Charles Dickens on economics

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In Household Weekly, 1850:

“Political economy is a mere skeleton unless it has a little human covering, and filling out, a little human bloom upon it and a little human warmth in it.”

Courtesy of Sylvia Nasar’s [amazon_link id=”1841154563″ target=”_blank” ]Grand Pursuit: The story of the people who made modern economics[/amazon_link], which I’m finally reading now it’s out in paperback.

[amazon_image id=”1841154563″ link=”true” target=”_blank” size=”medium” ]Grand Pursuit: The Story of the People Who Made Modern Economics: A Story of Economic Genius[/amazon_image]

In last Saturday’s FT John Sutherland opted for [amazon_link id=”1853262374″ target=”_blank” ]George Eliot[/amazon_link], rather than [amazon_link id=”014143967X” target=”_blank” ]Dickens,[/amazon_link] as the Victorian author with the most to say about poverty and wealth. I’d go for [amazon_link id=”046087781X” target=”_blank” ]George Gissing[/amazon_link] or [amazon_link id=”014043464X” target=”_blank” ]Mrs Gaskell[/amazon_link] or [amazon_link id=”0199538697″ target=”_blank” ]Zola[/amazon_link] or [amazon_link id=”0140444300″ target=”_blank” ]Victor Hugo[/amazon_link] above either.

The uses of declinism

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The title of Josef Joffe’s new book tells you the argument: [amazon_link id=”0871404494″ target=”_blank” ]The Myth of America’s Decline: Politics, Economics and a Half Century of False Prophecies[/amazon_link].

[amazon_image id=”0871404494″ link=”true” target=”_blank” size=”medium” ]The Myth of America’s Decline: Politics, Economics, and a Half Century of False Prophecies[/amazon_image]

The first part of the book sets the scene with an entertaining history of American declinism through the decades, starting with the Sputnik shock and fear of the Communists in the 1950s, through the upheavals of the 60s, the impact of Vietnam and dire economic situation in the 70s, the Japan-bashing of the 1980s, a 1990s hiatus thanks to the end of the Cold War and the New Economy (as Joffe writes, “It doesn’t take much to vault from declinism to triumphalism when the geopolitics is right”), and the 2000s angst about the rise of China culminating in what the Chinese call the North Atlantic crisis of 2008.

The most interesting aspect of this first section is Joffe’s analysis of the political uses of declinism. For he convincingly shows it is used as a prelude to the promise of redemption. Ronald Reagan for one, John F Kennedy for another, used the claim of present decline very effectively in election campaigns to promise a brighter future. Joffe writes that declinist prophecies are intended to be self-averting: “Declinism is a political programme even though it comes in the guise of an empirical exercise such as counting guns or measuring growth.” He contrasts the 20th century declinist political philosophy with the Enlightenment tradition of optimism about the possibility progress, noting how feted pessimistic pundits are these days. (Though there are some optimistic ones – Matt Ridley’s [amazon_link id=”0007267126″ target=”_blank” ]The Rational Optimist[/amazon_link] is one, Mark Steven’s [amazon_link id=”1846683572″ target=”_blank” ]An Optimist’s Tour of the Future[/amazon_link], Charles Kenny’s [amazon_link id=”0465020151″ target=”_blank” ]Getting Better[/amazon_link] – and his new one, [amazon_link id=”0465064736″ target=”_blank” ]Upside of Down[/amazon_link]).

The next section of Joffe’s book turns to the empirical matters when it comes to comparing the US now with the challengers, especially China. He argues that direction of travel is irrelevant – the BRICs have grown rapidly but from such a low base that there is no challenger to the US: “It is size and weight that count.” A lengthy section runs through all the by now well-known arguments about China’s prospects. He is dismissive of the BRICs concept, arguing that the countries are too dissimilar to be relevant to each other, and a neat acronym has had too much purchase. It’s true they are not at all alike but I think this greatly underestimates the impact the concept has had in drawing attention to a genuine shift in the world economy – as I noted here recently writing about Jim O’Neill’s [amazon_link id=”1907994130″ target=”_blank” ]The BRIC Road to Growth[/amazon_link] and Danny Quah’s work.

The final section considers America’s prospects and status in the world, especially vis a vis China. Joffe concludes that if America’s relative decline continues, it will be self-inflicted. America’s demography is in its favour, he argues, its military might is vastly ahead of its rivals, it is still the most innovative country with free and flexible markets to bring innovations to fruition. He seems to think this will outweigh problems such as the disintegrating infrastructure, inequality and social problems and so on, but is it possible to predict how relative global growth rates will play out when there are such uncertainties on both sides of the Pacific? Writing in a country which did have the world’s leading empire and then did decline (the flavour so well captured in Corelli Barnett’s books such as [amazon_link id=”033034790X” target=”_blank” ]The Audit of War[/amazon_link] and [amazon_link id=”0330346393″ target=”_blank” ]The Lost Victory[/amazon_link]), but I’m not sure.

