Like many people, I'm being kept awake at night by a financial crisis that I don't even understand. But rather than being stressed out and confused, I decided to educate myself by actually picking up an economics book.
This was not as easy as it sounds. Charles Kindleberger has written a classic called Manias, Panics, and Crashes, but the title alone reminded me too much of my emotional state.
Peter L. Bernstein's Against the Gods: A Remarkable Story of Risk was also supposed to be terrific. But what if I paid $20 to find out that I was a financial coward? I couldn't chance it.
Then, I came across Niall Ferguson's The Ascent Of Money: A Financial History of the World, and a brand new book by Alan Beattie called False Economy: A Surprising Economic History of the World. These appealed to me because they didn't seem to be so much about finance, as, well, history. Storytelling: That, I could get behind.
And so, I settled in with both tomes for what I figured would either be an informative read or — let's face it — a good nap. After all, this is still economics we're talking about.
But I found myself riveted by two lucidly written, engaging books that complement each other beautifully. One explains the components of financial systems, the other illustrates how they've shaped different countries' fates. And both place our current financial crisis in a greater historical context.
Ferguson's The Ascent of Money charts the evolution of our financial system from Babylon right through May 2008. He starts with money itself — first conceived as clay tablets in the ancient world — and ends with the virtual "electronic" money that so many of us use today.
Through examples drawn from the Medicis to Shakespeare, he explains the hows and whys of the bond market, the development of the stock market, private insurance, mortgages, "financial bubbles" and so forth. Ferguson states that the purpose of his book is to "educate" — and he does. The only trouble I had getting through it was because I kept underlining so much of it.
While Ferguson charts the evolution of finance — and folly — Beattie's book, False Economy, explains, in an equally compelling fashion, how and why countries got where they are today because of financial decisions they've made. His book takes off like a rocket. He begins with a comparison between Argentina and the United States — both countries had similar beginnings and economic prospects, yet one became a powerhouse, while the other devolved into a nearly Third World country. Thoughtfully, Beattie explains why.
Drawing upon everything from Chinese history, to the repeal of the Corn Laws, Beattie takes readers on what he calls "a whistle-stop tour of the world" to explore how societies have become what they are.
I was swept away. When I closed the book, I was dizzy, but smarter.
Ferguson and Beattie are not Milton Friedman: Neither elevates the free market to god-like status. Reading these books made it clear that the economy isn't some big, uncontrollable, inhuman force. People create it. And since we got ourselves into this mess, we can also get ourselves out of it.
I'm still being kept awake at night. But thanks to The Ascent of Money and False Economy, now it's because I'm up reading.
Susan Jane Gilman is the author of the new memoir, Undress Me in the Temple of Heaven.
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