Longitudinal – Reflections On Recent Economic Writing

Yves here. Please thank Satyajit Das for sending another informative piece after allowing us to publish his in-depth series on the prospects for a (less than painful) energy transition. Das roused himself to read a large sample of recent economic books so you don’t have to.

Das finds some unexpected commonalities, the most striking being a stronger propensity to rely on narrative techniques. This may be due to publisher economic considerations, as in wanting to find blockbusters, and hence agents and authors looking for ways to reach a mass audience.

Das mention Milton Friedman as a polemicist. His  bestseller, Free to Choose, written for laypeople, led to a ten-part TV series with the same title.  But despite Friedman’s success in propagating libertarian ideas, most Serious Economists had preferred to sell their ideas at policy-related conferences, and in articles in perceived-to-be top academic journals (the economics publication hierarchy has been challenged by James Galbraith as too-obvious vehicle for reinforcing orthodoxy), and venues like the Financial Times and Project Syndicate. So the shift is noteworthy.

By Satyajit Das, a former banker and author of numerous works on derivatives and several general titles: Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives  (2006 and 2010), Extreme Money: The Masters of the Universe and the Cult of Risk (2011), Fortune’s Fool: Australia’s Choices (2022)

The dismal science has its own curious literature. Originally, books on economics were mostly textbooks or technical works. Authors were crusty mildewed academics, liberally sprinkled with dandruff, smelling of halitosis and pipe smoke. The writing style, if that is a correct description, was often impenetrable. Generations of students memorised incomprehensible passages and equations for regurgitation in examinations. Theoretical works engendered friendly or hostile exchanges between camps reminiscent of medieval theological debates. The idea of popular or readable economics was a contradiction in terms. There were exceptions like John Maynard Keynes, some of whose works found a more general readership.

Since the 1970s, interest in money matters has increased. Milton Friedman’s polemics expanded readership with mass-market targeted economics books. UK Prime Minister Margaret Thatcher rescued Keynes’s rival Friedrich von Hayek from obscurity when during a Conservative Party policy meeting, Thatcher allegedly produced Constitution of Liberty declaring: “this is what we believe.” US President Ronald Reagan, Thatcher’s soulmate, performed a similar service for Friedman and less successfully for Arthur Laffer’s supply side economics.

Few actually read the books although leaving them lying around or causally referring to them, whether you were a politician or had intellectual pretensions, established your superior standing.

Since then, the genres of economics books have expanded. Celebrity central bankers, like Alan Greenspan, Ben Bernanke and Mervyn King, now publish extensively. The practice does seem, thankfully, to be a largely Anglo-Saxon tendency. The works are really auto-biographies, loaded with self-justifications and often bilious, catty gossip. The object is to polish one’s legacy and fill in time in think-tanks – effectively sheltered workshops for unemployed policymakers. The books betray an obvious longing for the attention and personal security protection that their every utterance attracted when in office.

General historians, such as Niall Ferguson and Adam Tooze, have entered the fray with popular accounts and successful spin-off TV series. A lack of direct experience or domain knowledge is no obstacle. It is compensated for by industrial scale trawling of original sources by a plethora of adoring students or researchers. One Australian Treasury Minister with no known economic or financial expertise prepared for high office by reading Ferguson’s Ascent of Money over a weekend. Unfortunately, it does not seem to have helped as the appointee’s tenure was short and disastrous, anticipating British Prime Minister Liz Truss and Chancellor Kwasi Kwarteng’s more recent misfortunes.

Journalists tasked with covering economic and financial matters, after their obligatory stint covering flower shows, harbour authorial pretensions, with attendant speaking and consulting opportunities. Some have even used their publishing history to find marginally more useful employment in financial institutions.

The books themselves have changed. Economics, intellectual rigour and facts are subordinate to story-telling. Narratives and sensation are paramount. The text requires larger-than-life ‘characters’ who can be centred around standard tales of quests, heroes and villains. This means the books are essentially a sequence of mini-biographies of central figures, which bear a remarkable resemblance to their Wikipedia page. Christopher Leonard’s Lords of Easy Money could be mistaken for a favourable life and times of former Fed governor Thomas Hoenig. The same anecdotes are recycled across multiple books, providing comfort for the senile reader. Titles are chosen for click-bait value. The book’s bare premise must be a compact tweet-able attention grabbing statement. A compact ‘[insert your topic] for Dummies’ list of solutions is mandatory, preferably easy, simple and generally useless.

