Economists, growth and welfare
during the Keynesian era
*
Roger Middleton
Paper prepared for the
‘Cambridge School of Economics:
Welfare Economics and the Welfare State’ Workshop,
Hitotsubashi University, Tokyo, 26-27 February 2005
*
Address for correspondence: Dr Roger Middleton, Reader in the History of Political Economy,
University of Bristol, 13 Woodland Road, Bristol BS8 1TB, United Kingdom. E-mail:
[email protected].
This paper – the extreme preliminary nature of which means that it should not be cited without the
author’s permission – extends work begun in Middleton (1996; 1998) and developed in Middleton
(2002), Rollings and Middleton (2002), Ringe, Rollings and Middleton (2004) and Middleton
(2004).
[ver 2.1/07.02.05]
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 2/32
___________________________________________________________________________________
The activities of economists – what they do and how and why they do it – are of at least as
much interest and importance as the activities of the people economists themselves study …
(Hutchison 1955, p. 1)
§1.
INTRODUCTION
1.1
Like bush fires, which never really die out but burn beneath the surface and can flare
up again at any time, the question of whether and in what sense there was a Keynesian
revolution in British economic policy after the Second World has recently been
rekindled by Booth (2001a) in a further bout of controversy in the Economic History
Review. This eruption looks but a limited affair as only one of the half dozen or so
participants of the major debates of the 1980s and 1990s (described by Booth as ‘new
revisionists’) has chosen to respond (Peden 2003), leaving Booth (2003) in his
rejoinder somewhat unfulfilled as battle has not satisfactorily been rejoined. Figure 1
summarises the enormous literature that has been generated thus far on this debate
since it began its modern phase with Howson and Winch (1977).
1.2
My purpose here is not to make a further contribution to that debate as currently
constructed by Booth, though personally I see nothing amiss with the new revisionists
having arrived at an understanding of Keynesian influence as fragmented and
dependent on the precise definition of terms. I am somewhat less comfortable with
our conclusions being represented as post-modern, being deeply averse to the literary
turn that has infected history and some of the social sciences in recent years.
However, if post-modern is taken as meaning that we have sought to capture the
complexity of events and eschewed simplistic dichotomies between situations which
are either Keynesian or not, then I can be content here also for there has been a gross
overemphasis on dichotomies in the existing historiography of Britain during the
1950s and 1960s.
§2.
SOME CONCERNS ABOUT BRITISH ECONOMIC HISTORIOGRAPHY
2.1
Concern about simplistic dichotomies was a point made in an earlier paper with
respect to this and other economic policy debates (Rollings and Middleton 2002), a
paper in which we identified also that there has been too much compartmentalisation
of debates and that too often their dynamic characteristics have been ignored,
resulting in a preoccupation with static analysis which has been at the expense of
understanding incremental change which arguably has always been the hallmark of
British public policy.
2.2
We have some further concerns about the historiography of British economic policy
during the Keynesian era which relate to its comparative ignorance of relevant
developments in the literatures produced by historians of economic thought and
political scientists. Of these, the fact that British economic historians do not ordinarily
read the writings of historians of economic thought is probably the more serious, for it
has a number of consequences. First, being unaware of contemporary advances in
economic methodology as applied by the historians of thought, economic historians
lack their rigor in considering the rise and fall of economic ideas and might be
Figure 1 The Keynesian revolution in British economic policy literature, c.1977-2005
Phase
1.
2.
3.
4.
5.
intermission
6.
7.
Focus and key contributions
Begins with an initial wave generated by Howson and Winch’s (1977) study of the 1930s Economic Advisory Council and Hutchison’s (1978, p. 155) much cited review
thereof which proclaimed that it showed ‘that both the Treasury and the Bank were largely converted to “Keynesian policies” … at least a year before the publication of
The General Theory’ (Cairncross 1977 provides a much more balanced review).
Concerned with both Keynes’s influence before the war and the extent of Keynesian elements in postwar policy, this contained the first contributions by Peden (1980);
Tomlinson (1981a) – part of a deeper methodological critique of the then current orthodoxies of modern British economic history (Tomlinson 1981b) – which brought
forth responses by Smith (1982) and Schott (1982), along with a reply by Tomlinson (1982); and Middleton (1982; 1983). Scepticism about Keynesian influence is
restored.
This saw battle joined in earnest and the arena shifting to the Economic History Review as Booth (1983) made his initial contribution on this topic, arguing (p. 122) that the
Treasury’s conversion to Keynesianism was completed by 1947. In sequence we then have Peden (1983; 1984), which did not directly address Booth (1983), and
Tomlinson (1984) and Rollings (1985) which did. Booth (1984; 1985), responding to these papers, completes this stage of the debate. Middleton (1985) summarised the
debate as then reached for the 1930s.
Largely concerned with immediate postwar policy, beginning with Tomlinson’s (1987) continued scepticism about whether policy can genuinely be seen as Keynesian by
c.1950, a position given added force by Rollings (1988), and concluding with Booth’s (1989a). Concurrently, after an early contribution on the politics of Keynesianism
(Clarke 1983), Clarke’s (1988) detailed study of the making of the Keynesian revolution seemed to settle this stage of the debate for the 1930s
Overlap with 4. above: initiated by Booth (1987) which disputed the then emerging consensus about the form and extent of Britain’s managed economy in the 1930s; it
brought forth critical responses by Peden (1989) and Middleton (1989b) and a rejoinder from Booth (1989b) (see also Peden 1990; and Hall 1989 for important
comparative work on the diffusion of Keynesianism).
Meanwhile, at least one of these participants, tiring of the issue of whether there was a Keynesian revolution in policy, thought it prudent to revisit what Keynes actually
said and therefore what the benchmarks ought to be, in the process abandoning the instrumentalist approach (Keynesianism as deficit-finance) in favour of an emphasis on
the underlying philosophy of economic management and whether governmental objectives would have been recognisable to Keynes (Middleton 1989a; see also Skidelsky
1989; 1991). The debate now abates, and not a moment too soon according to Newton (1991) who identified diminishing returns.
From the early 1990s onward the debate occasionally surfaces but is largely subsumed within the controversy about postwar consensus politics, with key contributions on
the Keynesianism or otherwise of policy from Rollings (1994; 1996).
Represented by studies which emphasised the durability of pre-Keynesian policy goals (price stability and balance-of-payments equilibrium) and the practical limits placed
upon postwar Keynesian demand management by the conservative nature of the postwar settlement between government, capital and labour in relation to the struggle to
understand and contain Britain’s relative economic decline (for example, Howson 1993; Middleton 1996; 1998). The ESRC-sponsored Whitehall programme of the 1990s
also produces works which are relevant (in particular, Lowe and Rollings 2000).
8.
9.
10.
The publication of the Robert Hall diaries (Cairncross 1989; 1991), Cairncross and Watts (1989) on the Economic Section and Cairncross’s (1992; 1996; 1997; 1999)
diaries and other policy memoirs provided essential raw material for studying policy in practice, as did the opening up of the official papers for the 1950s and early 1960s,
resulting in rather disparate work which to a greater or lesser extent engages with this debate: Ringe and Rollings (2000) on the establishment of the National Economic
Development Council; Kelly (2002) on demand management; Burnham (2003) on exchange rate policy in the 1950s; and Newton (2004) on sterling and immediate
postwar reconstruction; with Ringe et al (2004), which surveys the public records on economic policy during the Conservative years, 1951–64, summarising what is
currently known. Peden (2004), which reprints key Treasury responses to the Keynesian revolution between the return to gold and his death, also provides a valuable
resource for future study.
Represented by a series of studies inspired by the social learning literature, and in particular the Keynesian plus policy iniatives of the early-mid 1960s and the paradigm
shift from Keynesianism to monetarism in the mid-late 1970s, both of which of course assume a Keynesian revolution in policy in the first place: see Hall (1993);
Pemberton (2003; 2004) and Oliver and Pemberton (2004).
Finally, Booth (2001a; b) and his attack – in sequence– on the ‘new revisionists’ who are identified as Peden, Rollings, Tomlinson, Howson and Middleton.
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 5/32
___________________________________________________________________________________
accused of being stuck in a sort of logical positivist time warp.1 Secondly, they seem
also largely unaware of the considerable body of work done in recent years on the
sociology and professionalisation of economics in the major countries, work
orchestrated by A.W. Bob Coats.2 This is immensely relevant to policy and to the
influence of economists as it concerns the existence of distinctive ‘national styles’ in
economics (both theoretical and applied) and the extent to which they have been
subjected to internationalisation and Americanisation since the Second World War.
Thirdly, the debate as currently constructed is somewhat disembodied in that Booth’s
test of Keynesianism in policy – ‘did policy conform to advice from the Keynesian
economists in the Economic Section’ of the Treasury (Peden 2003, p. 118) –
disconnects policy from the broader economics profession through the assumption
that these are representative agents. Our second concern about the narrowness of
reading by most British economic historians relates to their innocence of much
relevant work being undertaken by political scientists. Admittedly, the ESRCsponsored Whitehall programme did bring historians and political scientists closer
together, and some have seen the potential offered by the social learning model
(Pemberton 2004) whilst others have generated new insights using the ‘fragmented
polity’ thesis to understand why modernisation programmes of the 1950s and 1960s
did not fulfil their promise (Lowe and Rollings 2000), but there is other work on
ideational change which has not yet been incorporated (for example, Blyth 2002).
§3.
PURPOSE AND PLAN OF THIS PAPER
3.1
Look to the economists
3.1.1
Having asserted that the extent or otherwise of Keynesianism in policy must be
located back in the British economics profession itself, we are led necessarily to
question whether research has hitherto been appropriately focused within the outputs
of economists. Working from the pre-existing challenge to the debate as currently
constructed, namely our scepticism that demand management be the sine qua non of
Keynesianism, this paper adopts the position that if we are to more fully comprehend
the Keynesian era in British economics and economic policy we must look to the
supply-side as much as to the demand side, to microeconomics as much as to
macroeconomics, and above all to the underlying preferences. philosophies and
professional norms of mainstream British economics at this time. Thus our purpose
here is to explore postwar economics and policy not through the filter of this now
rather sterile Keynesian revolution in policy debate but in terms of the more
fundamental characteristics of mainstream British economics and how these framed
policy advice and practice during the Keynesian era. (Given the workshop focus we
shall try and relate this as much as possible to the welfare state, though as will
become evident there are good reasons why for the economists this is not as easy as it
might appear at first sight.)
1
2
As for example, Blaug (1992) and variously Backhouse (1998), an ‘unrepentant Popperian’;
Hands (2001), broadly supportive of post-Popperian developments; and Dow (2002), an exponent
of methodological pluralism. An element of these methodological debates has been whether there
can be ‘truth and progress’ in economics, upon which see Backhouse (1997b) and Boehm et al.
(2002).
