Once upon a time in the British Economy

Managing the Economy, Managing the People: Narratives of Economic Life in Britain from Beveridge to Brexit by Jim Tomlinson is an interesting economic history of modern Britain. It appealed to me from the first page, where Tomlinson talks about the absence of a fixed meaning for the term ‘the economy’. The book therefore focuses: “[O]n the ways in which successive governments, in seeking to manage the economy, have sought simultaneously to manage popular understanding of economic issues.” In other words, to manage the economy is to tell a persuasive story about it – to have a narrative in other words.

This is not, as many economists’ first instinct will tell them, woolly nonsense. It is because there are many possible self-fulfilling (or self-averting) outcomes, given the role of both expectations about the future and interactions between individuals. In different ways many fine economists are starting to incorporate such insights, from Roger Farmer in macroeconomics to Robert Shiller, George Akerlof and Dennis Snower, Kaushik Basu, and George Akerlof and Rachel Kranton.

Anyway, as Tomlinson points out, talking about the electorate misunderstanding economic reality is therefore missing the point that economic outcomes are to some degree always constructed (and besides, it backfires – people don’t like to be told they’re stupid and should listen to clever folk). The body of the book therefore traces the ebb and flow of these political and policy acts of construction, and the interplay of ideas, ideologies, and events. The first part considers some of the key narratives, broadly chronologically – “You’ve never had it so good,” “rolling back the state,” etc. The second part looks at the period through the lens of key macroeconomic indicators, and why some are more salient at specific times due to the way they feature in public debate.

An interesting conclusion considers two broader narratives’: the rise of neoliberalism; and deindustrialisation. Tomlinson argues that while academics (outside economics) focus on the former, the latter – having had a briefl flurry of scholarly interest in the late 1970s – is more significant in understanding the trajectory of people’s lives in postwar Britain. The book comes to a rather sudden halt, and it is by no means a vanilla economic history of Britain, but it’s a stimulating read.

 

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One thought on “Once upon a time in the British Economy

  1. I am not an economist, but I have been reading about economics for a decade after working for many years in business and government. I am intrigued by something you say in this post.

    Why is it an insight that telling a story about the economy (or any other issue) is a useful tool in a democracy? Surely that is obvious. Modern society is so complex that no-one has more than a simple story-level understanding of anything outside their own specialist subject(s). This applies to economists as much as anyone else.

    Our entire society is built on assuming the wisdom of the crowd. That means that specialists in all areas must explain themselves in language that the rest of society will understand and accept. That is why marketing is so important in business. Marketing is just explaining something to non-specialists in terms they will understand and find compelling. Lawyers’ arguments to juries, and politicians’ arguments to voters, must also be pitched at this same level. I call it the intelligent schoolchild level.

    That is also why there is a real difference between a “specialist” (someone who knows a lot about a subject) and an “expert” (someone who is acknowledged BY NON-SPECIALISTS to have a useful contribution to make). Most academic economists don’t seem to understand this distinction when they announce that they are “experts”. I’d argue that is also why many academic economists seem to be frustrated constantly with the rest of society.

    I note also that most academic economists seem to disparage marketing, or other effective communication mechanisms, which tells me that they have not really thought hard or deeply about either how our social systems really work, or about the implications for their own role in explaining the economy. A good example is that leftist economists have failed to come up with an effective alternative to “thinking like a household”.

    After a decade of reading about economics, I am convinced that the most famous academic economist of the first half of the 21st Century will be the first one to understand this and to act upon that understanding. However, the first step in successful marketing is to find out what the target market currently thinks and understands. That would involve an economist listening to the rest of us rather than talking at us, and understanding how practitioners in business, banking etc understand the economy rather than the economist simply assuming they already know.

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