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Summer books of 2021: Economics

The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations
by Philippe Aghion, Céline Antonin and Simon Bunel, translated by Jodie Cohen-Tanugi, Belknap Press $35/£28.95/€31.50

In this important book, Philippe Aghion of the Collège de France and the London School of Economics and two collaborators elucidate research on Joseph Schumpeter’s seminal idea of “creative destruction”. This rests on three foundations: first, “innovation and diffusion of knowledge are at the heart of the growth process”; second, “innovators are motivated by the possibility of lucrative monopoly”; and, finally, innovation threatens incumbents, who will fight to thwart it.

Economics in One Virus: An Introduction to Economic Reasoning through Covid-19
by Ryan A Bourne, Cato £14.99

In this excellent book, Bourne of the free-market Cato Institute applies economic ideas to the issues raised by the pandemic. Among other topics, he elucidates externalities, the relationships between private behaviour and public policy, cost-benefit analysis, marginal thinking, decision-making under uncertainty, regulatory trade-offs, the value of trade, how politics determine who is rescued and why we were unprepared for such a widely recognised danger.

Innovation in Real Places: Strategies for Prosperity in an Unforgiving World
by Dan Breznitz, Oxford University Press £22.99

In this fascinating book, Breznitz, a professor at the Munk School at the University of Toronto, argues that innovation is “the only way to ensure sustained long-term economic and human-welfare growth”. But, crucially, “innovation is not invention, nor is it high-tech and the creation of new technology and gadgets”. It is “the complete process of taking new ideas and devising new or improved products and services.” This catholicism gives fascinating insights.

Value(s): Building a Better World for All
by Mark Carney, William Collins £30

Carney, the former governor of the Bank of England, has written a surprising book. It begins with an emphasis on the distinction between a market economy and a market society. It then discusses how three crises — the global financial crisis, the Covid-19 crisis and the climate crisis — challenge us. Finally, it is a call to recognise the value of values, among which are “responsibility, fairness, integrity, dynamism, solidarity and resilience”.

The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions
by Chuck Collins, Polity £50/€56.50

In this fascinating book, Collins, a man who gave an inherited fortune away, describes in detail the web of legal protections — tax havens, trusts, shell companies, even charitable foundations — constructed by clever and unprincipled members of the wealth defence industry, to protect vast fortunes, themselves frequently the product of fraud, corruption and outright gangsterism. Read and weep.

An Economist’s Lessons on Happiness: Farewell Dismal Science!
by Richard A Easterlin, Springer £9.99

Does money buy you happiness? Richard Easterlin, the grandfather of “happiness economics”, has long argued it does not. He also insists that we can measure happiness and, once this is done, it is the government’s job to promote it, rather than national income. This is an increasingly widely shared belief. But it is worth noting that, according to the World Happiness Report, the happiest countries are all prosperous western democracies.

Religion and the Rise of Capitalism
by Benjamin M Friedman, Knopf £37.50

Harvard’s Friedman tackles the relationship between religion and the rise of capitalism, on which the German sociologist Max Weber wrote in the early 20th century. Friedman makes two particularly important points: first, 18th-century religious belief in the possibility of betterment on earth suffused early economics; and, second, the idea that socialism (or, worse, communism) was simultaneously hostile to Christianity and capitalism has created the potent ideological alliance seen in contemporary US conservatism.

Rescue: From Global Crisis to a Better World
by Ian Goldin, Sceptre £16.99

Oxford university’s Goldin argues that, pre-pandemic, the world was going to hell in a handcart: soaring inequality, rising populism and environmental disaster. But the shared catastrophe of the pandemic might rescue us. “The task now,” he says, “is to turn the reactive responses to the health and economic emergencies into a proactive set of policies and actions to create an inclusive and sustainable world of shared prosperity.” It is an optimistic vision. Will it happen?

