Political science and economics, when studied together, explores the relationship between governments and markets. Basically, the functioning of the world. By analyzing certain trends, examining history and producing forecasts, experts in both fields construct policy proposals that can have real impacts on human lives. By asking questions like: “What should the role of government be?” “What are the results of markets in certain conditions?” “How can living standards be improved?” students in both fields will be best equipped to solve some of the biggest issues facing our time. I was only fortunate enough to pursue these areas of study by accident.
By my junior year of high school, I had my heart set on studying political science in college. A very typical story of ‘I like politics and arguing, so I’ll study political science and go to law school’, I had a very weak grasp of my interests and goals. I was later convinced by my mom that poli-sci students aren’t too well paid, so I unenthusiastically added economics for the resume. I later fell in love with these interdependent subjects as they guided me to a better understanding of the world in which we live, rewarding truly for its own sake. The courses I took in a way completed one another, as one area of study could not be properly understood without the knowledge of the other. My ideas have been shaped and reshaped so enormously since my studies that it’s hard to take any former opinions of mine seriously. I haven’t regretted my decision and despite the deep flaws in my earlier opinions, I am pleased that my more ignorant former self was able to pick such an excellent field of study for my future self.
For fellow students of political science and economics interested in further advancement in the field(s), I’ve prepared this short top five list of books. While some of the ideas expressed by these authors may directly contradict one another, the different perspectives they present will provide the reader with a plethora of concepts to shape their viewpoints and give them a better understanding of how the world functions. I also provide my favorite chapter of each book for readers just interested in a taste of these incredible works and a recommended sequel for those who found the book especially worth their time. Happy Reading!
5) Milton Friedman, Capitalism and Freedom (1962)
While written in over half a century ago, the issues discussed in this magnificent short work from Nobel Laureate Milton Friedman remain shockingly pertinent today. An array of topics from international trade to monetary policy to school reform are discussed at length with unique arguments and deep conviction rooted in the principles of freedom and choice. Friedman discusses the appropriate role of government as they would fit into a liberal’s (in the classical sense of the term) political philosophy. A quote from the book I believe best represents the theme:“the role of the market…is that it permits unanimity without conformity; …On the other hand, the characteristic feature of action through explicit political channels is that it tends to require or to enforce substantial conformity”. Markets develop individualism while political forces restrain it.
As a liberal (in the contemporary American sense) this book had provided me with unique insights and has challenged my worldview in a thought provoking and accessible manner. Whether one is a free-market Libertarian or a more market skeptic Keynesian, all will find points of agreement and disagreement with this controversial work, which does an excellent job at challenging the readers preconceived notions, whatever they may be. The virtues of the free market and vices of government planning are well presented, with Friedman arguing to keep politics and economics in their separate corners with their explicit duties, preventing the former from obstructing on the latter.
(Favorite Chapter: 11- Occupational Licensure; Recommended Sequel: The Road to Serfdom by Friedrich Hayek)
4) Paul Krugman, Conscience of a Liberal (2007)
Turning to the term “liberal” in the contemporary American sense and to another Nobel Laureate, “Conscience of a Liberal” documents the politics behind the rise and fall of the Progressive movement in the United States. Krugman takes the reader through American history, from Roosevelt’s New Deal, the “Golden Age of Capitalism” of the post WWII era and the rise of conservatism in the 1970s in his attempt to show the importance political events had on the shape of our nation. Rather than Friedman’s judgment that circumstances are explained by economic laws, which political interference may only degenerate, Krugman goes for a different conclusion. Arguing instead that it has been political, rather than economic developments, which are responsible for the condition of areas such as health care, inequality and the welfare state. The middle class of the 20th century didn’t arise from free market forces, but by social and political ones shaped by direct government policy during the “Great Compression”.
And the Right’s exploitation of big money and racial tension, rather than the forces of supply and demand, play a key role in explaining America’s unique issues like the weakness of our unions and our social safety net. Politics and economics are rather deeply embedded and it is up to us as citizens if we hope to change how society functions. At the same time, the liberal ideas we may hold of believing that a better society requires change, will also require partisanship. The lessons of this book are even more true today than they were a decade ago. Krugman gives new meaning to the term “liberal”, as one who wants to bring the nation back to its era of (at least relative) social justice and equity. To quote from one of the book’s final passages “To be a liberal is in a sense to be a conservative- it means, to a large extent, wanting to go back to a middle class society”. This book is a must-read for those liberals who wish to seek a new perspective on their ideology or conservatives who wish to understand the other side and even their own side.
3) Karl Polanyi, The Great Transformation (1944)
Combining both an account of economic history and a critique of laissez faire, Polanyi in this timeless 1944 classic describes the political, social and economic forces that have shaped civilization and are responsible for the status of industrialized nations. Polanyi’s work, laying the foundations of the concept “embedded liberalism” outlines how markets and democracy are to coexist. Rather than allowing society to become subject to economics laws, the economy should be subject to society, serving as means rather than an end in itself. Analyzing the history leading up to the British industrial revolution and the state intervention of the late 19th and early 20th century, Polanyi sees the development of markets and government as a natural and necessary relationship. He challenges proponents of laissez faire who label the administrative and legislative actions of government as a “collectivist conspiracy” and instead offers the explanation of the “double movement”, the growth of the market being checked by a countervailing movement from society through the state. Far from being the utopia its proponents claim it to be, a market left entirely to its own devices would place the wellbeing of society in jeopardy.
