The list of books that I would recommend that every student in economics read is very short [*]. However, I now have one new book to add to that list: The Economics Book by Steven Medema. I was first attracted to this book in the Unity Books store in Auckland. It had a shiny blue cover that appealed some inner magpie instinct, and the word 'economics' on the cover. And inside, lots of pictures.
Through the book, Medema takes the reader on a tour of the history of economics. The book is structured as a series of short essays, each just a page long and devoted to some aspect of the history of economic thought, a key publication, or a key moment in history that had economic implications. The book starts with Hesiod's Work and Days, and ends with cryptocurrency (the book was published in 2019). Along the way, Medema writes about tulipmania, Mandeville's Fable of the Bees, several pages devoted to Adam Smith's writings, the Austrian School, the 'circular flow diagram', the permanent income hypothesis, agency theory, endogenous growth theory, and much, much more. I made around two pages of short notes on things to incorporate in my teaching (as my students know, I often like to namecheck the economists who were the origins for the theories we cover in class).
I also learned a lot from this book. One lowlight of my own economics education was a lack of exposure to the history of economic thought and key moments in the development of economics as a discipline. This book fills the gap nicely, and it is for that reason that I think it should be required reading for economics students. But not just for economics students. This is a book that an economics student could give to their parents, to help them understand a bit more about economics (unless, of course, the parents are also economists!).
Medema writes in an interesting and engaging style, making each short essay a pleasure to read. He also handily cross-references the essays, so that readers can follow particular lines of thought, forwards or backwards through the book. The pictures that accompany each essay are added value, although this is not quite a coffee table book.
There were several stand-out essays for me, especially early in the book. I hadn't heard of Aristotle's writings on justice in exchange, which Medema illustrates with Aristotle's tale of an exchange between a cobbler and a builder:
Each man receives something of value from the other, and each incurs costs in producing the goods offered. For an exchange to be just, Aristotle posits that the ratios of benefit to cost for each party must be equal. A house provides great benefit to the cobbler, but the cost of producing a pair of shoes is very low. On the other hand, a pair of shoes for the builder provides a relatively small benefit, while the cost of building a house is very high. Given this, the cobbler should provide the builder with many pairs of shoes in return for a house, to satisfy the reciprocity requirement.
There are also excellent essays on Ibn Khaldun as a forerunner to Adam Smith, and the Salamancans as the origin of the quantity theory of money as early as the 16th Century. I also really appreciated the references to early female economists, including Jane Marcet and Harriet Martineau as early popularisers of economic ideas, and Joan Robinson's contributions to understanding monopolistic competition. Medema also offers what I think is the clearest explanation of the Shapley value that I have ever read.
Inevitably, in a book like this, there will be key ideas and developments that do not make the final cut or are not considered at all. I was truly surprised, though, that there was no mention of the Mont Pelerin Society, or not as much devoted to the neoliberal turn in economic policy in the 1980s as I would have expected (those two are, of course, closely related).
Nevertheless, this is an excellent book, and well worth purchasing. Highly recommended!
*****
[*] The short list of books that I think every economics student should read (along with this one), includes Robert Frank's Falling Behind: How Rising Inequality Harms the Middle Class (which I discussed here), Ziliak and McCloskey's The Cult of Statistical Significance: How the Standard Error Costs Us Jobs, Justice, and Lives (which I reviewed here), and Akerlof and Kranton's Identity Economics (which I reviewed here).
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