How Should A Student Start Their Economics Library?

Books are often the products of the economics field.  Our field is also one that consistently builds upon its previous work.  I like to think of this feature as a long game of telephone with citations being the links between generations work.  There are many, but Eugene Fama is a good example of this.  He wrote a famous paper declaring that firm ownership is irrelevant, "Agency Problems and the Theory of the Firm."  He cites earlier work by Armen Alchian and Harold Demsetz, "Production, Information Costs, and Economic Organization," and Ronald Coase's landmark, "The Nature of the Firm" (amongst others).  So previous work can be considered an indispensable part of an economist's tool belt.  These are all academic articles, but even more so, books form the foundation of our economic academic knowledge.  With that in mind, which books should a student begin building his library with?

(photo: BBC)

Which books form the core of economics?  This question is probably as fraught with variation as economics itself.  Because much is still somewhat in debate, the books we have often inform those positions end up displaying those positions as well.  Here is my first attempt at a short list for students and beginners to the field:


The Basics of Economics:

An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith
The Principles of Political Economy and Taxation, David Ricardo
Value and Capital, J. R. Hicks
The General Theory of Employment Interest and Money, John Maynard Keynes
Principles of Economics, Alfred Marshall
Foundations of Economic Analysis, Paul Samuelson
Elements of Pure Economics, Leon Walras

Miscellaneous Economics:

Social Choice and Individual Values, Kenneth Arrow
The Calculus of Consent, James Buchanan & Gordon Tullock
The Theory of Interest, Irving Fisher
Monetary History of the United States, Milton Friedman & Anna Schwartz
Price Theory, Milton Friedman
Prices and Production, Friedrich Hayek
A Theory of Economic History, J. R. Hicks
Essays in Persuasion, John Maynard Keynes
Risk Uncertainty and Profit, Frank Knight
The Economics of Welfare, A.C. Pigou
Economic Analysis of Law, Richard Posner
Capitalism, Socialism, and Democracy, Joseph Schumpeter
Interest and Prices, Knut Wicksell
Natural Value, Friedrich von Wieser

Politics:

Capitalism and Freedom, Milton Friedman
The Road to Serfdom, Friedrich Hayek
Human Action, Ludwig von Mises

Philosophy:

A Treatise of Human Nature, David Hume
Second Treatise on Government, John Locke
The Virtue of Selfishness, Ayn Rand


These are just some recommendations for starting points.  Many of these books have seen their theories updated in more recent articles and being familiar with the following articles is also important.  Also, if an individual decides to specialize, for example in Monetary Economics, a larger range of books such as Inflation Targeting by Ben Bernanke, et al become essential works.  I've likely missed many and there are many jump off points in that list, so please feel free to add books in the comments section!

Most of these books are out of print and even somewhat rare, so finding them going from store to store might be a nightmare of a process.  Most book stores don't have dedicated economics sections and if they do they are usually lumped in with books on business so you'll have to sort through mountains of books by the likes of Jim Cramer and Suze Ormann to find one or two books (often these will be pop economics books rather than actual academic economics books).  There are some book websites that cater to used book buyers.  Alibris is one of these sites, but some of these books are quite rare so be prepared to spend a substantial amount of money (Elements of Pure Economics by Leon Walras being an example of a book that is quite essential and quite rare).

Building a library is also an academic discovery process so everyone's library will vary quite a bit, but this list is designed to give a basic understanding of what might make a good economics library.  My hope is that this can help be a small guide on that process.  I know as I've been on this process, I've looked for resources like this.  If I can be a small help to someone else, than this has worked.

Remembering Milton Friedman

The Free to Choose Network is commemorating the 100th birthday of Milton Friedman by releasing an update of his groundbreaking series Free to Choose.  The series titled Testing Milton Friedman will be a three part series of roundtable discussions on three major topics: "The Power of the Market," "Tyranny of Control," and "Created Equal."  The participants include original Free to Choose participant Walter Williams (George Mason University) and other famous economists such as J. Bradford DeLong (University of California - Berkeley), Kevin Murphy (University of Chicago), Bryan Caplan (George Mason University), Austan Goolsbee (University of Chicago), Dani Rodrik (Harvard University), Raghuram Rajan (University of Chicago), and others.




It is scheduled to begin airing May 1, 2012.  Check your local listings for exact date and time.  For those of you who would like to brush up, here is the original Free to Choose series from 1980.






















