Ideas from Dead Economists, arguably does an even more comprehensive job and even includes a good discussion of public choice theory, but I am more partial to Heilbonner’s mini-biographic style.
One additional recommendation that I could add would be to understand how economic thinking in everyday life. I believe that a truly comprehensive understanding must incorporate both the macro big-picture theoretical view as well as a deeper micro level analysis. That is where I would add Tim Hartman’s book, The Undercover Economist. Hartman is a great start for understanding how the larger theories play themselves out in the real world.
To return to Kay’s recommendations he next lauds business book, Good Strategy/Bad Strategy, which I haven’t read yet, but I did just order it. Kay’s next choice is the journalist Michael Lewis. Mr. Lewis is always a great writer and doesn’t disappoint here as he details the great financial engineered CDOs doomsday machine that that lead to our current Great Recession. He followed that up with Boomerang: Travels in the New Third World, where he tours the countries most impacted by the great unwinding–Greece, Germany, Ireland. Along the way he provides a wonderful commentary on the colorful cultural attitudes that are shaping our modern interconnected world.
Finally, Key moves to two works that are very dear to my heart, The late David Landes’s Wealth and Poverty of Nations, and Jared Diamond’s Guns, Germs, and Steel. Both of these works have been very influential in my own intellectual development. I have lauded Diamond’s great synopsis of human History numerous times (including on this blog), so I won’t again here. But I second Key’s recommendations. Landes’s has been chastised for a euro-centric perspective and even cites Webber’s famous protestant work ethic as a cultural causal agent of European development, but he makes a very persuasive case that deserves understanding.
I do have to stop here and make a comment that as wonderful as all of these works are, they are all missing a critical analysis of the most important human institution ever invented–cities. Economies do not really exist without cities, and certainly modern economies do not. We need to understand how they function and here it is Jane Jacobs who shows us the way. Although she is more famous for her earlier work The Life and Death of the American City, it is her later masterpiece The Economies of Cities that she established herself as a preeminent economic thinker. Our understandings of how development–and critically innovation–happen owe much to her elegant work.
Another important idea that is noticeably missing–at least explicitly–from Kay’s recommendations is that of cultural capital. Culture is critically important to understanding how our modern economy and its composite institutions function. The journalist Michael Lewis understands that in his works, which make them so insightful, but a good economist should also have a proper academic tool set with which to understand how culture shapes our institutions. Here I would recommend beginning with the ideas of two books, Veblin’s classic Theory of the Leisure Class, and the eminent French sociologist Bourde’s La Distinction. (In full disclosure mode I should state that I have only read the first one. I gave a good effort last year at the second but basically resorted to the crib sheet version; among which I recommend this crib from the author himself; although there is much great commentary out there).
Throughout his interview Kay’s characterization of economics and business as being the last realms of Modernism is spot on, although likely heavily influenced by a book he does not mention, but seems to pervade his thinking, Seeing like a State. (I have mentioned this book in the past, but I will be dedicating a future solo review to it in the future, it’s a phenomenal read).
I suppose I should take the opportunity here to also recommend acquainting oneself with Friedrich Hayak‘s thinking, and the entire Austrian school for that matter. But any student who reads far enough in the literature will get to that on their own accord. It is not my purpose here to provide a comprehensive reading list, but rather a good introduction to understanding the economics of our world today. These books will take you a long way.