The most recommended economic policy books

Political scientists and economists have long argued that voters are rationally ignorant.

On this theory, people tend to acquire and retain information only if the expected benefits exceed the expected costs. This explains why students cram material to pass a test but let themselves forget it afterward, why Americans who speak English at home don’t usually bother to learn a foreign language but so many people learn English, or why you don’t bother attempt to memorize your local phonebook.

It also explains why voters know so little. Since individual votes make so little difference, individual voters can afford to remain ignorant. Political information is a collective action problem: what we know matters, but what any one of us knows does not. 

Caplan adds an innovation. This point also applies to how we think, not just what we know. Political psychologists have long found that voters process what little information they… show more.

You might think this book is a bit left field in the arena of leadership, given its title. I think it cuts to the heart of the big question all leaders, whether of organisations or nations, should be considering, that of economics and economy.

What really resonated with me is the exploration of the subject from holistic and spiritual, or consciousness, perspectives and how this encourages thinking more deeply about the confines and constraints our economic systems place on us, the compromises that ensue in decision-making and, most importantly, the choices we need to consider more carefully from an ethical and human values standpoint.

This is a topic central to human survival and well-being, a must-read for leaders.

This is one of the defining books that has helped a generation of researchers name an important tendency – that capitalism isn’t all-dominant and there are always alternatives to it.

I use this book often with campaigners and city policymakers to help them understand that if you really take a closer look at our modern-day economy you will see all sorts of activity – co-operatives, family labour, barter, gift exchange.

I love the idea of postcapitalism as it really asks us to think about what should, or ought to, come next. This broader understanding of our economies as diverse entities opens up the possibility of supercharging more community-focused economies. 

The Will to Improve is most celebrated for its explanation of ‘rendering technical’: the ways complex, political factors contributing to poverty are reduced to those amenable to technical intervention.

But I have found Tania Li’s concept of ‘trustee’ the most useful in my work on local development actors: understanding how they come to take on the role of trustee, their desire to ‘improve’ others, and the prickly subjects that resist their efforts.

Li traces the ‘will to improve’ through 200 years of Indonesian history, but it is most powerfully elucidated through her rich ethnographic description from the province of Sulawesi.

Her analysis weaves together Marx, Foucault, and Gramsci, showing how theory can illuminate description. It is a masterclass in storytelling and the power of theory. 

In the original version of this book, Wade refutes the two extreme versions of the reasons for the dramatic successes of the East Asian Tigers, particularly Taiwan, in going from undeveloped to advanced economies, fully integrated into the global economy, within one generation.

One version is that the success was mainly due to the free market and the other that it is attributed mainly to government intervention. Instead, Wade shows that key decisions were divided between the private and public sectors in a way that produced a synergy between them.

The revised version extends the coverage to explain the booms and busts in the early 21st century and outlines his new agenda for national and international development policy.

I liked that this book highlighted how supposedly tried-and-true approaches to innovation fail to deliver results.

The book’s insights about how to drive radical innovation informed the advice I now give executives about how to approach organizational transformation, starting with an ambitious vision, communicating the “why,” and enlisting great people to go on the journey with them.

It helped me to understand that building organizations to develop disruptive technologies requires leaders to envision things that may sound crazy until they are realized. 

This book explains why Mexico has been important to the governance of the global economy.

Mexican officials and economists promoted a post-colonial and development conception of the global economy based on equality, inclusion, and redistribution. Thornton writes about the entire architecture of the global economy, of which international trade was an important part.

Her work explains the significance of a politics of resistance that shaped and was suppressed by the global economic order. She notes that scholarship that excludes or minimizes global South countries perpetuates their marginalization.

The most recent entry on my list is already a landmark achievement.

Margarita Fajardo’s authoritative monograph places the UN’s Economic Commission for Latin America – the incubator for the cepalinos who successfully challenged the postwar consensus on developmental policy – into the broader geopolitical history of the 20th century. This richly detailed study retraces the emergence of an intellectual and political movement that channeled discontent with the structural biases inherent in the global economic order into a cogent agenda of political economy for the peripheries of capitalism.

It also reveals how the fragmentation of the fragile postwar liberal consensus, in both North and South, eventually pushed this movement toward the high-powered framework of dependency theory, and thence into anti-establishment activism across the world.

This detailed historical narrative ably recounts the zig-zags in government policy toward large firms during the New Deal and the concomitant debates among advocates of regulation, antitrust, and laissez-faire.

Modern antitrust can be understood as emerging during the 1940s to resolve the 1930s policy struggles successfully. Today’s antitrust policy debate may seem new and fresh, but it often echoes the divergent positions taken during the 1930s.  

While researching a documentary, I tripped over an interview with George Reedy, White House press secretary from 1964-65.

Reedy had also worked in Pres. Johnson’s Senate office, and he spoke about how thirteen days after the Sputnik launch, he and an aide to Alabama Senator Lister Hill plotted to use the space program to transform the South. This book fleshes out much of that story. While it primarily delves into the economic development and transformation of the South, it also provides valuable insights into Johnson’s tenure as a senator.

The book highlights how Johnson used his political acumen to advocate for policies that would improve the economic conditions of his region. He understood the importance of federal investment in infrastructure, education, and healthcare to lift the region out of poverty.