Assertions of “propaganda” are not an argument – unless your friends believe that propaganda means “accepting what fashionable opinion tells us, that arguments against giving government more money and power are propaganda, while arguments in favor of giving government more power and money constitute ‘questioning authority.” Ask them precicely what is incorrect in the books they consider “propaganda.”
As for book recommendations, well there’s two categories there; “best” pro-statist books, and best books arguing against libertarianism (or do you mean arguing against Austrian economics? Or anarcho-libertarianisn?); if your friends think they read good arguments against libertarianism, ask them what they are. Let them point you to the books they think make a convincing case against libertarianis.
Anyhow, as for the former:
1) Rawls; anyone who is anyone over the last generation and a half has read Rawls, and even people who aren’t anyone have imbibed his view of “fairness.” Now, even as an undergraduate I found his reasoning to be particularly poor, especially the under argued assumption that “trust us, giving tons of power to central agencies to bureaucratically manage your affairs down to the most trivial details really does make you freer. Trust us, telling you what views you can openly express lest you hurt the feelings of other really is respecting your freedom of expression,” but lots of people lap this stuff up. Not explicitly explained in the book (because the audience was fellow academics) is that Rawls’ underlaying premises are based on standard (mainstream) economic premises, and the under-argued details of what he thinks follows from his two principles (essentially, the bureaucratic state & managerial, theraputic left-liberalism) also follow from what these people take to be standard macroeconomic premises (“welfare economics”). This makes Rawls useful in seeing how people derive the unlimited state from these premises, and believe that it protects freedom. Its underlaying premises are also a social-constructivist theory of social contract, and a claim that their system is “neutral” between ‘competing comprehensive conceptions of the good” (where, in fact, it constitutes a comprehensive system – if you read the whole book – and I mean read it closely, not skimming, but reflecting on the implications of each passage – you’ll see that absolutely every detail of people’s behavior is to be determined by the Rawlsian state; indeed, a sort of determinism follows naturally from the foundational economics. I blithered on about that because it’s important to understand these premises; if you want a good description of the differences, I highly recommend watching this by Bob Murphy and this and this by Israel Kirzner; both describe the differences/distinctions, and why they lead “standard” economics to statist conclusions (much of it has to do with their unit of analysis being equilibrium states, but other premises, including how they define rational action, are also important). (IMO those three videos are “must views”).
2) similarly in that vein I’d recommend Cass Sunstein’s “Nudge” – which argues (I crap you not) that its libertarian to paternally manage everyone’s choices for them through “choice architecture.”
3) before he became the world’s greatest internets troll*, Krugman was a legitimate left-liberal economist. I recommend reading some of his old books. Also those of, say, Lester Thurow and/or Robert Kuttner are useful in this regard. Further regarding the interwebs, the site “Crooked Timber” is written by people who are apparently considered clever and insightful on the left; to that end you can make of this what you will. (Also keep in mind this true fact: by the standards of the left, libertarianism is racist). Note you’ll find that many of the reasons people oppose libertarianism is because they believe the progressive narrative of history: that governments aren’t violators of liberty; in every and all cases (except when a republican is in office and neglects things), government is our savior.
4) in the above I’ve basically assumed that those you’re arguing with are liberals, or accept liberal premises. However there are also conservative critiques, and even libertarian critiques. Much of the thoughtful of these have to do with the fact that classical liberalism contains within it the seeds of tendencies towards modern liberalism (some of these problems may not apply to anarcholibertarianism, but they definately apply to minarchical-libertarianism; which means I for one have a problem – see below); to that end I’d recommed the writings of Jim Kalb (some of which are in online articles, I recommend this, this and especially this, and some of the older ones here and he has a book “The Tyranny of Liberalism,” which is very good); Kalb attempts to explain why classical liberalism has tended to become modern statist-liberalism basically everywhere. I also recommend Ed Feser’s post – which will probably not convince an anarcho-libertarian but does explain. (I for one still have a lot of respect for Feser as a philosopher, but think he made an error/omisson – which I explained in another post – in his philosophy, which led him to reject even minarchy. Once that is corrected – and his fellow Aristotelian-Thomist, Oderberg, gets it right – then where he went wrong becomes clear, without tossing out the whole philosophy. But this just illustrates how even seemingly small errors can lead to great problems, when it comes to philosophy, as in logical proofs or mathmatical proofs).
5) for a Libertarian, and essentially Austro-Libertarian, critique of anarcho-libertarianism, and a critique I essentially agree with, I recommend Randal Holcomb’s article government unnecessary but inevitable (note the title is even wrong; Holcomb suggests in the article that government is necessary, for the two standard minarchist reasons).But see also Walter Block’s reply and note what I said in point #4, above – Kalb’s argument that classical liberal minarchy inevitably collapses into modern, comprehensive-statist managerial-theraputic liberalism, a point i also agree with (the problem? The problem is basing things on classical liberal theory. To that end, Rothbard was probably correct in seeking an Aristotelian foundation, and Mises, Nozick, & Hayek wrong in using Kantianism as a foundation. While, yes, accepting that Aristotle was a statist. The basic problem there though is Aristotle’s “polis” is usually translated to mean he believes “man is a political animal” – which, to a degree he always is – even in a non-state, there will be politics & governance. But man is a social animal is a more apt description, and then one insists upon the distinction – which social contract theory inevitably confuses – between state and society. One is also then free to argue that anything that would go into a “social contract” reflect pre-political commonalities and understandings, and thus cannot themselves be based on a social contract ‘we all agreed to/would agree to in a state of nature/behind the veil of ignorance” – these sorts of arguments, which lead to social-constructivist theories of, I.E., rights: that rights come from a political agreement, that is, from a state, and thus are subject to redefinition, modification, and even elimination at the discretion of “The Big We” – the state, the Hobbsean absolutism of “unlimited democracy.”
*Given how legitimately brilliant Krugman is – and anarcho-libs like to mock him, but if you read any of his old stuff – the writing isn’t very readable, it’s dry and academic, and there will be much to disagree with; – but the man is legitimately intelligent. Therefore, as I started to say; given how legitimately brilliant Krugman is, I’ve been forced to conclude that his “Conscience of a Liberal” polemics constitutes the greatest, decade-long troll of liberalism, ever, a subtle joke to the effect that liberals have no conscience. Well played, Krugman, well played. He belongs in the /b/ hall of fame.