Best summer books of 2024: Economics

The Bankers’ New Clothes: What’s Wrong with Banking and What to Do About It by Anat Admati and Martin Hellwig (Princeton)

This is the second edition of the most original and important book to have emerged from the financial crisis of 2007-08. In it, the authors explain that not enough has changed since then to make banking safe. On the contrary, the highly profitable — for banks — moral hazard of being “too big to fail” largely remains and so, too, do bailouts. That was demonstrated in 2023, with the response to the failures of Silicon Valley Bank and Credit Suisse. The problem, show professors Admati and Hellwig, remains a dangerous mixture of intellectual error with excessive power: banks are not just too big to fail; they are also “too big to jail”.

Public Net Worth: Accounting — Government — Democracy by Ian Ball, Willem Buiter, John Crompton, Dag Detter and Jacob Soll (Palgrave Macmillan)

If something is important, it must be counted. Yet governments mostly provide grossly inadequate information on their financial activities, because, with rare exceptions, they do not provide a full balance sheet, focusing instead on their overt debt and their short-term spending and revenues. What is missing are full statements of their assets and many of their liabilities as well, such as their pension obligations. As this important book explains, if governments are to manage their assets and recognise their true liabilities, they must both provide and discuss their balance sheets in full.

Small, Medium, Large: How Government Made the US into a Manufacturing Powerhouse by Colleen A Dunlavy (Polity)

We live in a world of standard sizes for a vast range of product: think batteries and beds. Without this achievement, today’s world of mass production and consumption could not exist. Crucially, argues Dunlavy, professor emerita of the University of Wisconsin-Madison, it would not exist without the US government and, in particular one man, Herbert Hoover. “Fordism” was in fact “Hooverism”. Market forces alone would not have created standardisation. This book, based on extensive archival research, shows that the standardisation on which today’s economies depend is the product of a close partnership between US public and private sectors, subsequently spread across the world.

€uroshock: How the Largest Debt Restructuring in History Helped Save Greece and Preserve the Eurozone by Charles H Dallara (Rodin)

Dallara, a former US Treasury official, led private creditors in 2011-12 in negotiating a restructuring of Greek debt. The crisis that led to this renegotiation was not only dangerous for Greece, but could have led to the unravelling of the Eurozone. The account is informed, detailed and penetrating. It reveals how fragile the architecture of the Eurozone was. Despite improvements, the problems of managing this currency union have not been resolved.

Making Sense of Chaos: A Better Economics for a Better World by J Doyne Farmer (Allen Lane)

The world is a complex place. Standard economics tries to get round this reality by making the heroic assumption of individual rationality. Behavioural economics drops the assumption of rationality. But, argues Farmer, a leading expert on complexity economics at Oxford university, we can and must be more radical. The answer, he asserts, is to focus on developing computer models of the interactions of heterogeneous agents with one another and with nature. With greater investment, he says, far more progress in understanding the economy could be made.

Money in the 21st Century: Cheap, Mobile, and Digital by Richard Holden (University of California)

What is the future of money? Digital technologies have made this an urgent question for both policymakers and economists. In this excellent short book, Holden, who teaches at the University of New South Wales, provides a sober and penetrating analysis of the prospects. “Money,” he argues, “will only become more central as it becomes more useful. And cheap, mobile, digital money will be more useful for more people in more settings.” Central bank digital currencies will, he argues, serve as a superior alternative to cash and cryptocurrencies. But they could also devastate the monetary role of bank deposits, with transformative effects on the credit system.

This Time No Mistakes: How to Remake Britain by Will Hutton (Apollo)

Hutton, the well-known journalist, rightly argues that “What Britain now confronts is something much more profound and deep-rooted, and its resolution demands much more extensive economic, social and political reform than the national conversation currently admits.” Yet even though the opposition Labour party is forecast to win a huge majority, it has been extraordinarily timid. Hutton seeks to shake it out of its intellectual and political torpor. Will he succeed? It seems doubtful.

The Contest for Japan’s Economic Future: Entrepreneurs vs Corporate Giants by Richard Katz (Oxford)

Not very long ago, Japan’s economic performance was deemed miraculous. It was, argues Katz, one of the western world’s foremost experts on the country, seized by “a spirit of experimentation” out of which new companies such as Honda and Sony emerged, to become world-beaters. Then the era of entrepreneurial dynamism came to an end, as “the country’s leaders slowed down creative destruction in the name of social stability”. Japan’s future depends on whether this changes. If this is to happen, he argues, the many “veto powers” in society must be removed. Katz is cautiously optimistic that this will happen.

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

The Shortest History of Economics by Andrew Leigh (Old Street)

This book manages to cover the history of economies from prehistoric times to today in just 194 pages of text. It is clearly written and sensible. It will be the invaluable gift for anybody trying to understand how humanity moved from hunter-gatherer bands to today’s high-tech world economy and what economists think about how the system works. In the space available, this really is a miracle.

