In the next few days I'll be writing about the 2011 annual meeting of the American Economic Association in Denver, from which I've just returned. But such was the dreadfulness of my journey home that I'm going to start with a review of the book that kept me completely absorbed through the unpleasantness of a 9 hour flight and 5 hours of delay. That's Matt Taibi's Griftopia: Bubble Machines, Vampire Squids and the Long Con That Is Breaking America.

The title sort of sums up his views, but the detail is compelling. Taibbi looks at sub-prime mortgages, Alan Greenspan's fuelling of the bubble years by always bailing out the financial markets from their latest crisis, the more recent commodity bubbles in oil and foodstuffs, takes a detour into health insurance in the US, and always comes back to the leading role played by the vampire squid, his famous term for Goldman Sachs.

In some ways the book is similar to John Lanchester's Whoops! It has the clarity of a book about finance written by a non-expert who has gone to the length of understanding the market jargon and the complexities of financial products. However, Griftopia is also a book about politics and the corruption of US democracy by big business donors in general and the banks in particular. So in that way it sits alongside 13 Bankers by Simon Johnson and James Kwak. The financial crisis is a political story as much as a business and economic one. Taibbi, who works for Rolling Stone magazine, is on the political left but he concludes concludes that partisan voters of both the left and the right are correct, and has great sympathy with the source of anger amongst Tea Party supporters, though not with its exploitation by the movement's leadership: both big business and the government are screwing the people. They're doing it hand in hand.

This is of course a book about the United States but that shouldn't be much comfort to those of us living elsewhere. The big banks have excessive market and political power elsewhere – the City has certainly had a privileged place in British politics and we can only hope the coalition government sticks to its tough line on tackling the banks' power. Griftopia explores in detail the relaxation of regulation in the US in recent decades, but although the details differed the trends were the same elsewhere.

Moreover, the financial markets are global. The latest get-rich-quick asset bubble on Wall Street, pouring the ample liquidity that's around courtesy of the Fed into commodities indices, has been driving up oil prices and – even more damagingly – food prices. People are going hungry thanks to big finance. I'm not sure what can be done about it. If the Americans can't fix their political system, it's hard to see what anyone else can do. But Griftopia's themes of the harm caused by short-termism, and the way that market and government failure often go hand in hand, are important – they feature in fact in my forthcoming The Economics of Enough: How To Run The Economy As If The Future Matters.

Griftopia is also a greatly entertaining read. Taibbi is an angry man, and a fine writer made more eloquent by his anger. He's also very rude about many people, and it's often hilarious. So, don't wait for a long journey – this is a book about the financial crisis very well worth reading.

There's a review in this morning's Financial Times of The Price of Everything: Solving the Mystery of Why We Pay What We Do by Eduardo Porter. I hadn't heard of this one before – it gets only a mildly positive review from Martin Sandbu. He picks out one chapter as best, 'The Price of Free', covering intangibles and zero marginal cost products, which is of course a fascinating question.

In day-to-day competition policy, a rule of thumb is that you can distinguish competitive from non-competitive markets depending on whether the executives in hearings say they set prices depending on costs or depending on 'what the market will bear'. In the end, economics falls back on the latter – prices paid are a demonstration of revealed preference. People will only pay as much as something is worth to them. Which is both true and – like Freudian interpretations of behaviour – inescapable and therefore banal. It all depends what you mean by 'worth'….

I am off now to the American Economic Association Meetings in Denver, where I hope to meet lots of top economists and gather blog-worthy material. Here is the description of my own session with Robert Frank, Steven Levitt and Robert Shiller. Meanwhile, no new posts here until I get back on Monday.

Burton Malkiel's classic A Random Walk Down Wall Street is being reissued in a post-credit crunch, financial crisis edition this month. It will be interesting to see his response to the post-crisis critique of financial economics, and especially of course the (hiss, boo) Efficient Market Hypothesis. The book's title refers, of course, to the original finding that active selection of stocks by professional investors delivered returns no better than those generated by investing according to the toss of a coin (a random walk).

That finding has since been successfully challenged by Andrew Lo and Craig MacKinlay in their A Non-Random Walk Down Wall Street. They have developed techniques for finding the predictable elements of stockmarket movements. But despite this, one empirical regularity remains true: professional investors do not outperform the market (and still charge retail investors high fees). Nassim Taleb has caught the popular imagination with his blasts against stockmarket professionals in The Black Swan and Fooled by Randomness. He shows that pure luck can amply explain seemingly star performances on Wall Street. But the father of the Efficient Market Hypothesis, Eugene Fama, has also recently confirmed the failure of investment professionals to add value. One can only conclude that too few professionals have bothered to read Lo and MacKinlay.

There's another interesting perspective on stockmarket patterns, and that's econophysics, which describes price moves using non-linear mathematics to spot bubbles building over a long period. Didier Sornette's Why Stockmarkets Crash: Critical Events in Complex Financial Systems describes this type of work very clearly.