See Coats (1997; 2000), the product of significant international collaboration and building upon
his earlier studies of economists in government and in international organisations (Coats 1981;
1986).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 6/32
___________________________________________________________________________________
3.1.2
Potentially, of course, such a project is an enormous undertaking, but for the purposes
of this paper we activate two shortcuts: the first, in revisiting an under-utilised source
for what it may illuminate about mainstream British economics; and the second, in
casting a sceptical eye over the dominant strand of the historiography which assumes
an end to the Keynesian era3 amidst the stagflation of the 1970s as the Keynesian
conventional wisdom was variously challenged and then overwhelmed by monetarism
and the new-classical macroeconomics, etc.
3.2
Constructing an advocacy coalition
3.2.1
It was central to those challenges as they played out in Britain that the agents for
change attempted to construct an advocacy coalition which, in turn, first presented
mainstream British economics as Keynesian and,4 secondly, sought to convince (or
was it remind) the political agents for change that Keynesianism embodied certain
core characteristics which were inimical to both optimal government size and scope
and an efficient economy. To test their veracity we look at what is known about
disciplinary attitudes during the 1970s, and in particular whether mainstream British
economics was culpable of one or more of the serious charges made against it:
1.
2.
3.
4.
3
4
5
6
7
Was ‘there a recurring theme – that free markets will perform in an unsatisfactory
way and give rise to unemployment and exploitation, externalities and social
costs, inefficiency and excess’ such that ‘Massive government intervention is
needed in order to ensure full employment, fair rewards, and the efficient
allocation of resources’ as Walters (1978, p. 90) maintained in his attack on the
false theories that had guided postwar policy.5
Was there a ‘presumption that pervades most of the mainstream literature on the
rôle of government in economic life – the imposed social welfare function, and
the myth of the omniscient and impartial government’ as O’Brien (1981, p. 64)
argued in another IEA publication.
Was there, and here Balogh6 was cited by name but there would have been other
candidates, ‘a fringe of economists’ of influence who ‘regard all the laws of
demand and supply as readily repealed for political purposes’, this another one of
Walters’ (1978, p. 28 n1) complaints.
And, even more emphatically, as one Centre for Policy Studies (CPS)7 pamphlet
The beginnings of a written – as against oral – reaction to this is now becoming evident, with for
example Jim Tomlinson set to give a paper at the April 2005 Economic History Society Annual
Conference entitled ‘Tale of a death exaggerated: how Keynesian policies survived the 1970s’.
There is a different strand to this literature by those who have argued that the supply-side reforms
of the 1980s and 1990s wrought by the reaction against Keynesianism now make possible a
revival of Keynesian demand management, albeit of a coarse rather than the fine-tuned variant of
the 1950s and 1960s (for example, Skidelsky 1997).
As in the syllogism then current ‘(a) Economic policy in Britain has been a failure. It has failed to
improve our economic performance; (b) Economic policy has consisted of “Keynesian demand
management”; (c) Therefore “Keynesian demand management” has been a failure.’ (Blackaby
1979, p. 185).
This was the eighth Wincott Memorial Lectures, a series of high-profile Institute of Economic
Affairs (IEA) sponsored attacks on the Keynesian conventional wisdom. The first of these was
given by Friedman, being his ‘The counter-revolution in monetary theory’ (1970), which was
enormously important in the diffusion of monetarist ideas to Britain. Subsequent lectures were by
Meade, Jewkes, Hayek, Robbins, Jay and Peacock.
Thomas Balogh along with Nicholas Kaldor attracted the ire of much business and City
commentators, routinely being referred to as the ‘terrible twins’ or the ‘Hungarian goulash’: see
George and Bewlay (1964), an Aims for Industry pamphlet.
The CPS had been established in 1974 by Keith Joseph to ‘champion liberalism’ via ensuring that
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 7/32
___________________________________________________________________________________
argued, was there a case to answer that such a willful disregard for commonsense
policies amounted to treasonable conduct on the part of the Keynesian economics
establishment (Pringle 1977).
3.2.2
The attack on Keynesian thus concerned much more than just demand management; it
connected directly to the cardinal choice of political economy: that of government or
market; or less dichotomously, of government and market. We thus examine what is
known about the characteristics of the discipline for unity and divisiveness during the
1970s with respect to the fundamental concepts of welfare economics: of scarcity and
choice, of economic efficiency, of the distribution of incomes and of market vs.
government as allocational devices. Our source material will be a pioneering
attitudinal survey of the autumn of 1971 which was conducted by Samuel Brittan
(1973a) who at that time was just on the cusp of his ‘second thoughts’ on
Keynesianism (Brittan 1975), for later in the decade his writings – in the Financial
Times and elsewhere – would become enormously influential in the growing attack on
the Keynesian conventional wisdom (see Brittan 2000 for his account of this period).
We then use this attitudinal survey to connect to the more recent literatures on the
defining characteristics of British economics.
3.2.3
Of course, the attack on Keynesianism in the 1970s was the culmination of a much
longer process, having foundations in the widespread disillusionment with the
economic record of the 1960s in which successive Conservative and Labour
governments had tried to promote faster economic growth and had failed to do so.
The British economics establishment were deemed at best complicit in this failure and
at worst much more directly responsible as it was their hubris which drove the
politicians onwards to ever more extravagant growth claims and ever less effective
(and ultimately more damaging) policy interventions.8 In effect, in this stronger
version they were the engine of Pollard’s Law: that ‘of the deterioration of British
economic policies. Like the “average” Russian harvest (“worse than last year’s, better
than next years”), every government seems to have done more damage and to have
succeeded in fewer things than the preceding one’ (Pollard 1984, p. 165).
3.2.4
In an earlier paper (Middleton 2004) on policy-making and policy outcomes during
the growth experiments of the early-mid 1960s I demonstrated that far from the key
economic advisers being intoxicated with the ‘growth mania’ of the times (Clark
1961; Hutchison 1968, pp. 207––33; Arndt 1978) it was to the politicians that one
should look for deeper explanation of the policy failures of that period. With the aid
of the official documents recently available, together with the very full and not
entirely self-serving memoirs of key policy agents (notably Cairncross 1996; 1997),
we can see that the ‘representative agents’9 of the British economics profession were
not imprudent about what growth targets were possible and what risks were bearable
for inflation and the balance of payments. In short, we rejected the stronger version of
the critique advanced by Hutchison (1968) and others about the pseudo-Keynesians
and the damage they inflicted on the British economy, for in practice the economists
acted as a break upon the wilder ambitions of the politicians and they provided
8
9
the next Conservative government elected no longer remained stranded on the middle grounded of
consensus politics but could instead embark upon radical neo-liberal reforms. On this and the
IEA, see Cockett (1994).
Some of the strongest condemnation can be found in Hutchison (1968) and Sinclair (1972).
In alphabetical sequence, but most definitely not an ordering of their respective influence on
policy, this was a close study of the advice proffered by Balogh, Cairncross, Kaldor, MacDougall
and Neild.
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 8/32
___________________________________________________________________________________
broadly sensible mainstream advice. Where the economists did fail, however, is that
economics at that time actually provided very little useable knowledge about how to
increase growth. This current paper, which focuses a little later in the Keynesian era
than the growth experiments, is offered as a further contribution towards rehabilitating
the economists and saving them from the condescension and misrepresentation that
they have endured at the hands of an anti-Keynesian advocacy coalition. Whilst this
research is part of a continuing project demonstrating that the problems of the postwar
British economy are more political than economic, and are to be found principally in
the way in which political competition was highly dysfunctional for good economic
policy, again we will examine so far as we can those aspects of these economists’
writings and policy advice which shed light on the fundamentals of contemporary
mainstream welfare economics in Britain. A fuller version of this would, for example,
explore property rights, regulation, monopoly, taxation, externalities and the
environment, the tensions between the pursuits of social and economic objectives and
the relative efficiency of public and private production. What is offered here is a very
modest start towards that larger agenda.
3.3
Harry Johnson and what passes for economics in England10
3.3.1
Before proceeding, however, we need also to introduce a special class of critique: that
of Johnson’s (1973a; 1975) condemnation of the British economics establishment, for
he was a pioneer in seeking to identify and explain national styles in economics as
well as being an important agent in his own right in the monetarist counter-revolution.
Of course, we await Moggridge’s biography for the full story of his very particular
disdain for British (more correctly, English; perhaps, just Cambridge!) economics, but
we here begin with his contribution to the debate – which took place in Encounter –
as a response to Postan’s (1968) charge that the British economy was suffering greatly
from the malign influence of a plague of Keynesian economists. Johnson (1968) was
actually on the economists’ defence team, but he was scathing about the lack of
professionalism in British economics. Thus, it was:
a great mistake, though a common one, to assume that governmental economic policy is
really made in accordance with, or even much influenced by, the best that economic science
has to offer. Instead, the government economist is more frequently a barrister making the
best case for his client’s behaviour that he can.... This is true not only in England, but in the
contemporary homeland of scientific (as contrasted with forensic) economics, the United
States. The difference is that in the United States a pluralistic university system based on
competition in academic excellence ... provides incentives for economists to base their
careers on scientific accomplishment rather than political usefulness, to challenge forensic
nonsense on scientific grounds rather than accept and repeat it out of a sense of
responsibility to and personal participation in the power structure, and to relate themselves
to government for the most part as scientifically qualified expert consultants rather than
employees or general policy advisers. (Johnson 1968, p. 52)
3.3.2
For Johnson, the problem with poor policy quality in Britain lay not with the
shortcomings of contemporary economics, but with the deficiencies of British
economists. The inferences are clear, and the charge serious: British economists were
both a product and a cause of the British disease, that shorthand term for the economic
decline of Britain which encompasses a dysfunctional body politic, due in no small
part to Oxbridge dominance and characterised by an obsession with class and with the
cult of the amateur; successive economic policy mistakes; a contempt for production,
science and technology and so on. More specifically, Johnson charged British
10
This section draws upon Middleton (1998, pp. 21-4).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 9/32
___________________________________________________________________________________
economics with being amateurish, in the sense of lacking a proper postgraduate
programme of economics education and, as a consequence, unable to develop firm
traditions of scientific progress. Particular ire was reserved for Oxbridge and the civil
service, the former for its undue influence on British academe and the political
classes; and the latter, together with the honours system, for its corrupting influences:
The result is that academic economists are too easily bought, either as public and ostensibly
impartial defenders of party and government policies or as expert advisers to and servants of
government, willing to allow their reputations to sanction policies adopted contrary to their
advice or to the prescriptions of their science in return for the opportunity to exercise some
residual influence in some areas of policy-making. That residual influence, in turn, is
frequently exercised, not by demonstrating superior competence in problem analysis, but by
demonstrating superior ability to invent politically appealing economic policy gimmicks.
