The 10 crucial business books that explain why modern capitalism works the way it does now

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Fifty years ago, capitalism in the West was based on manufacturing that provided well-paid, lifelong jobs and close to full employment. By the 1970s and 1980s that system was carrying a layer of credit and debt that made it more lucrative for banks to extract profits from deals and transactions than provide financing for the creation of actual products.

And then, in the 1990s, the burgeoning tech industry made physical products even less relevant — and even more lucrative for investors and speculators.

These 10 classic business books tell the story of how capitalism changed from a system that made things into a trading desk for bonds, credit derivatives, and leverage … and created modern inequality along the way.

We’ve arranged the books chronologically. If you read them in this order you’ll see how one segues into the next, and how dramatically capitalism has changed in the last 50 years.

RANK AND FILE (1973): The brutal, forgotten history of ordinary people who faced down death threats to get decent pay and safety standards at work.

“Rank and File” is an oral history of the lives of a dozen workers’ rights activists during the six decades to the end of the 1960s, a period in which Americans went from being little more than slaves to some of the best-paid employees on the planet.

Pursuing the American Dream in the mines, steel works, and meat yards of pre- and post-war America sometimes meant risking your life, as authors Alice and Staughton Lynd recount in this often overlooked book.

Jock Yablonksi, for instance, was shot to death in his Clarksville, Pennsylvania, home, along with his wife and daughter, on New Year’s Eve, 1967. Their bodies were discovered six days later. They were murdered because Yablonski stood in a union election against the president of the United Mine Workers, whom Yablonski believed was more concerned with interests of mine owners than that of miners.

It’s gruelling stuff — but required reading if you want to know what “blue collar” really meant in the days when work was done in factories rather than offices.

BARBARIANS AT THE GATE (1989): An epic thriller about ’80s excess, a time when debt financing replaced manufacturing as capitalism’s main focus.

“Barbarians” is regarded by many as the greatest business book ever written. In 1988, the flamboyant CEO of RJR Nabisco, F. Ross Johnson, decided he could buy his company outright, take it private, and then sell it again later at a profit. The deal would use a “leveraged buyout” — a transaction that would let Johnson use junk bonds (risky corporate debt)  to pay for the deal. He offered $ 17 billion, or $ 75 a share, for a stock that had been trading at $ 55.

The flaw in Johnson’s plan was immediately obvious to Wall Street: Once the board agreed to consider the deal it was required to consider competing bids too — and they flooded in. Anarchy ensued. Bryan Burrough and John Helyar had sources inside every office, enabling them to eavesdrop on every conversation, every plot, every betrayal.

Ultimately, the LBO specialist firm Kohlberg, Kravis, Roberts triumphed in a frenzied auction, with a $ 25 billion ($ 109 per share) offer — the largest corporate takeover in history.

KKR then stripped the company of its assets as it struggled to pay the debt that financed the deal, turning a once-great consumer product empire into a husk of its former self. 

LIAR’S POKER (1989): The classic tale of life inside Salomon Brothers that defined how stories about Wall Street are told.

This was Michael Lewis’s first book, and it covers the three years he spent as a bond trader at Salmon Brothers in the 1980s. It set the tone for everything we understand about Wall Street today, and much of what we remember about the money-hungry 1980s.

Lewis’s tale focuses on the bond trading desks’ hyper-macho culture of practical jokes and prideful greed. “Big swinging dicks” and “feeding frenzy” are among two of the phrases the book popularised. In a climactic scene, CEO John Gutfreund proposes playing one hand of Liar’s Poker — a guessing game based on the serial numbers printed on dollar bills — for $ 1 million.

The book also describes Lewis’s experience selling junk bonds before Black Monday in October 1987, when the market crashed, and thus provides an anxious appetiser for what happened next …

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