What is the ordinary investor to make of all this? My advice is to buy John Kay's marvellously straightforward and sensible book, The Long and Short of It, and do what he says. That certainly includes not paying high management fees to fund managers.

I noticed in one of the year-ahead round-ups that Malmesbury has badged itself as the UK's Philosophy Town, with an annual Hobbes festival. I particularly love the sound of its

for obvious reasons.

Hobbes is a particularly interesting philosopher for economists because he is the origin of the idea of self-interest as the basis for human behaviour, something for which you can acclaim or blame him depending on your perspective. The extent to which he relies on an extreme and unrealistic view of humanity is often overstated, I think. (There's a good summary of the debate here.) Many of his works are readily available online (here is Leviathan at Project Gutenberg), so you can make your own mind up. I'm not sure anyway that Hobbes's thought is really appropriate for our own political context. Although he's historically important for originating a number of key ideas – another is the distinction between state and civil society – he was  a man of his own disordered and war torn times. Our 21st disorders are very different.

I've been reading chapters from Edward Barbier's Scarcity and Frontiers: How Economies Have Developed Through Natural Resource Exploitation, a newly published history of the role resources have played in economic development from the dawn of recorded time to the present. It's a book that truly deserves the adjective 'magisterial', and I think it's going to prove an important text for both economic historians and development economists.

The central question Barbier poses is deceptively simple. If natural resources were such a blessing at different times and places in the past – think of the American Frontier, for example, or the Britain of the Industrial Revolution – why are they so often a 'curse' now? Economies which have already developed on the whole manage their resources to the benefit of growth, but amongst the developing and poor economies only the BRICs (Brazil, Russia, India and China) seem to benefit from their endowments of resources. In other cases the resources are a source of macroeconomic instability at best and violent conflict at worst.

Prof Barbier answers the paradox with a 'frontier expansion hypothesis'.  A frontier can be horizontal – adding land – or 'vertical' – for example mining a new discovery. Natural resources are a blessing when their exploitation creates substantial economic rents which are captured and reinvested into productive activities in other sectors of the economy. The large-scale rents have stemmed from a number of phenomena at different times. For example, serfdom or slavery – Evsey Domar's 'free labour' – is one way. Windfalls from price booms or new discoveries, as in the gold rush, is another. Thirdly, technological developments can achieve the same result.

The resource curses of contemporary times thus stem from either benefits from resource exploitation which are too low, relative to the economy, and/or from a failure to reinvest the benefits into other dynamic sectors.

The final chapter of the book looks in detail at the complex reasons for this failure. It starts with the stylized facts of modern resource-dependent economies in the developing world. For one thing, they remain resource-dependent and do not diversify, and the more resource-dependent, the greater their poverty. There is often pressure on land and water, and a high proportion of the population is concentrated in fragile land. The context of the global economy differs markedly from that in earlier eras of resource development, particularly in the much smaller share of world output accounted for by primary products: technology and human capital are far more important resources now. Finally, the poorest countries have weak institutions – as often noted – so the benefits of natural resources are not invested wisely. It is probably clear from this that Barbier incorporates a number of other suggested explanations, such as the 'Dutch disease' impact on exchange rates, or hypotheses about corruption, into his overarching 'frontier expansion hypothesis'.

The book concludes: “The problem of underdevelopment, and particularly the persistence of poverty and lack of economic opportunities among the world's poorest people, may be inextricably linked to the poor management of land and natural resources.” (p633) And Barbier ends with a discussion of the way ecological pressures are exacerbating these problems as well as presenting new challenges everywhere. He takes comfort from the fact that modern growth does not depend as heavily as economies did in the past on the exploitation of natural resources. Resources that were abundant up to the 20th century will be scarce now. However, “a critical driving force behind global economic development has been the response of society to the scarcity of key natural resources.” The challenges are different, but the conditions for a successful response are the same as they have always been.

I should add that this is not a light read, but a large and scholarly book – I picked out the chapters which looked most interesting. There are 3 or 4 chapters of particular interest for the modern issues. Barbier's over-arching hypothesis seems sufficiently capacious to include a number of more specific hypotheses about economic development. This isn't intended as a criticism; indeed, the point about the need for  productive investment into other parts of the economy seems absolutely spot on, looking at the absence of diversification in so many developing countries.

Scarcity and Frontiers is an important addition to the research looking at the crucial role nature plays in our economic well-being, joining books like Jared Diamond's Collapse and Thomas Homer-Dixon's Environment, Scarcity and Violence (also interesting for his interest in the dynamics of complexity – see the article at the top of this page) and older texts such as Joseph Tainter's The Collapse of Complex Societies.

This is a key and expanding literature for our dawning Era of Scarcity.