Interested in the use of public value as a process for getting better outcomes in public services? My book Public Value in Practice: restoring the ethos of public service (written with Chris Woolard, now at Ofcom) has been published by the BBC Trust. It's an every-day tool for the Trust, so I hope others working to improve public services will find this interesting.

We look at the theoretical underpinnings of the concept of public value, from political science and economics and describe some other examples of its use, as well as explaining in some detail how we've implemented public value in BBC Trust decisions. The decision-making is inevitably judgmental but the framework ensures that relevant evidence is brought to bear on them, making for accountability and transparency without the rigidity which undermines decisions based on target-setting or on output measures. (Some of the relevant evidence in our case comes from audience research – that's now all gathered together on the Trust website.)

Anyway, I know some other organisations are now looking at using the public value framework. I'd be very interested in hearing of other experiences or feedback on this.

The novelist John Lanchester has written one of the best books I've read on the financial crisis (although I haven't read them all by any means, and anyway they'll keep on coming). Whoops! isn't an exhaustive history of how the crisis unfolded. Nor does it definitively assign blame. What it does do incredibly well is set out some central elements of how the financial markets had come to operate by 2007, and the political and cultural context which formed an environment in which a boom and bust on steroids could happen.

The book starts by rooting the emergence of red-raw capitalist financial markets in the collapse of communism in 1989. In both its direct impact on the economy and financial markets, and its moral impact in removing an external constraint which had made capitalism kinder, Lanchester sees the fall of the Berlin Wall as a key turning point. He stresses that there was absolutely no 'moral equivalence' between communist and western regimes, as some leftist apologists used to claim, but nevertheless: “The population of the west benefited from the existence, the policies and the example of the socialist bloc.” The west had to show that ordinary people had better lives under capitalism. After the end of the Cold War, that imperative evaporated.

I think understanding this context is important: the political causes of the financial crisis have been oddly overlooked. One exception is in Simon Johnson's brilliant Atlantic Monthly article of May 2009, The Quiet Coup. Margaret Thatcher came to power in 1979 determined to deregulate finance in the UK as a political principle, with no thought about the practical consequences. One of the junior ministers in that government once told me that there had been no attempt to assess the impact of removing exchange controls overnight. I worked in the Treasury from 1985-86 and one of my jobs (as a newly minted PhD)  was to write a paper explaining derivatives to senior officials and ministers. This was after, not before, the legislation deregulating the City for its 'Big Bang' had been passed.

Other chapters in Whoops! look at the mathematization of finance, the introduction of fancy but wrong models of risk; at the creation of securitization and key moments at which the regulators blinked and permitted banks to create financial instruments with inadequate capital held in reserve; and the outright fraud and misselling scandals of the sub-prime mortgage market, with devastating human consequences.

However, the key point I take away is a simple one. Lanchester sees the fundamental problem as the industrialization of banking. The son of a banker (a manager at the Hong Kong and Shanghai Bank in Hong Kong), he writes that banking is very simple: pay interest on deposits, lend the money out at a higher rate of interest. It's a recipe for making money as long as you properly assess the risk of the loans. That can only be done case by case, in detail. Securitisation appeared to make it possible to avoid the effort and cost of assessing risk but in reality led to an increase in risk which was ultimately bound to end in disaster. “The invention of securitization broke banking, in separating the lender from the borrower by selling on the loan to somebody else” This is what created the predatory mortgage lending of the sub-prime market. (p103).

Not surprisingly, Lanchester joins all other sane observers in concluding that it's time to put finance back into its earlier, restrained framework. From Paul Volcker on down, almost everyone not depending on bankers for election campaign contributions thinks the huge banks need to get smaller. (A small ad: a paper I've co-authored with four other economists on competition in European banking will be published next week by the CEPR: we conclude there is a need for a more rigorous application of competition policy than we've seen so far.)

The book concludes: “It's time to ….. decide how to make the finance industry back into something which serves the rest of society rather than predating on it.” He links this to the much wider debate under way now about what the economy is for, a question I've been writing about in the draft of my next book and indeed will be debating with Professor Michael Sandel and the Archbishop of Canterbury later this month.

I'm very glad I've read Whoops! as it does absolutely clarify the moral issues. There can't be any doubt that what happened in many instances in global financial markets in the mid-noughties was without question immoral. The book is beautifully written too, as you'd expect from such a fine novelist, and to cap it all a page-turner. One of the crisis must-reads.

There's a thorough and interesting analysis in this morning's Financial Times of the future of publishing in a world of electronic books and Apple iPads.

Maybe I'm a deluded optimist but I think the technology will be great for reading. It has been great for music after all – not for record companies, and an uncertain impact for individual artists depending on their previous position in the food chain (sorry, supply chain). But more music is getting to more people and there seems to have been a supernova of creative activity. It seems to me a good time to be a creator of content.

An intriguing new title has arrived in the post. It's Identity Economics by George Akerlof and Rachel Kranton. Professor Akerlof is someone who seems to have come into his time. Last year saw the publication of his well-reviewed book Animal Spirits, co-authored with another man for our season, Robert Shiller. Not only that, the banking crisis provided a dramatic demonstration of the validity of Akerlof's classic 1970 'market for lemons' article, as the interbank market simply shut down due to the asymmetric information about the quality of credits between different banks.

The new book steps away from the anonymous identical agents of conventional (but increasingly retro) economic theory. Here's the blurb – a review will follow in due course:

It brings identity and norms to economics. People's notions of what is
proper, and what is forbidden, and for whom, are fundamental to how
hard they work, and how they learn, spend, and save. Thus people's
identity–their conception of who they are, and of who they choose to
be–may be the most important factor affecting their economic lives.
And the limits placed by society on people's identity can also be
crucial determinants of their economic well-being.

Brian Arthur has many fans amongst the kinds of economist, once considered outlandish but increasingly rather mainstream, who think about the economy as a non-linear dynamic system in which the concept of equilibrium makes no sense. Arthur has also written interestingly about technology previously, especially the path dependence of a series of successive technology choices. His latest book The Nature of Technology was reviewed for The Enlightened Economist by Richard Bronk of the LSE. I've just caught up with it myself and concluded that it has strengths and weaknesses.

The main strength is an utterly believable account of how the process of technological innovation takes place, at the level of the specific invention, the cluster of related innovations which enable it to diffuse through the economy, and the macro-system of technologies. Building on Schumpeter and economic historians such as Paul David, Arthur explains the combinatorial dynamics whereby any new technology is the fruit of older technologies being put together to serve a new purpose. “Technologies somehow must come into being as fresh combinations of what already exists.” (p19) He also sets this out in accessible language, a big plus. What's more, Arthur includes in the technology system the institutions and social structures such as money, laws, business organisations which enable the use of specific technologies, so he has in effect a theory of economic growth of a rather specific kind. It has something in common with Will Baumol's vision of The Free Market Innovation Machine.

I also like, although some readers might find it strange, Arthur's conclusion that technology is alive, in the way that a coral reef is alive. It is evolving, albeit through different processes than the evolution of what we normally consider to be living things. He points to the way it is even starting to reproduce itself, with nano-machines replicating themselves for example, or computer networks starting to learn from experience in interaction with their environment, and not in a top-down controlled way. (p189, pp206-7). Maybe this is too far-fetched but it's something I've often pondered myself when thinking about the proliferation of digital connections and wondering what that implies if human consciousness is itself the emergent product of a massive number of neural connections.

However, for all this provocative strangeness, this was a plodding book as well. Arthur spends too much time setting out definitions, too little on the examples which might have brought them to life. I think it's worth a read but ended up being a little disappointed at how unexciting it had been.