The Narrow Corridor: States, Societies and the Fate of Liberty, by Daron Acemoglu and James A Robinson, Viking, RRP£25/Penguin, RRP$32

“Liberty originates from a delicate balance of power between state and society,” write the authors of Why Nations Fail. A successful society needs a powerful state — what the English political philosopher Thomas Hobbes called Leviathan. But his Leviathan was despotic. The opposite is an Absent Leviathan, which is either an anarchy or a cage of oppressive social norms. In the Despotic Leviathan, there is too little state. In the Absent Leviathan, there is too much. In between lies a corridor, where state and society are in balance. That is also where we need to be.

Schism: China, America and the Fracturing of the Global Trading System, by Paul Blustein, Centre for International Governance Innovation, RRP$35

Today, the US is suffering extreme buyer’s regret over China’s accession to the World Trade Organization in 2001. This book provides a deeply-researched corrective. No, it would not have been better to have left China dangling outside the WTO, and no, China did not systematically break its commitments. Above all, Blustein argues, the WTO “remains the best way of inducing China to play by the rules”. Amen.

The AI Economy: Work, Wealth and Welfare in the Robot Age, by Roger Bootle, Nicholas Brearley, RRP£20

Bootle, chairman of Capital Economics, argues that the economic effects of artificial intelligence may not be as different from those of previous technological transformations as many suppose; that the speed with which the changes occur may not be all that fast; and that, in all probability, piecemeal changes in policy, rather than a radical shift towards universal basic income, are the right response. We need to hear his arguments.

Unbound: How Inequality Constricts Our Economy and What We Can Do about It, by Heather Boushey, Harvard University Press, RRP£22.95/$27.95

For a long time, the argument over inequality was about whether it was the price that had to be paid for a dynamic economy. In this outstanding book, Heather Boushey of the Washington Center for Equitable Growth turns this upside down. She shows that, beyond a point, inequality damages the economy by limiting the quantity and quality of human capital and skills, blocking access to opportunity, underfunding public services, facilitating predatory rent-seeking, weakening aggregate demand and increasing reliance on unsustainable credit.

Open: The Progressive Case for Free Trade, Immigration, and Global Capital, by Kimberly Clausing, Harvard University Press, RRP£22.95/$27.95

The one thing the American right and left increasingly agree on is that trade, capital flows and immigration damage many if not most Americans. On the contrary, Professor Clausing of Reed College argues, openness to the world economy is a source of substantial gain. Neither liberal trade nor technological change is the enemy, it is foolish, even malevolent, policies that fail to help people and places to adjust to change and exploit new opportunities.

Extreme Economies: Survival, Failure, Future — Lessons from the World’s Limits, by Richard Davies, Bantam Press, RRP£20

Exploring what economies and economics look like in extreme conditions, Davies shows in this original book that “trade and exchange sprang up quickly in tsunami-ravaged Aceh, in the Zaatari refugee camp and even in Louisiana’s highest-security penitentiaries”. Markets are both natural and indispensable. But they can create huge problems, too. An excess of individualism is ultimately corrosive; we need a strong sense of mutual responsibility, too.

A Better Planet: Forty Big Ideas for a Sustainable Future, edited by Daniel Esty, Yale University Press, RRP$30

Our species can only thrive if our activities are in balance with our natural environment. Yet many opponents of environmental policies are “hostile to science, unwilling to look at data, and inattentive to the long-term environmental consequences of certain industrial activities”, writes Esty, a professor at Yale. The book provides excellent ideas on what can and should be done. The question remains whether the dialogue on these vital topics can cease to be one with the persistently deaf.

Winners Take All: The Elite Charade of Changing the World, by Anand Giridharadas, Allen Lane, RRP£12.99/Vintage, RRP$16

Can the rich save the world or is their philanthropy an elaborate charade? The author of this thought-provoking book has no doubts about the answer: it is indeed a charade, in which the rich seek to justify their wealth by how they use it to improve the world. In the right hands, philanthropy can indeed be valuable. But only politics can tackle the big problems. To suggest otherwise, Giridharadas concludes, is fraudulent.