(Johnson 1968, p. 52)
3.3.3
For Johnson (1975, p. 226), Keynes was ‘an exceptional economist when he lived, but
.. a malevolent myth since he died.’ From this standpoint he then developed his five
propositions of British establishment economics (Johnson 1975, pp. 222–5), ‘all of
them connected with the career and the writings of ... Keynes - by which is meant, not
what Keynes actually wrote and thought, but what Keynes is believed or construed to
have thought (or would have thought, if he had understood his own theory) by his
modern-day successors’:
1.
2.
3.
4.
5.
‘all economics in the main tradition of scientific economics is mere “orthodoxy”,
and as such is to be despised and turned on its head by the clever economists,’
one implication of which was the ‘assumption that the more startling
“unorthodox” a new proposition is, the more true it must be.’
‘money cannot possibly matter - because Keynes triumphantly established this
point against the barbarous forces of orthodoxy, and demolished the quantity
theory once and for all.’
“‘full employment” is an exclusive definition of social well-being, and as such to
be pursued at virtually any cost.’
‘workers ought to be so grateful for the efforts of their intellectual and political
superiors to give them the benefits of full employment that they will refrain from
embarrassingly inflationary wage demands.’
‘faster economic growth is the panacea for all England’s economic (and for that
matter political) problems and that faster growth can easily be achieved by a
combination of generally inflationary demand-management policies and
politically appealing fiscal gimmickry.’
§4.
‘TAKING THE PULSE’: THE BRITISH ECONOMICS PROFESSION IN THE
EARLY 1970S
4.1
A discipline in disarray?
4.1.1
In the early 1970s mainstream British economics, as in university economists and
academic economics, faced three challenges: first, new economic problems and an
intensification of existing ones, both domestic and international; second, rival views
of how to understand these problems; and third, and most important, a revival of
market-based (as in City of London and business) producers of economic
commentary. As is well-known, the market for economic expertise in Britain has
always been highly competitive, with the professionalisation of academic economics
not being mirrored by anything resembling dominant producer status, and certainly
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 10/32
___________________________________________________________________________________
not in terms of economic policy advice.
4.1.2
Peden (1996, pp. 171–2) has provided a useful taxonomy on the supply side of
economic knowledge available to policy-makers:
1.
2.
3.
4.
5.
information (diverse sources, official and non-official);
practical experience, and especially knowledge that is sought and proffered by
City agents on more than just financial matters;
economic theory, principally but not exclusively the domain of academic
economists;
informed opinion, a key category which captures the wide policy networks in
Britain of financial journalists, interest groups and individual members of the
‘establishment’ (in the Balogh sense); and
realities of political economy, which I have described elsewhere as ‘a residual
category which captures the “art of the possible in economic affairs”, and more
particularly gives to the higher civil service their role as guardians of past
experience and mediators of present constraints and possibilities’ (Middleton
1998, p. 51).
4.1.3 To take the pulse of the British economics profession is thus no easy matter, and
particularly at this time when there was a major political issue confronting political
elites and others participants: that of whether Britain should join the then EEC (now
EU), upon which the profession was evenly divided as regards the potential benefitcosts of membership (Khan and Johnson 1972; Hutchison 1977, ch. 5; Middleton
1998, pp. 26-8). Concurrently, the Heath government had felt compelled to abandon
its ‘Selsdon’ policies in face of mounting unemployment, resulting in a policy U-turn
in 1971–2 – both macroeconomic and microeconomic in scope –which had enormous
implications for the economy and for the credibility of Keynesian economics.
Conditions were thus ripe for crisis, but as we turn to examine what is known about
disciplinary attitudes towards fundamental economic issues at this time a rather
different picture emerges.
4.2
Brittan ‘Is there an economic consensus’? (1973a)
4.2.1
Brittan (1973a) is pioneering work,11 though his probing of economists’ professional
opinion had origins not in these growing concerns about the discipline, but in his
having encountered some multiple choice test questions for economics
undergraduates12 which provoked him to muse that the ‘correct’ answers ‘might cause
surprise, disagreement or even indignation among many laymen and perhaps even
some economists’ (Brittan 1973a, p. 5). This motivated him to survey the profession
11
12
The first US survey of US economists was Kearl et al. (1979). Needless to say this made no
mention of Brittan’s (1973a) prior study, though this later study was methodologically much more
advanced, and in particular we should note that Brittan’s processing of the questionnaires returned
had involved a careful reading (including any accompanying explanations and elaborations) with
his interpreting the results before tabulation. As he noted (Brittan 1973a, p. 25): ‘I shudder to
think … what this enquiry would have yielded if it had been undertaken by the fashionable
computerised methods, in which only rigidly pre-specified alternatives would have been digested
by a literal-minded magnetic tape …’
The Economics Education Project was based at Heriot-Watt; see Attiyeh and Lumsden (1971)
which must be one of the last papers published in an economics journal to carry in a footnote
referring to its main statistical findings: ‘For readers unfamiliar with regression analysis, the
regression coefficient indicates the change in the dependent variable that can be expected ceteris
paribus from a change of one unit in an independent variable…’ (p. 85).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 11/32
___________________________________________________________________________________
to see how much general consent they might elicit and to test their professional
responses against two reference groups keenly interested in public policy but without
necessarily any specialist economic expertise.
4.2.2
The questionnaire was sent to just over 250 economists in the autumn of 1971, of
which 117 were useable replies: comprising 44 academic economists, 37 members of
the Government Economic Service (GES), 13 17 business economists and 15 others
who could not be categorised by occupational type. In total, we might estimate the
number of questionnaires dispatched as approximating to 20 per cent of the combined
stock of academic economists, members of the GES and the Society of Business
Economists.14 The two lay groups comprised Conservative (39) and Labour (52) MPs
and political commentators (24) (useable responses in parentheses).15
4.2.3 The questionnaire totalled 19 questions divided into two sections: A and B, in part
separated along micro-macro lines but also with part A subsequently sent to the two
lay reference groups as it was expected that they would have relevant opinions. Part B
was deemed to require at least a modicum of professional training and was therefore
limited to the economists. The underlying principles of the exercise and the multiple
choice format were obvious points for disputation amongst those who did not
respond, and indeed many who did respond. The questions selected, and their
wording, was also contentious, but hopefully it is less tendentious that to a greater or
lesser extent they do address fundamental economic concepts which are of relevance
to whether the British economics profession was so wedded to market failure and so
dirigiste in instincts that the liberal market order was in peril.
4.2.4
Table 1 reports in abbreviated form the results for part A and Table 2 those for part B.
Taking these in turn, in part A of the questionnaire, that with the microeconomic
focus, there is a systematic pattern of the differences between economists being much
less than the differences between economists and the two reference groups. These
data are not subject to any quantitative analysis beyond that reported here, and in
particular there is no use of entropy measures which are now routine in such exercises
(as will be the case for the next substantial polling exercise on British economists:
Ricketts and Shoesmith 1990; 1992). Nonetheless, had such analysis been undertaken
we can be confident that the difference revealed in part A would be statistically
significant. Turning to part B of the questionnaire, the macroeconomic questions,
there was undoubtedly less agreement than on the microeconomics, but still sufficient
common ground to belie the stronger versions of the ‘discipline in disarray’ school of
13
14
15
Defined as Whitehall departments, the Bank of England, NEDO and NIESR. Of the 37 in this
category, about 30 could be directly regarded as responsible to Ministers, and of these about
three-fifths were connected with the Treasury or had related responsibilities. The Chief Economic
Adviser to the Treasury and Head of the Government Economic Service (Donald MacDougall)
and his deputy (Bryan Hopkin) were not canvassed; ‘otherwise the Whitehall recipients covered a
broad spread of ranks from junior to very senior positions’ (Brittan 1973a, p. 10).
Booth and Coats (1978, tables 4–5) report 874 university teaching posts for 1971 and 268
professional economists in government, giving approximately a 5 per cent sample for the
academics and 14 per cent for the governmental economists. Brittan (1973a, p. 9) tells us little
about the academic group, save that he ‘thought it desirable to spare the holders of chairs at the
ancient universities this particular form of inquisition’ A list is provided in his appendix 4 of the
academic and business economists who consented to being publicly identified by name and
institution/business employer.
No attempt can be made to estimate the sample size for the commentators, but for the MPs it
amounted to 14.4 per cent overall (Conservatives 11.8 per cent; Labour 18.1 per cent). The 1970
election results have here been used as the denominators: Butler and Pinto-Duschinsky (1971, p.
354).
Table 1 Brittan (1973a) questionnaire and abbreviated replies: part A
1
Question
In order to make the most effective use of a city’s resources, how should tube and bus
fares vary during the day?
c They should be relatively high during rush hour to minimise the amount of
equipment needed to transport the daily travellers.
d They should be the same at all times to avoid making travellers alter their
schedules because of price differences
Economists:
Others:
Academics Governmental Business Total Con. MPs Lab. MPs Commentators
Correct
(44)
(37)
(21) (117)
(39)
(52)
(24)
answer*
%
%
%
%
%
%
%
*
91
84
90
88
35
19
25
-
5
10
4
60
39
42
9
82
5
82
24
62
11
82
22
43
4
48
17
37
77
7
69
5
81
9
71
11
43
11
42
9
58
13
Qns 2 & 3 based upon following information: Smog in the Central City area is largely
caused by automobile exhaust fumes. The smog problem could be virtually eliminated if
approximately 100 air-purification plants were built in the area. These plants would
simply draw in smog-filled air, remove the smog, and pump the clean air back into the
Central City atmosphere. It is estimated that the cost of operating each plant would be
£25,000 per year
2
3
It is highly unlikely that private business firms would build and operate the plants
and sell their services directly to individual residents of the Central City area because:
b People are unlikely to be willing to pay for smog-free air.
d It would be impossible to provide smog-free air to those willing to pay for it
while withholding it from those who refuse to pay.
Suppose that the government of the Central City were to build and operate the air
purification plants. From the standpoint of achieving efficiency in the allocation of
economic resources, which of the following taxes should be increased to provide
the additional tax revenues needed to finance the operation of the air-purification
plants?
a Motor vehicle fuel
c Property
*
*
4
Question
As compared to direct social security payment, how would you evaluate the provision
of below-cost public housing to poor persons from the point of view of satisfying
consumer wants?
a
b
5
6
7
It is more efficient because it gives low income persons what they need.
It is less efficient because it will result in too much housing and too little of
the other things that consumers want.
The most important economic function of rental payments for the use of land is to:
b Influence how land will be used.
d Assure an adequate supply of land in the society as a whole.
Which, if any, of the following statements would be correct when applied to a private
enterprise economy?
a One of the principal effects of competition is to force prices to the lowest
level consistent with normal profits.
b One of the principal functions of profits is to indicate to the government where
wages are too low.
i. (a) only
iv. neither (a) nor (b)
In a free-enterprise economy, the presumed harmony between individual and public
interest depends on:
b Careful planning and co-ordination of economic activity.
d Competitive markets and pursuit of self-interest by individuals.
