The current issue of the New York Review of Books has a thoughtful essay by Sue Halpern, The iPad Revolution, about the implications of the iPad and other electronic devices for books and publishing. Halpern reminds us that techno-prophets have for some time been predicting the end of books and the end of reading, yet despite the recession publishing is a big business and there's a lot of reading going on. You only have to look at the popularity of book clubs to appreciate that.

There's much about the e-revolution in publishing that's hard to predict. Will Apple's 'agency' pricing model prevail? What will happen in the Kindle vs iPad battle given that Amazon is pricing e-books as loss leaders currently (at least given the present deal with publishers) and – as Robert McCrum writes in an article on the Apple-Amazon-Google contest in today's Observer, showing real publishing ambitions?

It strikes me, though, that some questions aren't even being asked. There's a presumption often made, and often wrong, that a new technology for doing something replaces the old technology. Everybody thinks of the example of music media where this is largely true, with CDs killing cassettes and now being threatened with extinction by downloads. However, in many cases, people use both old and new technologies for a very long period. Are physical and e-books substitutes or complements? Will people combine the convenience of e-books for commuting with the physical, tactile and visual, pleasure of a beautiful artefact?

And what about the implications for publishing and bookselling? Much of the comment focuses on the titans. The big bookstore chains have been suffering, but there are at least in very big cities signs of a revival in small bookstores – such as the wonderful Daunts and London Review Bookshop in London – and many committed independents in market towns. Reading isn't only a solitary pleasure, but also a social one, and small bookstores can use the social links they create and events to attract customers.

As for publishers, the big beasts are massive oligopolists – yet another industry where competition authorities on both sides of the Atlantic have failed to prevent merger after merger – but I spy signs that independent presses are starting to use the new technologies – print on demand, internet retailing – to get their titles to much bigger markets than used to be possible. I just ordered Richard Mabey's classic The Unofficial Countryside from Dovecote Press in Dorset. It was founded in 1974 and has a list of 200 titles. Judging from the review pages, there are perhaps more of them starting up, and they have certainly become more prominent.

I not only enjoyed reading Amar Bhide's The Venturesome Economy, but also agreed with it – no doubt the two are closely related! He uses his research amongst innovative American firms to probe the types of innovation they do, what they need to be able to innovate, and their various links to the global economy. The results lead him to conclude that the US should not only not worry about countries such as India and China 'catching up' in measures of  basic scientific research, but should also actively embrace the contribution countries seen as threats can actually make to US living standards through their own innovations.

The book complements Will Baumol's The Free Market Innovation Machine, which dug deeper into the process of innovation by making the distinction between small and entrepreneurial firms which typically are the source of dramatic or disruptive innovations and big businesses which typically make incremental innovations. Bhide points out some other important distinctions. There is a difference between high, mid and low level know-how, and high, mid and ground level products or services. For example, microprocessors are a high-level product requiring high level know-how (solid state physics) and mid and low level (designing the circuits, managing the fab plant), while a motherboard is a mid-level product with its own high, mid, and ground level types of know-how. Only high-level know how requires advanced scientific research, and such research quickly becomes globally available, no matter which countries' universities and institutes originate it. No country, not even the US, can hope to be the source of all the world's scientific knowledge.

Bhide writes:

“Though the expansion of cutting-edge research abroad of course reduces the US share, as long as the United States maintains its capacity to harness high-level know how to improve the performance of its mid-a and ground-level industries, the expansion of global cutting edge research, regardless of where it originates, is a good thing for the United States.” (p255).

On the other hand, most of the innovation in any specific economy is mid and ground level, and rests on the detailed and complex relationships between firms and their suppliers, staff and customers. The kind of tacit knowledge and the interactions between the people involved can't easily be replicated in any other country, and indeed the past candidates seen as 'threats' to the US haven't quite caught up either. The overtaking of one leading economy by another is rare, and China would need to develop the thickets of supply chains and multiple levels of innovation to overtake the US lead. What's more, the mass of innovation doesn't require advanced scientific knowledge, but technical skills. Minting more and more science PhDs is fine if that's what they in fact have, but not if they all plan to do basic research only.

I gather that Bhide also has a new book in the works, due out this autumn. More on this one in due course.

An unplanned shortage of books in my in-pile has sent me to some older ones that I've had around for a time, and well worth while it's been. States, Scarcity and Civil Strife in the Developing World by Colin Kahl is one of these – it was first published in 2006. It's an assessment of different approaches to understanding to role of environmental issues in explaining civil conflicts, covering economic theories including the 'resource curse' and political science explanations those which emphasise power relations and inequality. The different explanations are assessed in detail against experience in the Philippines and Kenya, and in less detail against several other examples such as Mali and Rwanda.

Even taking the conventional economic approaches by themselves, the relation between environmental strains and conflict isn't simple. The 'resource curse' blames an over-abdundance of a resources such as oil or diamonds for conflict, whereas in other contexts it's the scarcity of a resource such as food or wood for fuel which causes the fighting. Economic Gangsters by Raymond Fisman and Ted Miguel emphasised the latter, while Paul Collier (in The Bottom Billion) has highlighted the former. What's more, the experience differs greatly between countries, with some able to avert conflict, pointing to a key role for institutions and politics.

Kahl tries to synthesise the arguments into a theory that involves demographic and environmental stress as an indicator for conflict, but with an important role for either state failure (weak institutions) or state exploitation (strong but exploitative institutions or groups) as the pathways to conflict. In addition, the degree to which the society is sharply divided between different social, ethnic or religious groups, and the inclusiveness of the institutions, play a part in determining the likelihood of conflict. The case studies presented seem to support the approach – I found the example of Mali, and its emergence from conflict despite continuing extreme environmental stress, particularly interesting.

