100 books like Institutions, Institutional Change and Economic Performance

In this slim book, Ken Arrow – Nobel laureate and “one of the transcendent minds in the history of economics” – reveals with extraordinary clarity many essential truths about how the world works and why.

The first of these four essays is among the most eloquent and succinct statement about the core conflicts humanity faces: between the individual and society, between freedoms and collective obligation, between compromise and commitment.

Given that context, Arrow builds a framework for understanding the nature of organizations: their purposes, processes, and the central role of information. The clarity with which Arrow has developed this economics of information – an asset intangible and unmeasurable – reveals his genius.

The inquiry closes by considering the role of authority and responsibility; but throughout there are gems of insights in nearly every paragraph. 

Private property or the commons? Free enterprise or public ownership?

Arguably the most substantive contribution to such debates in the past 50 years has come from Elinor Ostrom for her decades of study of common-pool resource management.

From case studies around the world and from centuries past, she proves that collective ownership need not end in a “tragedy of the commons,” but can succeed.

In work that won her the Nobel Prize in Economics (she is a political scientist) studying community-managed fisheries, forests, grazing lands, and watersheds, Ostrom describes and evaluates successes and failures in great detail and with attention to the role of rules, monitoring, and enforcement, and leadership, in determining the kinds of governance that are most likely to succeed.  

Read this book if you say, “Let’s find a win-win solution.”

Sadly, most aspiring leaders misuse and abuse the term “win-win.” Instead of considering it a strategic option that should be thoughtfully applied, they treat it as a moral virtue. They then espouse win-win while striving for what I call “win-no-lose”—the hope that “we” win but “they” don’t realize they lost.

This makes building coalitions and collaborating terribly difficult precisely at the time in history when we desperately need to do these well. The book is full of surprising insights (like why turning the other cheek—advocated by most religions—doesn’t work).

It also teaches (aspiring) leaders how a critical mass of people who believe in cooperation can transform their organizations even if their peers don’t agree with them.

The aims of economic development are often said to be higher incomes, industrialization, efficient investment, and poverty alleviation.

Amartya Sen argues for a broader goal: increasing the capability of all human beings to achieve those things that they most value.

Such an agenda implies more ambitious goals for empowering people, especially in poor countries, to begin a process of expanding the real freedoms that people enjoy: education, health care, longevity, and the ability to influence political decisions.

Sen, a Nobel laureate in economics, draws on a lifetime of thought about human predicaments, famines, and poverty, how to define one’s capabilities, and the meaning of one’s ‘standard of living.’

Rather than offering specific recipes, this book provides a provocative framework for thought. 

As post-Cold War globalisation seems to face its fate, I always go back to this book as it offers lessons on the perils of taking for granted economic rationality. The 19th-century liberal order crumbled, and fascism emerged as a solution. In the same vein, is far-right populism a reaction against the consequences of neoliberalism?

Although he does not bring to the centre stage the impact of ethnic-religious cleavages, such a shortcoming only made me wonder whether his riveting account of modernity applies nowadays.

The British Industrial Revolution is the single most important event in shaping the modern world. Since 1800 the standard of living in Western Industrial nations has increased nearly 40-fold, and in the last half-century, this prosperity has spread more widely. Writing in an engaging style, Clark offers a unique and provocative account of these changes and their causes.

This is the first of four book recommendations that may not be as inspirational as The Grapes of Wrath, but which make up for that by providing real-world information that can be useful to people trying to improve our world. This book shows how fresh thinking about economics can help solve some of the world’s most intractable problems. Innovative research, careful observation, and plain common sense enable these two Nobel Prize-winning MIT economists to upend a lot of conventional wisdom and develop interesting and compelling policy proposals, which they discuss in a particularly accessible way.

Under the headings of hope, fear, and confidence, Nasar takes us through the lives, the ideas, the failings, and arguments of several dozen economists, in a lively journalistic fashion. From the last chaotic days of Joseph Schumpeter’s failing post-war Vienna to Joan Robinson’s 1950s propaganda trip to Stalin’s Moscow, she gives us an illuminating view of history and what economists did to try to improve it.

How can we make sense of the Covid-19 pandemic? Adam Tooze gives us a clear answer: it is the first crisis of the new era of environmental crisis. My work now focuses on the increasingly destabilizing effects that the crisis will bring into the future and how future leaders can be better ready to carry on the struggle under worsening conditions. The responses of current leaders to the pandemic – some good, many poor – are a key resource to learn from. This book is a first bash at learning the lessons from the pandemic. Into the future, more than anything we need leaders and governments who are capable of freeing us from the freezing embrace of fear in face of seemingly insurmountable odds. 

This book treats a rich variety of weighty topics, global in scope. It lays bare the real insights that bubble up when economic history is subpoenaed to the bar of economic thinking. The famous British Disraeli said he only read biographies because biographies were life without theory. It helps to take a break from scholars whose thoughts are pinned down by the most recent theories. To study economics without theory, it is necessary to study economic history. Economic forecasters too often have a bias toward predicting a continuation of existing trends with small adjustments. Rostov’s long sweep of history shows that these forecasts may be overridden by long-term trends. This book contains a lot of meat—a great abundance of instructive explanations, intelligent comments, and practical conclusions.