Muddle, muddle, toil & trouble

It’s back to routine tomorrow, with too many (>0) Zooms in the schedule. Still, I’ve been making the most of the extra reading time since New Year, and have now polished off Duncan Weldon’s Two Hundred Years of Muddling Through. This is an aptly-titled economic history of Britain since the dawn of the Industrial Revolution, a story of accidental successes and forseeable failures, told with verve.

War features prominently in the story, as it would any industrialised nation’s economic history. Raising taxes to fight wars paved the way for the expansion of the franchise and growth of the state. And the legacy of war, either financial or physical, shaped much of the 20th century’s economic history. The distinctively British parts of the experience are the long shadow of the landowning aristocracy and our dysfunctional politics, giving us a uniquely warped political economy with a ruling class running the entire country as if it were a colony (See Tom McTague’s marvellous recent article in The Atlantic on this.)

I’ve grown interested in the role of the Treasury in this, having sort of read (only sort of because reading online) a fascinating Kings College London PhD thesis by Tom Kelsey, Picking Losers: Concorde, nuclear power, and their opponents in Britain, 1954-1995. His research established the effective internal Treasury opposition to these postwar efforts to stay on the frontier of technologies the US did not clearly dominate: what we got was a shadow of what ministers had planned. (Although of course the great counterfactual is what would Britain’s role in the computer industry have been were it not for the UK gestablishment insisting on secrecy postwar as the Americans did not, and were it not for their persecuting Alan Turing.) Anyway, I’d have liked a bit more about where the consensus around economic ideas in UK policy came from, as these shifted over time. (And is there a long-view history of the Treasury looking at how it has preserved a largely consistent culture and worldview over centuries? Today’s fiscal hair shirtism inside that building is wholly consistent with the decision to go back on the Gold Standard, for example.)

This is a terrific book to recommend to 6th formers and students who know little economic history. When I was a student there was a gap for just such a book – Sked & Cook’s Postwar Britain: A Political History came out during my undergraduate years. I had a 1958 book, British Economic Policy Since the War by Andrew Shonfeld. (Both hard to find now, but still on my shelves.) Robert Skidelsky’s magisterial biography of Keynes wasn’t published yet though I read the Roy Harrod one. We are now blessed with many histories particularly of the 20th century – David Edgerton, Correlli Barnett for instance – albeit with a more detailed focus. Two Hundred Years of Muddling Through is a lively, clear and balanced overview of British economic history, & I wouldn’t hesitate to recommend it.



War of the words

A terrific book I read in proof has arrived here: it’s The War of Words: A Glossary of Globalization by economic historian Harold James. As the book notes at the start, this is a time of the polarisation of ideas about how to interpret the economy, society and politics. Nationalism is on the up and globalisation has become a dirty word. Well, the key point of the book is that the disputes about the world are in part due to the way different uses of the same word can lead to muddled thinking. “This book starts from the notion that moments of profound social transition spark new questions and inspire new vocabularies.” And yet fuzzy concepts obscure discussion rather than clarifying it. The book seeks to clarify potential differences in meaning, so that communication can perhaps become an exchange of ideas more than an angry shouting past people with opposing views.

The chapters each take a word, often an ism: capitalism, socialism, populism, globalism, but also technocracy, democracy, hegemony, debt, and more. They take a journey trough the history of how each term has been deployed, reflecting the changes in society along the way. The complex and changing politics of debt are a great example, and this chapter is a masterly and brief aerial view of why various types of debt – personal, corporate, sovereign – have become so problematic in the 21st century. The historical perspective is essential (I was very struck by Danny Quah’s pointing out on social media today that 2021 is as far from 1980 as 1980 was from 1939…. this is sobering if you remember 1980 as an adult). The debt chapter compares well with David Graeber’s much-praised vast tome Debt, in terms of setting out key political issues of our own time.

I also particularly liked the chapters on technocracy and populism; one could do worse than start students out with these two chapters before diving into the more extensive literature. Again, they have a clarifying focal length, just enough detail to start orienting oneself in these debates of competing isms and politiks. Professor James has the capacious knowledge that makes this possible and a wealth of historical details. Who knew that technocracy was a term born of World War 1, introduced by Californian engineer William H Smyth? He saw it was the means to ensure science and technology servied society. Technocrats took another giant leap forward with World War 2, with the recruitment of science into the comprehensive war effort and then the managerialism of the post-war era. Periodic revolts against the technocrats have occurred, such as Alasdair MacIntyre’s influential polemic After Virtue; but they are essential despite the constant need to maintain a balance between experts (techno-) and people (-cracy) which will inevitably shift over time.

