This marvellous book, The Company of Strangers: A Natural History of Economic Life by Paul Seabright, is just out in a revised edition. The title refers to the extraordinary accomplishment of modern economies in extending mutual trust vastly beyond the small family and social networks of prehistory, even though our genetic characteristics as 'murderous apes' have changed little. The first edition was published when hubris about globalization was at its height. Seabright, professor of economics at the University of Toulouse (and a friend of mine), ended it with a warning about the fragility of the globalized economy, given what other disciplines from psychology to evolutionary biology and anthropology had been learning about human nature and human society.

The new edition has a foreword by Daniel Dennett, and a new chapter reflecting on the financial and economic crisis. Dennett aptly compares The Company of Strangers to Jared Diamond's Guns, Germs and Steel in its breadth of understanding. He sums up the central argument thus:

“Co-operation depends….on trust, a sort of almost invisible social glue that makes possible both great and terrible projects, and this trust is not in fact a natural instinct hardwired by evolution into our brains. It is much too recent for that. Rather, it is a by-product of social conditions that are at once its enabling condition and its most important product. We have bootstrapped ourselves into the heady altitudes of modern civilization, and our natural emotions and other instinctual responses do not always serve our new circumstances.”

Of course the financial crash came along as a vivid example of the fragility of modern civilization, a self-fulfilling implosion of markets. The trustworthiness of the financial system most of the time meant we trusted it also when that confidence was misplaced. His conclusion about whether or not we've escaped relatively lightly, at least compared to the violence of the 1930s and 40s? “It would be foolish to engage in self-congratulation to early.”

There's a parallel perhaps with another or Diamond's books, Collapse, which ties the collapse of civilizations to ecological and social overstretch. A cheering thought for the weekend.

Anybody with an interest in technology and its implementation who hasn't yet read Francis Spufford's The Backroom Boys has a huge treat in store. It's an account of the engineers who created leading British technologies – for example, the origins of mobile telephony and the creation of Vodafone in the activities of the men who drove around the country in vans mapping the transmission of radio waves. The book captures the passion, the sheer love of technology, which drove the innovators. It's also a nostalgic work as the tales illustrate present failings in recounting past glories. What did happen to the proud tradition of British engineering? Although the UK does have some thriving technology businesses now, engineering and technology don't have that central role in the economy and our sense of ourselves as a nation as was the case a generation or two ago.

This is by way of a trailer for Francis Spufford's new book, Red Plenty, which will be published by Faber in August. I'll review it closer to launch date. All I will say for now is that it will be another must-read. Here is a book about central planning which is a gripping page-turner, one I polished off in two sittings, staying up late into the night to finish. It's set in the Soviet Union of the 1960s, the years when Kruschev liberalized the country a little, and when – briefly – it seemed that planned economies were more successful than capitalist ones. The book explores how the system operated and why ultimately it failed, and describes the experiment in applying linear planning on the scale of the whole economy.

A page turner? Yes indeed. The publisher clearly expected a work of non-fiction – that's how it's billed in the Faber catalogue. Equally clearly, the book isn't what they expected, and that surprise is reflected in the blurb. In reality this is a superb novel of ideas, peopled by vivid characters, moving, wonderfully written. It's a timely exploration, now so many people have gone of the idea of markets, of why the alternative is worse. I think the publisher should re-categorize it and enter it at once for the fiction prizes.

The power of Spufford's imagination is a magic carpet taking us back to an era that – although now ancient history and remote from everyday memory – made my childhood nightmares dark dreams of nuclear holocaust. I shall give it to my 19-year old son: studying politics and economics; it will bring home to him the human truth of the ideological battle between communism and capitalism.

The geographer Joel Kotkin has a new book out, The Next 100 Million, about demography. Specifically it concerns the implications of the relatively high birthrate and the greater willingness and ability to absorb immigrants of the United States compared to many other countries. The book is optimistic about the US in 2050, which is a rather contrarian perspective at present.