My Professor, Thomas Rustici, was taught by James Buchanan who was taught by Milton Friedman so I think that makes me Friedman's Great-Grandstudent.  One of the stories that Rustici told me about Buchanan's tenure at the University of Chicago is that Friedman arrived while he was in the middle of his doctorate.  He had already taken his graduate level microeconomics class with Frank Knight, who was chairman of the department.  Knight was apparently so impressed by Friedman's approach to micro that he forced every graduate student to retake their micro course with Friedman.  According to Rustici, Buchanan said that he never really understood Microeconomics until that class.

I recently found a copy of Friedman's Price Theory, which is actually the lecture notes of David Fand and Warren Gustus which were reviewed and enhanced by Friedman.  Friedman characterizes the notes as being part of his course on Price Theory, so I'm not sure if that is the same course that Buchanan told Rustici about (these are the perils of second-hand knowledge) but when I was reading through the book, it was basically what Rustici was teaching on the subject.  In any case, it is a terrific book and even though it is far from famous it is as good or better than anything I've ever read by Friedman or on the subject.

In one of the last conversations I had with my grandfather, Dr. Philip Raup, he mentioned that he once shared a two hour drive with Milton Friedman in the early 1950's.  Friedman was lecturing at Saint John's University in Collegeville, Minnesota.  My Grandfather rode with him from the airport in the Twin Cities to Collegeville.  I asked him what they talked about, or what he could recall of the conversation, and he only said that "He was very opinionated."  I think that is a gentleman's way of saying that they didn't agree very much.

Austrian School Wins Poll

I asked my readers this question:  "Which 'School' of Economics is Closest to You?"  These were the results:

1.  Austrian (41%)

The Austrian School was founded by a generation of economists that were influenced by Carl Menger, who taught at the University of Vienna.  Notable This generation included Friedrich von Wieser and Eugen von Böhm-Bawerk.  It was Wieser that succeeded Menger at Vienna and taught the next generation which included Friedrich Hayek (left), Ludwig von Mises, and Joseph Schumpeter.  The school is still active with economists such as Peter Boettke and Israel Kirzner.

2.  Neo-Keynesian (24%)

John Maynard Keynes (left) launched this school of thought when he revolutionized the field with his groundbreaking work, The General Theory of Employment, Interest and Money.  This work had a lasting influence on other important economists such as Joan Robinson, James Tobin, and perhaps most importantly on Paul Samuelson who did much to add mathematics to the logical principles set forth by Keynes.  This school is probably best described today as New Keynesian and it includes most of the information economists such as George Akerlof and Joseph Stiglitz.  His greatest champion today is likely Paul Krugman.

3.  (other) (17%)

There are many schools that I could not mention such as Neo-Ricardian, Classical, Supply-Side, and others.  Individuals also often refuse to be categorized.

4.  New Institutional (12%)

Institutional economics also dates back to the 1930's when Ronald Coase wrote his essay, "The Theory of the Firm."  This school focuses on  laws that govern behavior and shape social norms as the primary causes of economic realities.  The term New Institutional started in the 1970's when Armen Alchian and Harold Dempsetz completely redrew mainstream economic understanding of the firm in their essay, "Production, Information Costs, and Economic Organization."  Contemporary participants in this school include Elinor Ostrom (left) and Daron Acemoğlu.

5.  Monetarist (6%)

This term is, for the most part, interchangable with the "Chicago" school of economics, which is perhaps the name that it is better known by.  This school was started at the University of Chicago by Frank Knight who invigorated the program there.  Milton Friedman (left) is the economist that is most associated with it.  It possibly has more Nobel laureates than any other school of economic thought; including Friedman, Robert Lucas, Gary Becker, George Stiglitz, Theodore Schultz, James Buchanan, and others.

6.  Marxist (0%)

Karl Marx (left) created the Marxism along with Friedrich Engels in the 19th century.  There have been many individuals including Sydney & Beatrix Webb that were influenced by Marx & Engels.  Marxism has many variations including socialism, communism and combinations with other schools economics to create distinctly Marxist variations.  Much of this has fallen out of favor as most governments that have tried to implement policies that Marx advocated in Kapital have not proven to work very well or at all.



Please vote in the new poll, "Who Should Win the Nobel Prize in Economics?"

The Trap

Summer breaks are great times for movies.  Adam Curtis is a British documentary director for the BBC.  He has released many interesting documentaries such as The Power of Nightmares, which compared Qutbism to American neo-conservatism.  He recently put out a new title, All Watched Over By Machines of Loving Grace, but I'm more interested in his 2007 film, The Trap.

