Books to Understand Economics
filmlifestyle.com
filmlifestyle.com
I also want to shout out to Hidden Order, which I was really surprised to see here, but is really quite the gem. More than any other econ book, I have pulled off the shelf and gone through the much dog-eared pages. It does an amazing job of taking off-the-shelf economic ideas and framing them in such excellently written parables or examples. Disagree or whatever, but it's an excellent and often trite way to understand classic principles.
A couple books I would add to the list:
Why Nations Fail
Red Plenty
Who Gets What and Why
https://www.amazon.com/Hidden-Order-Economics-Everyday-Life/...
while economics is inherently political, it isn't a sport.
Also really pleased to see The Road to Serfdom by Hayek on the list. Eager to check out the book on Climate vs. Capitalism as I haven't seen this topic given full treatment in a book yet beyond questioning the sustainability of growth economics and efficacy of carbon taxes in broad terms.
The Mankiw textbook is used in intro undergrad classes everywhere.
I would also love to read a book by a contemporary Chinese economists on their thoughts of the Chinese market, although something tells me a good academic/unbiased book on this topic is impossible to find.
Only two books I would add would be:
The Age of Diminished Expectations (Krugman)
Dune (Herbert)
Yes, activism has a role to play in convincing governments to act, but when it perpetrates the myth of individuals vs. corporations it does nothing but help individuals relinquish themselves from blame. Look at the gilet jaune movement in France after it tried to impose a fuel tax. Some of these people are the same individuals who if asked would declare unwavering support for climate action. In practice however few are willing to shoulder the associated cost, even in the rich world. They mistakenly believe that taxes on corporation wont eventually filter down to consumers. There are also vast misconceptions about our existing ability to substitute away from fossil fuels even if we had the renewable capacity (for example, over 80% of UK households only have infrastructure for gas heating). The public debate needs to make these trade-offs clear rather being inundated by people like Naomi Klein who are more interested in finger pointing and sensationalism.
If you really want to want to understand the issues we face and how we might actually confront them then read the IPCC report [1], the Club of Rome Climate Emergency Plan [2], or even this blog post by Bill Gates [3].
[2] https://www.clubofrome.org/project/the-club-of-rome-climate-...
[3] https://www.gatesnotes.com/Energy/My-plan-for-fighting-clima...
I'll check out the reports you've linked, and Gates' blog post.
>Bastiat, by contrast, presents fantasy history, his abstractions sometimes in the form of arguments, another time in the form of supposed events, which however have never and nowhere happened, just as a theologian treats sin sometimes as the law of human existence, then at other times as the story of the fall from grace. Hence both are equally unhistorical and anti-historical. But the unhistoric moment in Carey is the contemporary historic principle of North America, while the unhistoric element in Bastiat is a mere reminiscence of the French eighteenth-century manner of generalizing.
This criticism also does nothing to attack the merits of the argument or even the existence of opportunity cost. Does he deny that such a concept exists?
I'm curious what criticism of Marx's historiography you're mentioning though. While controversial, his theory of historical materialism is not discounted in contemporary history academic literature.
Marx doesn't really care or understand the argument about opportunity cost, but he focuses on Bastiat's use of wages as an example in the argument (wages are fixed, as opposed to the volatile nature of capital).
But Bastiat doesn't actually understand history! Wages come out of slavery and serfdom. Wages can only come about from the destruction of resources or the breaking up of guilds. (No citation or historical evidence provided). So actually fixed wages over the long run of all human history are not actually fixed.
"No economist denies the fluctuations, the rise and fall of wages. Or are wages independent of crises? Or of machines which make wage labour redundant? Or of divisions of labour, which displace it? To assert any of this would be heterodox, and it is not asserted."
This is clearly misunderstanding the point that Bastiat was making, wages were an example provided of trade-offs. Marx is steering the conversation off-topic to rant about how awful wages are. And furthermore, he is throwing out a historical argument to combat a philosophical one. But he doesn't show his work - he proposes his own view but provides no real evidence.