Inevitably, Joffe is selective in his evidence and fails to address the kind of questions many people have now about the American model. The gross inequality of income and wealth, and consequent accumulation and abuse of power, is just one aspect of it. There are questions about the US tradition of freedom, post-NSA revelations. In a time of generally polarised party politics, American politics stands out as particularly grotesque. Many people would also challenge’s Joffe’s rather positive view of how America is currently exerting its military power overseas.

It is interesting to hear his rather contrarian view. I would have preferred, though, more on the politics and philosophy of declinism, and the use to which it is being put, which is the best part of this book.

Enlightenment values

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I’ve thoroughly enjoyed reading Anthony Pagden’s [amazon_link id=”019966093X” target=”_blank” ]The Enlightenment and why it still matters[/amazon_link] (a present from Son 1 for Christmas along with home-made biscuits and sweets – how well I brought him up). The ‘why it still matters’ argument is that we’ve inherited from the Enlightenment’s ‘science of man’ the values of common humanity, universality, a ‘global civic ethic’; and that these are values well worth defending against narrow nationalism and exclusive communities.

[amazon_image id=”019966093X” link=”true” target=”_blank” size=”medium” ]The Enlightenment: And Why it Still Matters[/amazon_image]

The book concludes:

“Nothing in the future will ever be achieved by shutting ourselves up in communities, by measuring out our lives by the horizons of what our fathers and forefathers have set down for us …. Much of what modern civilization has achieved we obviously owe to many factors, from increased medical knowledge to vastly improved methods of transport, which although they are an indirect legacy of the Enlightenment, and the revolutions in science and technology which both preceded and followed it, have no immediate of direct connection to its ideals. But our ability to even frame our understanding of the world in terms of something larger than our own small patch of ground, our own culture, family or religion, clearly does.”

The book is excellent on the intellectual restlessness that drove Enlightenment thinkers – something that Hobbes attributed to all of us, “the general inclination of mankind.” He argued against the Aristotelian idea of the ultimate good or greatest good: “There is no such Finis Ultimus, no summum bonum as is spoken of in the books of the old Moral Philosophers. Nor can a Man any more live, whose desires are at an end, than he whose senses and Imaginations are at a stand. Felicity is a continual progress of the desire from one object to another.” ([amazon_link id=”0199537283″ target=”_blank” ]Leviathan[/amazon_link] 70 I xi)

Hobbes was at the most radical end of the spectrum, but Kant agreed – sadly, finding a pithy quote from Kant is difficult, but he emphasised the ‘proceeding and growing activity’ rather than the end-state of happiness, which seems to me similar to Czistalmilhalyi’s ‘[amazon_link id=”0712657592″ target=”_blank” ]flow[/amazon_link]’. Kant was also firmly against state paternalism: “A government established on the principle of benevolence towards the people, like that of a father towards his children – that is, a paternalistic government – … is the greatest despotism thinkable.” So it’s clear what he would have made of the current vogue for governments ‘nudging’ us all to be ‘happy’!

Pagden is – like me – a big fan of [amazon_link id=”0140432442″ target=”_blank” ]David Hume[/amazon_link]. (Incidentally, I learned that Hume might have been the first philosopher in Britain to earn a living from writing – not that it can be a crowded field.) He writes that part of Hume’s importance stems from his appreciation that in the study of humankind, the object and the subject doing the observing are the same – and putting that into practice in his own writings. As Diderot phrased it: “It seems to me that one must be at once inside and outside oneself. One must perform the roles simultaneously of the observer and the machine that is being observed.” (I wish I’d read this before giving a lecture last summer!)

Pagden is of course alert to the negative aspects of the Enlightenment and its consequences, perhaps best encapsulated in Edmund Burke’s opinion that it combined: “Benevolence to the whole species, and want of feeling for every individual with whom the professors come into contact.” Isn’t that combination still found on the trendy, universalist left, those who eat organic quinoa but won’t send their children to the local state school because it’s full of poor people? More seriously, communitarian thinkers of course reject the individualism they trace to the Enlightenment, and the pace of change and loss of traditional identity. This is not a set of concerns to be dismissed lightly. Similarly, the Aristotelian theme of virtue has – quite rightly – enjoyed a revival post-crisis, when the loss of moral compass in the modern global economy became so apparent. (This review of David Caute’s new book on Isaiah Berlin, [amazon_link id=”0300192096″ target=”_blank” ]Isaac and Isaiah: The Covert Punishment of a Cold War Heretic[/amazon_link], indicates that Berlin – an evangelist for Enlightenment values – was also well aware of their negative aspects too.)