Economists:
Others:
Academics Governmental Business Total Con. MPs Lab. MPs Commentators
Correct
(44)
(37)
(21) (117)
(39)
(52)
(24)
answer*
%
%
%
%
%
%
%
23
52
19
66
19
38
22
51
30
27
69
10
63
8
*
96
-
83
11
86
14
89
7
32
22
36
27
42
17
*
84
16
89
11
81
14
83
16
87
13
42
56
67
25
2
78
3
84
14
57
5
74
14
35
31
17
42
17
*
*
Question
Qn. 8 based on the following quotation: ‘The programme of economic reforms shatters the
rigidity of central planning establishes realistic prices and eliminates subsidies. It forces
each factory to pay its own way or close down. There was no other way to start using the
market again. If we take free enterprise to mean free price competition in the market, then
even socialism cannot do without this enterprise. Only a few staples will have centrallyfixed prices. All others will be allowed to move freely in response to supply and demand.’
8
9
This report of changes taking place in many of the Soviet bloc countries supports
the view of many Western economists that:
b A freely-operating market system can perform efficiently the function of allocating
scarce resources to satisfy competing wants under socialism as well as under
capitalism.
c Socialism cannot work because it requires rigid central planning and unrealistic
prices which cannot allocate resources efficiently.
The bigger the volume, the lower the cost; that is the first law of all industry!
Which of the following best describes this quotation?
b Although not a scientific law, the statement embodies a well established
generalisation applying to most products, but not to all of them.
d Although true up to a point for virtually all products, the statement is
inconsistent with a well-established finding of economics.
10 ‘The Selective Employment Tax (SET) in effect requires a non-manufacturing firm to
pay a tax for each worker it employs. For these firms the SET can be expected,
in the long run, to lead to an increase in output per worker.’ Is this statement
correct or incorrect and why?
b Correct, because a rise in labour productivity can be expected in the long-run when
firms substitute other factors of production.
Impossible to answer …
Source: Brittan (1973a, app. 3).
Economists:
Others:
Academics Governmental Business Total Con. MPs Lab. MPs Commentators
Correct
(44)
(37)
(21) (117)
(39)
(52)
(24)
answer*
%
%
%
%
%
%
%
*
77
84
67
77
21
21
50
2
8
14
8
73
2
33
43
32
57
40
76
50
67
*
39
46
33
40
13
29
17
*
75
92
86
84
49
59
63
14
-
9
7
13
6
4
Table 2 Brittan (1973a) questionnaire and abbreviated replies: part B
Question
1 On which of the following can economists offer only a personal opinion, not professional analysis?
a Whether real income per capita would rise if Britain joined the Common Market.
b Whether taxes should be changed to distribute income more evenly.
c Whether a decrease in income tax would lead to a higher national income.
d Whether devaluation of the pound would improve the British balance of payments.
2 Is the following statement correct or incorrect and why? ‘Economic analysis has shown that to increase
economic welfare any policy that would increase economic efficiency should always be undertaken.’
a Correct, because an improved allocation of resources will increase everyone’s real income.
b Correct, because an improved allocation of resources can increase everyone’s real income.
c Incorrect, because an improved allocation of resources can increase everyone’s real income, but may
reduce someone’s real income.
d Incorrect, because an improved allocation of resources cannot increase everyone’s real income.
Impossible to answer …
3 Which of the following explains why considerable unemployment can exist in a market economy?
a At full employment national income is not always sufficient to purchase all output produced.
b Many product and factor prices respond very slowly when supply exceeds demand.
c The rate of productivity increase is not always great enough to keep interest rates low.
d The growth of productive capacity outstrips the growth of consumers’ private wants.
4 In response to expansionary monetary and fiscal policy national income has risen to an all time high,
unemployment has fallen to its lowest level in three years, and the rate of inflation, though somewhat
higher than in recent years, is only slightly above the historical average. A leading economist has
proposed that for the coming year the government reduce income tax or increase its spending.
What can be inferred about the economist’s policy objectives? He seeks:
a Lower unemployment, even at the expense of a higher rate of inflation.
b A lower rate of inflation, even at the expense of a higher rate of unemployment.
Correct Economists:
answer* Academics Governmental Business Total
%
%
%
%
*
*
*
*
9
65
-
8
67
5
-
48
5
-
6
59
3
-
2
12
79
3
11
78
38
57
4
16
74
7
3
5
5
-
2
4
21
47
4
17
55
14
10
71
10
16
58
8
84
-
89
-
67
-
84
-
Question
c
d
Lower unemployment and lower interest rates.
None of the above. (Or impossible to answer …)
5 Qn 5 is based on the following quotation: ‘I have pledged myself to my constituents to do everything
in my power to reduce the Federal Government’s debt. This means a budget surplus every year until our
goal has been reached. It means reducing Federal expenditure and, if necessary, increasing tax rates.
Under present circumstances of full employment and steady prices, we can afford to bear the burden of
debt ourselves instead of passing the burden on to our children and grandchildren.’
If the express wishes of the Congressman quoted were attained, what changes could be expected in
the future (assuming other things remain the same)? Key: (i) Increased unemployment and idle
capacity; (ii) Increased rates of economic growth.
a (i) only.
b (ii) only
c Both (i) and (ii).
d Neither (I) nor (ii). (Or impossible to answer …)
6 ‘Unit sales of durable goods last month were unprecedented. Recent price rises have lifted indexes towards the
highest level of the century. Average wholesale price increases have been in excess of 1% a month during the
past year. Unit wage costs, as a result of soaring wage rates without equal gains in productivity, are 5% higher
for durable goods now than in the third quarter of last year, and 4% higher for non-durable goods. Unemployment
is not a real problem at this time.’ Which of the following policies would be most appropriate?
a Imposing of price ceilings on sales made by wholesale establishments.
b Increase of reserve requirements of central banks.
Mention of either (a) or (b)
c Purchase of securities by the central banks.
d Lengthening of the maximum repayment period on instalment credit for purchases of consumer goods.
Impossible to answer …
Correct Economists:
answer* Academics Governmental Business Total
%
%
%
%
3
28
7
16
8
5
9
*
*
84
16
95
5
95
5
-
89
1
1
9
7
73
8
87
19
62
10
77
2
11
5
-
9
5
5
5
Question
7 ‘Last month new highs were reached both in industrial employment and industrial wages. Unemployment is at its
lowest mark since World War II. In the week just ended, steel production reached the highest mark in history.
The latest reported increase in the cost of living, with prices up 1.4% per month, was slightly higher than the
average increase for the past eight months.’ Which of the following policies would be most appropriate?
c An across-the-board increase in personal income tax.
a Lower taxation for corporations that increase investment.
Both (a) and (c).
b Purchase of securities by the central bank.
d Increase of the maximum period unemployed workers may draw unemployment compensation.
None. (Or impossible to answer …)
8 Dramatic increases in expenditure for the war abroad are likely to cause serious inflation at home unless the government
restricts the growth of aggregate private demand. Currently, the government is considering either increasing interest
rates or increasing personal income taxes. Which policy would have the lesser adverse effect on economic growth?
a The increase in interest rates, because this will restrict consumption expenditures more than investment expenditure.
b The increase in interest rates, because this will restrict investment expenditure more than consumption expenditure.
c The increase in personal income taxes, because this will restrict consumption expenditure more than investment
expenditure.
d Each policy will have the same effect on economic growth; that is, no effect, because economic growth is
independent of government actions.
Impossible to answer …
9 Which is a valid argument supporting an increase in the world’s supply of international monetary reserves by creating
a new international currency (‘paper gold’)?
a The demand for gold and reserve currencies is growing faster than supply.
b An increase in the dollar price of gold would not add to the world’s monetary reserves but
would only help gold-producing countries.
Source: Brittan (1973a, app. 3).
Correct Economists:
answer* Academics Governmental Business Total
%
%
%
%
*
*
75
2
2
5
5
11
89
3
5
3
67
9
5
19
-
77
3
3
7
5
5
5
5
79
97
10
10
66
3
3
84
2
-
-
3
9
3
14
7
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 18/32
___________________________________________________________________________________
thought which had become a staple of AEA and RES16 presidential addresses by the
early-mid 1970s and which, of course, featured even more prominently in City and
business comment on economics and economists. Although in practice much of the
City/business critique conflated the concerns about empty formalism with frustrations
that disciplinary agreement on macroeconomics was breaking down into wars
between rival camps of economists (crudely monetarists vs. Keynesians), it was the
case that by the mid-1970s a generalised crisis of confidence in economics was
apparent. Coats (1988, p. 219) refers to the ‘collective “self-flagellation of these
years, a reflection of professional and public concern following the ending of the
Keynesian hegemony (c.1945–1965), and … a reaction from the collective hubris and
exaggerated claims of that era.’
4.2.5 Brittan’s interpretation of these results was, of course, directed at determining the
extent of agreement amongst economists and whether there was any dissonance as
between the economists and the two lay reference groups. However, as can be seen
from the nature of the questions and of the pattern of responses, there is potential here
to reveal the economists’ attitudes for a different objective: that of assessing whether
the British economics profession displayed any of the – according to its critics –
malign views about such fundamentals as the primacy of the market and of the price
mechanism. After all, the questions in part A were calibrated to illuminate the
economists’ responses to questions which entailed application of the key instruments
in their professional toolkit which, of course, comprise the fundamentals elements of
economics: those of scarcity and choice, efficiency, distribution and market failure.
4.2.6
Viewed in this light, about 75 per cent of the economists who responded subscribed to
what Brittan (1973a, p. 21) termed the ‘liberal economic orthodoxy’: ‘that
competitive markets and the pursuit by individuals of their own interests can – with
definable exceptions – produce an effective and prosperous economic system, and a
reasonable harmony between public and private interest.’ On market failure, he noted
further that the evidence was from this survey that British economists’ preferred
solution for externalities was through adjusting relative prices through taxes and
subsidies rather than by direct controls or regulations. Thus on efficiency and
equilibrium we have an image of orthodoxy, but what about equity? Here we
obviously enter more normative terrain, and Britain says of the questionnaire
responses:
A large number of economists, even among those who voted fairly solidly for the liberal
orthodox ticket, showed an extreme pre-occupation with the distribution of income –
arguably outrivalling that of many Labour MPs. An impressionistic judgment is that their
egalitarian concern is greater than among economists in most other Western countries, and
greater than that of almost any other British middle class professional group outside the
social services. (Brittan 1973a, pp. 22–3)
4.2.7
He tentatively connected such egalitarianism to the puritan legacy17 and also located a
more immediate antecedent in Alfred Marshall. Subsequent cross-national survey
evidence, reported in Table 3, confirms a possible British distinctiveness in this
respect. Certainly, for Johnson (1973b) British economics and politics suffered from
16
17
For the RES, Worswick (1971) was certainly pretty glum, Phelps Brown (1972) less so, but see
by contrast MacDougall (1974) who made the important point that the cacophony against
economists coincided with a period in which the demand for economists has risen very
substantially.
