Book on the basic foundations of economics...?

Question

i need a book (not a website) which will give me all the knowledge i need for the basis of economics. I have been reading The Undercover Economist by Tim Harford (which is great) but i want a book which will help me understand the current economic situation etc...

Any advice is greatly appreciated

thanks in advance

Answer 1

I've put up a condensed list below in order of recommendation. The explanation follows up here.

Do you want to know the theory, or do you want to see how the theory is applied?  There are multiple good books on the foundations. How technical do you want to get?

Thomas Sowell, Greg Mankiw and Paul Krugman all wrote excellent texts, all called "Economics" or something like that. Sowell's is more straight-forward, Mankiw's leans a little more towards classical approach, and Krugman's is more Keynesian and expects a little more algebra (which is good).

The textbooks give summaries of some of the larger points in the classics - ie Smith's "Wealth of Nations", Keynes' "General Theory of Employment, Interest and Money", Hayek's "Road to Serfdom", and many papers by heavyweights Okun, Solow, Stigler, Marshall, Barro, Walras, Samuelson, etc. As an undergrad, you read the textbooks. As a grad student, you read the papers.

If you want to get away from textbooks, look up Milton Friedman's "Capitalism and Freedom" and "Free to Choose". A few of his approaches strike me as unrealistic, but his defense of laissez-faire capitalism is both well-thought out and passionately defended.

If you want to get more technical (ie, mathematical) seek a book with a name like "Microeconomics with Calculus". The grad school standard is Hal Varian's text.

Now, if you don't just want to understand theory, but want to see how it is applied, that's a horse of a different color.

Joseph Stiglitz's "Globalization and its Discontents" and "The Roaring Nineties" may be of use to you. Most economists LOVED the former (which chronicled the Asian currency crisis of '97) and didn't like the latter as much.

Greenspan's "Age of Turbulence" is fascinating look from inside the halls of policy.

Kindleberger, Aliber and Solow's "Manias, Panics and Crashes" is not as timely but I think it helps explain much of the market behaviors.

Some might suggest Leeb's "Coming Economic Collapse" and other such provocative titles. My uncle gave me a copy of one of Leeb's earlier books printed in the 1970s. Thirty years later, his message of calamity hasn't changed, only his explanation of how. Leeb isn't an economist - he's a journalist with an excessive concern over oil prices and doesn't show real analysis. Any book that focuses on only one part of the economy is like a physician who looks at a scab on a knee and concludes that the patient has smallpox.

A journalist with a much better understanding of the global picture is Thomas Friedman (no relation to Milton) who wrote two books on the subject - "The Lexus and the Olive Tree" and "The World is Flat". While he's overly optimistic on hybrid fuel vehicles, he at least takes into account the impact of growing wealthy populations on world markets.

For a longer-term perspective, I suggest Jared Diamond's "Guns, Germs and Steel", which is the book that got me interested in economics (though at the time my research interest was more on the economic life of cities).

I don't trust as much the more pop-oriented books like "Undercover Economist" and "Freakonomics". Okay, Wheelan's "Naked Economics" was cute. There's too much of a tendency to aim for the most unusual cause and pin it down - so little in economics is unicausal.

Perkins' "Confessions of an Economic Hit Man" was a fun read, but I take much of his writing with a grain of salt. I mean, the man practically claimed to have been the first to apply Gauss-Markov Theorem to econometric analysis (an economist first applied this in a 1938 econometrics text).