In the chapter, the whole thing is dismissed as a product of Bastiat's "French-ness". As if to say, Of course he would see things this way, he is just a mouthpiece for the French Bourgeois.
While interesting in its own right, I don't really think Marx's criticism of Bastiat is of much merit in this case. Bastiat's essay is truly a beautiful piece of writing and philosophy, and eloquently describes a universal truth. Marx is being nit-picky in order to prove his point about wages.
The topic isn't at all a normative discussion on wages; Marx is tracing wages as a social-historical phenomenon, one of "natural history"[0], one which occurred rather than being merely a philosophical abstract concept. Hegel, at the very least, merged these - "what is rational is real, and what is real is rational" - but Bastiat, just like Proudhon, did not. Marx's point is that it's a folly to discuss the world as it really exists when you abstract away from the social formations that determine consciousness - including, of course, the consciousness of such abstraction. Economics is not merely thought experiments and philosophy, it's supposed to be real, and when you start from an anti-historical point you will arrive at an anti-historical conclusion. See, for example, Marx's (and other's before and after him) criticisms of the "economic" theory of Robinson Crusoe.
I am curious how Bastiat can claim to describe a universal truth without reference to real, historical social formations which produce these truths. By what mechanism does Bastiat have the "view from nowhere"?
[0] "To prevent possible misunderstanding, a word. I paint the capitalist and the landlord in no sense couleur de rose [i.e., seen through rose-tinted glasses]. But here individuals are dealt with only in so far as they are the personifications of economic categories, embodiments of particular class-relations and class-interests. My standpoint, from which the evolution of the economic formation of society is viewed as a process of natural history, can less than any other make the individual responsible for relations whose creature he socially remains, however much he may subjectively raise himself above them." (Preface to the German edition of Capital, 1867)
I understand that Marx has a grand unified theory of history and economics. But it is folly to point to anyone else that does not have a grand unified theory and blame them for not fitting into his. I wish he would spend more time defending his view and showing the merit of it, rather than attacking people for essentially not seeing the whole picture like he does.
No. We cannot talk about software in the same way we talk about other phenomena - it is obvious that various sciences have their different objects (e.g physics is the study of the physical world, biology the study of life etc.) - the point Marx was making is that economics (or rather, political economy) is a science which has an object strikingly similar to the science of history or the science of biology - it is a study in which one must engage the emergence and passing away of various forms of society, and of course to make any predictions or analyze trends. When detached from this view, the science that's left has no explanatory power. Why are wages the value that they are? Why does value appear as the objectification of labour? Why is it that the majority of large-scale productive capacity is owned by few? What can change given these parameters already determined? What can't change?
Marx was a great admirer of Darwin and they corresponded on at least one occasion. Like Darwin, Marx viewed man as a necessarily historical being: "The anatomy of man is a key to the anatomy of the ape. On the other hand, indications of higher forms in the lower species of animals can only be understood when the higher forms themselves are already known.", and similarly, "While focusing on political economy, Marx took the opportunity to criticize Hegel’s phenomenology. Specifically, he attacks its idealist premises that take the real starting point as the product of the thinking mind rather than as having an existence «outside the mind and independent of it»"[1] Marx is not only attacking Bastiat for his method, he's attacking it for the fact it is completely unscientific, unlike (he claims) his own[2].
But even granting your point, I'm highly skeptical one would find a software engineer who outright denies the value of history for software development, for instance to know what's been tried before and to know where things can go.
Marx's argument would say that the necessary and experienced development of things the way they are today is due to the premises already set in motion. If Bastiat claims that he has discovered universal human truths, this is to some extent a historical, social and empirical claim. You can't abstract away from that and still maintain the relevance of your theory to real world phenomena. To take this further, Marx's fuller critique was that economists were obsessed with appearance and in being ignorant of economic activity resulting from people acting in their interest (again, these interests transmitted from the past[0]) they miss the "whole picture" as you say.
[0] "Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past. The tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves and things, creating something that did not exist before,[...]" (Marx, The Eighteenth Brumaire of Louis Bonaparte, 1852)
[1] http://www.consecutio.org/2018/11/every-beginning-is-difficu...