Yet progress is a bit out of fashion – we fear the robots rather than embracing them. So a reminder of the achievement of the Enlightenment at a time when there seems to be an inclination to pull up the drawbridge and turn away from the world is timely. As Mary Wollstonecraft put it: “The more I see of the world, the more I am convinced that civilization is a blessing not sufficiently estimated by those who have not traced its progress.”

The book is not chronological; rather, each chapter covers a theme, with as a thread running through it the debate about the role of government – in the historical context bookended by the English Civil Wars and Treaty of Westphalia in the mid-17th century and the French and American Revolutions in the late 18th century. Over the years I’ve read many books about the subject – Roy Porter’s [amazon_link id=”014025028X” target=”_blank” ]Enlightenment: Britain and the Creation of the Modern World[/amazon_link] is still a favourite. This is a worthy addition to the shelf.

[amazon_image id=”014025028X” link=”true” target=”_blank” size=”medium” ]Enlightenment: Britain and the Creation of the Modern World (Allen Lane History)[/amazon_image]

My one quibble is the number of typos in this book – from the minor like missing commas to frequent substitutions like ‘palette’ for ‘palate’ and ‘Chaplin’ (as in Charles) for ‘chaplain’, as if dictated to word-recognition software. There are one or two per page. Surely OUP could have run to a copy-editor?

BRICs, MINTs and a disordered world economy

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Jim O’Neill, famous as the inventor of the idea of the BRICs, has moved on to MINTs – Mexico, Indonesia, Nigeria and Turkey. He has a series on BBC Radio 4 starting today on these countries.

We’ve become very familiar with the idea of the rising economic powers, and enmeshed in debate about whether their growth rates can be sustained, and where the next growth stories are – hence the interest in MINTs, and the recent ‘Africa rising’ theme in so much comment. So it’s easy to forget the dramatic impact of Jim O’Neill’s original report over a decade ago, capturing the idea of a shift in economic power in the memorable acronym. What is still overlooked – and this is one of the themes of his new book, [amazon_link id=”1907994130″ target=”_blank” ]The BRIC Road To Growth[/amazon_link] – is that this shift has already happened. Many of us commenting from the West still talk about it as something that is going to happen. But as Danny Quah of the LSE has mapped very carefully (and he is writing about the Great Shift East in his own forthcoming book), the world centre of economic gravity is in Asia *now* – here is his map.

This makes the other theme of Jim O’Neill’s book all the more relevant. He argues passionately that the structures of global economic governance need to change. A world economy whose governing institutions reflect patterns of growth and trade that no longer exist is going to be a disordered world economy. It’s an important message, and my impression is that nobody is doing anything about it.

[amazon_image id=”1907994130″ link=”true” target=”_blank” size=”medium” ]The BRIC Road to Growth (Perspectives)[/amazon_image]

Science fiction economics

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Gavin Kelly of the Resolution Foundation has written a very informative and balanced article in today’s Observer about technology and jobs – it’s more balanced than the headline (“The Robots Are Coming!”). He discusses the gloom about the hollowing out of good, ordinary, middle income jobs as featured in Tyler Cowen’s fascinating [amazon_link id=”0525953736″ target=”_blank” ]Average is Over[/amazon_link] and the forthcoming [amazon_link id=”0393239357″ target=”_blank” ]The Second Machine Age[/amazon_link] by Erik Brynjolfsson and Andrew McAfee; but also some of the reasons for not assuming we’re heading straight for the dystopia of a society divided between a minority of highly skilled, high earners and a lumpenproletariat earning minimum wage for service sector jobs the machines can’t quite do yet.

[amazon_image id=”0393239357″ link=”true” target=”_blank” size=”medium” ]The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies[/amazon_image]

I’m in the latter camp, although not at all sanguine about the social and institutional adjustments that will need to be made as we glide into the Age of Robots. These adjustments are everything: technology drives prosperity and progress (old fashioned idea, I know), but society determines how the benefits are shared.

In the article Alan Manning (author of a book with one of the best titles ever, [amazon_link id=”0691123284″ target=”_blank” ]Monopsony in Motion[/amazon_link]) refers to ‘science fiction economics’, a marvellous concept. [amazon_link id=”1857988124″ target=”_blank” ]Blade Runner[/amazon_link] is the obvious reference for the robots-are-coming thesis, but Bruce Sterling’s [amazon_link id=”0441374239″ target=”_blank” ]Islands in the Net[/amazon_link] leapt to my mind as the best example. Some of William Gibson’s recent novels, of course, such as [amazon_link id=”0399149864″ target=”_blank” ]Pattern Recognition[/amazon_link].

Any other suggestions for the best economic analysis through the medium of science fiction?

[amazon_image id=”0441374239″ link=”true” target=”_blank” size=”medium” ]Islands in the Net[/amazon_image]