One reader asked me: David do you have a Top 10 book list on Economic Theory for beginners? Just finished “The Myth of the Rational Market” and loved it. But I don’t know what to read next. Or let me ask the question another way, should I start with reading books on Austrian economics? Hayek? Misses? Fisher?
I do want to give a list of economics books that I have read that I have found useful. I am an odd duck here, because I have been schooled in the neoclassical theories, and I have largely rejected them. Men, and the institutions of men are more complex than that.
Here’s my dirty secret. Yes, read the Austrian economists, but I have not read any of them. I have come to their conclusions on my own, but my views have also been influenced by Minsky and the Santa Fe Institute. I view economics as ecology.
All that said, here is a list of economics books that I think are valuable, that I have read:
1) Manias, Panics and Crashes, by Kindleberger. Kindleberger explains how crises come into existence in a systematic way.
2) Devil Take the Hindmost, by Chancellor. Chancellor describes the history of crises, and gives significant background data regarding economic crises.
3) The Alchemy of Finance, by Soros. Explains why men are not rational as the neoclassical economists think. Explains nonlinear dynamics — reflexivity, as he calls it.
4) A History of Interest Rates, by Homer. Detailed studies of how interest has played a role in our world again and again, even as idealists attempt to limit or eliminate it.
6) The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else, by de Soto. Puts forth the idea that laws protecting property rights help create wealth.
7) Against the Dead Hand: The Uncertain Struggle for Global Capitalism, by Lindsey. Promotes global trade as a means of increasing wealth. On the same topic, How Nations Grow Rich: The Case for Free Trade, by Krauss.
8 ) The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor — Puts forth why culture matters. Some cultures by nature will be poor and others rich.
9) The House of Rothschild: Volume 1: Money’s Prophets: 1798-1848 and The House of Rothschild: Volume 2: The World’s Banker: 1849-1999, by Ferguson. Records tumultous years, and how some of the most clever capitalists ever known survived it. Also notes that they never expanded to America when it would have counted.
10) The Birth of Plenty : How the Prosperity of the Modern World was Created, by Bernstein. Explains how the Western world grew into the present lack of scarcity that it now has.
11) The Elusive Quest for Growth: Economists’ Adventures and Misadventures in the Tropics, by Easterly. Development economics is at its best when there are few subsidies — economics in the developing world is the same as it is here, only more so.
12) The Nature of Economies, by Jacobs. In story form, she explains the nonlinearities of economics.
My view is that governments should provide a few basic simple rules regarding the economy, and let the courts fill in the details. Economies grow best when they are free, and where the culture concludes that growth is valuable. That is not true everywhere.
Full disclosure: all of the books that I mention here I own, and I bought with my own money. If you enter Amazon through my site and buy anything, I get a small commission, but your prices are he same regardless.
Update: These are books on macroeconomics. I may have a similar post on microeconomics coming. Also, I forgot one book that I recently reviewed: This Time is Different, by Reinhart and Rogoff. They cover why crises happen, but unlike Manias, Panics, and Crashes or Devil Take the Hindmost, they quantify it.