Yes, it is worth reading more about Keynes

There are many books about Keynes, and I’ve read quite a few of them. The first was Roy Harrod’s authorised biography, The Life of John Maynard Keynes, set for me to read the summer before going to university. It was coy about his personal life but a good introduction to the economics. Later I read the superb three volume biography by Robert Skidelsky, since shortened into a one volume version, and followed up with Keynes: Return of the Master. More recently there was the excellent Capitalist Revolutionary by Roger Backhouse and Bradley Bateman, and Keynes: Useful Economics for the World Economy by Temin and Vines. And on Keynes’s role in the post-war international monetary order another two terrific books, Benn Steil’s The Battle of Bretton Woods and Ed Conway’s The Summit.

   

   

The latest to join the list is Universal Man: The Seven Lives of John Maynard Keynes by Richard Davenport-Hines. And although it’s familiar territory, I did enjoy reading it and found some new insights. This is not just because there is a whole chapter on Keynes’s sex life, not the focus of previous books. The section about the Versailles Treaty prompted reflection, in the current European context – and I hadn’t before known that The Economic Consequences of the Peace had influenced T.S.Eliot’s The Waste Land. The section on the Macmillan Report sent me to the trade statistics, claiming the UK hadn’t had a trade in goods surplus between 1822 and 1934 – a glance at the Bank of England’s Three Centuries of Data resource suggests this is largely true, bar odd years. There is a great vignette of Stone and Meade working on the first national income accounts in a Treasury cubby hole during the war with, literally, a quill pen and a hand calculator.

I also liked the chapter on Keynes’s role in the arts. There’s much about him that is unappealing to me – the Eton and Bloomsbury poshness and superiority. But his success in bringing the highest quality, most ambitious arts to the people redeems that, through the establishment of the Arts Council and other interventions. It’s amusing to read that Customs & Excise taxed entertainment but not art (cinema and popular plays but not opera) and had a tussle with Keynes over whether Euripides and Ibsen should be considered ‘entertainments’ and so liable to tax. Keynes was also keen for the BBC to ensure its arts broadcasts covered the whole of the country, not just metropolitan works, when its regional broadcasts resumed after the war. “Nothing can be more damaging than the excessive prestige of metropolitan standards and fashions.” Indeed.

And I hadn’t known Keynes helped the Archbishop of Canterbury, William Temple, write the marvellously radical economic parts of his 1942 bestseller Christianity and the Social Order: minimum housing, education and employment standards, regional devolution, worker representatives on company boards, nationalisation of the banks, public ownership of land for development for housing, and restrictions on mortgage borrowing. The book sold 139,000 copies and Davenmport-Hines calls it, “Perhaps the most read Keynesian tract of all.” It sounds a radical programme now, as it evidently was in 1945 as well.

EmailLinkedInShare/Save

Inventors and manufacturers, and their economics (Version 1.0)

Courtesy of Anton Howes (his economic history blog is here) and Marc Andreessen, here are other works of political economy written by 19th century people who could and did make things. There is obviously a rich vein of literature to revisit here. This post is now updated with better links, also courtesy of Anton.

Here is his list, with his comments and a few notes from me.

“The one that immediately sprang to mind was the chemist Andrew Ure (1778-1857) and his The Philosophy of Manufactures (1835). (Free online copy.) I believe he had other works on political economy too.

My note: Here’s another, The Cotton Manufacture of Great Britain:

And a free online copy.

James Anderson (1739-1808) had quite a few writings on political economy, apparently anticipating Ricardo. Here is Observations on the means of exciting national industry. My note:  this article says he critiqued Adam Smith.

John Marshall (1765-1845), the flax spinning pioneer, wrote a book called The Economy of Social Life in 1825. I’m not sure if it’s on political economy, but he certainly lectured on the topic later on in life.

John Sinclair (1754-1835), the agricultural pioneer and writer, had quite a few works touching on political economy and the national finances. He was apparently a notorious bore offering unsolicited advice on the latter topic in particular. Here is his History of the Public Revenue of the British EmpireArthur Young (1741-1820) may have similar works, but was a little more focused on just agriculture.

Account of the origin of the Board of Agriculture, and its progress for three years after its establishment. By the president.  An Account of the Systems of Husbandry Adopted in the More Improved Districts of Scotland: With Some Observations On the Improvements of Which They … Agriculture with a View of Explaining How F

Andrew Yarranton (1619-1684), the metallurgist and civil engineer, has quite an interesting work called “England’s Improvement by Land and Sea: how to Beat the Dutch without Fighting” (2 vols., 1677–81). Quite interesting, particularly for the time. Here is the free online copy.