Contemporaneously, he was working on his Capitalism and the permissive society (Brittan
1973b) which was developing the efficiency and equity arguments for the free market.
Table 3
No.
1
International comparisons of economic opinion, selected countries, 1970s and 1980s (%)
Proposition
A minimum wage increases unemployment among
Agree
young and unskilled workers
Disagree
2
A ceiling on rents reduces the quantity and quality of
Agree
housing available
Disagree
20
Consumer protection laws generally reduce
Agree
economic efficiency
Disagree
27
Tariffs and import quotas reduce general economic
Agree
welfare
Disagree
30
Wage-price controls should be used to control
Agree
inflation
Disagree
35
The redistribution of income in the developed industrial
Agree
nations is a legitimate task for government
Disagree
Source: Middleton (1998, table 1.3) derived from Ricketts and Shoesmith (1990, table 3).
US Austria France Germany Switzerland Canada UK
(1979) (1984)
(1984)
(1984)
(1984)
(1988) (1989)
88
64
38
69
66
85
76
10
35
60
30
32
15
24
96
89
52
93
79
95
85
2
11
44
6
20
5
14
50
29
22
35
44
46
23
46
70
77
65
56
52
77
95
86
70
94
87
96
84
3
13
27
6
10
4
15
28
47
54
7
39
26
39
71
52
43
92
61
73
60
78
88
88
79
70
84
91
19
11
11
21
28
15
8
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 20/32
___________________________________________________________________________________
‘naïve egalitarianism’. Whether naïve or not, it is probable that this national
preference is connected with another characteristic of British economics during the
Keynesian era: the allegiance to very low levels of unemployment, and certainly
much lower than Keynes (or even Beveridge) had thought possible (Kahn 1976, p. 30;
see also Hutchison 1976, p. 61). But, of course, the whole postwar welfare state had
been built on the basis of Beveridge’s assumption C (HMSO 1942, para 440): that of
full employment. This constituted an interlocking system whereby, on the supplyside, full employment boosted national income and thus, for any given tax ratio, the
resources to finance welfare expenditures, whilst on the demand-side, low levels of
unemployment reduced the demand for welfare expenditures, both directly on
unemployment benefits and indirectly through the association of primary poverty with
unemployment. The breakdown of this calculus in the 1970s is central to explanations
of the crisis of Keynesian social democracy (Middleton 1996, p. 474).
4.2.8
Such income redistribution preferences might be seen as Keynesian, but only insofar
as Keynes and Beveridge were engaged in the common task of redefining liberalism
so as to ensure the survival of a market order which whilst no longer laissez-faire was
still largely unregulated. For Cutler et al. (1986, p. 9) this redefinition produced the
following demarcation between government and market:
(i)
(ii)
(iii)
(iv)
(v)
4.2.9
Certain basic conditions of social life have to be ensured. Poverty and economic
insecurity, for example, are dysfunctional and may ultimately threaten the
existence of the capitalist order.
The maintenance of these conditions of social life is impossible on the free
market if a policy of strict laissez-faire is pursued. The control of poverty, for
example, requires some form of state social security and so does the curbing of
insecurity.
State intervention is not undesirable but imperatively necessary. This is because
norms on the basic conditions of social life cannot be maintained without some
form of state intervention.
State intervention should be minimal and confined to what is necessary.
Intervention should be circumscribed in nature and extent so that there is as
little interference as possible with the valuable political and economic freedoms
of capitalism.
State intervention should be directed so that it suppresses basic capitalist
freedoms only so as to re-establish the conditions of their effective functioning
(elsewhere). Classically, for example, with state regulation established in one
sphere of the economy, unregulated market choice can flourish elsewhere.
The economists’ preferences thus inevitably have a political dimension, but are they
nationally distinctive and in particular with respect to the US? Certainly, we might
hypothesis that during the Keynesian era it is possible that British economics was
distinctive from American economics because the politics of the median British
economist was to the left of their American counterpart, though we have no direct
evidence for this.18 What we do know is that notwithstanding the growing
18
Backhouse (2000, p. 22) cites evidence from Halsey (1992, p. 237) on the leftward shift in
academics’ political allegiances between the 1960s and the 1980s, but this is not differentiated by
discipline. Halsey’s earlier work (Halsey and Trow 1971, p. 429), derived from questionnairebased research conducted during 1964–6 as an offshoot of the Robbins report, asked ‘Is there a
causal relation between academic subjects and political outlook?’ They obtained evidence that
social scientists were ‘well to the Left of all the other’ academic groups, with two-thirds of social
scientists being Labour Party supporters. Although this result partly reflected social class origins,
the difference in political preferences between subjects was statistically robust (p. 431).
Unfortunately, they did not separately identify disciplines within the social sciences. We also lack
cross-country evidence, though they do cite (p. 429 n.1) Lipset (1963, pp. 336–8) on ‘evidence for
the Leftism of American social scientists.’
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 21/32
___________________________________________________________________________________
Americanisation of British economics, that different market conditions resulted in
British economists sharing with their European counterparts a greater propensity to
develop national knowledge and to participate more fully in national affairs (Frey and
Eichenberger 1993); that there was greater production and consumption of heterodox
ideas; and that British economists have made particular contributions in fields such as
the measurement of inequality and in public economics (Backhouse 1997a, p. 58)
which support Brittan’s survey evidence. Moreover, to judge from Rickett and
Shoesmith’s (1992, pp. 211–12) later survey, these differences seem enduring.
4.2.10 Turning next to the politicians’ responses, the difference between their views and the
economists may reflect inadequate knowledge on the part of either side, different
normative positions or different conceptual equipment. Look, for example, at question
1 in Table A where 88 per cent of the economists favour using the price mechanism as
a short-term rationing device as against only 35 per cent of Conservative MPs whose
ideology presumably made them more predisposed to favour market solutions.
Question 4, that on housing, also revealed a very significant gap between MPs
(whether Conservative or Labour) and the economists on the efficiency of subsidies
for the poor. There are some predictably ideological responses, as for example in
question 8 where the Conservative and Labour MPs are hugely apart in their opinion
on the potential efficacy of socialism (see 8c). The strength of Conservative antipathy
did not surprise Brittan (1973a`, p. 56), nor Labour’s modal response (8a) which led
him to comment ‘The cause of any sort of market oriented social democracy has still
made painfully little headway in the British Labour Party, even at the Parliamentary
level.’
4.2.11 It is unfortunate for our purposes that Brittan’s survey did not delve deeper into the
sort of areas that are now routine in the literatures on welfare states’ impacts on
economic growth via inefficiencies and disincentives, though the fact that he did not
suggests something about the limited measure of economists’ concern about the
possible ill effects at this date relative to later in the decade. Of course, the modern
literature is somewhat inconclusive on whether large welfare efforts ‘cause’ or are the
consequence of slow growth,19 and it must be remembered that the size of Britain’s
public sector, its tax levels and characteristics and the extent of its welfare effort by
the early 1970s were often gravely misrepresented by those of the emerging New
Right: the reality was that by Western European standards, on tax and welfare Britain
was decidedly average, though obviously more developed than the US which here, as
in so much else in economics and public policy, is a misleading comparator
(Middleton, 1996, ch. 11). Indeed, as is clear from Table 4 on social expenditures as a
percentage of GDP, one of the routine summary measures used in this debate (for
example Atkinson 1999, figure 2.2), Britain went from having the highest welfare
effort of the G-7 just before the Second World War to being the median country of the
OECD by 1970 as other countries underwent a catch-up process. Figure 2, another
routine presentation in this debate, also shows that in terms of social transfers and
GDP/capita, there was nothing distinctive about the British case by 1970.
19
The modern phase of indicting the welfare state for slow growth can be dated to the 1993
Lindbeck Commission report which was prompted by the crisis of the ‘Swedish model’ of social
solidarity through a high redistributive effort; on this see ‘Controversy: economists, the welfare
state and growth: the case of Sweden’, Economic Journal, 106 (November 1996), pp. 1725–79;
and for a balanced assessment of the cross-country economic evidence that welfare states are a
barrier to high economic growth, see Atkinson (1995, ch. 6; 1999).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 22/32
___________________________________________________________________________________
Table 4 OECD: government expenditure on social transfers as % of GDP, selected
years, 1937–95
Australia
Austria
Belgium
Canada
France
Germany
Ireland
Italy
Japan
Netherlands
New Zealand
Norway
Spain
Sweden
Switzerland
UK
US
1937
..
..
..
1.6
7.2
7.0
..
..
1.4
..
..
4.3
2.5
..
..
10.3
2.1
1960
6.6
17.0
12.7
9.0
11.4
13.5
..
14.1
5.5
11.5
..
12.1
1.0
9.3
6.8
9.2
6.2
1970
10.5
16.6
20.7
12.4
21.0
12.7
18.8
17.9
6.0
29.0
11.5
24.4
6.7
16.2
7.5
15.3
9.8
1980
16.7
22.4
30.0
13.2
24.6
16.8
26.9
26.0
12.0
38.5
20.8
27.0
12.9
30.4
12.8
20.2
12.2
1995
19.0
24.5
28.8
14.9
29.9
19.4
24.8
29.3
13.5
35.9
12.9
27.0
25.7
35.7
16.8
23.6
13.1
Average
4.6
9.7 15.1 21.4 23.2
UK ranking
1
7
9
9
8
Source: Derived from Tanzi and Schuknecht (2000, table II.4).
Figure 2 OECD: government expenditure on social transfers as % of GDP and
GDP/capita (1990 international Geary-Khamis dollars), 1970
30
NLD
social expenditures as % of GDP
25
NOR
FRA
BEL
20
IRL
ITA
AUT
DEU
CAN
NZL
10
USA
AUS
CHE
ESP
5
6,000
SWE
GBR
15
JPN
8,000
10,000
12,000
14,000
16,000
18,000
GDP per capita (1990 international $)
Source: Calculated from Tanzi and Schuknecht (2000, table II.4) and Maddison (2003, tables 1c, 2c,
5c).
4.2.12 None the less, a full scale analysis of economists’ views during what has been called
the ‘classic’ welfare state era of 1945-75 would be immensely useful. In histories of
welfare policy, the economists appear as tool-makers for judging efficiency and
equity, but otherwise are not present (for example, Lowe 2005). We thus know little
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 23/32
___________________________________________________________________________________
of the profession or of its leading figures in this respect. We know more about some
of the canonical figures in the social policy field who used economic analysis to
justify a large welfare effort, most notably Richard Titmuss,20 and we know also that
in Britain social policy analysts were significant drivers for egalitarianism. But as
things currently stand, it is the politicians and the commentators, not the economists,
whose economics is more dirigiste and/or potentially autistic with respect to the
fundamentals of welfare economics.
§5.
