The first edition of The State of Working Britain was published in 1999, and this third volume, The Labour Market in Winter edited by Paul Gregg and Jonathan Wadsworth, continues the tradition of careful, comprehensive analysis of the labour market in the UK. (Volume 2 was The Labour Market under New Labour.) The issues covered include employment and unemployment, job quality, and the trends, causes and consequences of income inequality. Each chapter is written by leading experts on the specific subject – and labour economics is a field in which British economists are particularly strong. So the quality of the research is consistently high, and all the underlying data are available online – no danger of slapdash econometrics here.

The range of material is too wide for me to review it all. The migration chapters – one by Steve Nickell and Jumana Saleheen on the overall labour market impacts of high migration and one on second generation immgrants by Christian Dustmann, Tommasso Frattini and Nikolaos Theodoropolous – were of particular interest to me. (Co-editor Jonathan Wadsworth is a colleague of mine on the Migration Advisory Committee.) The first of the two finds some evidence that high levels of immigration have borne down on wages at the bottom end of the income and skill scale – but the effect is surprisingly small, perhaps, in the context of the size of the inflows. The chapter concludes that the more salient impact for existing UK residents may lie in the implications of faster population growth for housing, school places, transport and so on – although as they note: “Developed land in England occupies some 8.5% of the total land area. In contrast, some 54% of the people surveyed in 2005 think that urban areas take up more than 50% of the land area.” Even if we're not, this feels an overcrowded land. The chapter on second generation ethnic minority migrants reveals that tehy tend to be better educated than their white native peers but have lower employment rates and lower wages on average. However, there are significant differences between different minority groups, and between the sexes in come cases. Black Caribbean and Chinese women and Indian men fare relatively well, Black African, Bangladeshi and Pakistani women particularly poorly, by comparison with white native peers.

I also found the chapter on regional labour markets interesting (its authors are Peter Dolton, Chiara Rosazza-Bondibene and Jonathan Wadsworth). Some of the results were familiar – the north-south divide narrowed during the boom, but employment rates and wages are lower in the north than the south, and the north depends more on public sector jobs. Mobility between regions is at its lowest for decades, moreover. The chapter also maps the skills distribution of the UK, which is as uneven as the wage distribution implies. The regional divide has plagued the UK for decades and is unlikely to alter, the chapter concludes, without a significant shift of capital to the North. As British banks don't like to lend to business, and certainly not to businesses outside the home counties, there seems little prospect of that happening.

To pick out a third area, inter-generational mobility has become a policy concern – witness the recent focus on unpaid internships and their possible role in perpetuating privilege. The chapter here by Jo Blanden and Lindsey Macmillan suggests that intergenerational social mobility has stopped declining, while so far investments in Early Years schemes have not reduced the shadow family background casts over early achievements – but family background inequalities are starting to narrow by the end of secondary school. I must confess to having mixed feelings about the policy focus on social mobility per se, as it glosses over the fact that there must be as many downwardly mobile as upwardly mobile. A direct focus on distribution of adult employment and wage outcomes seems preferable.

All in all, this is an essential book for anybody with an interest in the UK labour market. It's also a model of good empirical economics with practical policy implications. I hope it's already being widely read around Whitehall and Westminster.

There is a fascinating essay by Sue Halpern in the New York Review of Books covering three recent books about the impact of the internet on human thought processes. They are World Wide Mind: The Coming Integration of Humanity, Machines and the Internet by Michael Chorost, The Filter Bubble: What the Internet is Hiding From You by Eli Pariser and You Are Not A Gadget: A Manifesto by Jaron Lanier. Halpern notes that all these books address an underlying reality, namely our growing dependence on the internet and its growing influence on our thoughts and actions. Referring to Ray Kurzweil's 2005 idea, The Singularity is Near, the moment of internet consciousness, she writes that it seems a silly idea, but it would be even sillier to dismiss it given how much our thinking and behaviour has already changed. Indeed one of the three books reviewed, The Filter Bubble, seemingly documents the way that searches for the same subject by different people produce different results depending on their preconceptions:

'…[B]y having our own ideas bounce back at us, we inadvertently indoctrinate
ourselves with our own ideas. “Democracy requires citizens to see
things from one another’s point of view, but instead we’re more and more
enclosed in our own bubbles,” he [Pariser] writes. “Democracy requires a reliance
on shared facts; instead we’re being offered parallel but separate
universes.”'

This is the central concern of course of Cass Sunstein's earlier book, republic.com.

There are many books at the moment offering assessments of the wider impact of the internet on politics and protest, on society – and now on humanity itself. None of them will be the last word, not least because the effects of the technology are still unfolding. But what does seem undeniable is that the technology – like any general purpose technology – is having profound effects on society, and – unlike previous technologies almost certainly having profound effects on humanity too.

The economic historian Deirdre McCloskey is part way through a monumental book project, The Bourgeois Era. There's an interesting new review (by James Seaton in The Weekly Standard) of the first of a planned six book series, the 2006 The Bourgeois Virtues. I reviewed the second, Bourgeois Dignity, in the New Statesman earlier this year.