Of course there are omissions but the point is clarification of terms, not exhaustive analysis. As the book concludes: “Words matter: … language can empower citizens.” This is exactly why ‘fake news’ and misinformation have had such a malign influence, why authoritarians control the media, why ‘woke’ and ‘neoliberal’ and many more words can become terms of abuse. We are indeed in a war of the words, and I recommend this book as ammo.




The history – and future – of American capitalism

Reading Jonathan Levy’s Ages of American Capitalism: A History of the United States has been quite a commitment: over 700 pages of text, plus notes, in hardback. The sheer weight militated against my taking in the grand sweep if its ambition, as I had to read it sitting at home propped on cushions. Nevertheless, it was well worth it.

As the title suggests, the account is organised into different ages: commerce (early days from late 17th century, and the role of slavery); capital (post Civil War to Fordism and the Depression); control (New Deal & postwar golden age); chaos (1980 on). The organising idea is the changed relationship between state and business in each of the eras, but importantly that the state, and political decisions, always ultimately determined the character of capitalism. The private sector – titans such as Morgan and Ford – clearly made a massive contribution to shaping US industrialisation through their business model choices, union-bashing and personal force of will; but they were not writing the story of capitalism on a blank sheet of paper. Government decisions and political forces constrained them and tamed them. And in each of the eras, there were distinct political visions, starting with the conflicting Hamilton and Jefferson visions.

This political economy framing made the final section the most interesting to me, given the many straws in the wind indicating that the 2020s will prove another junction between eras as belief in the “Magic of the Market” (Chapter 19) evaporates. This isn’t to say the Biden presidency will form the template for a new era – and indeed the book stops with the post-GFC recession – but rather that the Reaganite/Thatcherite order has become a disorder.

As in any Big Book, there are lots of interesting details and eye-catching turns of phrase. The superior logistics of the Union Army for example, involving vast military contracts for provisions and even railroad-building: “A highly functional political economy of corruption helped the Union win the war.” The early signs of the importance of the changing geography in US economic development as NASA and companies such as IBM opened facilities in Alabama in the late 1950s, signalling the rise of the sunbelt. The role of JP Morgan in creating forward-looking corporate valuations in the late 19th century merger movement.

There are points at which it seems like the book isn’t 100% in control of the economic terminology. For instance, Levy frequently uses a phrase about deposits ‘pyramiding into New York’ as if it’s a technical term of art. And there are a few scattered graphs that don’t add much to the words – the reproduced paintings are better illustrations of the points being made, be it about the frontier or 1960s consumerism. These are minor quibbles.

The book ends: “I have emphasized that American capitalism is an especially forward-looking economic system, in which expectations of the future play a prominent role in determining the present.” I think this statement is always true, and that it’s the balance between optimism about the future and nostalgia for the past that shapes an economy. The same page later lights on what is particularly distinctive about the US: “its pronounced historical amnesia.” And as Levy concludes, now is the moment for a better imagined future to come into play. Over to the politicians, Biden and the not-yet dormant spectre of Trumpism.



The unknown pioneer

Many people – including economists, I suspect – won’t recognise the name Colin Clark. Yet he has at least as much claim as Simon Kuznets to be known as one of the pioneers of national income accounting. I came across Clark’s work when researching my book on GDP, and was pleasantly surprised to know that he had been a Fellow (and much earlier a student) at my Oxford college, Brasenose. Eventually I put two and two together and realised that the very nice chap I had spoken to at various events was Colin Clark’s youngest son David, another Brasenose student.

Anyway, this is all by way of preamble to saying how much I’ve enjoyed reading Alex Millmow’s biography, The Gypsy Economist: The Life and Times of Colin Clark. This is the first biography of somebody who worked as a young man with Keynes, taught Richard Stone, and produced some of the first modern statistics on national income; and later corresponded with Kuznets and Lewis, creating the field of development economics alongside them. In 1984 the World Bank honoured him as one of the 10 pioneers of development economics, along with Hirschman, Myrdal, Rostow, Bauer and others. Clark was influential in the Labour Party, being particularly close to Hugh Dalton, before spending many years in Australia, as a government economist in Queensland. Later he returned to England for some years, where he was involved in the founding of the Institute for Economic Affairs.