Tell us what you think

What are your favourites from this list — and what books have we missed? Tell us in the comments below

#We Are Rent: Capitalism, Cannibalism and Why We Must Outlaw Free Riding
by Fred Harrison, Land Research Trust £14

As one of the leading contemporary devotees of Henry George, Harrison is, unlike others who think themselves such, a genuinely heterodox thinker. George, an influential 19th-century writer, emphasised the dire results of the privatisation of land, which created a class of rent-extracting parasites. Harrison has the same underlying idea but broadens it. Rent-seeking, he argues, is the great destroyer of civilisations. He is not wrong.

Noise: A Flaw in Human Judgment
by Daniel Kahneman, Olivier Sibony and Cass R Sunstein, William Collins £25/Little, Brown Spark $32

The Nobel laureate Kahneman has co-authored with Sibony, of HEC Paris, and Sunstein of Harvard, a fascinating book on “noise”, defined as “the unwanted variability of judgments, and there is too much of it.” Noise is what is left when bias has been eliminated. It “is variability in judgments that should be identical.” Noise creates mistakes, sometimes ones of enormous magnitude. It is hard to eliminate. But we can try. But, first, we must recognise its importance.

Freedom from the Market: America’s Fight to Liberate Itself from the Grip of the Invisible Hand
by Mike Konczal, The New Press £18.99

The US and, to a much lesser extent, other high-income democracies are in the midst of one of those historic battles over the role and limits of markets, as they were in the 1930s and again in the 1980s. The Roosevelt Institute’s Konczal is one of the warriors in this fight, arguing fiercely for the need to set much narrower limits on what is left to markets than has been the case in recent decades. A powerful polemic.

The Next Money Crash — And a Reconstruction Blueprint
by Uli Kortsch (ed.), iUniverse £20.95

This collection of essays starts from a simple and unquestionably correct point: our monetary system, built as it is on debt created by profit-seeking private businesses, is fundamentally fragile. To remedy that fragility, it has required ever-greater support and regulation by governments and central banks. This creates huge moral hazard and so encourages the creation of ever more debt. We do need a better system. This book explains why and how it might finally happen.

Mission Economy: A Moonshot Guide to Changing Capitalism
by Mariana Mazzucato, Allen Lane £20

This book is by an influential thinker on an important topic at a time when trust in direction by governments has risen greatly relative to trust in decentralised competition within markets. Mazzucato recommends goal-oriented innovation as the way forward for the world. Personally, I am highly sceptical. But others need to make up their own minds about these important arguments.

Bettering Humanomics: A New, and Old, Approach to Economic Science
by Deirdre Nansen McCloskey, University of Chicago Press $30

McCloskey is a unique figure in economics. In this short book, she summarises her creed: this is, quite simply, that humans are not machines. A social science, economics, must embrace the humanities, which study what humans think about themselves. It is our ideas, not institutions or technology, that created the modern world. In sum, “we need a better economics, a bettering humanomics, an economics with the humans left in.”

What We Owe Each Other: A New Social Contract
by Minouche Shafik, The Bodley Head £18.99

Shafik is an insider, turned radical. She is director of the London School of Economics and previously held senior positions at the World Bank, the UK’s Department for International Development, the IMF and the Bank of England. In this intelligent and lucid book, she calls for a new social contract based on three principles: security for all; investment in capability; and efficient and fair sharing of risks.

How China Escaped Shock Therapy: The Market Reform Debate
by Isabella M Weber, Routledge £29.99

China’s advance has been the transformative economic story of the past four decades. But why did China adopt its incremental strategy of “reform and opening up”? The German-born Weber, now at Amherst, provides a well-researched answer: the Chinese state “uses the market as a tool in the pursuit of its larger development goals”. Above all, by eschewing “shock therapy”, it sought to protect “the economy’s commanding heights” from destabilising change.

Summer Books 2021

All this week, FT writers and critics share their favourites. Some highlights are:

Monday: Business by Andrew Hill
Tuesday: Economics by Martin Wolf
Wednesday: History by Tony Barber
Thursday: Politics by Gideon Rachman
Friday: Fiction by Laura Battle
Saturday: Critics’ choice

Join our online book group on Facebook at FT Books Café


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