Political commentary

A plague on the economists

Colin Welch

The Russian anarchist Bakunin, so I have heard, was travelling through Germany in a coach. He saw peasants burning an im- posing Schloss. He jumped out at once and, without asking to whom the Schloss belong- ed, or why and for whose benefit it was be- ing burnt, joined in the fun with fanatical glee. A blazing Schloss — always so right.

I was forcibly reminded of this tale at various points in Sir Ian Gilmour's marvellously readable (I managed it in one day flat), often amusing, always pro- vocative, never tedious latest book, just out.* Too late to influence next week's Budget, it offers in its later pages an alter- native strategy for a Wet Tory or Alliance Budget in a year we should never hope to see. The earlier pages are devoted to a Wet economic history of Britain since the in- dustrial revolution.

Sir Ian notes the wealth of Tory social reforms in the latter part of the last century. Herbert Spencer had drawn up a blacklist of them — a whitelist, naturally, to Sir Ian, who contrasts the Tory record most favourably with American lack of achive- ment at that time. He cites an American law of 1905 limiting night work in bakeries. The Supreme Court declared it unconstitu- tional, a meddlesome interference with the rights of the individual. No question for Sir Ian as to whether bakeries would have been forced to close or to lay off staff, whether those thrown out of work would have found other employment, whether fresh bread would have been still available. Oh no: like blazing castles, all regulations are always right so long as they impede the in- famous workings of the free market and af- front the susceptibilities of crazy classical economists.

His hatred of and contempt for these gloomy scientists becomes ever more mark- ed, at times even imprudent. 'Happy is the country', he cries at one point, 'which has no great economists!' I hope no knights are taking him literally, setting off even now, swords in hand, to rid him, say, of those turbulent savants and b'etes noires, Hayek and Friedman. Even if not taken to its logical conclusion, the remark is still strange. One could expect from it to find great economists pontificating only in lands reduced to desert, acute poverty and misery, while without such economists there are everywhere smiling fields, thriving industries and happy fat people. But where are the great economists of Bihar and Orissa, or among the Australian aboriginals * Britain Can Work (Martin Robertson, Oxford, £8.95)

or Kalahari bushmen? Britain and America have by contrast sustained great economists, yet seem to prosper better.

Indeed,' Sir Ian himself seems intermit- tently to realise that there might be another way of looking at things. 'However great the initial misery,' he concedes, the market economy secured far greater benefits for man than any other. An economy which allows scope for individual initiative has brought technical progress and material prosperity never previously dreamed of.' Really this passage, which continues in the same unexpected vein, should have been printed on a fold-out sheet, so that one could refer back to it constantly as a correc- tion to practically everything else in the book, which reads for the most part like Godzilla versus the Mad Monetarists from Outer Space, or Superman Zaps the Economic Apemen from Alpha Centauri.

To be fair, Sir Ian has a very entertaining monetary tennis match with Professor Friedman, emerging in the length of these pages as the clear victor, 6-4, 6-2, 6-0. I have not figures to hand to challenge this remarkable result, though I note that some of Sir Ian's shots came from a suspect source, Lord Kaldor to wit. (His prejudice against economists is not so great as to cause him to spurn their support when useful.) Meanwhile, those who, like myself, here at the Spectator hold Sir Ian, once our proprietor, in affection and respect, will re- joice at such a turn-up for the book. A return match might go differently.

On almost every page there is something to make the economic reader sit up and twitch. Sir Ian comes near to saying that all unemployment is involuntary, and despises the 'anecdotal evidence' of those who, knowing people who never look for work and prefer the dole, or who draw the dole while working, think otherwise.

Sir Ian quotes Cobbett, Oastler and Carlyle to the effect that workers in the ear- ly industrial revolution were worse off than slaves, dogs, hogs and horses. I see what is meant; but the supposed felicity of slaves and the rest was inseparable from their con- dition as valuable property, and unat- tainable by men except by such as had forfeited the seemingly ambiguous benefits of freedom, personal responsibility and in- deed humanity. The benefits conferred by these last attributes came later, and are not, as I have shown, always denied by Sir Ian.

Not always denied, but sometimes. Sir Ian thinks Marx 'justified in saying that, in a free labour market with a surplus of workers, ... wages would be starvation wages and that this with other unchecked developments of capitalism would lead to increasing misery.' Reforms alone are sup- posed to have confounded Marx's pro- phecies. But, as W. H. Mallock pointed out, the facts themselves at the time disproved Marx's analysis. Misery was not increasing when Marx wrote and wages, unremarked by him, were rising.

Competition is in Sir Ian's view a very frail plant, doomed by the ability of suc- cessful firms to grow at others' expense and dominate the market. But the imperfect competition which results is better than no competition and, even in a monopolised in- dustry, competition is never in effect dead nor its benefits forfeit till potential com- petitors are legally or otherwise barred from competing.

Of monetarism itself, Sir Ian gives an ex- cellent and fair summary and a very funny definition — 'the uncontrollable in pursuit of the indefinable'. He then adorns it with some bizarre addenda of his own. Does it really, 'at least as propounded by its most energetic evangelist, Professor Friedman, [provide] a complete economic system and a political ideology as well', with 'ag- gressively right-wing Conservative at- titudes'? Professor Friedman may or maY not adopt such attitudes. They are not con- fined to monetarists, nor are socialists or even Communists debarred from being monetarists. They were all once sound money men and, so far as I know, Peter Jay still is.

All so far is history and counter-history, theory and counter-theory. When we come to Sir Ian's prescriptions for the future, his advice (so to speak) to Sir Geoffrey, we are faced with a less exciting mixture of the stale and the unsound, with strange alterna- tions between caution and rashness.

What, expand domestic demand? Not me, cries Sir Ian. But expand aggregate de- mand? Why, certainly, by all means, yes! In a reflationary package, 'new resources must be channelled 'towards investment in our export industries and away from con- sumption'. But are governments the best judges of what foreigners want to buy? And, if not, would the investment be more productive than the consumption? The 'new resources' would presumably be financed either by inflation or by higher taxation. Yet Sir Ian has already noted over-taxation as having contributed to our failure, and advocates lower indirect taxes to offset price rises consequent on the devaluation a la Shore he also advocates.

Contradictions are beginning to emerge, so is renewed inflation; and, as so often, an incomes policy is here commended to reconcile irreconcilables. And over the mounting chaos is to preside a public in- dustrial forum of windbags, a 'House of In- dustry', in which government, industry, unions and 'consumers' would all be represented, and which should be 'preferably televised'. Help! Come back, Jeremy Isaacs! Come back, Top of the Pops!