The Trap is a film about how liberal ideologies have become logically trapped into a world that is not very attractive and paradoxically less free.  Curtis blames models created by game theorists and public choice theorists in the 1940's, 50's, and 60's as being incorrect descriptions of the human condition.  He inserts an old interview with Friedrich Hayek, who when asked where altruism fits into his philosophy, quickly responds that "It doesn't."  This ultimately seems to be the main sticking point to Curtis' complaints.  He does not believe that the Nash equilibrium is as prevalent as the models would suggest.  Similarly he does not believe that Public Choice is a good description of politics.  The main problem with Curtis is that he does all of his documentaries in a dramatic and tightly wound fashion.  He tells the story of game theory and public choice as though it were a massive conspiracy played out by the Rand Corporation on the unsuspecting citizens of the world.  As with so many political documentary-makers, his film is short on answers other than 'this is wrong.'

I'm drawn to The Trap for the same reason I was drawn to The Power of Nightmares, the high drama.  I remember seeing that film and feeling uneasy about Leo Strauss despite the fact that I was only drawing my information from a distortion artist that was trying to poison my well against Strauss' ideology before I had ever learned about it.  I wonder what viewers of this documentary think of Hayek, James Buchanan, John Nash, Richard Dawkins, and Isaiah Berlin.  Buchanan and Nash both have Nobel prizes in economics, but Curtis goes out of his way to make them look strange and radical.  New ideas are very powerful, but they are only as effective as the manner in which they are presented.  Game Theory and Public Choice offer important insights to large parts of individuals lives, but despite the fact that they are half a century old, they are still novel to many people.  This film might introduce the subjects to many or most of the viewers view this and what impression do they gather?

The film is actually three one hour television programs.

"Fuck You Buddy"

"The Lonely Robot"

"We Will Force You To Be Free"

Ultimately I'm interested in these because Curtis is a good communicator.  I would like to learn from him because if I were ever to make a documentary film, I would use many elements of his style.  I enjoy all of his music and visual montages.  They compliment one another very well.  His visual style and tempo perfectly matches that of the Internet driven generation.  He seems so much more polished and intellectual than Michael Moore, but actually he plays just as loose with the facts.  Enjoy, but with the caution that I've hopefully provided.  Try to observe Curtis' points for what they are: trying to stick holes in well rounded and accepted principles.  If you are interested, Buchanan and Hayek are worth reading as well.  Then, at least, you can judge for yourself.  Welcome to Summer Break infotainment!

The Inflation Tiger

Notes:  

This essay won the 2011 F.A. Hayek Award at George Mason University.  The topic was: “Hayek famously warned that policy makers engaged in discretionary monetary policy are in effect holding a “tiger by the tail.”  From that perspective, how would you judge contemporary monetary policy since 2008?” 

This essay was written on Federal Reserve System monetary policy, and not United States public policy.  These two subjects are closely linked, but I did not address public policy issues because of the scope of the essay topic.

“Your Money or Your Life?” What is the Difference?

This the my first essay for my summer class.  It is a work on the morality of property, democracy, and individualism.

The Start of Something!

I will begin my second semester at George Mason University, a summer semester when I'm only taking one course.  It's known as the synthesis course and is taught by Dr. Thomas Rustici.  He refers to it as: "Economics and Public Policy."  I've had him for one other class and he is very tough and judging by the reading list I'm in for another round of it.


REQUIRED:


Regulation, The Constitution, and the Economy by J.Edwards

Lost Rights by James Bovard

The Road To Serfdom by Friedrich von Hayek

The Anti-Capitalistic Mentality by Ludwig von Mises

Capitalism: The Unknown Ideal by Ayn Rand

RECOMMENDED:

The State by Anthony DeJasay

 It is somewhat fitting that the economic "synthesis" course be on public policy.  We are the school that both James Buchanan and Gordon Tullock taught at.  They practically invented the field of public choice when they wrote The Calculas of Consent.  Public Choice Theory is a way of looking at political issues using an economic way of viewing the world.  The practice reminds me that economics was previously called political economy, and perhaps removing the political aspects of economics might have always just been a fantasy for economists who would rather not have their theories meddled with by politicians who barely passed macro 101.

So the class should be a fun course in terms of subject matter.  Judging by the syllabus it looks like I will have 39 pages of essays to write in total and an examination so I hope that you didn't want to see me this month.

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We have a new distinguished alumni at the George Mason University.  Dr. Abdiweli Mohamed Ali has been named Prime Minister of Somalia.  He received his doctorate in economics in 2000.  He has an enormous challenge in front of him.  The government of Somalia is so young and fragile that most people in that country have spent most of their lives in anarchy rather than any state at all.  It's #1 export/import might be pirating/booty which is nothing to build a future on.  All the best to Prime Minister Abdiweli Mohamed Ali, I'm sure that his constitutional economics courses are finally going to pay off!