Recently I reviewed for The Independent David Erdal's book about employee ownership, Beyond the Corporation: Humanity Working. It was a positive review, welcoming the suggestion that more businesses should be run as employee-owned. However, I made two criticisms. One was that Erdal attacks economics in an ill-informed way, which just gets tiresome. The other was that the book doesn't address the reason for the absence of more employee-owned businesses even now – its examples are the same as in every book and article on the subject, John Lewis and the Mondragon co-operative.

These mild criticisms have annoyed an email correspondent, Hugh Donnelly of the Co-operative Educational Trust Scotland. He wrote:

[W]hilst I can live with your response that much of the problem is with self interested, corrupt postulations of perfect competition rather than the economic model per se (although I would still contend that it does not approximate the real world too often) I would have to take issue with the hoary old chestnut of why there aren’t more EO companies.  If we don’t educate people, if we don’t explain there are alternatives and don’t offer choices then why would there be.  Furthermore, the whole legal and financial system developed around the joint stock model makes it much more difficult to create and sustain a collective model of enterprise.
 
Part of what we are trying to do at CETS is to try to ensure that anyone spending 20 years in our education system (primary to MBA) is offered these options.  They might not all go for it but at least they should have the information necessary to make rational choices.  Something our business schools do not currently offer.

I don't accept that lack of education can be the main problem. John Lewis is a large and well-known company. Social enterprises have developed as a widespread phenomenon in recent years despite not being promoted in special courses. I don't know the legal position on employee ownership currently but there have been times when governments (Mrs Thatcher's was one) went out of their way to legislate in order to encourage it. Similarly, the law permits mutuals and credit unions, but they are few in number. So I continue to believe advocates of employee ownership need to offer an explanation.

Back to you, Hugh?

There has been a spate of very good books about economic development recently, and here is another. It's a sign of the subject's increasing maturity, founded on better data, experimental methods, and also the intellectual space for debate created by the end of the Cold War – whose chill grip had previously made discussions about development inescapably ideological. There are certainly still strong disagreements between economists, and they probably even correspond to a left-right political divide, but hypotheses are now tested rather than only asserted.

More Than Good Intentions: How a new economics is helping to solve global poverty by Dean Karlan and Jacob Appel is a tremendous addition to this burgeoning literature. The book draws from its authors' experiences in implementing a variety of schemes in developing countries, many of them in microfinance. Out of the school of experimental methods and behavioural economics centred on MIT's Jameel Poverty Action Lab, they have applied randomized control trials – analogous to the gold standard method for testing new medicines – to see which structures of loans or savings accounts or other potentially poverty-reducing intervention achieve their aims. (The recent forum in the Boston Review on experimental and behavioural economics in the field of development, with a lead essay by Rachel Glennester and Michael Kremer, makes for fascinating reading about the methodological approach.)

They also make the powerful point that it isn't enough for economists or aid workers to think up an effective scheme. The people the scheme is supposed to be helping have to take part – all too often, participation is low. This is where the behavioural 'nudges' (or marketing techniques, as we used to call them) come in.

I knew I was going to like this book when it referenced one of my favourites, Portfolios of the Poor, which describes actual financial needs through diaries kept by people in Bangladesh and South Africa. Karlan and Appel are equally clear-eyed about real rather than supposed needs – they note that borrowers can be satisfied with high APRs on loans because they need a small amount of money for a small time. The local moneylender might look usurious but is serving their need better than a microcredit organisation with rules about group meetings and loans much larger than actually needed.

Similarly, just as few people in poor countries as in rich ones are natural entrepreneurs, and many micro-entrepreneurs would prefer a job to their informal self-employment; so the focus of microcredit on entrepreneurship is largely romanticism – people might actually want loans for the equally valid purpose of buying a household implement. They conclude firmly that microfinance needs a rethink. Their willingness to challenge conventional wisdom is a welcome sign of the progress made in development economics.

I wasn't crazy about the style of the book – although admirably clear, it overdoes the chattiness for my taste. Still, it's an absolutely essential read for development economists and aid practitioners. It joins a growing list of very high calibre titles and would be worth reading alongside Charles Kenny's deliberately upbeat Getting Better to get a good flavour of the exciting potential for real contributions to improving the quality of life of people in poor countries.

Not surprisingly, I've been doing a lot of talks about The Economics of Enough (see the Facebook page for details of talks past and future), and it's always interesting as an author to see what audiences pick up on. One popular theme is the banking industry and immoral bankers. But another is, of course, the future – why does it matter, how much should we care about it? And two upcoming panel discussions – 20th May at the Arnolfini in Bristol as part of the Festival of Ideas and 24th May at the British Library – are explicitly about the future. Both panels will include Mark Stevenson, author of An Optimist's Tour of the Future, and Jon Turney, author of Rough Guide to the Future.

So my request to blog readers is this: what should I read between now and then to refresh my thinking about the idea of progress and the relevance of the future to the present? All ideas welcome!