My editor asked some of us to write a top ten list of books in certain categories for people to consider when picking a book to read over the summer. My list is not so much a top ten of all time or even a top ten that I have read, but more of a top ten or twelve I have read in the last two years (but in no particular order). The links without any review are books that I read some time ago or that I have purchased but not yet had a chance to read. Since this is summer reading I tried to stay away from books that were overly academic.
Please leave comments about books you would suggest others read. I’ll be happy to update by list with suggestions I get from readers.
The Shock Doctrine: The Rise of Disaster Capitalism by Naomi Klein
In The Shock Doctrine, Naomi Klein brilliantly proposes a compelling thesis that attacks the prevailing fable of free market infallibility. Klein suggests that politicians and corporations who follow Milton Friedman’s “laissez-faire” approach to business and government use disasters as mechanisms to spur radial changes in economic and government policy while people are in shock because the citizenry will be too distracted by immediate concerns to resist changes. Using various case studies and in-depth research, Klein shows that today’s “disaster capitalism” has taken the theory of creative destruction to a whole new level. Central to Klein’s thesis is the suggestion that our political leaders no longer see the difference between private and public interests, in so far as they seem to believe that what benefits the private sector will invariably benefit the public sector since the market will always find an equilibrium that provides for the public goods.
As much as the book is a critique of the shock doctrine, one has to wish that President Obama had used the shock of the financial crisis to create rapid and sweeping financial changes instead of waiting eighteen months. I think it would be fair to say that the changes that could have been wrought in early 2009 would have been more rigorous and far reaching than the changes we have yet to see.
Confessions of an Economic Hit Man by John Perkins
Perkins wrote that he worked as an Economic Hit Man or EHM during the 1970s. As an EHM Perkins travelled around the world to various developing countries and helped to cook the books on the projected benefits of various development projects. By doing this, he claims he was able to get foreign governments to accept billion in loans from NGO such as the World Bank to build dams, and other large infrastructure projects. The loans of course were only given if the construction jobs went to U.S. companies.
When the projects failed to spur the innovation or development promised the nations were still on the hook for the loans and had to either borrow more money for more projects or succumb to various austerity measures. In the end, it was the citizenry of the developing countries who paid the price.
Globalization and its Discontents by Joseph Stiglitz
For those old enough to remember the Seattle WTO protests, Stiglitz’s book provides a rich resource for those that want to clearly understand what the protests were about. Besides being a respected academic, Stiglitz served on President Clinton’s council of Economic Advisors and he also spent three years as the Chief Economist and Senior Vice President of the World Bank. This experience lends credence to the book which does a phenomenal job of explaining the functions, powers, and problems of the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO). Stiglitz does not demand an end to globalization or progress but he does make a strong argument for altering the process—specifically how the IMF, World Bank and WTO operate.
The book is a little old but the message is still fresh. And while I haven’t read it yet myself, I am sure his 2007 book, Making Globalization Work, is just as good.
Bad Money by Kevin Phillips
Published just prior to the worst failures in our financial system in 2008, Phillips provides a stark warning that came a little too late. Bad Money refers most to the flawed financial products and general malfeasance of the financial industry and the regulators they have captured. I was literally reading this book in June of 2008 so when I read the first paragraph I felt a pit in my stomach as I could see that this was becoming less a warning and more a eulogy for the U.S.’s overgrown financial sector.
Mad Money: When Markets Outgrow Governments by Susan Strange
Strange was an innovative financial thinker whose prescient about the problems inherent within an ever growing financial system with an ever shrinking regulatory structure should be held in awe by those of us reading her books today. In 1998, she managed to predict that our financial leaders and our policy makers would eventually become so greedy and so confident that they would make a financial bet so big that states could not easily bring about recovery. In this book, she doesn’t speak about it as a possibility as much as inevitability because large multi-national corporations have managed to create an economic and political framework that allows them to operate with little to no interference from world governments. I only wish she was alive to see how right she was.
Age of Turbulence: Adventures in a New World by Alan Greenspan
As the architect of the U.S.’s monetary policy for the past couple of decades Alan Greenspan’s autobiography provides a look into the Ayn Randian objectivist approach that lay at the core of Greenspan’s belief system. Besides giving a detailed look into the inner working of the Federal Reserve, this book also serves to provide a lot off political fodder. Greenspan criticized Bush for not using his veto power until 2006 and letting spending sky rocket, he vehemently disagreed with Cheney when Cheney said “deficits don’t matter” (I certainly don’t hear Cheney saying that now, do you?), and my favorite, he claimed that there might be a housing bubble but that when it popped it would not be significant.