Prof Seaton's review is interesting because he is preoccupied with how to categorise Prof McCloskey politically – whereas one of the most appealing things about her writing for me is that she is impossible to pigeon hole. The review notes and agrees with the argument of The Bourgeois Virtues, that left-wing intellectual thought in the west has on balance done people more harm than good in resisting market capitalism, and he reviews the book very positively. However, he concludes, uncomfortably, that “now the differences between her view of the movements of the sixties and
that of most neoconservatives has narrowed to the vanishing point.”

This is the final sentence of the review, and we are left dangling. What does Prof Seaton think about this? Are conservatives in all western economies right in their view that left-wing social liberalism and economic interventions from the 60s to at lease the Thatcher/Reagan era inadvertently caused damage to the fabric of society and the functioning of the economy? Can left-of-centre intellectuals even now bring themselves to agree with Deirdre McCloskey and admit it? This is unfinished business since 1989, and a pressing question at a time of financially essential cuts in public spending and the scope of the state. If the left wants to rebuild a credible and persuasive political narrative, it will have to address this so far taboo question of morality.

In blazing sunshine in west Wales for the past few days, I've read a fascinating book, The Party, by Richard McGregor, formerly the China bureau chief for the Financial Times. It's an account of the role played in modern China by the Communist Party, and the way the organisation itself is changing as the country grows so rapidly into a far larger and more complex economy. I had never before understood the structures within the CCP, nor the distinction between the party – and its interests – and the government of the country.

Anybody considering making an investment in Chinese growth, whether on a large scale as a business investor or even on a small scale as a retail investor in a fund, would do well to read this book. For one thing, the party's lack of regard for legal contracts, securities laws in other markets and so forth, ought to be factored into any and every risk assessment. The party's own interests are paramount, and may differ from either the interests of China's commercially-run businesses and – certainly – from those of any foreigner. What's more, the interpretation of the party's own interests will depend on the outcome of personal struggles for power in a context of utterly pervasive purchase of influence, and the buying and selling of official posts. The personal struggles form a large part of the book. The near absence of ideological debate is striking.

I was left unsure what the prospects for both the party and China might be. It is evident that the leaders retain the habit of making a pronouncement and expecting to see it occur, with little regard for the consequences. But as the economy becomes massively more complex and entwined with the rest of the world through trade, pronouncement may no longer be sufficient for something to happen. Governments everywhere are finding that their job is no longer all that simple. On the other hand, the Chinese Communist leaders are a talented and – by definition – determined group of people well aware of the risks on the path ahead. The recent 12th Five Year Plan, declaring the importance of domestic consumption rather than exports, housing, and environmental and quality of life indicators, shows that awareness, whether or not it can be attained.

The Party does not pronounce either the dominance of China or its inevitable downfall – it is a more intelligent and subtle book than either of those genres. The changes this enormous country is going through form a massive controlled experiment in political and economic systems, and we will no doubt witness extraordinary developments in our lifetime. It has become a cliche, but we do indeed live in interesting times.

A while ago Emma Rothschild wrote a terrific book about Adam Smith, and in particular how his moral philosophy in Moral Sentiments informs his better-known Wealth of Nations. She's followed up that one, Economic Sentiments, with The Inner Life of Empires: An 18th Century History.

It's a tale of early globalisation seen through the lives of one generation of a Scottish family of 11 children, the Johnstones. The book is based on immense research in the archives – the notes run to 150 pages. Their personal stories illustrate the rapid increase in interconnectedness and complexity as the modern capitalist economy began to take shape. The complexity and uncertainty is striking – in a marvellous phrase Rothschild describes it as “the unsettled world of possible empires.” (p129)

I was very struck by how early in the Industrial Revolution distant places and people – especially slaves – began to play a large role in British lives. The Johnstone sons travelled the world, from working for the East India Company in Bengal to owning slave plantations in Grenada and Florida. Their incomes depended to a large degree on overseas activity. This is long before what one normally considers to be the heyday of empire. Also striking is the central role of slavery in creating early globalisation – and the number of black and Indian people there must have been in Britain in the late 18th century.

Another very interesting discussion is the contemporary debate about the nature of the state and public morality as the British empire slowly took shape. The pragmatic deals with local rulers of the early East India Company days had to give way to more formal and regulated relations, with the exercise of state military power and political authority. This sheds light on our own debates about the relations between multinationals and states.

Adam Smith was a friend of one Johnstone son, and the family engaged with the new ideas of political economy in discussing these various rights and wrongs. One used free trade as an argument for the slave trade, they appealed to competition and self-improvement in their activities in Bengal. Two brothers became rich while others had more varied fortunes. And, in another marker of the times, of the 14 children 3 died in infancy, and a majority of the others by their early 40s. Short lives, albeit crammed with world events.

So a fascinating book. The thread of the argument gets submerged in detail in places. I found it hard to keep track of all the siblings, and the line of argument is unclear in the structure of the chapters. Nevertheless, a wealth of insight into early capitalism and – as in her previous book – the moral foundations of the global economy.