Book Review – It’s the Economy, Stupid!

Fifty Things that made the Modern Economy

by Tim Harford (Abacus, 2017)

Tim Harford is an expert at making complexity understandable. He is a fine broadcaster, such as on BBC Radio 4’s More or Less which probes the numbers that appear in the news and exposes the real evidence behind them, in recent times famously unpacking the shaky foundations of the UK government’s handling of the pandemic. The programme somehow gets across the notoriously non-intuitive ideas of probability and sampling. And Fifty Things that made the Modern Economy started out as a broadcast too, on the BBC World Service.

This is a gem of a book: 50 short self-contained chapters each based on an invention or an innovative idea. From the plough to the light bulb; from passports to insurance, there is a wide range presented in entertaining style and with surprising insights. He looks at origin stories and traces out the importance history of each idea through to the place in the present economy.

We may be familiar with some stories, like Harrison’s clocks to tackle the longitude problem at sea and the standardisation of times to accommodate the network of steam trains in the 19^th century, or the accidental invention of radar from a vain attempt to develop a “death ray” in the 1930s. But Joseph Woodland’s origination of the barcode, or entrepreneur John Warne Gates’ promotion of barbed wire, and the extraordinary scale and reach Ikea’s Billy Bookcase were all new to me, and in Harford’s hands these tales are vivid and thoughtful.

But this is not just a lucky dip of entertaining titbits, like so many “stocking-filler” books thrown together on the Smart Reading section of the local bookshop. Each chapter also teases out the results of how inventions are used, often with far-reaching consequences in the economy and society as a whole. The Pill, the concept of Limited Liability companies and the U-bend which makes a flushing toilet tolerable in the home – these have shaped the way we live and work. And to draw out several themes, the author presents the chapters in seven sections under headings like “Ideas about Ideas” (Public Key Cryptography making online trading feasible; Intellectual Property Rights which both enables and hampers innovation) are enablers for others to flourish; “The Visible Hand” which riffs on Adam Smith’s influential but mysterious concept of the “invisible hand”, includes the brilliant introduction of M-Pesa which gives many people living in countries with less developed banking systems a secure way to handle their money, and the appalling corruption that blighted the world with leaded petrol: these and others show the results for good and ill of government intervention in the economy.

Overall this is a sparking and accessible tale of unintended consequences, of the winners and losers (entertainers who didn’t survive the invention of the gramophone; the great good and dubious downsides of the Welfare State. Within the constraints of chapters only 5, 6 or 7 pages long he somehow conveys the moral dilemmas, the dark side of “great” inventions, the light and shade of the turmoil and interconnectedness of the modern economy. This book has achieved a rarity: making aspects of the economy digestible, one bite at a time. Brilliant!

Elsewhere on the Billy Bookcase

• Ha-Joon Chang Economics: The User’s Guide (2014) – this is very good: a Pelican Introduction book, but not as easy a read as the author may have hoped. This is a fine review of the various theories of economics, with clear explanations of many of those baffling terms that economists like to baffle us with. His main message is that no one theory (or policy) is right for all times or all places – economists should be more grown up!
• Steven Levitt & Stephen J Dubner Freakonomics (2005) and SuperFreakonomics (2009) – the original book and its sequel are game-changing in opening up how to think about economic activity in parts where other economists do not reach (e.g. how drug dealers work!)
• Niall Ferguson The Ascent of Money (2008) – I think Ferguson is a sparkling economic historian, though in places he does not spare you the detail and never underestimates his reader. Never short of a spiky, provocative opinion.
• Adam Smith An Enquiry into the Nature and Causes of the Wealth of Nations (1776) – the starting point of so many economists
• Karl Marx Capital (1867-1894) – his theory of class history and proposed solutions to the world’s problems have been found wanting after 100 years of tragic experiment, but his analysis of how capitalism works and the plight of working people in the 19th century is timeless and insightful.