Writing at a time when fascism had conquered most of Europe, Polanyi knew first hand the implications that subjectation of society to the free market held. Government expansion was meant to preserve what Polanyi calls “fictitious commodities”, namely land, labor and money. Separating them from normal goods, Polanyi explains the threat to society that leaving these fictitious commodities would bring. The reader will not just learn of the English Statute of Artificers and Poor Laws, but will develop a new perspective on the development of modern society as a whole. With the current backlash against neoliberalism, the negative implications of globalization and the 2007 Financial Crisis, the lessons of The Great Transformation has proven to stand the test of time and who’s lesson are to be heeded, as Joe Stiglitz warns in the book’s foreword, “before it’s too late”.
(Favorite Chapter: 21- Freedom in a Complex Society; Recommended Sequel: Globalizing Capital by Barry Eichengreen)
2) Sebastian Mallaby, The Man Who Knew: The Life and Times of Alan Greenspan (2016)
No institution embodies the relationship between politics and economics more than the U.S. Federal Reserve. And no individual embodies the Federal Reserve more so than Alan Greenspan, arguably once the world’s most powerful individual. From the Great Depression to the Great Recession, the life of Alan Greenspan takes one through the turbulent and fascinating moments of US history: the post WWII prosperity, the 1970s stagflation, and the neoliberalism of the late 20th century with the politics behind it all and Greenspan as the sideman. Culminating in the Great Recession of 2007-08, Mallaby documents the rise and fall of Alan Greenspan, providing a fair and insightful account of the man who was once at the driver’s seat of the global economy, highlighting his unique flaws and abilities that made him who he is/was and our economy what it is/was.
From membership inside Ayn Rand’s inner circle of free market ideologues to becoming the pragmatic overseer of the modern economy, Greenspan’s life and personal development will provide the reader with a new perspective on the controversial central banker. Challenging the conventional stereotype of economists as dry, abstract technocrats, Mallaby presents a story of a brilliant but shy man who had used his cunning, wit and charm to climb to the top of the vicious political ladder, securing a 19-year chairmanship at the U.S. Federal Reserve.
Throughout this nearly 700-page biography, we are told the story of Greenspan’s rise to fame during the Great Moderation and his fall from grace in the aftermath of the Great Recession. This book helps set the record straight and provides us some insight on how history will judge the Maestro. The work also chronicles Greenspan’s relationships with some of the most powerful and influential people of the late 20th century: his rivalries with politicians, his love affairs with journalists, his ties with businessmen and his associations with Presidents, world leaders, academics and fellow central bankers. This is a fantastic book that does a superb job documenting the dynamic relationship between American politics and textbook economics.
(Favorite Chapter: 12-”Do We Really Need the Fed?”; Recommended Sequel: The Courage to Act by Ben Bernanke [disclaimer: haven’t yet read])
1) Daron Acemoglu and James A. Robinson, Why Nations Fail (2012)
This book certainly lives up to its rather grandiose title and #1 spot for must-read book for any student in economics and/or political science. The ideas of the new institutional school of economics, which this book argues from the perspective of, placed economics at the intersection of political science and history. The authors make the compelling case for why institutions, not culture or geography, explain the differences in economic prosperity between nations. The book is accessible to a general audience but with plenty of insightful concepts to satisfy the challenge seeking reading. What may strike readers most is not just the effects that certain types of economic and political institutions have, but their long-lasting impacts, which can influence living standards centuries after their dissolution.
Readers will gain a new appreciation of history, institutions and the fortunate or unfortunate role self interest has in shaping the wellbeing of nations. The book takes the reader on a fascinating journey through history, recounting tales such as the English Glorious Revolution, the Three Chiefs of Botswana, the Satsuma Rebellion and the Potosi Mita of Peru and Bolivia. Using a plethora of historical examples, Acemoglu and Robinson make the case for why “inclusive” economic and political institutions are responsible for the development of the advanced industrialized society. But having the answer at hand will not solve the problem of global poverty and inequality. Self-interested actors will seek to maintain the status quo of “extractive” political and economic institutions, which hinder growth and are responsible for much of the poverty in developing nations. Institutions, shaped by “critical junctures” and “creative destruction”, serve to explain the vast differences in living between different parts of the world, so argue Acemoglu and Robinson. This book should not be restricted to just students of economics and politics, but rather to a general audience interested in world history, global issues and the state of humankind.
(Favoriter Chapter: 1- So Close and Yet So Different; Recommended Sequel: Global Economic History: A Very Short Introduction by Robert C. Allen).