The book draws on economics and political science. I was a bit surprised not to see any reference to the literature on anthropology and the environment, including Jared Diamond's popular version, Collapse. This might have provided additional supporting evidence alongside the near-contemporary examples. Kahl has made me think more carefully about the econometric evidence on the impact of resources and their interaction with institutional frameworks. Economists have taken great strides in thinking about policies to avert the dangers of environmental strain but no doubt could do even better in thinking about the subtleties of how policies are implemented, what institutions and political framework can help them succeed.

The subtitle of Roger Farmer's book How The Economy Works is 'Confidence, Crashes and Self-Fulfilling Prophecies', and goes a long way towards explaining his mission. This is to set out his synthesis of the presumption in neoclassical economics that people act in their own interest using all available information (that is, rationally) with the Keynesian insight that confidence is all-important for macroeconomic outcomes. There are a number of things I like about the book, and this obviously sensible synthesis –  based on Farmer's academic work in another new book, Expectations, Employment and Prices  –  is one of them.

The book combines two strands. The first is a brief and non-technical history of macroeconomic theories, from Adam Smith to rational expectations. This part is definitely for the general reader – I think it will all be known to any economist. Still, it sets the scene usefully for a discussion of what has gone so badly wrong with the cosy consensus in economics about the 'Great Moderation' (steady growth and low inflation for a decade). This was usually complacently attributed – before the Crisis –  to the success of monetary policy.

The second strand is a non-technical explanation of Farmer's theories about the way the role of expectations in macroeconomic, or collective, performance means there are multiple potential equilibria. Asset prices, including the stockmarket, affect the labour market by affecting wealth, and wealth, Farmer argues, is a far more important determinant than income of the level of demand in the economy. “Low confidence can result in low asset prices and that lack of confidence can become a self-fulfilling prophecy that leads to very high unemployment, potentially for a very long period of time.” (p107) And again: “Confidence selects the unemployment rate we observe.” (p114) This seems a highly plausible claim to me, but I must say I found the non-technical explanation here rather impenetrable, and pined for a few equations explaining what the words mean, at least in an appendix. Perhaps non-economist readers would find this section of the book perfectly clear, but it seems possible that it falls between the two stools of being too complicated for the general reader and too imprecise for the professional reader. Maybe not – this is a hard balancing act – but this is my main reservation about the book.

The role of wealth means the conventional Keynesian policy fix for a recession, a fiscal stimulus, will misfire – just as it did in the 1970s when most western economies ended up with both high unemployment and high inflation. The policy target needs to be wealth, and therefore asset prices, instead, according to Farmer. His conclusion is that the inflation targeting policy followed by central banks before the Crisis was inadequate and needs to be supplemented by asset price targets. He argues that conventional monetary policy – interest rates and/or the money supply – should be set to target inflation, while central banks should use changes in the composition of their balance sheets – asset sales and purchases – to target asset prices. He recommends targeting a stockmarket index.

“The correct response to the crisis is to set in place, in every country in the world, an institution to control the value of the national stockmarket wealth by targeting the rate of growth of an index fund.” (p165)

In effect, this is what quantitative easing policies are doing. But there isn't enough in the earlier part of the book to convince me that this is a good idea. Certainly, I think we've learnt that central banks should call time on asset price bubbles, and will need additional instruments to do so as raising interest rates enough to burst a bubble would harm unduly the rest of the economy. Yet old-fashioned regulatory interventions such as reserve requirements and credit restrictions seem to me more practical tools.

Still, this is an interesting idea, and Farmer's combination of solid theoretical foundations with the obviously important role of expectations and confidence in the economy is appealing. The recommendations made here definitely deserve to be part of the wider debate under way now about lessons for macroeconomic policy and central banking.

It's a couple of years since Amar Bhide's The Venturesome Economy was first published – the paperback edition is just out. By happenstance it was low down in my pile of books, and again by chance I've almost run out of books other than the novels I'm taking on holiday next month. So finally today I started reading it, and am impressed just by the Introduction.

First of all, I like Bhide's introduction of the process of reasoning and judgment used in common law trials as a valid process for gathering economic evidence. As he says, it's a “pragmatic, well-tested model for integrating a wide range of facts and theories.” Testimony is provided by different witnesses, both quantitative and qualitative. Experts testify. Different theories and precedents are aired. A mix of induction and deduction leads to a reasoned judgment. This resonated with me as a former competition regulator – this is precisely the process used in merger inquiries. Economists are dangerously prone to over-privileging the purely statistical and econometric approach; but other types of evidence are just as important.

I also thoroughly agree with his main argument which is that globalisation is not a zero-sum game, and especially when it comes to technology. Ideas are non-rival – and innovation depends on so much more than ideas anyway. Even the most successful developing country, even China, can not match the wider advantages of the developed countries in any reasonable length of time. I like the look of the way this book combines questions of technology and trade. Indeed, trade can itself be thought of as a 'technology': China is a fantastic technical innovation which allows us to get the same shirts as before but more efficiently produced at a lower price.

Thirdly, I really liked this:

“Effective intervention … requires humility – an appreciation of how difficult it is to fathom the complexity of the modern economy – and alertness to the unintended consequences of policies base on a limited understanding.”

It should be emblazoned on the wall of every meeting room in every ministry around the world.

So off to a great start. A review will follow later.