Your humble writer has shunned economic works for years for the above reasons as well as laziness. Recently, masochism led him to delve into several newish economic books, selected with a careless randomness.

In order of publication (to avoid any suggestion of fear or favour), the books were:

Disorder Hard Times in the 21st Century Hardcover by Helen Thompson (Oxford University Press UK 19 May 2022)

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by Gary Gerstle (Oxford University Press USA 28 June 2022)

The Price of Time: The Real Story of Interest by Edward Chancellor Atlantic Monthly Press (16 August 2022)

A Monetary and Fiscal History of the United States, 1961–2021 by Alan S. Blinder (Princeton University Press 11 October 2022)

Scarcity: A History from the Origins of Capitalism to the Climate Crisis by Carl Wennerlind  and Fredrik Albritton Jonsson (Harvard University Press 2 August 2023)

We Need to Talk About Inflation: 14 Urgent Lessons from the Last 2,000 Years by Stephen D. King (Yale University Press 21 July 2023)

The Economic Government of the World: 1933-2023 by Martin Daunton (Allen Lane 15 August 2023)

The striking thing is the longitudinal flavour. King and Chancellor delve across millennia. Others confine themselves to mere decades. The relevance of the past to the present is implicit ignoring J.P.Hartley’s oft quoted maxim that the past is another country. Chancellor and King are narrow in their focus while the others work through ‘big ideas’, sometimes across disciplines.

The irresistibly titled Price of Time focuses on the history of interest. In the beginning was the loan and forsooth the lender demandeth recompense and thus was born interest, hark! The historical treatment is prelude for the main act – excoriation of recent abnormally low rates and its side-effects such as the everything price bubbles, excessive risk taking, reduced incentive for savings, lower productivity growth, and increased inequality.

Chancellor, an economic historian and journalist whose Devil Take The Hindmost remains an important history of speculation, writes fluently. The central theses that low rates have side-effects and central bank policies have shortcomings are not original. To some extent, the problem has also changed with over-zealous authorities now raising interest rates rapidly to compensate for past failings. The Price of Time makes the important point that rates affect both assets and liabilities. The effect of long term payment streams, such as pensions, insurance payouts, health and aged care government program costs as well as infrastructure income and related debt which is frequently indexed is not well understood.

King, a well-known financial market economist and media talking head, has titled his text on inflation after Lionel Shriver’s book and film with the similar name. The premise follows that inflation, like Kevin, is bad and can get quickly out of control, and policymakers must keep it under control. The choice is questionable in that Kevin’s parents fail decisively.

King lists a handy 14 lessons that should be kept in mind. The book glosses over some issues. Measures of price changes are ambiguous. Economist’s theories on inflation are poor and the econometric evidence unclear. The case for inflation targeting or, in fact, any need for encouraging price rises is uncertain. Inflation’s potential power as a policy instrument is not adequately emphasised. It can be useful in reducing real debt levels, transferring wealth from lenders to borrowers, encouraging consumption, devaluing currencies, and, vitally, avoiding deflation which would be problematic for highly indebted economies.

King, whose writing does not bear any resemblance to the gothic horror specialist of the same name, tries to make the book fun –a dangerous endeavour. The relationship between Richard Burton and Elisabeth Taylor informs the relationship between central banks and governments with confusing results – I mean she did keep the jewels, didn’t she?

In Scarcity, Wennerlind and Jonsson revisit Thomas Malthus 1798 hypothesis set out in An Essay on the Principle of Population. Across 400 years, they chart changes in the relationship between mankind and nature, primarily from the perspective of the Western canon.

The central thesis, unsurprisingly, is that human society moved from living within its constraints to exploiting natural resources endlessly for economic growth. The authors differentiate between Cornucopian ideologies – which endorse a mastery of nature and assume resources can be extended indefinitely – and Finitarian ideologies – emphasising the need for constraint a balance between nature and the economy. Solidly researched, it traces the various historical strands taking care to join ideas to the existing environmental and social conditions. The book’s coverage of recent attempts by various economists to place a value on nature, such as Adrienne Buller’s Value of A Whale, a last ditch attempt to motivate a greater shift to more environmentally and sustainable practice, is scanty.

