New Ideas From Dead Economists by Todd G. Bucholz

This book summarised the key concepts created by influential and major economists from the father of economics ,Adam Smith, to recent economists who have helped to solve economic disasters like John Maynard Keynes. Bucholz has created an excellent guide to the ideas and theories of great economists and analysing their works to understand their true meaning.

The most prominent of the economists, Bucholz analysed was Karl Marx, who could be considered as the father of Communism. Marx created the Communist Manifesto which outlined the basic ideologies of Communism and their significance, however Marx also wrote another work labelled: ‘Capital’ which criticised Capitalism. Although, the extraordinary part of this work was that he eventually defined the end of Capitalism, which at the time in the 1800s seemed impossible, yet the recent economic disasters resemble greatly the type of problems Marx pointed out. Bucholz has revealed the worrying predictions of Marx and how they could be true, regarding the disaster most Capitalist countries now are in.

Another prophecy that was outlined, was that of Malthus. Malthus was an economist but also a population expert and he claimed that population increased geometrically while food supplies increased arithmetically which would inevitably mean that humans would begin to suffer due to exhausted food supplies. However, he was obviously wrong as this is not the case, yet Malthus raised a serious issue. There are some resources on Earth that do increase at a rate slower than humans do, such as non-renewable energy sources. Therefore, perhaps humans will suffer due to exhausted resources and not food, as was explained by Bucholz.

Furthermore, there were many other ideas of famous economists, that Bucholz illustrated in a clear and precise manner, including: David Ricardo and his views on Free Trade, Adam Smith and his theory of the ‘invisible hand’, the ideas of taxation from John Stuart Mill, the creation of the theory of Marginalism by Alfred Marshall and the methods John Maynard Keynes used to help solve the problems of economies around the time of the Great Depression of the 1930s.

In conclusion, Bucholz has compacted all these ideas from famous economists within one book, that could perhaps be used to help the current economic disaster. From the father of Communism to the father of Capitalism, Bucholz ensures he has presented the views of the most famous economists. 

The Ascent of Money: A Financial History of the World by Niall Ferguson

Currency has been used as a form of payment for centuries having been formally created in the fifteenth century in Renaissance Italy, under the influence of the Medici family who helped to create the first bank. Therefore, the birth of modern finance can be accredited to the Medici family of Renaissance Italy. However, one ought to know how transactions and payments were made prior to the invention of money, as we know it today.

Currency, as has been demonstrated in the past, is only worth what someone else is willing to give to you for it. The most illustrious example was the Incan Empire where this civilisation had vast quantities of gold and silver, yet they were valued as worthless. Instead labour was often measured as currency. However, some ancient civilisations such as the Mesopotamians had a Barter Economy. This means that instead of using currency to ‘purchase’ goods or services one would like, a trade was completed. This means a trade was offered in terms of goods or in services for the other.

This simply demonstrated how currency is greatly valued today, yet throughout human history currency was hardly used. Many civilisations have come and gone who have used currency or have not. One example of an ancient civilisation that used currency were the Romans, who did in fact have a stable currency, with which their markets operated. Although, most other civilisations did not value money greatly and instead used other methods to suffice payments or transactions.

Money has now been used for centuries and often seen as depended upon by many powerful nations across the world. However, in recent history money has also been criticised by many different people. This is most apparent with the beliefs of Communism, which states that money is a tool of capitalist exploitation and should be eradicated. Although, the remaining communist countries such as North Korea have still failed to remove their currency, which simply highlights the dependence our modern civilisations have acquired. Furthermore, even John Maynard Keynes one of the greatest British economists, dismissed the Gold Standard in 1924. The Gold Standard is the form in which currency is measured in the UK, which makes money equivalent to gold in banks.

To conclude, this short book clearly summarises the history of currency and the problems associated with the dependence on money. Ferguson has created an excellent book that provokes much thought and questions the fundamentals of the civilisations that we have created.

How Markets Fail by John Cassidy

This book by John Cassidy outlines the main causes of why markets fail, as the title suggests, however it also provides useful analogies and reference to the works of very famous and influential economists who also dealt with this type of market failure and possible solutions.

The book consists of three parts, each offering a different view on the failure of markets from the opinions of well-known economists such as Adam Smith to the effects of rationality. Cassidy offers a very convincing explanation and argument of why these markets and economies, which were once thriving, fail and collapse, not just in the last few years but throughout history.

The theory of incentives that Cassidy offers state that they are crucial in helping to keep economies thriving and expanding and that when there is an absence of them whole markets can collapse, such as markets that follow Communism, as they lack incentives and rewards. This is an accurate comment regarding the crucial role of incentives, however that would inevitably mean that markets that follow ideologies such as Capitalism should thrive and succeed, as incentives are a key part of Capitalism. This is not apparent as most if not all markets that collapsed in the Great Recession of 2008 were Capitalist, instead the comments of Karl Marx, who could be considered as the founder of Communism, were correct as he stated that Capitalism would eventually collapse in on itself, due to it’s fundamental design flaws.

Furthermore, one of the main causes of financial disasters especially the most recent ones, are becoming too confident about the market and relying heavily on formulae and predictions regarding the economy. Cassidy touched this upon as he stated that extreme events such as recession or great financial disasters cannot be predicted and are random. This accurately depicts why markets fail.

Moreover, the analogy used by Cassidy of the vicious circles that markets enter when they fail, is plausible and clear in demonstrating the problems economies suffer once they collapse. Prices fall, which signals to banks that they must sell quickly which again feedbacks to make prices fall further and the cycle continues. This is the main issue with economies and markets when they fail and has been dubbed by Cassidy as a vicious circle. However, this cycle does not accurately portray the entire economy and only looks at the effects on banks, but the impacts on consumers or firms have not been considered. If they had been in this vicious circle, it would have been too complex to understand and analyse, as within the different classes of consumers, reactions are very unpredictable and immeasurable, therefore such a model would not satisfy the complexity of the situation.

In conclusion, John Cassidy powerfully portrays the impacts on a country when a market fails and the reasons why such catastrophes can occur. Cassidy also offers some solutions and the solutions of famous economists to these financial disasters that have brought some countries to their knees.