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The Crisis Of '08 Reading List

The best books to help you make sense of Marx, Keynes, the Great Depression, and how we got where we are now.

Every few years, someone urges me to do a Christmas book list, and while protesting my ignorance and incompetence, I gladly comply. This year’s subject is the current global recession, which threatens to become a global depression. This is a layman’s list, because I am strictly a layman on the subject of economics. You don’t have to know anything about string theory to read any of the books I recommend.

I learned most (or what little I know) of economics from reading on my own or from study groups we used to hold in the fading days of the new left. I read all three volumes of Capital in a study group organized by the late Harry Chang, a Korean immigrant to the Bay Area who was a computer programmer by day (in the keypunch era) and a Marxist scholar by night. I read Keynes under sporadic supervision of economist Jim O’Connor, the author of The Fiscal Crisis of the State, and a fellow member of the collective that published Socialist Revolution (which in 1978 became Socialist Review). And I got my introduction to economic history from historian Marty Sklar, who was also a member of that collective.

A decade ago, I might have been embarrassed to admit that I was raised on Marx and Marxism, but I am convinced that the left is coming back. Friedrich Hayek is going to be out; Friedrich Engels in. Larry Kudlow out; Larry Mishel in. And why is that? Because a severe global recession like this puts in relief the transient, fragile, and corruptible nature of capitalism, and the looming contradiction between what Marx called the forces and relations of production evidenced in unemployed engineers and boarded up factories and growing poverty amidst a potential for abundance. As capitalism itself--or at the least the vaunted miracle of the free market--becomes problematic, the left is poised for an intellectual comeback. So here are four topics and some books to read about them, plus a few articles, from someone who learned economics by reading and rereading Paul Baran and Paul Sweezy’s Monopoly Capital.

1. The current crisis. I was warning my colleagues of an encroaching disaster a year ago, because I was reading the columns and articles of Paul Krugman, Nouriel Roubini, Larry Summers, and Dean Baker. They were on top of this when Hank Paulson and Ben Bernanke were still telling everyone not to worry. Of the current books I’ve read (and I haven’t read many), I’m very high on Financial Times columnist Martin Wolf’s Fixing Global Finance, George Cooper’s The Origin of Financial Crises, Jamie Galbraith’s The Predator State, and Dean Baker’s Plunder and Blunder. Wolf is terrific on the international currency mess--and the Financial Times is the paper to read--Cooper is first-rate on the irrationality of money and finance, Galbraith has a good explanation of how we got to where we are, and how to get out of it, and Baker is the expert on the housing bubble. I also liked Krugman’s The Return of Depression Economics when it appeared almost ten years ago (Short take: If it could happen to Japan, it could happen to us). There is a new edition that incorporates some material about 2008, but I haven’t read it.

2. John Maynard Keynes. Keynes is back in vogue, and rightly so. One economist--I can’t remember who it was--recently warned against reading The General Theory of Employment, Interest, and Money because it was written strictly for economists. I don’t agree at all. It’s a very hard book, especially some of the middle sections, but worth reading and rereading. If you don’t have energy for the whole thing, read the first three chapters, some of the middle chapters (7, 10, 16, and 18 are my suggestions) and the last three. I suggest, however, a guide. The best I’ve found is Dudley Dillard’s The Economics of John Maynard Keynes, which, to my amazement, is still in print after sixty years. I also like Hyman Minsky and Paul Davidson’s guidebooks to Keynes. But you’ve got to read Robert Skidelsky’s three-volume biography of Keynes, Hopes Betrayed, The Economist as Savior, and Fighting for Freedom (also now available in an abridged one-volume edition). Believe me, this is one of the great biographies. The way he brings together Keynes, the gay aesthete of Bloomsbury, and Keynes, the economist and man of worldly affairs, is something to behold. Skidelsky’s second volume is also the best introduction to Keynes’s economics, because you learn that exactly those ideas you found mystifying or most difficult in Keynes were hotly debated between him and his colleagues.

3. The Great Depression. There have been a lot of books on this subject, but most of what I read I read decades ago, so I’m sure I’m going to overlook worthy choices. Still, there are two older books that continue to stand up. George Soule was an editor of The New Republic during the 1930s. He was also an economist and in 1947 published a study of the American economy from 1917 to 1929 entitled Prosperity Decade. Soule shows that well before 1929, there were rumblings of trouble in the American economy--not only in the stock market bubble, but in overcapacity in key industries like auto, and in the rise of technological unemployment. You’ll see the surprising resemblance to our own decade, including an anticipatory recession in 1926 like the one in 2001. On the international crisis of the 1930s, I like Charles P. Kindleberger’s The World in Depression, which I reread two months ago when I was writing about the current international imbroglio. I want also to mention an essay by Sklar in The United States as a Developing Country. In chapter five, “Some Political and Cultural Consequences of the Disaccumulation of Capital,” Sklar puts forward the idea that during the 1920s, capitalism shifted from the accumulation to disaccumulation of capital. That’s Marxist jargon, but what it means is that goods production began to expand as a function of the reduction rather than increase in labor-time and in the labor force. That created an enormous opportunity, but also a potential crisis. The depression of the 1930s, Sklar argues, was the first “disaccumulationist” depression. One of his former students, historian Jim Livingston from Rutgers, has put forward a similar analysis of the current recession.

4. Marx and Marxism. Marx, like Keynes, is best read in his own words. There are a lot of brilliant shorter works, but I’d put the first volume of Capital up there with The Origin of Species, The Interpretation of Dreams, and The Philosophical Investigations on my list of great books of the last two hundred years. It’s not a guide to starting your own business and really doesn’t have a theory of crises. Some of that is in the other unfinished volumes. What volume one does is establish capitalism as a phase, and perhaps a passing phase, in world history whose very nature has consisted in disguising that fact from worker and capitalist alike. You read Capital to understand the historical underpinnings, not the mechanics of capitalism. Marx’s theory of history has obvious deficiencies--he didn’t foresee, certainly, the rise of corporate capitalism and of corporate liberalism. His trademark theory of the falling rate of profit, which you can find in volume three, is also unpersuasive. But these failings pale beside his portrayal of capitalism as mode of production based upon labor power as a commodity and on the accumulation of capital. I wish I could recommend guides to Marx’s thought. The economic guides often err by trying to justify his works as modern economics. G. A. Cohen’s book, Karl Marx’s Theory of History, is a little academic, but of all the books I’ve read in the last twenty or thirty years, it’s the best.

Have a good, if grim, read of these books--if you have some better ideas, include them in the comments below--and let’s hope that the next year brings some better economic news than this one.

John B. Judis is a senior editor at The New Republic.