John Chapman (1801-1854), the inventor of the cab, had quite a few well-known (at the time) works on the political economy of India. May well be considered one of the earlier development economists! Here’s The Cotton and Commerce of India.

The actuarial and navigational pioneer Francis Baily (1774-1844) had quite a few works on political economy. One that sticks out as sounding quite interesting is called “The Rights of the Stock Brokers Defended Against the Attacks of the City of London” (1806)

Another actuarial pioneer, Robert Wallace (1697-1771), was also very prolific writing about demography and political economy. One that sounds quite intriguing is called Dissertation on the Numbers of Mankind (1753). Here’s the free online version.

A dissertation on the numbers of mankind in antient and modern times: in which the superior populousness of antiquity is maintained. With an appendix, … on Mr. Hume’s Political discourse, …

A lot of people also tend to overlook Richard Price‘s (1723-1791) contributions to economics. They’ve been largely overshadowed by his radical political and theological works. But it was he who originally proposed and then advised on the National Debt sinking fund, as well being the person to promote Bayes’ work on statistics and probabilities. Here is Observations on the Debt.

An appeal to the public, on the subject of the national debt. The second edition. With an appendix, … By Richard Price, D.D. F.R.S.

Observations on Reversionary Payments: On Schemes for Providing Annuities for Widows, and for Persons in Old Age; On the Method of Calculating the Values of Assurances on Lives; And on the National Debt. Also, … a PostScript on the Population of the Kin (Paperback) – Common

You may also be interested in the works of William Cobbett (1763-1835). [Me: best known name on this list.] He’s on my list as an agricultural pioneer, but he’s better known as a political radical and for compiling what would later be better known as Hansard. In 1815 he wrote something called Paper against Gold, (available here too) but there are many other works on economics and political economy.”

Cobbett’s Paper against gold: containing the history and mystery of the Bank of England, the funds, the debt, the sinking fund, the bank stoppage, the … shewing, that taxation, pauperism, poverty,

Many thanks to Anton for those. And from Marc via Twitter (@pmarca), this one by David Wells, Recent Economic Changes and Their Effect on the Production and Distribution of Wealth and the Well-Being of Society.

On The Economy of Machinery

On The Economy of Machinery and Manufactures by Charles Babbage was published in 1832. I discovered it courtesy of Sydney Padua’s The Thrilling Adventures of Lovelace and Babbage, not having known Babbage had written at all about political economy.

It’s a marvellous book. Babbage clearly had a joyous, expansive interest in everything. The first half describes and discusses all kinds of innovations in manufacturing – how machines work, what different industries have been introducing, and a long chapter on different types of copying, from copperplate printing to mass production techniques making copies of manufactured items.

The second half turns to questions of political economy and it is fascinating to see how Babbage links his observations about actual businesses that he visits – clearly, very many of them – and the price lists he sees, and the machines he has seen built – with analytical principles. He describes the importance of fixed costs and increasing returns to scale; the importance of asymmetric information in explaining many phenomena in business; the way large productivity gains depend on a reorganisation of production, but may be left untapped unless there is enough pressure from competitors because old techniques are still profitable; the phenomenon of geographic clustering for exactly the reasons Alfred Marshall more famously set out his 1890 Principles of Economics; and the sheer restless dynamism of the industrial economy. He even has thoughts about the relationship between automation and jobs.

All in all, it adds up to a very modern-seeming view of how the economy operates. Although of course it would have seemed very old-fashioned to 20th century economics, having no equations, no steady state equilibrium, no machinery of assumptions and axioms.

I love Babbage’s detailed empiricism. He is overjoyed by the potential of the division of labour, and takes Adam Smith’s example of pin manufacture. He visits pin makers of all kinds and describes the 10 stages of pin making in some detail. He tells us whether tasks are mainly done by men, women or children, and what their typical wages are. He describes the tools used and how they work. He also has a detailed account of pin making from half a century earlier. He can put a figure on the productivity gain from the division of labour!

It turns out Babbage wrote a fair bit of economics. I might move on to another of his works.