Supercapitalism by Robert B. Reich
Former Labor Secretary, Robert Reich, warns against the inherent dangers of “supercapitalism, i.e., capitalism run amok, but his policy recommendations might awe conservatives and liberals alike: abolish the corporate income tax, stop lobbying corporations to have social responsibility, consumers need to take responsibility for the society they create when they purchase cheap goods, etc. Central to his policy recommendation is his belief that corporations should not be treated as people (too bad none of the Supreme Court justices read this before deciding the Citizens United case, eh?) because they are inherently profit making institutions and profit making should be their main goal. If we want the people who run corporations to act responsibility than we need to address it legislatively so all corporations have to play on the same level playing field, and if we stop taxing corporations and tax their shareholders and owners instead than corporations can no longer contribute to political campaigns since they are not taxed.
Animal Spirits by George A. Akerloff and Robert J. Shiller
As behavioral economists, Akerloff and Shiller contend that “animal spirits,” i.e., the impulses and emotions that cause economic actors to behave in irrational ways has been too often ignored by economists. They argue that any economic theory that assumes (all economists assume something) that people will always rationally pursue their economics interests, and this rational pursuit will provide a stable free market economy is misguided because it ignores the simple fact that people make irrational and misinformed decisions all the time. Those in favor of market deregulation assumed that financial institutes would not take on more leverage or risk than they could adequately manage but that ignores what Alan Greenspan called irrational exuberance.
This is a great book for anyone that is looking to understand how smart people can make such bad decisions.
And while I have purchased Akerloff’s new book, Identity Economics, I haven’t had a chance to read it so if anyone has please let me know what you think.
The Ascent of Money: A Financial History of the World by Niall Fergusson
People often say money or wealth is at the center of all great conflicts, for Ferguson it is also at the center of all great civilizations. He makes a case for money’s role in the development of modern social and political structures. He is a staunch supporter of globalization in general and global finance in particular. As for money being the root of all evil, he writes, it “magnifies what we human beings are like . . . our tendency to overreact” to booms and busts, enriching the “lucky and the smart, impoverishing the unlucky and not-so-smart.” In this way, money is a mirror, and “it is not the fault of the mirror,” he notes, “if it reflects our blemishes as clearly as our beauty.”
Sorkin provides an engaging narrative account of how it all came crashing down. Sorkin claims to have obtained extensive notes from people who were present during crucial decisions and conversations, as well as, interviews with many of the participants (more than 500 hours of interviews with more than 200 people).
I was hooked by page three when I read the description of Jamie Dimon’s, Chairman & CEO of JP Morgan, early morning phone call with two dozen members of his management team on September 13, 2008.
“Here’s the drill…We need to prepare right for Lehman Brothers filing.” Then he paused. “And for Merrill Lynch filing.” He paused again. And for AIG filing.” Another pause. “And for Morgan Stanley filing.” And after a final, even longer pause he added: “And potentially for Goldman Sachs filing”
“There was a collective gasp on the phone”
Wall Street: America’s Dream Palace by Steve Fraser
This book gives a great and colorful history of America’s “love-hate” relationship with Wall Street. Fraser divides Wall Street types into four categories: the aristocrat, the confidence man, the hero, and the immoralist. Throughout the book he shows how we have historically wrestled with fundamental questions of wealth and work, democracy and elitism, greed and salvation. Moreover he helps us see how we still wrestle with these questions today.
Making a Killing: The Political Economy of Animal Rights by Bob Torres
If you’ve read Fast Food Nation or seen Food Inc. you may already be aware of some the content within this book, what you are probably not familiar with is the political economic view point espoused by Torres, a professor of Sociology at St. Lawrence University. He explores animal rights by tying the concept into the human rights of those who labor in meat industry and those that consume it. While his Marxist view point and social anarchist theory might turn some people off of the book, I still encourage those who are grappling with the economic and moral contradictions of the meat industry to give this book a try.
Free to Choose: A Personal Statement by Milton Friedman
As I am sure you can guess by my suggestions thus far, I tend to fall into the Keynesian side of the economic divide. Nonetheless I think it is important to understand where the arguments of market fundamentalists stem from and there is probably no better place to look than in the writings of Milton Friedman, the father of “Chicago School of Economics.” Friedman’s libertarian ideology permeates his economic thinking. He believes that personal freedom is eroded by government regulations, even if that regulation is something supported by most people today, such as a minimum wage. If you want to know where the virulent anti-regulation sentiment came from over the last few decades you would do no better than to read this book.
Other books you should consider reading:
The General Theory of Employment, Interest and Money by JM Keynes
The Wealth of Nations by Adam Smith
Falling Behind by Robert H. Frank
Prosperity Unbound by Elena Panaritis
The Origin of Wealth by Eric D. Beinhocker
Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
The Big Short by Michael Lewis
The Great Crash of 1929 by John Kenneth Galbraith
Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed
All Together Now: Common Sense for Fair Economy by Jared Bernstein
The Return of Depression Economics and the Crisis of 2008 by Paul Krugman
Greenspan’s Bubbles: The Age of Ignorance at the Federal Reserve by William Fleckenstein and Frederick Sheehan
In Fed We Trust: Ben Bernanke’s War on the Great Panic by David Wessel
The Great Transformation by Karl Polanyi