Stuff Matters: Genius, Risk and the Secret of Capitalism, By Harry Bingham

(DAVID SANDISON)

There have been so many books about the world economy since the recession struck that the book market has become a bit like the economy itself. It's hard to pick out the clear signals from the background noise, but insofar as one can distinguish what has been happening, the tone is pretty sombre. Harry Bingham's approach is refreshing in what it is not. It isn't quite a study of the meltdown itself, nor of the decline of the West vis-à-vis China and India, nor a banker-bashing tome, and certainly not one of those tedious "I told you so" exercises of which there have been far too many.

Instead, he looks at the failings and successes of our market system, setting what has happened over the past few years in its historical perspective. If there is a bit of bite, it derives from the author's experience as an investment banker, which has left its mark. The book is built round a series of interviews of people that he (mostly) admires: bankers, business people, and particularly entrepreneurs. The result is not so much an analysis of the world economy, more a walk around its more interesting pathways with an engaging friend as a guide.

So Bingham tells us about his time as a banker, and a reasonably successful one, at JP Morgan, and why he was glad he chose that employer rather the principal alternative, Goldman Sachs. He tells us about his time advising the fledging Polish government, just after the fall of Communism. Trekking around factories in Eastern Europe was a good way of convincing him of the value of the market system as opposed to the hopelessness of central planning, but also the limits to the market within individual corporations.

He explains why companies where the principals have their own money in the business are generally run with greater care than those where managements are playing with shareholders' money. He takes us to factories in India and China, to the ad agencies of Madison Avenue and shows how Nescafé is made to smell like the real stuff.

All this is entertaining enough. This is terrain many of us have been around but it is good to be taken to these places again in a thought-provoking way. There were two aspects of this journey, however, that stand out. One was the author's respect for entrepreneurs: people who create something special out of nothing. The other is his examination of that most elusive quest of human beings: the search for happiness.

This has become the hot subject in economies, with professionals splitting into a variety of groups. There is the Abba version: "Money, money, money...", while he notes that the Beatles constructed three laws: "I don't that care too much for money"; "Money can't buy you love"; and "Love is all you need".

Confused? Don't be, because on page 244 the author reproduces a graph that I should have known about, based on work by Betsey Stevenson and Justin Wolfers. It shows the relationship between wealth and happiness in different countries around the world.

By and large, the richer a country is in terms of GDP per head, the happier its people are. In addition, the richer people are within a country, the happier they tend to be, though the gaps are greater in some countries than others. The Danes are the happiest people on earth, it seems, while people on Togo are, I fear, the most miserable. (The United Arab Emirates is the richest country, Afghanistan the poorest.)

Quite how people should use this information is another matter but that is not the fault of the author. He is seeking to explain the issues rather than fix things – an absurdly ambitious aim anyway. But he does make one general plea which should catch some resonance: that policy-makers should try to understand what makes economies tick.

Why do entrepreneurs try and create businesses? Why do some firms succeed while others fail? It is about people being prepared to take risks and it is about trying to do things honourably and well. It should be simple really to keep an economy sweet – but it is so fiendishly difficult in practice, isn't it?