The New World Economy in 5 Trends: Investing in Times of Superinflation, Hyperinnovation & Climate Transition by Koen De Leus and Philippe Gijsels (Lannoo)

The authors, who both work at BNP Paribas Fortis, have written a book that covers the driving forces in the world economy and their significance for investors. The former include technological innovation, the climate crisis, changes in globalisation, debt levels and ageing. In terms of growth, they argue, these five forces will cancel one another out. But they will also lead to a world of higher inflation and interest rates. The book is intelligent and informative. Investors should find it particularly interesting.

The Longevity Imperative: Building a Better Society for Healthier, Longer Lives by Andrew J Scott (Basic Books)

In the UK in 1965, the most common age of death was in the first year of life. Today the most common age to die is 87 years old. This startling statistic comes from Scott’s superb book on what is arguably humanity’s greatest achievement — huge reductions in the probability of death among the young. This has opened up opportunities and challenges, for both individuals and societies. Scott, a professor at London Business School, rightly stresses the former. Our ability to live longer is a blessing, not a curse.

Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy by Teresa Ghilarducci (University of Chicago Press)

This book by Ghilarducci of the New School for Social Research in New York is a powerful rejoinder to the view that, in an ageing society, people must work longer and retire later. This, stresses the author, ignores the importance of class. Working-class and lower middle-class people tend to be in worse health. So, as things are, they gain less from pension arrangements with a single retirement age than the better off. This would get even worse if they got their pensions later. The jobs they can do tend to be physically arduous. Finally, their pension income tends to be inadequate. Class matters. It has to be taken into account. This is particularly true in the US.

The Divine Economy: How Religions Compete for Wealth, Power, and People by Paul Seabright (Princeton)

Seabright has a great talent for addressing original questions. In this book, he reverses the familiar trope that religion is the antithesis of mere economics. On the contrary, he argues, religions are competing businesses: they attract people by providing services they value, from the mundane — a community in which to find a compatible mate — to the sublime — a sense of life’s meaning. Since these wants will not disappear, neither will religions. But, he concludes rather encouragingly, religions will fail if they choose to shackle themselves to tyrants. One hopes he is right.

Cheaper, Faster, Better: How We’ll Win the Climate War by Tom Steyer (Spiegel and Grau)

Steyer is a classically “can-do” American. An investor committed to solving the climate crisis, he calls on all of us to become “climate people”, that is, people committed to making stabilising the climate our life’s work, as he has done. Such “climate people” are the heroes of this lively, well-informed and passionate book. A true American, Steyer is an optimist — even though “we have a huge fight ahead of us, and the fossil fuel industry isn’t going to fade a way quietly”. He is an optimist because, in the last resort, there is no alternative. The alternative to optimistic effort is defeat.

Growth: A Reckoning by Daniel Susskind (Allen Lane)

This book is a reasoned response to the challenges created by economic growth. Susskind argues, convincingly, that rising prosperity has brought huge benefits and that halting it, let alone reversing it, as the “degrowth” movement demands, “would be a catastrophe”. But it is also true that the wrong sort of growth can lead to unacceptable outcomes — environmental catastrophe, for example, or extreme inequality. The answer, then, is to pursue the right sort of growth, with the right incentives and institutions, while recognising that there exist other values that we also need to treasure.

Richer & More Equal: A New History of Wealth in the West by Daniel Waldenström (Polity)

Waldenström, the Swedish economist, has written a fascinating rejoinder to Thomas Piketty’s best-selling Capital in the Twenty-First Century. The latter argued that the natural law of capitalism is towards greater inequality, barring war or heavy taxation of capital. Waldenström argues against this that wealth has become more equal since the late 19th century, as home ownership and pension savings have become increasingly spread across the population. This is an important perspective. But note that Waldenström’s measures of wealth rightly include claims on the welfare state.

Money & Promises: Seven Deals That Changed the World by Paolo Zannoni (Apollo)

Nearly all the money in our modern economies consists of debts created by the lending of private institutions, namely banks. We are so familiar with this arrangement that it is regarded as grossly improper when state institutions — that is, central banks — create money directly. The conversion of debts into money is done within the ledgers of banks. The invention of accounting made bank debts almost instantaneously transferable. This was the crucial idea behind the development of bank-based monetary systems. In this wonderful book, Zannoni, a former banker, using original research, explains how these evolved from 12th-century Pisa to the 20th century, bringing with them both convenience and crises.

Unjust Debts: How Our Bankruptcy System Makes America More Unequal by Melissa B Jacoby (The New Press)

In this compelling book Jacoby, professor of law at the University of North Carolina, shows how the bankruptcy code favours fake people, also known as corporations, over real people, especially relatively disadvantaged ones. As she notes, “artificial persons filing for bankruptcy, especially if they are bigger in size, are far less likely to encounter the value judgements that lower-income individuals face, before, during, and after they file.” More broadly, the books shows that bankruptcy law is another way in which the US is plutocratic. One of the prime justifications for bankruptcy is to help the vulnerable and the unlucky. In practice, it is used to protect the powerful, including those responsible for serious wrongdoing, from being held accountable. This is a highly disturbing account.

Join our online book group on Facebook at FT Books Café