I would recommend two older books that get more to the heart of what is wrong with our economic system in general, laying some of the basis for what has gone one recently.
Thorstein Veblen's Theory of the Leisure Class and Theory of Business Enterprise. Both are available free on Google Books.
gliftor
Member
I agree strongly with Douglas Edwards on both the usefulness and inadequacy of Paul Krugman's popular work. Before Krugman, the late John Kenneth Galbraith was the leading mainstream liberal economist; Krugman has been very critical of Galbraith exactly for the reason that Galbraith emphasized the structural and psychological reasons why Krugman's beloved models of the "free market" have only limited relevance to the real world. Galbraith's most important works, "The Affluent Society" and "The New Corporate State" contain many insights, but because they describe the old 1945-1975 version of corporate capitalism (in which the "countervailing power" of labor unions and government regulation tends to offset the power of large bureaucratic corporations), they don't deal with the leaner and meaner unchecked capitalism of today. However, Galbraith's "A Short History of Financial Euphoria," written in 1994 before the dot-com bubble, Enron, and the current mess, says most of what needs to be said about speculative booms and crashes in very few words.
In "The Accidental Theorist," Krugman trashes William Greider's "One World, Ready or Not: The Manic Logic of Global Capitalism" because Greider failed to use Krugman-style economic theorizing to discover that Greider's fact-based view of globalization was too pessimistic. Both books came out in 1997, but it is Greider's that describes today's world: "American politics is steeped in ignorance about the global reality, and any who question the reigning mantra of economic orthodoxy will be harshly disciplined by the press and multinational interests... if I am compelled to guess the future, I would estimate that the global system will, indeed, probably experience a series of terrible events - wrenching calamities that are economic or social or environmental in nature - before common sense can prevail."
Greider has never called himself an economist, as far as I know, but in his 1987 "Secrets of the Temple: How the Federal Reserve Runs the Country" he uses over 700 pages to explain the Fed's place in history and especially its role in the transition from Keynesian-era capitalism to the current system. This may not be a Top Five book, but it's essential background for any non-specialist who wants to think seriously about changing the financial system.
Douglas D. Edwards
Member
gliftor, thanks for the recommendations. I didn't include Greider's One World, Ready or Not because I haven't finished it (and, unlike David Graeber's Debt: the First 5,000 Years, it is not already on the Primer list, or next on my personal queue of political books to read); but from what I've read so far, I agree with your highly favorable assessment. Another older book along these lines is John Gray's False Dawn: The Delusions of Global Capitalism (1998). I abandoned both Gray and Greider in the middle, essentially because I agreed nearly 100% with what they were saying, but found it so depressing to contemplate how totally the Powers That Be had lost their minds. World empires usually don't last very long (on a historical scale) after their dominant classes become so totally divorced from reality. Krugman has a reputation for being a Cassandra or a Jeremiah, but he sounds like a wide-eyed optimist beside Gray or Greider.
I was also intrigued by your description of Galbraith. I haven't read any of his books, but I've heard a very interesting argument attributed to him: that large modern business corporations have undermined the very notion of property ownership on which capitalism itself is based. The effective owners of a large corporation are not its nominal owners, the stockholders, but its upper management and directors, an elite who exert (jointly) exclusive meaningful control of the corporation's actions. This elite's control gives them the ability to divert the lion's share of the corporation's profits to their own pockets, through such devices as stock option grants, and to insulate themselves from any negative consequences of their actions, through such devices as golden parachutes. So the elite, while nominally the corporation's employees, in reality have all the attributes of effective owners, while any stockholders who are not members of this elite are at best moneylenders, at worst chumps and suckers. Does this sound like part of Galbraith's message, from what you know of his work?
gliftor
Member
DDE - Galbraith's classic works were discussing companies like IBM, AT&T, and GM in their glory days, so it wasn't much of a stretch to see executives of those companies as holding more power than any combination of their stockholders. JKG pointed out the similarities between corporate and government bureaucracies, and claimed that both were part of a "planning sector" that stood above purely economic forces like supply and demand. He shows the part of our evolution in which the supposed power of ordinary stockholders became irrelevant. His work doesn't (AFAIK) describe our current situation in which the financial sector has taken away much of the autonomy of executives of non-financial corporations.
gliftor
Member
I wince when I reread my sentence about Krugman vs. Galbraith - what I was trying to say was that Krugman, with his emphasis on "pure" economic theory, dismissed Galbraith's work as something other than real economics. The claim that JKB's work shows the limited relevance of PK's is my own editorializing.
Speaking of unfortunate sentences, I have a real problem with one on p.96 of David Graeber's "Debt" in which he is obviously confusing the founding of Apple Computer with something else. A lot of his readers will know that Apple was started by the two Steves in the 70s, and will see the error. To me, that mattered a lot because "Debt" forces me to rely on Graeber's explanations of what goes on in a great variety of societies I know nothing about. Can I trust him to have done better fact checking on his less easily checked facts? I would like to be able to, because his book provides just the kind of meta-economic insights we need to get beyond where the mainstream economists have taken us. I agree that it's a very important book, but I wouldn't put it in this top 5.
Douglas D. Edwards
Member
gliftor, I agree that the error on page 96 of Debt is disturbing. Despite Debt's extensive notes and bibliography, Graeber does not cite a source for the claim he makes about the founding of Apple, and I'm not even sure what other event he's confusing it with. (Do you have any idea? His account also doesn't match the facts of the founding of Microsoft, which occurred in 1975, any more than that of Apple.)
Still, I think it's going overboard to downgrade the overall significance of Debt because of this single mistake, or to draw conclusions about its overall reliability from this one example alone. Still, as I continue to read through the book, I'll be on the lookout for other errors of fact. Thanks for pointing this out. Please consider contacting Graeber and asking him what he was thinking.
It's highly dated in some spots, but this is far and away the most powerful explanation of corporate capitalism:
http://astore.amazon.com/thecontra-20/detail/0853450730
I say it's one of the 5 best books of the 20th century.
leha
Member
Economic Democracy: The Political Struggle of the Twenty-First Century
J.W. Smith
An exhaustive account of the practices and policies that have led us to where we are today, and a strategy for a way back out.
Read about it here:
http://www.amazon.com/Economic-Democracy-Political-Struggle-Twenty-First/dp/1933567015/ref=sr_1_4?s=books&ie=UTF8&qid=1323751834&sr=1-4
