The most recommended books about economic inequality

Philippe Aghion has been one of the pioneers in the development of “Schumpeterian Growth Theory” to model the process of Creative Destruction” that drives technological innovation and economic growth. This is an accessible presentation of the dynamics of the model and the observable consequences in the real world.  

I have found it essential for teaching my course on Venture Capital and the Economics of Innovation.

The great fact of economic history is that we all used to be poor, and now most of us are not. 200 years ago, almost 90 percent of the world’s population lived in extreme poverty, today around 9 percent does. This is the story of that remarkable transformation and what made it possible. Of course, there are many good books on this, and I have greatly enjoyed for example Joel Mokyr, Deirdre McCloskey, and David Landes, but this is a powerful, short book by a great historian, that manages to weave together economic, political, technological and intellectual factors into a very compelling narrative of progress and its preconditions over the past one thousand years.

After interviewing me for my new book in May 2021, the editor of a suburban newspaper in Chicago asked me to write an Op Ed piece about the new federal holiday, Juneteenth. It is the day of recognition and celebration of the ending of slavery in the last confederate state of Texas in 1865. My Op Ed piece titled, “My Bittersweet Feelings About Juneteenth,” was written to inform and educate adult readers about June 19, 1865. That was the day Union Troops arrived in Galveston, Texas, and began informing Black enslaved people that they were officially emancipated. 

The Juneteenth Story is a well-researched and beautifully written historical depiction of the same event. But the targeted audience of readers are children. It is the size of a large typical children’s coloring book filled with pretty colors and appealing graphic art. My 40-year-old daughter, Akilah, gave it to me as a Father’s… show more.

There should be at least one book about the 1920s on this list, and this one deserves mention because it elegantly brings to life several of the most interesting characters from that era. There are some dubious ones, such as Jesse Livermore, the “Boy Plunger” who operated bucket shops, shady financial firms that manipulated stocks with fake news. And there are more legitimate leaders of the era: Pierpont Morgan’s son, Jack, and his brainier partner, Tom Lamont, and the power brokers of Kuhn Loeb. Brooks vividly skewers all of them. He misspelled “Golkonda,” but the essence of his story nails the excesses of the era, and is an apt reminder of how much wealth and economic inequality can result from the Federal Reserve going wild with loose monetary policy.

This is a good book to understand the pervasive existence of “rents” in the economy. From the literal rents that homeowners in popular areas can charge, to the rents that accrue to copyright or patent holders, to the rents earned by firms using regulation to block competition, the authors document all the places in our economy where this restricts innovation. It is ultimately a book asking “what is fair?”.

I enjoy myth-busting.

A favorite message from the economic profession is that free trade is good for everyone, and that those who do not agree are either misguided or defending vested interests of their own. In this book, Williamson shows that this view is false.

The welfare gap between the West and the rest of the world developed during the 19th and 20th centuries in large part because of trade-induced division of labor that led to de-industrialization, increased inequality, and volatile revenues in the losing countries—factors that all contributed to retarding economic growth and social development in countries that are now poor.

More recently, the free movement of capital has had similarly negative effects on developing and emerging economies, a fact that is now recognized also in organizations such as the IMF.

In this book, Walter Scheidel proficiently exploits the new information that we now have available about wealth inequality in the past to make one bold claim: across history, only catastrophes and large-scale violence (the “Great Leveler”) could significantly reduce economic inequality. Otherwise, the concentration of political power and of coercive force in a few hands also led wealth to become ever more concentrated.

This is a rather depressing view, with which I partially disagree for scientific reasons (as it downplays the importance of human agency and of our collective choices).

Nevertheless, I love this book for its scope, its ambition, and the treasure trove of information about the Classical Age and non-Western societies and cultures that it brings to the debate on wealth inequality in human history.

In Marriage Markets, June Carbone and Naomi Cahn, both law professors like Lynne Marie Kohm, examine how macroeconomic forces are transforming our most intimate and important spheres, and how working-class and lower-income families have paid the highest price.

Their book shows how the best-educated and most prosperous have the most stable families, while working-class families have seen the greatest increase in relationship instability because greater economic inequality has profoundly changed marriage markets.

The failure to see marriage as a market affected by supply and demand has obscured any meaningful analysis of the way that societal changes influence culture. But Jane Austen understood this principle very well.

I lived through some of the events that Lane Windham describes in her super-readable and super-informative account of how new types of workers challenged both their employers and the American labor movement to listen to them and improve their work lives.

Shipyard workers, department store workers, office workers – these groups figured out new ways to raise their voices and “knock on the door” to make themselves heard. The result was big changes in their own lives, in the workplace, and in America’s unions.

Today, we’re seeing a surge of labor organizing just as groundbreaking as the initiatives Lane Windham describes. This made the book especially relevant for me. 

Margaret Thatcher famously argued that “there is no alternative;” this book is the ultimate rebuttal.

I read this for the first time as an undergrad, and it forever changed me. What’s so powerful about it is that Schweickart lays out a simple but powerful model for a fundamentally different kind of society–a democratic socialist society based on economic democracy. He then carefully demonstrates that this alternative is not only feasible but that it would work far better than capitalism in pretty well every regard.

For anyone who has been searching for a clear and coherent alternative–this book is for you.