Tag Archives: review

Inventing the property market

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Desmond Fitz-Gibbon’s Marketable Values: Inventing the Property Market in Modern Britain is an interesting history of exactly what the subtitle says: the institutions and practices that created the forerunner of today’s anonymous, professionalised property market out of the thickets of traditional social relations that still characterised property ownership at the end of the 18th century. It’s a very nice study of the development of an economic institution: the creation of physical marketplaces, the standardisation and publication of information flows, the development of relevant professions such as auctioneer, estate agent, surveyor, even the invention of suitable filing systems and procedures for enabling viewings of properties. This had to bring together the building of suitable premises for auction rooms or the purchase of estate agency offices, legal and governance practices, social norms, the creation of professional development pathways, and much more.

This all sounds a bit niche, perhaps, but I’m a sucker for the detail of markets as economic and social institutions (& never tire of recommending John McMillan’s Reinventing the Bazaar). This is a very nice study, and, importantly, ends with a chapter on the ‘Limits of Marketability’, looking at the battles to preserve open land and the struggle that led to the formation of the National Trust in 1970. The nascent property industry painted property markets as democratizing: “At present the land is held by the few but the day is coming when it will belong to the many,” said the Estates Chronicle in 1898. But land held by all is important too. To be read alongside Brett Christophers’ The New Enclosure (reviewed here).

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Where did economics go wrong

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David Colander and Craig Freedman have an answer. ‘Where Economics Went Wrong‘, to give the title of their new book, is answered by the subtitle: ‘Chicago’s Abandonment of Classical Liberalism’. They have something very specific in mind by this, namely the move from widespread acceptance by economists that economic policy does not follow from economic theory, but rather is “a blend of engineering and judgement”, an art rather than a scientific endeavour. They continue: “Clearly one wants evidence-based, objective analysis of policy. An art and craft methodology uses theory and science whenever it can.” But policy is messy and requires a methodology recognising the unavoidable role of normative judgments.” This is what they mean by classical liberalism.

The Chicago School upended this, the book continues, by “removing the firewall between economic science and policy” from the 1930s on. It did so to further a laissez faire agenda, insisting that economic science justified the conclusion in real life policy that the market should be left to its own devices. It merged economic theory and science with economic policy advice. This agenda held sway for some decades, embedded in policy by politics and the electoral success of Reagan and Thatcher.

I must say I found this argument confusing  at first because of my own perspective that the problem for much of 20th century economics was the ‘separation protocol‘ between positive analysis and normative advice, expressed by Lionel Robbins and later by Milton Friedman. However, I think it’s a similar point in fact: the claim they made was that positive economic analysis was appropriate for policy, and value judgments could be coralled into the domain of political choice, about which economics has nothing to say.

Many economists probably still think this, but my sense is their number is diminishing. Colander and Freedman end the book with an overview of the work of six economists they perceive to be working in the ‘art and craft’ policy tradition: Dani Rodrik, Ed Leamer, Amartya Sen, Ariel Rubinstein (love his book Economic Fables), Alvin Roth, Paul Romer. A shame they’re all men but I for one approve of the selection, with that major caveat.

The book is an inside-the-beltway one, of interest mainly to history of thought folks I would guess. Having said that, it does highlight a key methodological issue of importance to all applied economists.

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The long run is now

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Among my Christmas present books was Ta-Nehisi Coates’ We Were Eight Years in Power, a powerful read. This passage spoke to me:

“A nation outlives its generations. We were not there when Washington crossed the Delaware but Emmanuel Gottlieb Leutze’s rendering has meaning to us. We were not there when Woodrow Wilson took us into World War 1 but we are still paying out the pensions. … ”

The more I think about the broad sustainability issues I wrote about in the Economics of Enough, the more important I believe paying attention to the long run to be. Hence the new project we just launched at the Bennett Institute on improving measures of natural and social capital. My goodness, we – certainly all the western countries – have been destroying both, and it looks like the bills are starting to come due.

Another extraordinary essay in We Were Eight Years in Power is about the incarceration of African-American men: “The US now accounts for less than 5% of the world’s inhabitants – and about 25% of its incarcerated inhabitants.” The rise and fall of crime in the 20th century was a common, broad pattern to many countries. Only in the US did the rate  of imprisonment climb as crime fell – other countries saw their crime rate fall without creating a prison state.

The book is great – he’s an outstanding essayist.