   

Generalizing about Africa (& why it’s a bad idea)

This morning I attended a breakfast at the Centre for Global Development at which Morten Jerven spoke about his new book, Africa: How Economists Get It Wrong,” which I’m now looking forward to reading – especially after enjoying his previous book, Poor Numbers: How We Are Misled by African Development Statistics. The new book is published today.

 

His talk kicked off with a critique of two successive approaches to ‘Africa’ by economists – a category refined in discussion to macroeconomists, and not absolutely all of those. The first approach was cross-country regression analysis, given its definitive shape by Robert Barro, in which a dummy variable for African countries would have a negative coefficient. (Charles Kenny has an excellent critical review of growth regressions, and Dani Rodrik has a terrific paper on the limitations of trying to get policy prescriptions from this approach.) The second approach takes low growth in African countries as a given and tries to pin that to institutional failures – corruption, clientilism, lack of transparency etc – and is perhaps symbolized by Acemoglu and Robinson in their ambitious Why Nations Fail. Morten Jerven said, “There are economists who have written non-modest books.” He argued that the latter approach leads to policy prescriptions of the kind that ask, “Why aren’t you like Denmark?”

 

Instead, he suggests focusing on trajectories from today’s specific situation, rather than seeking to explain deviations from a rich world ‘norm’. He argued too for, “Fingertip knowledge of each country’s data.” Yes!! The standard international datasets lead researchers to think history started in 1960, and also are misleading because they interpolate or otherwise guess to fill in the many gaps “They should leave gaps if there are no data – or at least put them in a different colour,” Jerven says.

There was some challenge from the attendees. One said that there clearly is something distinctive to explain about most African economies, where people are still poor on average. Another argued that most economists in the development field do recognise the need for a rich description of specific economies, so the book attacks a straw man. However, I think Jerven is right to highlight the cavalier approach far too many economists have to the data, and their tendency to generalise. Surely he is right when he says, “A paper about ‘Africa’ gets more citations than a paper about ‘Tanzania’.”?

And how valid are those generalisations, when you consider the following Economist covers from 2000 and 2011. Was there really so much change in just over a decade?

Hopeless?

Hopeless?

Or Rising?

Or Rising?

Enlightened economists

It’s hard for me to resist a book about the Enlightenment, and I’ve just read The Enlightenment: History of an Idea by Vincenzo Ferrone. I have to confess it was quite hard work because it’s written in the scholarly language of another discipline. But the argument is interesting: that the Enlightenment as a set of philosophical ideas and as an historical phenomenon need to be kept separate, and are all too often conflated.

There is a definition in the introduction of the historical Enlightenment: “A conscious and passionate creative effort aimed at bringing about a fairer and more equitable society, made by man for man [sic], an attempt to put into practice individual rights, giving political space to what was the truly revolutionary discovery of the natural right of man to pursue happiness as the ethical foundation of a new universal morality.” I suppose it’s historically accurate that it was mainly by and about men, but it would have been good if Ferrone had explicitly acknowledged this limitation, as this language is so exclusionary.

He adds: “One can scarcely imagine a greater challenge to the political action and coherence of those European citizens who were working with passion and intellectual honesty to spread the new political language than the deportation of millions of African slaves mostly to the United States of America, the self-styled homeland of rights and freedom.” Economics, or rather political economy, was born of the Enlightenment, and economists were on the side of the angels in the anti-slavery campaign. Carlyle labelled it the ‘dismal science’ because he was pro-slavery and disliked the argument by political economists such as J S Mill and  – I learned from Sydney Padua’s The Thrilling Adventures of Lovelace and Babbage – by Charles Babbage. (I’ve now started Babbage’s 1832 book On The Economy of Machinery and Manufactures, which is a ripping good read so far.)

 

Back to Ferrone. He wants to preserve a historical understanding of the Enlightenment from those from the post-modernists to Jonathan Israel who, he argues, make it too philosophical: “The idea of natural rights is not philosophical in origin. It is an extraordinarily important moral idea …. that in the course of the 18th century became a powerful new political and juridical discourse. … Far from being a project single-mindedly aimed at the goal of modernity, the Enlightenment is more accurately understood as a cultural experience defined first and foremost by the values it has bequeathed us.” As a process or experience, it has no definitive conclusion, he concludes. Of course I understand the importance of the historical context, but I must say I don’t see that Ferrone entirely avoids the same pitfall himself as the scholars he critiques. Aren’t ‘inherited values’ staking a philosophical claim? Luckily I feel no need to reach a firm conclusion about a debate in another discipline.