The Next Convergence: The Future of Economic Growth in a Multispeed World
(Farrar, Straus and Giroux, 2011)
Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
Grand Pursuit: The Story of Economic Genius
(Simon & Schuster, 2011)
It’s been a good year for economics books. Autopsies on the economic crisis of 2008 continued to tumble out in 2011, some of them quite compelling. But it is clearly time to look to the future, and a spate of notable books describing the changing profile of the global economy did just that, including World 3.0: Global Prosperity and How to Achieve It, by Pankaj Ghemawat (Harvard Business Review Press, 2011); The Post-American World: Release 2.0, by Fareed Zakaria (W.W. Norton, 2011); and The Globalization Paradox: Democracy and the Future of the World Economy, by Dani Rodrik (W.W. Norton, 2011).
Other books, which were partially eclipsed in the rush to reset our horizons, explored interesting topics outside the center ring, including The Price of Everything: Solving the Mystery of Why We Pay What We Do, by Eduardo Porter (Portfolio/Penguin, 2011), and The Economics of Enough: How to Run the Economy as if the Future Matters, by Diane Coyle (Princeton University Press, 2011). All are worthy books.
But three of this year’s economics books are especially good. One — The Next Convergence: The Future of Economic Growth in a Multispeed World, by Michael Spence — looks forward, providing what is likely to be a durable framework for thinking about the global economy. The other two — Jeff Madrick’s Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present, and Sylvia Nasar’s Grand Pursuit: The Story of Economic Genius — look backward, in compelling, insightful, and highly readable ways.
From G-7 to G-20
Spence’s The Next Convergence, my choice for the year’s best business book on economics, starts with simple arithmetic: China and India represent about 40 percent of the world’s population. Their combined GDP is growing at an annual rate of 7 percent or more; India is perhaps 14 years behind China on the curve. Their growth will slow in another two or three decades, as they finish the process of converging with the present-day industrial countries. By then, they will have become economic giants.
Indeed, Spence calculates that the world will have a global GDP that is four times as great as what it is now. But what kind of a world will a US$240 trillion global economy create? That is the question Spence seeks to answer in this book.
A considerable deepening of economics has taken place during these last 40 years, a process in which Spence has been an active participant. In 2001, he shared a Nobel Prize for contributions to the economics of information. By then he’d been drawn off into university administration — including nine years as dean of the Graduate School of Business at Stanford University. In the middle years of George W. Bush’s presidency, when Deputy Defense Secretary Paul Wolfowitz was posted to the World Bank with the goal of rethinking its agenda, Wolfowitz turned to Spence as an honest, independent broker of ideas whose views would be of interest to leaders of nations all around the world.
Thus began the Commission on Growth and Development, an ambitious project designed to bring senior political leaders and policymakers from 18 nations (such as Zhou Xiaochuan, governor of China’s central bank, and Montek Singh Ahluwalia, deputy director of India’s planning commission) together with the world’s leading economists (Robert Solow and Robert Lucas, for example). For four years, the commissioners traded visits to one another’s countries and elicited expert testimony, building a cautious case for openness and trade. Unfortunately, their report fizzled after Wolfowitz was forced to step down over an impropriety. Spence, however, soldiered on and produced this compelling tour d’horizon based on his experiences as chair of the commission — a view more or less from the quarterdeck of the global economic system. Except, Spence says, that there is no proper quarterdeck — at least not yet.