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Quarterly Review
Einstein and Economics
E=mc2: A Biography of the World's Most Famous Equation
by David Bodanis (Berkley Publishing Group, 2000, $14)
The Return of Depression Economics
by Paul Krugman (W. W. Norton & Company, 2000, $12.95)Reviewed by Allan A. Kerin
Our first two book reviews concerned books about technology and history. In this issue I'd like to include other topics by briefly reviewing two books, one a popularization of physics and the other a discussion of current macroeconomic problems. I found both books to be well written, entertaining, and informative.
E=mc2: A Biography of the World's Most Famous Equation attempts to place Special Relativity in the context of the last three and a half centuries of scientific thought. The book discusses the establishment of modern concepts of matter, mass, and energy through the work of Newton and eighteenth and nineteenth century figures such as Lavoisier, Du Chatelet, Faraday, and Maxwell. This work is presented as the background for the connection between mass and energy described in Einstein's equation. The book then describes the equation's significance in the development of science and technology throughout the twentieth century.
Bodanis often vividly describes the historical environment (political, social, and religious) of scientists, as well as some interesting facets of their lives and personalities. Lavoisier's execution during the French Revolution (not for his beliefs, but because of connections with the old regime); Newton, Faraday, and Einstein's religious beliefs; Fred Hoyle's truancy from a strict rural grammar school; and Du Chatelet's relationship with Voltaire bring an additional dimension of interest to this book. Other notable stories include the largely successful appropriation of credit for German Jewish physicist Lisa Meitner's discoveries by her colleague and former personal friend, the opportunistic Nazi sympathizer Otto Hahn; the fate of the British and Norwegian commandos who attacked the Heavy Water facility at Vermork, Norway; and the debate among Allied military and political leaders about the use of the atom bomb.
I found this book to be a very interesting and understandable popularization of modern physics and chemistry. As someone with a meager background in these subjects, I can't comment on its accuracy. I invite our readers to write to The Actuarial Review with their opinions.
The Return of Depression Economics describes several economic crises of the 1990's. Published in 2000, it describes recent history, but omits developments during the last two years. The book deals with paradoxes, such as the failure of seemingly well-run economies such as Hong Kong, and the decade-long stagnation of Japan. Professor Krugman is very concerned that problems such as deflation and lack of aggregate demand can push economies into long-term stagnation and even depression. He feels the post-World War II successes, in using fiscal and monetary policy to avoid long-term declines in aggregate demand, have led many policy makers to ignore the continuing threat such declines pose to economic growth and prosperity. He feels we have the tools to avoid depressions and long-term stagnation, but may be too slow to use them, because we are overly concerned about igniting damaging inflation. We are naturally more sensitive to the problems of recent decades than to those of more than half a century ago, but the latter may be more of a threat now. His program for ending Japan's decade-long stagnation is to promote a mild degree of inflation as the most practical way to start resurgence in demand.
Professor Krugman sees both the domestically generated problems in Japan, and the trade and currency crises in the emerging economies of Asia and Latin America, as the creations of the self-perpetuating crises of confidence. His book provides discussions of possible actions he feels governments and central banks might take to prevent such crises from turning into destructive downward economic spirals.
This is a well-written and worthwhile book. I recommend it.