[2] "Nevertheless, the human mind has for more than 2,000 years sought in vain to get to the bottom of it all, whilst on the other hand, to the successful analysis of much more composite and complex forms, there has been at least an approximation. Why? Because the body, as an organic whole, is more easy of study than are the cells of that body. In the analysis of economic forms, moreover, neither microscopes nor chemical reagents are of use. The force of abstraction must replace both."
Neo-Ricardians took him seriously and the vast majority of people who dismiss him with snark today can't even reproduce what the initial debate regarding the LTV was and seem to have such a twisted idea of who Marx was that it never occurs to them that he was himself perfectly aware of the problems.
FWIW I've never downvoted anyone on HN so it appears as though your assumptions, just like your emotions, are out of control :)
From Goodreads
"Today’s financial system is seen by the most as having a fixed size. Bernard A. Litaer challenges this perspective by showing that there were different economic systems in history and that our present system has arisen from a tacit and problematic collective acceptance. He sees the future in the development of complementary currencies. He explains which money is necessary for which needs and how we can commonly create it. Money only exists because of trust — where trust has been destroyed, money is loosing its value; chaos and poverty are sad consequences. Lietaer has written an exciting and informative book for anyone who is aware of economic problems, from interested laymen to bankers."
https://www.goodreads.com/book/show/984314.The_Future_of_Mon...
He passed away earlier this year. RIP.
Bernard Lietaer: “My conclusion is that greed and the competitive drive are not inherent human qualities. They are continuously stimulated by the kind of money we use. There is more than enough food and work for everyone. There is merely a scarcity of money.”
Lietaer’s belief that the global monetary system needed reform led him to the Belgian Central Bank, where for several years he was involved in the establishment of the “ECU,” or European Currency Unit, the precursor of the euro. He subsequently became general manager of a foreign-currency fund. His remarkable successes in that capacity attracted international attention. The influential U.S. magazine Business Week proclaimed him the world’s best currency dealer in 1991.
Even more than that, Lietaer had become a genuine expert on money, privy to the deepest secrets of the financial world. He decided it was time to write new books. While teaching at the University of California in Berkeley and California’s Sonoma State University, in the 1990s, he worked on The Mystery of Money (Riemann Verlag, 2000) and The Future of Money (Random House UK, 2001). These books unravel the present concept of money and show how different approaches have different social consequences—including environmental and social sustainability.
According to economics textbooks, money is value-free. It is nothing more than a means of exchange and is regarded as having no effect on transactions. Lietaer contests that view. “Money isn’t at all value-free,” he argues. “The monetary system is programmed—albeit not deliberately—to cause certain behaviour. It promotes competition and short-term thinking; it forces economic growth; and it undervalues care, education and tasks crucial to maintaining a society. Economics theory teaches us that people compete for markets and raw materials; I think, in reality, people compete for money.”
This competition is a direct consequence of the manner in which money is created. Banks put money into circulation by means of loans. For example, as soon as someone negotiates a 100,000-dollar mortgage, money is created and begins circulating in the economy. But then the bank expects the recipient of the loan to pay back a total of 200,000 dollars in repayment and interest over the next 20 years. But the bank does not create the second 100,000 dollars. The receiver of the loan must get hold of that money—the interest—one way or another, and this forces him or her to compete with others. It’s simple: Some people must lose money or go bankrupt in order to put others in the position to pay off their loans.
At the same time, this collection of interest results in a concentration of wealth: Those who have money “automatically” get richer. In addition, the system forces society into an endless loop of economic growth: New money must constantly be put into circulation to pay off old loans. Lietaer says, “My conclusion is that greed and the competitive drive are not inherent human qualities. They are continuously stimulated by the kind of money we use. There is more than enough food and work for everyone. There is merely a scarcity of money.”"
From an old interview (thanks Archive.org!): https://web.archive.org/web/20101108043616/http://www.odemag...
I know - this all sounds crazy right?
The author Brett Scott has an easy to follow blog post where he helps the reader explore the many paradigm shifts needed to break the thought patterns behind our economic system:
https://howwegettonext.com/the-future-of-money-depends-on-bu...