Capitalism, Alone: The Future of the System That Rules the World, by Branko Milanovic, Belknap Press, RRP£23.95/$29.95

Capitalism has won, argues Milanovic, author of the brilliant Global Inequality, but which capitalism? A distinction needs to be drawn between “liberal capitalism” (which I would call “democratic capitalism”) and “political capitalism” (or “despotic capitalism”). As Milanovic notes, democratic capitalism offers not only political and personal freedom, but also political correction without mass violence. Despotic capitalism can only secure legitimacy through superior efficiency, even though unaccountable power tends towards corruption. Democratic capitalism ought to win this contest. I hope it does.

The Great Reversal: How America Gave up on Free Markets, by Thomas Philippon, Belknap Press, RRP$23.95/$29.95

In this seminal book, economist Philippon uses detailed evidence to argue that, far from being the home of free-market competition, the US today has less competition than the much-maligned EU, particularly in its product markets, which are riddled with monopoly and monopsony. This is not the result of natural forces, but of deliberate policy. Declining competition has raised profits, depressed wages, weakened investment and undermined productivity growth. The US needs a reinvigoration of antitrust.

Tell us what you think

What are your favourites from this list — and what books have we missed? Tell us in the comments below

The Code of Capital: How the Law Creates Wealth and Inequality, by Katharina Pistor, Princeton University Press, RRP$29.95/£25

“Capital rules, and it rules by law,” argues Pistor in this fascinating book. “It owes its capacity to create wealth to the modules of a legal code that is backed by state power; and its resilience in times of crisis can be attributed to a combination of legal asset-shielding devices and the state’s willingness to extend a helping hand to capital to preserve not only capitalism but social stability, and by implication, the state itself.” The law has created capitalism — and so lawyers rule.

Escape from Rome: The Failure of Empire and the Road to Prosperity, by Walter Scheidel, Princeton University Press, RRP£30/$35

The scientific and industrial revolutions were the most significant events in human history, since the slow birth of agriculture. So why did they start in Europe? The answer, argues Scheidel, author of The Great Leveler, was that “the Roman empire made modern development possible by going away and never coming back”. Europe’s “enduring polycentrism” replaced the ossification of empire with innovation, overseas expansion and the triumph of bourgeois values. The thesis is not new. But the evidence is compelling.

The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay, by Emmanuel Saez and Gabriel Zucman, WW Norton, RRP£21.99/£27.95

Saez and Zucman are leading figures in the detailed empirical analysis of inequality. In this important book, they document the perverse characteristics of the US tax system, which is now “a giant flat tax [that becomes] regressive at the top”. According to their figures, the 400 richest families in the US pay a lower average tax rate than any other income group, including the bottom 10 per cent of the income distribution. The US has become a plutocracy. The book shows in detail how this has happened.

Narrative Economics: How Stories Go Viral and Drive Major Economic Events, by Robert J Shiller, Princeton University Press, RRP£20/$27.95

Nobel-laureate Shiller is one of the world’s most original economists. In this book, he starts from the obvious fact that the economy is the product “of conscious living people, who view their actions in light of stories with emotions and ideas attached”. Stories allow human beings to make sense of an uncertain world. But they also drive economies into booms and busts. Armed with this understanding, we gain a far richer understanding of how economies behave.

99%: Mass Impoverishment And How We Can End It, by Mark E Thomas, Head of Zeus, RRP£14.99

A call to arms, this book makes three main arguments. First, the middle class is under extreme pressure and may vanish. Second, many of the constraints on purposive action in response, such as presumed fiscal limits or the view that taxes should never be raised, are myths. Finally, the needed reset is possible without revolutionary change. We can ensure a growing economy from which everybody benefits. The time for assessing such arguments has now arrived. They matter.

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Books of the Year 2019

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