BRITISH ECONOMISTS, THE WELFARE STATE AND TAXATION
5.1
In the 1950s and 1960s few British economists were specifically interested in the
welfare state, believing that the combination of full employment, rising real wages
and an enhanced social welfare transfers had eradicated the poverty that had
motivated an earlier generation to become economists in the first place and natural
supporters of the Keynes-Beveridge managed-mixed economy and welfare state that
emerged after the second World War. Social security was thus a topic which could be
left to the social policy analysts, with for example it being rare for a paper to appear in
the Economic Journal (EJ) or American Economic Review on the subject of the
welfare state (Atkinson 1999, p. 3). Atkinson is undoubtedly right about the EJ which,
on the old Journal of Economic Literature (JEL) subject classification for welfare,
health and education (910), carried a grand total of only 12 papers between 1942, the
publication of the Beveridge report (HMSO 1942), and 1973. As can be seen from
Figure 3, drawn from the 10 per cent sample of the EJ’s contents that I undertook for
my Charlatans or saviours? (Middleton 1998), the 900 class is dwarfed by papers in
the old JEL classes 000, 100 and 400 over the Keynesian era.
5.2
The connection between economists and welfare thus lies more with macro- and
microeconomic policies which impact on growth, employment and price stability
(pace the importance of Beveridge’s assumption C), all of which of course had
important distributional impacts. It was this dimension, as much perhaps as any
ethical inheritance from Marshall’s mission for the professionalisation of British
economics (that economists must do good as well as be scholastic), which
underpinned the British profession’s preoccupation with issues of income and (less
so) wealth distribution. Concurrently, of course, we can detect for the 1950s and
1960s an elite ambivalence about the desirability of growth which we can trace to
Keynes and to his well-known essay, ‘Economic consequences of our grandchildren’
(1930). This is typically read as a thoroughly Bloomsbury21 document in which, by
2030, the economic problem would be solved as material abundance abounded and
human beings would be able to delight in their bountiful leisure and the dominance of
non-pecuniary activities. For the interwar generation of British economists their
professional task was to help engineer, first, full employment and, second, a lessening
of income and wealth inequalities. This latter objective was partly ethical and partly
practical in terms of raising the average propensity to consume to counter any
inherent tendency towards secular stagnation.
20
21
Most recently by Reisman (2004); see also the three commentaries on this paper.
Skidelsky (1992, p. 237) notes that this essay ‘has attracted little attention from economists,
perhaps rightly’ but none the less proceeds to devote a number of pages to its exposition because
it ‘sums up many of the ambivalences in Keynes’s own thinking and psychology’, not least on the
educated bourgeoisie’s ambivalence about business.
Figure 3
Economic Journal: papers by Journal of Economic Literature (1983) classification, 1940, 1950, 1960 and 1970
35
30
1940
1950
1960
1970
25
20
%
15
10
5
0
000
100
200
300
400
500
600
700
800
900
J E L (1 9 8 3 ) c la s s ific a tio n
Note:
JEL (1983) classification: 000 General Economics; Theory; History; Systems; 100 Economic Growth; Development; Planning; Fluctuations; 200 Quantitative
Economic Methods and Data; 300 Domestic Monetary and Fiscal Theory and Institutions; 400 International Economics; 500 Administration; Business Finance; Marketing;
Accounting; 600 Industrial Organisation; Technological Change; Industry Studies; 700 Agriculture; Natural Resources; 800 Manpower; Labour; Population; 900 Welfare
Programmes; Consumer Economics; Urban and Regional Economics.
Source: Middleton (1998, figure 6.1).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 25/32
___________________________________________________________________________________
5.3
Concern for distributional issues over those of material advance was the hallmark of
the Keynesian generation, that is Keynes’s disciples who dominated the British
economics establishment until the 1970s. Harrod, the father of growth theory and the
most vocal critic of ‘Stop-Go’, was constantly pressing for further sustained
expansion because of his distaste for the waste of the Stop phase and his concern that
without growth promotion ‘the United Kingdom may sink down and fail to play the
part that could be so important for sustaining the strength and growth of the free
world.’ (Harrod 1963, p. 207; 1967). Joan Robinson, Kaldor and Meade can also be
portrayed in a similar light, although none of them espoused Harrod’s preoccupation
with national decline. Robinson and Kaldor would, of course, be active in the
Cambridge capital controversy, though they would differ substantially in their
engagement with current policy concerns with the latter’s diagnosis of incipient
deindustrialisation as the cause of slow growth (Kaldor 1966) and his proposals for
tax reform to stimulate the manufacturing sector being decisive for the 1964–6 Labour
government (Thirlwall 1989; Pemberton 2001). At first sight the capital controversy
appears remote from the politicians’ preoccupation with raising the growth rate, but
since it concerned a different – non-neo-classical – vision of how the capitalist system
functioned which emphasised the way in which output movements affected wage and
profit shares, the issue of the distributional consequences of the growth process was
actually to the fore.
5.4
Meade’s interests were more centrally macroeconomic (how to simultaneously
achieve internal and external equilibrium) but also more wide-ranging.22 In particular,
as I argued in Charlatans or saviours? (Middleton 1998, pp. 168–71), he – as his hero
Keynes – embodied the ethical imperative in his economics that was a hallmark of
Marshall’s mission for the professionalisation of British economics. Avowedly of the
political left, but always mindful of what could be achieved by government and what
must remain the domain of the market, his was a search for a ‘middle way’ between
collectivism and capitalism which would strengthen the potential efficiency properties
of the former without sacrificing the degree of equity and equilibrium that was
desirable for durable social democracy.
5.5
This, of course, returns us to the politics of the Keynesian era. Similarly, it is to
politics that one must look for what must be a central element in any fuller discussion
of distributional issues, namely the higher taxation levels that were characteristic of
this period compared with before the Second World, and personal taxation in
particular. Figure 4 provides a longer-run context for the very high standard and
highest marginal rates that were characteristic of the income tax from the end of the
Second War through to the late 1970s. Clearly, this is but one window into this part of
the fiscal system, and we need to acknowledge that all other OECD countries
experienced similar trends, but any fuller study would want to examine the writings of
mainstream economists on the rates and structure of taxation at this time. Certainly,
for some the incoherence of the British tax system by the late 1970s, as well as the
possible disincentive and other adverse effects that the system might be having, were
attracting attention, and most notably the much cited Kay and King (1978). However,
a recent two-volume study of the British tax system to 1979 found that politicians had
consistently placed their perceptions of equity (or just taxes) above considerations of
efficiency, with economists often consulted but rarely decisive (Daunton 2002). There
22
Meade was also very active in tax reform, culminating in his chairing IFS (1978), and had long
been concerned that the high levels of personal taxation on grounds of redistribution were
adversely impacting on incentives (Meade 1948).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 26/32
___________________________________________________________________________________
FIGURE 4
Income tax rates, 1860–2005
100
90
80
Reduced (Lower) rate
70
Standard (Basic) rate
60
%
Highest rate (earned income)
50
40
Highest rate (unearned income)
30
20
10
0
1860
1870
1880
1890
1900
1910
1920
1930
1940
1950
1960
1970
1980
1990
2000
Source: Board of Inland Revenue.
is still scope to study more fully the economists, but we should be aware of the
limitations of their impact in this sphere of public policy.23
§6
CONCLUSIONS
6.1
Politicians do not live in a vacuum, and whilst taxation and the welfare state were not
areas in which the economists’ voice was much heard (at least outside of the IEA,
whose publication programme and public profile, of course, was growing throughout)
there were many other dimensions to economic policy in which they found a much
more receptive audience. Indeed, were it not so there could not be the Postan,
Hutchison and Johnson critiques which helped fuel the fires for the eventual more
direct challenges upon the Keynesian economics establishment in the 1970s. In earlier
studies, we have raised objections to the representation of British mainstream
economics contained within those critiques. Here we reiterate that there has been too
much focus on stylised conflicts in macroeconomics. As Kearl et al. (1979, p. 36)
observed from their study of professional opinion amongst US economists:
23
See Ellison (1994) and Thompson (1996) for those economists who were directly involved in
Labour Party policy formulation. These studies, as with much else of this literature, is concerned
primarily with the development of social democratic economic thought rather than with the
history of economic thought. There is no comparable volume for the Conservative Party, but see
Barnes and Cockett (1994) on policy formulation mechanisms and Cockett (1994) on the allimportant IEA. Notable economists advising leading Conservatives during the 1950s and 1960s
included such LSE figures as Paish, Plant, Robbins [check also Jewkes, Dennison, Bauer,
Yamey***; a St Andrews connection***] There is one notable example of where a – presumed to
be politically neutral – (Cambridge) economist was used by the Conservative government in the
early-mid 1950s to investigate contemporary concerns about the burgeoning cost of the National
Health Service; the report, which found no substantive evidence of ill-administration or poor cost
control, was a profound disappointment to the government (Bridgen and Lowe 1998, p. 49).
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 27/32
___________________________________________________________________________________
Consensus tends to center on micro-economic issues involving the price mechanism while
the major areas of disagreement involve macro-economic and normative issues. The
normative nature of many issues also allows ideological considerations to become
important. However, it is clear from this analysis that the perceptions of widespread
disagreement are simply wrong. On the other hand, it is true that for many outside the
profession the questions of greatest interest are also those that generate the most
disagreement within the profession. Hence a good deal of the sampling of economists’
advice, which is in turn communicated to the public, comes from the weakest cell in our
analysis – macro-economic policy.
6.2
This conclusion is equally applicable to the British profession, and it is been one of
the purposes of this paper to revive a somewhat forgotten and much under-utilised
source to show that British economists when sampled in like manner appeared
similarly consensual and orthodox on microeconomics. Such a conclusion obviously
sits uneasily with the now deeply embedded IEA version of the British economics
profession, and of its policy advice during the Keynesian era, as irredeemably
dirigiste and antipathetic to an efficient and robust free market economy. That story in
any case overstates the influence of the economists, it gives far too much attention to
public pronouncements as against the private actions of those few economists who
were close to the centre of policy formulation; and it also ignores the fact that
throughout the 1950s and 1960s there were economists, notably but not exclusively
associated with the LSE, who subscribed to the Paish critique and accordingly
campaigned for governments to increase the maximum level of unemployment it
would tolerate so that demand management could escape the confines of Stop-Go.
6.3
And what about the representative agents and the ill effects of their pseudoKeynesianism? Postan, Hutchison, Johnson and the rest would not have been able to
sustain their version of events had they known what we now know about the conduct
of those few economists who mattered inside the Labour administrations of the 1960s:
they spent their time, in so far as their time-budgets were actually allocated to
economic advice as against routine administration, not in stoking up the inflationary
fires and encouraging the politicians to ever more dirigiste interventions but in the
very opposite. Cairncross’s moderation would not have surprised, nor perhaps
MacDougall’s, but Kaldor and Neild also appear from the official records now
available to have been significant voices for moderation and reason. Only Balogh
came close to the caricatures, and his influence was always less than he or his enemies
imagined.
