For the record, I have read every title on Sorkin’s list with the exception of Eichenwald’s “Informant” and McClintick’s “Indecent Exposure,” on which I shall accordingly withhold judgment.
I’m also going to omit any and all books about the 2008 Great Reset and everything associated with it, since it’s far too soon to gain any perspective on those events; we’re still living them.
Now, books that make the Adam Smith, Esq. First Annual Summer Reading list without reservation:
- “Den of Thieves”
- “Barbarians at the Gate”
- “Liar’s Poker”
- “Lords of Finance”
Books that make my list with reservations:
- “Capitalism and Freedom”—but only if you’re also prepared to read, or at least deeply sample, Joseph Schumpeter’s “Capitalism, Socialism, and Democracy” (whence we get the term, and invaluable concept, of “creative destruction”).
- “Steve Jobs” and “Titan”—with the surpassing caveat that lives of individuals, even legendary and vastly influential ones, are just that—lives of individuals, with all the irreproducible weirdness they bring to the table. Entertaining in spades, but fonts of enduring guidance? Not so much. (Indeed, the vast literature to the effect that genius shares a very long and undefended border with madness is only growing. “Titans” such people may indeed be, but exemplars of how to live as full human beings? More to the point, are we even capable of emulating them if not so endowed at birth?)
Books that do not make the cut:
- “The World Is Flat” (thanks, Mr. Friedman, but we’ve heard all about that);
- The final triplet—”Art of War,” “The Prince,” and “Intelligent Investor;” and
- Anything whatsoever by John Kenneth Galbraith or Paul Krugman (yes, that one’s for extra credit, folks).
What else do I recommend?
- My “desert island” business book—the book I’d recommend if you could only read one—would without doubt be Clayton Christensen’s “Innovator’s Dilemma,” which will cure you of any sense of complacency you may have ever felt or will ever feel. (William F. Buckley, Jr., having a pragmatist’s turn of mind, said his desert island book would be one on boat-building.) You’ll see in a moment that I cheat on the “desert island” category, since I have “Innovator’s Dilemma” in the business desert island category, and “Knowledge and the Wealth of Nations: A Story of Economic Discovery” in the economic-history-and-theory desert island category.
- “Built to Last,” Jim Collins’ 1994 study of 18 companies that outperformed their competitive set in an attempt to answer the question “what makes for an exceptional company?” Not all of his examples have stood the test of time, but concepts such as “having the right people on the bus” are timeless.
- And finally, a bit of an outlier, but the single most informative work of economic history and theory that I’ve read: David Warsh’s 2006 “Knowledge and the Wealth of Nations: A Story of Economic Discovery.”
Assuming few of you are familiar with Warsh’s book, a bit more about why it’s nip and tuck with “Innovator’s Dilemma” to finish as my top recommendation out of all of the above.
The two most famous intellectual memes to come out of The Wealth of Nations are those of the pin factory (division of labor) and the invisible hand (marketplace competition enables the best products and services at the lowest prices). Now, if you think about it, these are actually contradictory in a fundamental way, or at least incompatible views of how markets evolve. The pin factory parable is a story of constantly increasing returns to scale, which lead to one, or at most few, dominant players in a market, which immediately leads to monopoly or oligopoly distortions and suboptimal production levels and prices.
But the invisible hand presupposes a multitude of suppliers in a market, in order to enforce rigorous price and quality competition and to extract the highest feasible performance from every firm at risk of losing market share.
Historically, since Adam Smith’s time and up until the 1980’s or thereabouts, economists pretty much without comment or notice chose the parable of the invisible hand over the pin factory, partly for reasons of ideological correctness I suppose but also (and equally indefensibly) because it lent itself more readily to mathematical modeling. Warsh’s book does nothing less than square this circle, in theoretically solid but eminently approachable and entertaining fashion. Quite a coup.
The first half or so of the book is one of the most accessible and engaging treatments of the history of economic thought since Adam Smith–with equal weight given to the personalities, the institutions, and the broader sociopolitical forces at work. If the book ended with that, a Grand Tour of Smith, Ricardo, Keynes, Marshall, and Schumpeter, forward to Robert Solow and Kenneth Arrow, it would be a “short list” read for sure.
But it’s the second half where Warsh provides something I’ve not yet found anywhere else, at least not in as condensed and trenchant a fashion. Warsh takes off from the work of Paul Romer’s 1990 paper, “Endogenous Technological Change,” which is (fair warning) mathematically dense and imposing, but which at its core had the profound insight of substituting for the (neo)classical triumvirate of labor, capital, and land, the more powerful triad of people, ideas, and things. In other words, Romer spoke the the language of how ideas are generated and spread, how papers are dreamed up, curated, and published, and how individual careers and the advancement of society as a whole intersect.
Understand Romer’s insight: He tackles head-on, and explains, the reality we all know that economic growth and the standard of living has been accelerating in wealthier countries at the same time it’s been stagnant or worse in poor countries. For the first time, he explicitly recognized knowledge (hence the first word of Warsh’s title) as an “endogenous” factor of production rather than, as in classical economics, an exogenous factor that struck (or didn’t) like random lightning strikes. To Romer, and to Warsh, the creation, refinement, and dispersion, or knowledge are critical to the modern economy, and largely explain “creative destruction”–which, for all Schumpeter’s brilliance, he left as a descriptive name (you know it when you see it) and didn’t develop into a theory of how to do creative destruction.
Need I point out that lawyers have a bit of a role to play in the organized, efficient, economically optimal, spread of knowledge?
So, to recap, organize, and condense my list into a Greatest Hits:
The fun stuff:
- Den of Thieves
- Liar’s Poker
The edifying stuff:
- Lords of Finance
- Innovator’s Dilemma
- Knowledge and the Wealth of Nations (the “desert island” choice)
For tremendous extra credit:
- But yes, it reads to this day with shocking freshness: Adam Smith’s 1776 Wealth of Nations
And finally, of course, the obligatory volume:
- Yours truly’s 2013 Growth Is Dead: Now What?