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More palaces for the people, please

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The titular Palaces for the People in Eric Klinenberg’s latest book are libraries, so described by Andrew Carnegie as he built 2,800 of them in a lasting act of philanthropy. The book is a hymn of praise to libraries in particular but also all the other components of ‘social infrastructure’, places where people meet face to face and form relationships that are the warp and weft of a resilient society. This includes school playgrounds, local sports pitches, some bookshops and cafes, parks – the locations of community. The book starts with Klinenberg’s earlier work, reported in the excellent Heatwave, which explored why certain apparently similar communities experienced very different ‘excess’ death rates in the 1995 Chicago heatwave.

Palaces for the People: How to Build a More Equal and United Society picks up from this, pointing out near the start that having strong social capital in the heatwave was equivalent, in terms of mortality outcomes, to having an airconditioner in every home. One of the aspects of the new book I like is its emphasis on the interactions between different kinds of wealth – not only social but also conventional ‘grey’ infrastructure and the natural too. It’s long been obvious to me that there is no point in investing in concrete if you don’t think about natural capital alongside it, flood defences being the canonical example: green infrastructure such as downstream wetlands can be far more effective. Klinenberg points out they can also be designed as social infrastructure – put a park there, make a feature of the green space for enjoyment and also people’s physical and mental health, and the benefit of community relations.

The book distinguishes the social infrastructure from the social capital it enables to be built on top of it, a distinction I haven’t thought about a lot. Another point is that this lens puts the focus on place-based policies, rather than on individuals. In the heatwave example, all the individual characteristics an economist would typically control for on the right hand side a regression would have led you to predict the same mortality outcomes in all the deprived areas of Chicago, whereas it was the place they lived rather than their level of education or criminal record that affected people’s probability of succumbing to the heat.

As the book concludes, there are two reasons to think seriously about reinvesting in social and natural as well as conventional infrastructure. Climate change is one reason – New York City is going to end up under the sea. Concrete alone won’t prevent that. When a crisis hits, the only thing left to help people cope – is other people. The other is the all-too-evident impact of deindustrialization. The chickens of the 1980s and 90s have come home to roost, and they turn out to be monsters. Yet governments on both sides of the Atlantic are still cutting the facilities that make it possible for people with not much money and little hope for the future to cope: parks, playing fields – and libraries. The book doesn’t actually answer the ‘how’ of it’s subtitle, but it’s well worth a read.

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The matter of England

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A few days of quiet reading time, in between seasonal socialising, are more welcome than ever after a busy 2018. Later this week I’ll be doing my two usual seasonal posts: the most popular posts of 2018, and a forward look to books of interest being published in the months ahead (always, indeed, one of the most popular posts of the year).

Meanwhile, I’ve been dipping into a new book co-edited by my colleague Michael Kenny, Governing England: English identity and institutions in a changing United Kingdom, the result of a British Academy research project.

It always used to amuse me that whereas most English people I know described themselves as British, many of the French and Americans I know tended to describe all British people as English, blithely unaware of all the local sensitivities. In my days on the BBC Trust we spent much time debating the right balance between programmes aimed at the whole nation, given the BBC’s role as a national institution with a sense of the responsibility to unify, and those reflecting its constituent parts to relevant audiences. For example, the debate about whether or not Scotland should have a separate main news bulletin with a different editorial agenda went on for years, with the BBC’s management very reluctant (overly reluctant)  to cede the principle. Only certain drama series seemed to manage universality through authentic reflection of a specific time and place – Life on Mars, Last of the Summer Wine, Call the Midwife – although I always thought there was far more scope than the senior managers believed to interest people in other parts of their country. The BBC’s debates paralleled the wider political debates about national identity, of course. Public service in general, and in that context of one of the UK’s most important cultural institutions in particular, makes one super-sensitive to the issues debated in the book.

I’ve dipped into the book & particularly appreciated the two historical chapters, one on the relation between England and Britain, one on English nationalism, and also a chapter by my former Manchester colleagues Rob Ford and Maria Sobolewska on UKIP’s claim to English nationalism. Tony Travers’ chapter on London is interesting too. The essay on Manchester is, unfortunately, rather tendentious and seemingly written without having spoken to anyone involved in its devolution deal (I had a very marginal role in the process). But collections are always a mixed bag.

It’s a pricey book unfortunately (OUP for the British Academy – priced for libraries). Still, I’m sure it will be a must-read for all political scientists preoccupied with our national identity and governance questions, which the Brexit process is bound to affect, however it turns out.

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