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 28/32
___________________________________________________________________________________
§7.
REFERENCES
Arndt, H.W. (1978) The rise and fall of
economic growth: a study in contemporary
thought. Melbourne: Longman Cheshire.
Attiyeh, R. and Lumsden, K.G. (1971)
‘University students’ initial understanding of
economics: the contribution of the A level
economics course and of other factors’,
Economica, n.s. 38 (1), pp. 81–97.
Atkinson, A.B. (1995) Incomes and the welfare
state: essays on Britain and Europe.
Cambridge: Cambridge University Press.
___ (1999) The economic consequences of
rolling back the welfare state. Cambridge,
MA: MIT Press.
Backhouse, R.E. (1997a) ‘The changing
character of British economics’, in A.W.
Coats (ed.) (1997) q.v., pp. 31–60.
___ (1997b) Truth and progress in economic
knowledge. Cheltenham: Edward Elgar.
___ (1998) Explorations in economic
methodology: from Lakatos to empirical
philosophy of science. London: Routledge.
___ (2000) ‘Economics in mid-Atlantic: British
economics, 1945–95’, in A.W. Coats (ed.)
(2000) q.v., pp. 20–41.
Barnes, J. and Cockett, R. (1994) ‘The making
of party policy’, in A. Seldon and S. Ball
(eds) (1994) Conservative century: the
Conservative Party since 1900. Oxford:
Oxford University Press, pp. 347–82.
Blackaby, F.T. (1979) ‘The economics and
politics of demand management’, in S.T.
Cook and P.M. Jackson (eds) (1979) Current
issues in fiscal policy. Oxford: Martin
Robertson, pp. 185–97.
Blaug, M. (1992) The methodology of economics
or how economists explain. Cambridge:
Cambridge University Press.
Blyth, M. (2002) Great transformations:
economic ideas and institutional change in
the
twentieth
century.
Cambridge:
Cambridge University Press.
Boehm, S., Gehrke, C. and Kurz, H.D. (eds)
(2002) Is there progress in economics?:
knowledge, truth and the history of economic
thought. Cheltenham: Edward Elgar.
Booth, A.E. (1983) ‘The “Keynesian revolution”
in economic policy-making’, Economic
History Review, 36 (1), pp. 103–23.
___ (1984) ‘Defining a “Keynesian
revolution”’, Economic History Review, 37
(2), pp. 263–7.
___ (1985) ‘The “Keynesian revolution” and
economic policy-making: a reply’, Economic
History Review, 38 (1), pp. 101–6.
___ (1987) ‘Britain in the 1930s: a managed
economy?’, Economic History Review, 40
(4), pp. 499–522.
___ (1989a) British economic policy, 1931–49:
was there a Keynesian revolution? London:
Harvester Wheatsheaf.
___ (1989b) ‘Britain in the 1930s: a managed
economy? A reply to Peden and Middleton’,
Economic History Review, 42 (4), pp. 548–
56.
___ (2000) ‘Inflation, expectations and the
political economy of Conservative Britain,
1951–1964’, Historical Journal, 43 (3), pp.
827–47.
___ (2001a) ‘New revisionists and the
Keynesian era in British economic policy’,
Economic History Review, 54 (2), pp. 346–
66.
___ (2001b) ‘Britain in the 1950s: a
“Keynesian” managed economy?’, History of
Political Economy, 33 (2), pp. 283–313.
___ (2003) ‘New revisionists and the Keynesian
era: an expanding consensus?’, Economic
History Review, 56 (1), pp. 125–30.
___ and Coats, A.W. (1978) ‘The market for
economists in Britain, 1945–75: a
preliminary survey’, Economic Journal, 88
(3), pp. 436–54.
Bridgen, P. and Lowe, R. (1998) Welfare policy
under the Conservatives, 1951-1964: a guide
to documents in the Public Record Office.
London: PRO.
Brittan, S. (1973a) Is there an economic
consensus?: an attitude survey. London:
Macmillan.
___ (1973b) Capitalism and the permissive
society. London: Macmillan.
___ (1975) Second thoughts on full employment
policy. London: CPS.
___ (2000) ‘Samuel Brittan (b. 1933)’, in R.E.
Backhouse and R. Middleton (eds) (2000)
Exemplary
economists:
introducing
twentieth-century economists. Vol. II:
Europe, Asia and Australasia. Cheltenham
and Northampton, MA: Edward Elgar, pp.
270–95.
Burnham, P. (2003) Remaking the postwar
world economy: ROBOT and British policy
in the 1950s. London: Palgrave.
Butler, D.E. and Pinto-Duschinsky, M. (1971)
The British general election of 1970.
London: Macmillan.
Cairncross, A.K. (1977) Review of Howson and
Winch (1977), Economic Journal, 87 (3), pp.
628–31.
___ (1989) The Robert Hall diaries. I: 1947–53.
London: Unwin Hyman.
___ (1991) The Robert Hall diaries. II: 1954–
61. London: Routledge.
___ (1992) The British economy since 1945:
economic policy and performance, 1945–
1990. Oxford: Basil Blackwell.
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 29/32
___________________________________________________________________________________
___ (1996) Managing the British economy in the
1960s: a Treasury perspective. London:
Macmillan.
___ (1997) The Wilson years: a Treasury diary,
1964–1969. London: Historian's Press.
___ (1999) Diaries: the Radcliffe committee and
the Treasury, 1961-64. London: Institute of
Contemporary British History.
___ and Watts, N. (1989) The Economic Section,
1939–1961: a study in economic advising.
London: Routledge.
Clark, C.G. (1961) Growthmanship: a study in
the mythology of investment. London: IEA.
Clarke, P.F. (1983) ‘The politics of Keynesian
economics, 1924–1931’, in M. Bentley and J.
Stevenson (eds) (1983) High and low politics
in modern Britain. Oxford: Clarendon Press,
pp. 154–81.
___ (1988) The Keynesian revolution in the
making, 1924–1936. Oxford: Clarendon
Press.
Coats, A.W. (ed.) (1981) Economists in
government: an international comparative
study. Durham, NC: Duke University Press.
___ (ed.) (1986) Economists in international
agencies: an exploratory study. New York:
Praeger.
___ (1988) ‘Economics and psychology: a
resurrection story’, in P.E. Earl (ed.) (1988)
Psychological economics: development,
tensions, prospects. Boston, MA: Kluwer
Academic, pp. 211–25.
___
(ed.)
(1997)
The
post-1945
internationalization of economics. Durham,
NC: Duke University Press.
___ (ed.) (2000) The development of economics
in western Europe since 1945. London:
Routledge.
Cockett, R. (1994) Thinking the unthinkable:
think-tanks and the economic counterrevolution, 1931–1983. London: Harper
Collins.
Cutler, A., Williams, K. and Williams, J. (1986)
Keynes, Beveridge and beyond. London.
Daunton, M.J. (2002) Just taxes: the politics of
taxation in Britain, 1914–1979. Cambridge:
Cambridge University Press.
Dow, S.C. (2002) Economic methodology: an
enquiry. Oxford: Oxford University Press.
Ellison, N. (1994) Egalitarian thought and
Labour politics: retreating visions. London:
Routledge.
Frey, B.S. and Eichenberger, R. (1993)
‘American and European economics and
economists’,
Journal
of
Economic
Perspectives, 7 (4), pp. 185–93.
Friedman, M. (1970) The counter-revolution in
monetary theory. London: IEA.
George, C. and Bewlay, S. (1964) Two men of
influence: a new look at Professor Kaldor
and Professor Balogh. London: Aims of
Industry.
Hall, P.A. (ed.) (1989) The political power of
economic ideas: Keynesianism across
nations. Princeton, NJ: Princeton University
Press.
___ (1993) ‘Policy paradigms, social learning
and the state: the case of economic
policymaking in Britain’, Comparative
Politics, 25 (3), pp. 275–96.
Halsey, A.H. (1992) Decline of donnish
dominion: the British academic professions
in the twentieth century. Oxford: Clarendon
Press.
___ and Trow, M.A. (1971) The British
academics. London: Faber & Faber.
Hands, D.W. (2001) Reflection without rules:
economic methodology and contemporary
science theory. Cambridge: Cambridge
University Press.
Harrod, R.F. (1963) The British economy. New
York: McGraw-Hill.
___ (1967) Towards a new economic policy.
Manchester: Manchester University Press.
HMSO (1944) Ministry of Reconstruction,
Employment policy after the war, BPP 1943–
4 (6527), viii, 119.
Howson, S.K. (1993) British monetary policy,
1945–51. Oxford: Clarendon Press.
___ and Winch, D. (1977) The Economic
Advisory Council, 1930–1939: a study in
economic advice during depression and
recovery. Cambridge: Cambridge University
Press.
Hutchison, T.W. (1955) ‘Insularity and
cosmopolitanism in economic ideas, 1870–
1914’, American Economic Review, 45 (2,
Papers & Proceedings), pp. 1–16.
___ (1968) Economics and economic policy in
Britain, 1946–1966: some aspects of their
interrelations. London: George Allen &
Unwin.
___ (1976) ‘Economists and social justice in the
history of economic thought’, in A. Jones
(ed.) (1976) Economics and equality.
Oxford: Philip Allan, pp. 47–65.
___ (1977) Knowledge and ignorance in
economics. Oxford: Basil Blackwell.
___ (1978) Review of Howson and Winch
(1977), Economic History Review, 2nd ser.,
31 (1), pp. 155–6.
Institute for Fiscal Studies (1978) The structure
and reform of direct taxation: report of a
committee chaired by Professor J.E. Meade.
London: George Allen & Unwin.
Johnson, H.G. (1968) ‘A catarrh of economists?:
from Keynes to Postan’, Encounter, 30 (5),
pp. 50–4.
___ (1973a) ‘National styles in economic
research: the United States, the United
Kingdom, Canada and various European
countries’, Daedalus, 102 (2), pp. 65–74.
___ (1973b) ‘Some micro-economic reflections
on income and wealth inequalities’, Annals
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 30/32
___________________________________________________________________________________
of the American Academy of Political and
Social Science, 409 (September), pp. 53–60.
___ (1975) ‘What passes for economics in the
English establishment’, The Banker, 125
(October), pp. 1159–61. Rep. in E.S. Johnson
and H.G. Johnson (1978) The shadow of
Keynes: understanding Keynes, Cambridge
and Keynesian economics. Oxford: Basil
Blackwell, pp. 221–6.
Kahn, R.F. (1976) ‘Unemployment as seen by
the Keynesians’, in G.D.N. Worswick (ed.)
(1976) The concept and measurement of
involuntary unemployment. London: George
Allen & Unwin, pp. 19–34.
Kaldor, N. (1966) Causes of the slow rate of
economic growth in the United Kingdom.
Cambridge: Cambridge University Press.