It's been admiringly reviewed in the New York Times by David Brooks, who likes the upbeat message. Kotkin highlights the creativity and dynamism, contributing to productivity growth, of the growing population and the American melting pot. In line with his long-standing interest in suburbs, he also argues that:

The majority of additional hundred million Americans will find their
homes in suburbia, though the suburbs of tomorrow will not resemble the
Levittowns of the 1950s or the sprawling exurbs of the late twentieth
century. The suburbs of the twenty-first century will be less reliant
on major cities for jobs and other amenities and, as a result, more
energy efficient. Suburbs will also be the melting pots of the future
as more and more immigrants opt for dispersed living over crowded inner
cities and the majority in the United States becomes nonwhite by 2050.

(I enjoyed a previous book, The New Geography, which looked at the impact of technology on the shape of urban and suburban America.)

Kotkin's prediction about the consequences of American demography is, however, exactly the opposite conclusion to that drawn by French demographer Emmanuel Todd in his 2004 book After the Empire. He rather presciently brought in the likelihood of debt implosion and military over-extension as well as demographic factors. 

Very little of the comment about the relative strengths of the US and China, and especially that which predicts China's inexorable dominance, considers the demographic issues. China's one child policy means it has one of the most acute problems of supporting a dependent elderly population anywhere in the world. As so many parents have aborted or murdered baby girls, it also has an extraordinary imbalance of men over women in young adulthood. Xinran's recent Message from an Unknown Chinese Mother documents the terrible human cost of this policy. This tendency to overlook the economic impact of demography is an error; both size per se and dynamism of the population matter greatly for economic growth, as I described in the growth chapter of The Soulful Science. But I'm not aware of many good, accessible books about the general economics of demographic change, as opposed to the specifics of say the effects of aging on pensions in certain countries.

MIT economics prof Simon Johnson, who has shot to fame thanks to a brilliant Atlantic Monthly article a year ago (The Quiet Coup, May 2009) highlighting the political power of investment banking, has a new book out. It's called 13 Bankers and is co-authored with James Kwak.

The publisher says the authors:

“[G]ive a wide-ranging, meticulous, and bracing account of recent U.S.
financial history within the context of previous showdowns between
American democracy and Big Finance: from Thomas Jefferson to Andrew
Jackson, from Theodore Roosevelt to Franklin Delano Roosevelt. They
convincingly show why our future is imperiled by the ideology of
finance (finance is good, unregulated finance is better, unfettered
finance run amok is best) and by Wall Street’s political control of
government policy pertaining to it.”

A talk by Prof Johnson at MIT is reported in MIT News. It says Johnson was gloomy about reform prospects but did note that Senate Banking Committee chairman Chris Dodd had been reading his book. So there's some hope. Maybe we can get copies shipped quickly to this side of the Atlantic during the election campaign.

As it's been a holiday weekend, I've been reading a non-economics book (Orhan Pamuk's Museum of Innocence, which is great). So no new reviews from me here. The newspapers decided not to have lots of reviews of economics and business books either, but I did spot plenty of reviews of Philip Blond's Red Tory – in the Telegraph, Independent, Guardian, Times and of course the FT.

According to Madeleine Bunting in The Guardian:

Blond has intrigued and infuriated in equal measure – and his book
will do likewise. Blond is a man for big ideas, sweeping statements and
the grand historical overview. His key selling point is the way he
bundles together the unexpected: a passion for social justice alongside
an instinctive social conservatism. He wants the family back but he
also wants to get rid of the gross inequality of the last two decades.

The
consequence is that he has no obvious audience, no ready constituency
for his ideas. Everyone at some point in his argument is going to get
uncomfortable; ……..

But
such is the bland predictability of British politics, the territory of
managerialised soundbite, that the appetite continues for Blond's
intellectual equivalent of a firework display.

Judging from the number of reviews of the book, this last observation is spot on.