Maybe they are too far in the "popular economics" category to be included in a list like this (although there are some on the list that look similar) but he explains things clearly and argues well and I feel like I understand economics far better after reading them.
Bastiat’s work is timeless, whereas Hazlitt’s, written to be consciously modern at the time, is showing it’s age.
https://mises.org/library/man-economy-and-state-power-and-ma...
Another is Rothbard’s little book, “What Has Government Done to Our Money?” which provides a wonderfully accessible introduction to the theory and history of money.
https://mises.org/library/what-has-government-done-our-money
Available here in PDF: https://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
Modern Monetary Theory (MMT) has a convincing answer to the question: "What gives fiat currencies their purchasing power"
Mainstream economists simply say that purchasing power of money commes from "confidence", but they don't explain where the confidence comes from. It is a circular logic: one has confidence in a currency if one beleives that others have confidence in it, ... whoever whas the first the "have confidence" must have been duped, ... or more likely the theory is flawed...
MMTs explanation of purchasing power is simply that in an economy there are mandatory transactions: taxes, and taxes have to be paid in the currency mandated by the state. Money is not a commodity, it does not arise out of barter, it is (and always has) been imposed by states that required taxes be payed with their currency.
This has many consequences:
1. Taxes serve to generate and maintain demand for the currency (reduce inflation, or produce deflation).
2. Currency has to be spent before it can be taxed (how else can currency enter the economy?)
3. The debt of a currency issuing state is equal to the net financial assets (sum of all monetary assets, minus sum of all monetary debt)
4. Markets are monetary in essence, they are a side effect on the enforcing of money on a population. In a market, participants all purchase money with goods and services.
MMT is primarily a descriptive theory, the mainstream academic orthodoxy doesn't like it so much because it debunks many of its claims, but MMTs predictive capacity on the macro economy makes it a valuable tool on Wall Street: https://www.nytimes.com/2019/04/05/business/economy/mmt-wall...
I remember reading a book about this many years ago (Bastiat maybe?) which I'm pretty sure was French, since it focused on differences between the metropole and the colonies, but I'm hoping to find something a little more modern. I would be interested in a book from any time period, however, so please respond if you know of one.
1) What is a basic beginner book on Finance i.e. how do Normal Banks, Investment Banks and Money work? Explanation of the concepts, terminology and jargon involved.
2) What is a basic beginner book on Economics i.e. the big picture concepts of how trade, currencies (inflation) etc. work?
Basically the concepts behind what really makes our "modern world" tick.
2) For an introduction to macroeconomic principles you can try Cores free online textbook. [1]
Another thing i was looking for is a layman's book on how everything (economics+trade+debt+banks+money+etc.) comes together explaining both the concepts and jargon involved. Something which a high-school student can pickup to have an overview of "the market and the system".
You'd do much better with "ECONOMICS: PRIVATE AND PUBLIC CHOICE" by James Gwartney, Richard Stroup, Russell Sobel, David Macpherson.
Another good choice is "Basic Economics" by Thomas Sowell.
Honestly, what most people need to get basically educated in econ is 1. Some basic national-accounting type Keynesian macro, 2. Basic forex and bond pricing, 3. Enough education in marginalism to understand comparative advantage and enough education in game theory to genuinely understand the concept of a Nash equilibrium, and 4. A smattering of folks like Adam Smith and Douglass North to understand the human or sociological side of things.
I have never examined his ornithology, but I'm willing to extend him professional courtesy that it's solid, but his popular books should be categorized with Gavin Menzies.
For one thing, he was not arguing why Europeans conquered the world, but rather why a Eurasian civilization did so. Also he was not a determinist who was arguing that it was inevitable that this happen, rather that it was possible that it could, and that a civilization from another continent couldn't, or at least it was much less likely.