Kay, J.A. and King, M.A. (1978) The British tax
system. Oxford: Oxford University Press.
Kearl, J.R. et al. (1979) ‘A confusion of
economists?’, American Economic Review,
69 (2, Papers & Proceedings), pp. 28–37.
Keynes, J.M. (1930) ‘Economic possibilities for
our grandchildren’, The Nation and
Athenaeum, 11 and 18 October, pp. 36–7,
96–8. Rep. in Essays in persuasion.
Collected writings of John Maynard Keynes,
Vol. IX. London: Macmillan (1972), pp.
321–32.
Khan, M.S. and Johnson, H.G. (1972) ‘The
common market questionnaire, October
1971’, Economica, n.s. 39 (3), pp. 316–24.
Kelly, S. (2002) The myth of Mr. Butskell: the
politics of British economic policy, 1950–55.
Aldershot: Ashgate.
Lipset, S.M. (1963) Political man: the social
bases of politics, rev. edn. London:
Heinemann.
Lowe, R. (2005) The welfare state in Britain
since 1945, 3rd edn. London: Macmillan.
___ and Rollings, N. (2000) ‘Modernising
Britain, 1957–64: a classic case of
centralisation and fragmentation?’, in
R.A.W. Rhodes (ed.) (2000) Transforming
British government. Vol. I: Changing
institutions. London: Macmillan, pp. 99–118.
MacDougall, G.D.A. (1974) ‘In praise of
economics’, Economic Journal, 84 (4), pp.
773–86.
Maddison, A. (2003) The world economy:
historical statistics. Paris: OECD.
Meade, J.E. (1948) Planning and the price
mechanism: the Liberal-Socialist solution.
London: Allen & Unwin.
Middleton, R. (1982) ‘The Treasury in the
1930s:
political
and
administrative
constraints to acceptance of the “new”
economics’, Oxford Economic Papers, 34
(1), pp. 48–77.
___ (1983) ‘The Treasury and public
investment: a perspective on interwar
economic
management’,
Public
Administration, 61 (4), pp. 351–70.
___ (1985) Towards the managed economy:
Keynes, the Treasury and the fiscal policy
debate of the 1930s. London: Methuen.
___ (1989a) ‘Keynes’s legacy for postwar
economic management’, in A. Gorst et al
(eds) (1989) Post-war Britain, 1945–64:
themes and perspectives. London: Pinter, pp.
22–42.
___ (1989b) ‘Britain in the 1930s: a managed
economy? A comment’, Economic History
Review, 42 (4), pp. 544–7.
___ (1996) Government versus the market: the
growth of the public sector, economic
management
and
British
economic
performance, c.1890–1979. Cheltenham and
Brookfield, VT: Edward Elgar.
___ (1998) Charlatans or saviours?:
economists and the British economy from
Marshall to Meade. Cheltenham and
Northampton, MA: Edward Elgar.
___ (2002) ‘Struggling with the impossible:
sterling, the balance of payments and British
economic policy, 1949–72’, in A. Arnon and
W.L. Young (eds) (2002) The open economy
macromodel: past, present and future.
Boston, MA: Kluwer Academic Press, pp.
103–54
___ (2004) ‘Economists and economic growth
in Britain, c.1955–65’, in L.A. Black and H.
Pemberton (eds) (2004) Affluent Britain:
Britain’s postwar ‘golden age’ revisited.
Aldershot: Ashgate, pp. 129–47.
Newton, C.C.S. (1991) ‘The Keynesian
revolution debate: time for a new approach?’,
in A. Gorst et al. (eds) (1991) Contemporary
British history, 1931–1961: politics and the
limits of policy. London: Pinter, pp. 75–9.
___
(2004)
‘Keynesianism,
sterling
convertibility and British reconstruction,
1940–1952’, in R.C. Michie and P.
Williamson (ed.) (2004) The British
government and the City of London in the
twentieth century. Cambridge: Cambridge
University Press, pp. 257–75.
O’Brien, D.P. (1981) ‘The emphasis on market
economics’, in A. Seldon (ed.) (1981) The
emerging consensus?: essays on the
interplay between ideas, interests and
circumstances in the first 25 years of the
IEA. London: IEA, pp. 51–77.
Oliver, M.J. and Pemberton, H. (2004)
‘Learning and change in 20th-century British
economic policy’, Governance, 17 (3), pp.
415–41
Peden, G.C. (1980) ‘Keynes, the Treasury and
unemployment in the later nineteen–thirties’,
Oxford Economic Papers, 32 (1), pp. 1–18.
___ (1983) ‘Sir Richard Hopkins and the
“Keynesian revolution” in employment
policy, 1929–1945’, Economic History
Review, 36 (2), pp. 281–96.
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 31/32
___________________________________________________________________________________
___ (1984) ‘The “Treasury view” on public
works and employment in the interwar
period’, Economic History Review, 37 (2),
pp. 167–81.
___ (1989) ‘Britain in the 1930s: a managed
economy?: a comment’, Economic History
Review, 42 (4), pp. 538–43.
___ (1990) ‘Old dogs and new tricks: the
British Treasury and Keynesian economics in
the 1940s and 1950s’, in M.O. Furner and
B.E. Supple (eds) (1990) The state and
economic knowledge: the American and
British experiences. Cambridge: Cambridge
University Press, pp. 208–38.
___ (1996) ‘Economic knowledge and the state
in modern Britain’, in S.J.D. Green and R.C.
Whiting (eds) (1996) The boundaries of the
state in modern Britain. Cambridge
University Press: Cambridge, pp. 170–87.
___ (2003) ‘New revisionists and the Keynesian
era in British economic policy: a comment’,
Economic History Review, 56 (1), pp. 118–
24.
___ (2004) Keynes and his critics: Treasury
responses to the Keynesian revolution, 1925–
1946. Oxford: British Academy/Oxford
University Press.
Pemberton, H. (2001) ‘A taxing task: combating
Britain's relative economic decline in the
1960s’, Twentieth Century British History,
12 (3), pp. 354–75.
___ (2003) ‘Learning, governance and economic
policy’, British Journal of Politics and
International Relations, 5 (4), pp. 500–24.
___ (2004) Policy learning and British
governance in the 1960s. London: Palgrave.
Phelps
Brown,
E.H.
(1972)
‘The
underdevelopment of economics’, Economic
Journal, 82 (1), pp. 1–10.
Pollard, S. (1984) The wasting of the British
economy: British economic policy 1945 to
the present, 2nd edn. London: Croom Helm.
Postan, M.M. (1968) ‘A plague of economists?:
on some current myths, errors and fallacies’,
Encounter, 30 (1), pp. 42–7.
Pringle, R. (1977) The growth merchants:
economic consequences of wishful thinking.
London: CPS.
Reisman, D.A. (2004) ‘Richard Titmuss: welfare
as good conduct’, European Journal of
Political Economy, 20 (3), pp. 771–94.
Ricketts, M. and Shoesmith, E. (1990) British
economic opinion: a survey of a thousand
economists. London: IEA.
___ and ___ (1992) ‘British economic opinion:
positive science or normative judgement?’,
American Economic Review, 82 (2, Papers &
Proceedings), pp. 210–15.
Ringe, A. and Rollings, N. (2000) ‘Responding
to relative decline: the creation of the
National Economic Development Council’,
Economic History Review, 53 (2), pp. 331–
53.
___, ___ and Middleton, R. (2004) Economic
policy under the Conservatives, 1951–64: a
guide to documents in the National Archives
of the UK. London: IHR/TNA.
Rollings, N. (1985) ‘The “Keynesian revolution”
and economic policy-making: a comment’,
Economic History Review, 38 (1), pp. 95–
100.
___ (1988) ‘British budgetary policy, 1945–
1954: a “Keynesian revolution”?’, Economic
History Review, 41 (2), pp. 283–98.
___ (1994) ‘“Poor Mr. Butskell: a short life
wrecked by schizophrenia”?’, Twentieth
Century British History, 5 (2), pp. 183–205.
___ (1996) ‘Butskellism, the postwar consensus
and the managed economy’, in H. Jones and
M.D. Kandiah (eds) (1996) The myth of
consensus: new views on British history,
1945–64. London: Macmillan, pp. 97–119.
___ and Middleton, R. (2002) ‘British
economic policy in the 1950s and 1960s’,
paper presented to Economic History Society
Annual
Conference,
University
of
Birmingham, 6 April.
Schott, K. (1982) ‘The rise of Keynesian
economics: Britain, 1940–64’, Economy and
Society, 11 (3), pp. 292–316.
Sinclair, P.J.N. (1972) ‘The economy: a study in
failure’, in D. McKie and C. Cook (eds)
(1972) The decade of disillusion: British
politics in the sixties. London: Macmillan,
pp. 94–121.
Skidelsky, R.J. (1989) ‘Keynes and the state’, in
D.R. Helm (ed.) (1989a) The economic
borders of the state. Oxford: Oxford
University Press, pp. 144–52.
___ (1991) ‘Keynes’s philosophy of practice
and economic policy’, in R.M. O’Donnell
(ed.) (1991) Keynes as philosophereconomist. London: Macmillan, pp. 104–35.
___ (1992) John Maynard Keynes. Vol. II: The
economist as saviour, 1921–1937. London:
Macmillan.
___ (1997) ‘Bring back Keynes’, Prospect, 19
(May), pp. 30–5.
Smith, K. (1982) ‘Why was there never a
“Keynesian revolution” in economic policy?
A comment’, Economy and Society, 11 (2),
pp. 223–8.
Tanzi, V. and Schuknecht, L. (2000) Public
spending in the 20th century: a global
perspective.
Cambridge:
Cambridge
University Press.
Thirlwall, A.P. (1989) ‘Kaldor as a policy
adviser’, in T. Lawson et al. (eds) (1989)
Kaldor’s political economy. London:
Academic Press, pp. 121–39.
Thompson, N. (1996) Political economy and the
Labour Party: the economics of democratic
socialism, 1884-1995. London: UCL Press.
Tomlinson, J.D. (1981a) ‘Why was there never a
Economists, growth and welfare in the Keynesian era [2nd revise;08/02/2005 08:18] page 32/32
___________________________________________________________________________________
“Keynesian revolution” in economic
policy?’, Economy and Society, 10 (1), pp.
72–87.
___ (1981b) Problems of British economic
policy, 1870–1945. London: Methuen.
___ (1982) ‘The “Keynesian revolution”: a
response’, Economy and Society, 11 (2), pp.
229–31.
___ (1984) ‘A “Keynesian revolution” in
economic
policy-making?’,
Economic
History Review, 37 (2), pp. 258–62.
___ (1987) Employment policy: the crucial
years,
1939–1955.
Oxford:
Oxford
University Press.
Walters, A.A. (1978) Economists and the British
economy. London: IEA.
Worswick, G.D.N. (1972) ‘Is progress in
economic science possible?’, Economic
Journal, 82 (1), pp. 73–86.