It is natural to ask why, given his scholarly work, Clark is so unknown now. After all, Stone, Lewis and Kuznets all went on to win the Nobel. The answer probably lies in that career history, and political trajectory. Actually, Clark not only left academia for years to take up a policy role, he also seems to have torpedoed his chances in two other ways. One – emerging clearly from between the lines of the book – is that he was a maverick character, possibly even cantankerous. The other is that he converted to Catholicism and became an ardent advocate of ‘distributivism’, which seems to have been a romantic philosophy advocating small rural communities and the virtue of farming. The biography quotes throughout many comments to the effect that Clark was brilliant but his books and papers were disorganised – lacked an organising analytical framework – and were sloppy in many regards. One typical comment described him as, “Brilliant, original, provocative, eccentric and sometimes just plain wrong.”

Having said this, there are many fascinating aspects of Clark’s thinking that emerge here, including some themes that have re-emerged in economics more recently. One is an early and lasting interest in increasing returns to scale, stimulated by working with Allyn Young. The second is simply the opening up of development economics through the empirics of long-run trends: Clark, like Kuznets, did not focus on (what became) GDP but – in his case – on statistics including income distribution, leisure, macroeconomic stability, and natural resource use and depletion. His Catholicism made him interested in non-state, non-business economic institutions such as churches but also friendly societies and unions – an openness to the economic role of a variety of community institutions only just returning in today’s mainstream economics. It also meant he was pro-population growth (he & his wife had 9 children themselves), considering it essential for per capita growth as modern endogenous growth theories imply, and a fierce critic of the Ehrlich ‘population time bomb’ argument.

This very informative biography made me rather ashamed not to have known anything about Colin Clark until a few years ago, even when his papers were sitting in my college library. I learned a lot more from reading it. The book fills a gap in the history of economic thought, and about the history of policy economics in Australia. (Alas, it’s priced for libraries.)




Onions and eternal vigilance

This might sound weird, but I thoroughly enjoyed reading The Plague Cycle: The Unending War Between Humanity and Infectious Disease by Charles Kenny. It’s an absorbing history of exactly what the subtitle says, arguing that Malthus was wrong even when he was right: populations were indeed kept in check in a natural cycle for most of history, but the way this happened was infection, not starvation, when population sizes and densities increased by enough to make human settlements attractive homes for various pathogens.

As the book describes, people found responses to waves of disease: keeping strangers out or confining them; cooking and spices (hotter countries or regions have spicier cuisines). Who knew that, “[M]any spices kill bacteria. Garlic, onion, allspice and oregano inhibit or destory every bacterium they’ve been tested on.” But the significant breakthroughs, allowing urbanisation and modern economic growth through agglomeration, depending on the technological advances that started piling up just as Malthus’ book was published.

I say technological, but some advances were ideas requiring no laboratory. Oral rehydration therapy, devised by Indian doctor Dilip Mahalanabis in 1971, is cheap and simple. “But for its full potential to be realised, everyone has to know about it.” The book tells us that 95% of parents in Kerala know to give fluids to a child with diarrhea, but, “In West Bengal – where Dr Mahalanabis did his life saving work over four decades ago – more than half still give children less to drink.”

As the book goes on to explain, the techniques for defeating disease, from the simple to sophisticated vaccines (although – again, who knew? – Gandhi was an opponent of vaccination), enabled urban agglomeration and globalisation. For all their downsides, these have been the dynamo of modern prosperity: people exchanging ideas (in ways that Zoom etc just don’t make possible). It cites Abhijit Banerjee and Esther Duflo’s finding that infant mortality rates are now lower in urban than in rural areas, an amazing reversal of the historic gradient.

The book ends with the new challenges, from anti-microbial resistance, to sentiment about vaccines and the toll taken by the Wakefield scandal, to the institutional challenges manifest in tackling Covid19. While The Plague Cycle represents work predating this pandemic, it could not have been published at a more timely moment. There will be more pandemics. Antibiotics and antivirals are ceasing to be effective because of over-use and mis-use. Continuing basic research has to be funded. I hope everyone will read this and do all they can to get across the message of eternal vigilance in this ‘unending war’.