And indeed, when you look at the civilizations on other continents, they had much less developed military technologies, and much lower agricultural production per capita than the advanced Eurasian ones. None of the critiques I have seen address Diamond's argument that Eurasia prevailed because it had the plants and animals needed to develop more powerful civilizations than did the other continents. I mean, do you think the Mayans could have conquered Europe, China, India and the Middle East, even though they lacked grains and beasts of burden? And what about a civilization whose territory lacked the coal and iron ore needed to produce iron and steel, could it have won militarily against those that did and were making use of them?
If you've already familiar with a lot of Diamond critiques but have decided he's right all along then why say "Could you list a few books and main criticisms?". You come off as not engaging in good faith.
And as far as my point goes that Diamond's critics don't really address his main points, you are continuing the pattern.
However, if you read Why the West Rules for Now (which serves as a pretty good East and West world history), the author basically says near the beginning that of course geography played a big role in where early civilization started.
But, to the central question of the book, that doesn't begin to explain why China had to pay homage to Britain, rather than the other way around.
First, around 1100, China was starting in on an industrial revolution. They peaked at tens of thousands of tons of iron produced each year. Then the mandarins noticed that some commoners were getting rich, which was contrary to the proper order, and the government shut down the iron industry, and the whole thing stopped. But they could have had at least the beginnings of the industrial revolution five centuries before England. (Source: The Victory of Reason, by Rodney Stark.)
Second, China had fleets that dominated at least the Far East, and could have dominated the Indian Ocean. But shortly after 1434, the Chinese emperor decreed an end to the voyages of their great fleet. (Source: 1421 and 1434, by Gavin Menzies.)
Certainly after the Fall of Rome, the West declined precipitously. I've been reading a bit about that period in Europe recently and the extent of the decline is really quite staggering. It's uneven to be sure as areas of the Middle East, for example, didn't really fall as far.
In any case, China was arguably more advanced than Europe for a significant period and certainly didn't trail significantly until the industrial revolution in the West. (And the industrial revolution(s) pretty much swamped everything that came before.)
ADDED: The book is pretty light on the why behind the West's relative success but there's some speculation, as I recall, around centralized government and general conservatism caused China to miss out.
The list basically incorporates everything that frustrates me about the field of economics.
It pretends it is key to everything in the world (and there are many applications under certain circumstances), but it has pretended like capitalism and various policies enacted under economic (especially laissez-faire) recommendations have led to a fundamentally unsustainable world order and economic system.
I remember the first time I read about externalities. It was the perfect term. A tack-on to economics. A minor side concern to the primary task of making money for the rich while the world steams toward oblivion.
How does economics quantify the extinction of a species? In the nihilistic sense if humanity goes extinct, what is the economic impact of that? What is the value of a human life lost in mass displacements of global warming? What is the value of humanity?
It doesn't answer these questions. It can't. The real answer is that economics is a means for the powerful to rationalize their positions, and ignore their devastation.
It ranges from very specific works on central banking, finance and behavioural economics to an undergrad textbook covering most of Econ 101.
Some of these entries are only tangentially related to economic theory (Thinking Strategically, Capitalism vs. the Climate). There are also some glaring omissions (e.g. Radical Markets by Posner and Weyl).
Tim Harford's books are pretty good, in general in that he promotes "thinking like an economist" without going overboard in any direction.
I mostly avoid clicking on links like this because these pages exist to make money, not inform the user or deliver a unique point of view. That much was obvious with the "free ebook" interstitial that came up the second the page loaded, and the smattering of Amazon affiliate links for every book listed.
The closest thing I've ever seen to a proper economics is the "Silent Weapons for Quiet Wars" document. (It's chapter one of Bill Cooper's infamous book "Behold a Pale Horse". I want to make it clear, FWIW, that I never read the rest of the book. I have less-than-zero to say about the content of the rest of the book.)
Oh look, it's online and with diagrams now: https://lawfulpath.com/ref/sw4qw/index.shtml Bitchin'.
It's pretty creepy: it's a combination of an exposition on a simple electrical model of economics with a nightmarish gloss of crypto-fascism (or something, I'm not sure what you'd call it.)
Anyhow, the "electro-economics" is what I want to call HN readers' attentions to: something like that is what I would expect economics to look like. (Without the creep Dr. Evil vibe.)