Winner of the 2017 Enlightened Economist Prize

As ever, it has been much harder to select one book from my longlist than it was to narrow it down to those ten. After mulling it over for a few days, I can announce today that the winner is Jean Tirole’s Economics for the Common Good. My review of it is here. It has been widely reviewed elsewhere – here is The Economist and the FT and Breaking Views.

Price: £20.25
Was: £24.95

The reason – apart from it being a great read about the economics profession and about the kinds of policy problem on which economics can shed real light – is that in these times of disparaging ‘experts’ and ignoring evidence, it is great to have such a distinguished economist explaining for a wide audience the importance of evidence and expertise.

Festival of Economics 2017, Bristol Festival of Ideas, Bristol

Festival of Economics 2017, Bristol Festival of Ideas, Bristol

Photo courtesy of Bhagesh Sachania Photography

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Rational, level-headed, compelling, cheerful – our ‘Perspectives’ series

Seeing the materials for the latest in our Perspectives series – Driverless Cars: On A Road to Nowhere by Christian Wolmar – has prompted me to boast a little. This is the 14th title in the series, which started out as an experiment to see if there was any appetite for short, focused books about economics and related subjects. In my heart of hearts, I wasn’t at all sure we’d succeed, so my expectations have been greatly exceeded!

Christian’s book is a wonderful, and passionate, tirade against driverless car hype, but the book is also very persuasively argued. My scepticism about this particular technology is now pretty solid. As this bit of Giles Chapman’s blurb puts it, “This is just what the robot evangelists don’t want you to read: a rational, levelheaded, compelling yet cheerful analysis of why the driverless car‘s route to success is so uncertain.”

It’s difficult to single out individual titles. But to mention a few, both Dave Birch’s books have been best sellers for us – Before Babylon, Beyond Bitcoin and his earlier Identity is the New Money. The recent book by Rebecca and Jack Harding, The Weaponization of Trade is a really thought-provoking analysis of the links between rhetoric and reality, and between trade and international security relations. I have a personal soft spot for Mike Emmerich’s Britain’s Cities, Britain’s Future and Kate Barker’s Housing: Where’s the Plan? because of my own interests. But then when I start looking at the list, I also have to praise – well, all of them. Like David Metz’s Travel Fast or Smart? Julia Unwin’s Why Fight Poverty? …..

 

 

There’s an offer for people who want to pre-order Driverless Cars: On A Road to Nowhere and other special offers available – and still time to order as perfect stocking fillers!

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Management as a productive resource

I’ve been browsing through Edith Penrose’s Theory of the Growth of the Firm, having read the biography by Angela Penrose, No Ordinary Woman. Published in 1959, it is an interesting narrative approach to the dynamics of individual firms, with plentiful examples from case studies. One can see that it was heading in a very different direction methodologically from mainstream economics, and hence why Penrose was taken up by business schools instead.

Yet mainstream economics is arguably rediscovering her core reasoning:
“The emphasis is on the internal resources of the firm – on the productive services available to a firm from management within the firm. … the experience of management will affect the productive services that all its other resources are capable of rendering.” The manager’s mind interprets the environment in which the firm is operating, the expectations of future demand and the directions in which to expand, she continues. It is not only the objective resources available, but how the management of the firm can use them, and how they understand the competitive environment in which they are operating. All of this reminded me very much of the recent World Management Survey work by Nick Bloom, John Van Reenen and colleagues looking at the importance of management quality for firm productivity. They write: “Economists have long puzzled over the astounding differences in productivity between firms and countries. In this paper, we present evidence on a possible explanation for persistent differences in productivity at the firm and the national level — namely, that such differences largely reflect variations in management practices.” Maybe Penrose was less puzzled than many.

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Enlightened Economist Prize 2017 – longlist

I’m late this year with drawing up my longlist. The rules are that the contenders are the books I happen to have read this past 12 months (they don’t have to have been published in 2017), and the choice of the ultimate winner is mine alone. Criteria include: interest and importance, enjoyability/readability/accessibility, and being related to economics (ruling out my history and pop science reading). Links are to reviews on this blog.

With that, and in no particular order, the 2017 longlist is:

The Undoing Project by Michael Lewis

Hall of Mirrors by Barry Eichengreen

Price: £12.38
Was: £12.99

The Financial Diaries by Jonathan Morduch and Rachel Schneider

The Wisdom of Finance by Mihir Desai

Beating the Odds by Justin Yifu Lin and Celestin Monga

The Pricing of Progress by Eli Cook

Price: £20.35
Was: £23.95

Adaptive Markets by Andrew Lo

Economics for the Common Good by Jean Tirole

Price: £20.25
Was: £24.95

Straight Talk on Trade by Dani Rodrik

The Attention Merchants by Timothy Wu

 

I’ll decide on the winner before Christmas. The Prize is the offer of a fine lunch or dinner should the prizewinner and I find ourselves in the same place. Oh, and the glory.

By the way, my nominations for the best non-econ books I read this year are:

Second Hand Time and The Unwomanly Face of War by Svetlana Alexievich

Price: £11.99
Was: £14.99

The Deluge by Adam Tooze

East West Street by Philippe Sands

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There is no alternative?

Is Capitalism Obsolete by Giacomo Corneo is framed as an exploration of alternatives to capitalism by an economics professor father to his idealistic daughter. The Prologue is an email exchange between them, in which she writes: “Your economic system is wasteful, unjust and alienating. And wastefulness, injustive and alienation are not the result of some natural law. They are the result of particular social rules, the rules of capitalism. And keep in mind that the capitalist economic system is the product of a relatively short period in history. Just as it once emerged, it will one day decline and be replaced with a better set of rules.”

Set up in this way, the book explores some of the alternative models posited at various times, from Plato’s Republic and Thomas More’s Utopia through anarchism and socialist planning to modern variants including ‘shareholder socialism’ (state ownership of key industries) and the currently fashionable cure-all, Universal Basic Income. At the end of this journey, the economist concludes: “There is, at present, not really much else on offer.” However unfair, wasteful etc capitalism is, there is no convincingly superior alternative. Instead, the author proposes a range of reforms – cracking down on cross-border tax avoidance/evasion, investing in infrastructure & public services etc – concluding, “A pluralist market economy with an effective and generous welfare state represents the best economic system that is currently available to us.” An appendix contains a more detailed specific reform proposal, the idea that the state should invest in quoted companies to build up a socially responsible sovereign wealth fund paying a social dividend to citizens.

I have never found the abstraction ‘capitalism’ a helpful term when it encompasses societies as contrasting as Norway and the United States, and have always quite liked the slightly out-of-fashion ‘varieties of capitalism‘ approach. Even if you think the term useful, though, looking at the news this past week, Corneo is surely rather optimistic here in seeing any possibility for reform. Capitalism might be declining, as the daughter asserts, but it looks more likely to be replaced by something worse, call it plutocracy, than by something better.

This is a slighly odd book. I guess it’s meant to be pedagogical, taking students on a tour of historical thinking about economic systems, but this makes the framing material about the current day rather perfunctory, and then the actual reform proposal is stuck in an appendix. Although a mildly diverting read, I’m not sure it works well either as a history of thought book or as a current affairs one.

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