Scarcity offers the reader a crash course on the approaches of different philosophers, artists, theologians, and economists. Many readers will be perhaps disappointed that it does not have a simple 10-point plan outlining the authors’ world saving project.

Blinder and Gerstle also trace historical patterns. Blinder hews narrowly to US economic policy covering twelve presidents, from John F. Kennedy to Joe Biden, and eight Federal Reserve chairs, from William McChesney Martin to Jerome Powell. The story is familiar and parts of the story have been told in greater detail and better, such as in William Greider’s 1989 magisterial Secrets of the Temple. Blinder does however bring the story up to date.

An important limitation is the focus on the US and only tangential consideration of events in Europe and Asia. The reality that the Euro, Brexit and the growing power of China and the petrostates has profoundly altered the economic balance of the world does not seem to have reached American academic shores. Blinder’s belief in American exceptionalism mirrors that of Bradford DeLong in Slouching Towards Utopia.

Blinder is an insider – a former member of the Federal Reserve – and clearly a confidant of the powerful. This would imply insights drawn from first-hand experience. Instead, A Monetary and Fiscal History of the United States is curiously bloodless and diffident in its approach. Perhaps, an insider cannot afford to be candid because of their relationships and need to stay within the inner circle. In an effort to appeal to a broad readership, Blinder also falls for the trope of providing biographical snippets of key players which breaks up the narrative, unhelpfully.

Gerstle’s history is more ideologically oriented as the title of his book suggests. The Rise and Fall of the Neoliberal Order aims for a sweeping account of the dominance of neoliberalism that started in the United States and Great Britain in the late 1970s fundamentally changed the world. Blending economics and politics with skill, the book seeks to highlights the curious mix of free market principles, personal freedoms, deregulation, state actions, open borders, and economic and cultural globalization that underlies the transition away from the favoured mixed economy that prevailed from the 1930s to the end of the 1970s. Gerstle’s central argument is that there are long periods where there is a broad political and societal policy consensus, but which are ultimately punctured as political orders outlive their relevance. Such a change in political order may be underway today.

There are some inadequacies in the Rise and Fall of the Neo-Liberal Order. Curiously for a book about an ideology, it is fuzzy about what the author ignores that neo-liberalism, like all umbrella terms, is a convenient label for advocates and critics alike used to mask a sometimes disparate group of expedient policies and positions. The author’s overly politically correct writing, eschewing certain words like ‘conservative’ or ‘neo-conservative’, is tendentious. The most serious deficiency may be the books inadequate treatment of the way in which US and UK policies were adopted and adapted in different political settings in both the developed and developing world. The Chicago Boys’ embrace of Pinochet’s dictatorship in Chile comes to mind.

Daunton and Thompson’s books are possibly the most interesting in this clutch.

Daunton, a well-regarded historian, traces the shifting sands of globalisation and national sovereignty since the failed 1933 World Monetary and Economic Conference. It analyses the economic nationalism of the 1930s, the reconstruction of the global economy and the post-war General Agreement on Tariffs and Trade and its progressive breakdown since the 1970s. It documents the mixed effects of US domination, exemplified by Bretton Woods, the International Monetary Fund and the International Bank for Reconstruction and Development.

Drawing on original archival research, The Economic Government of the World carefully explores the interaction of trade, international monetary relations, capital mobility and development within the geo-political context of the twentieth century. It provides valuable context for current economic debates especially the shifting balance between domestic concerns and globalization and sharing of economic benefits between labour, capital and the state. Ambitious in scope and direct in approach, The Economic Government of the World is richly rewarding. Readers should not be put off by its detail and daunting size – some1,000 pages.

Thompson’s pithily titled Disorder has similarities with The Economic Government of the World, primarily in its deft fusion of economics and politics. It examines the overlapping history of energy, economics, and politics. Thompson, a political economist, analyses successive disruptions, such as the financial crisis, Brexit and geopolitical conflicts, through the lens of economic and energy competition.

Ambitious in conception, Disorder’s  attempt to pull together the three strands of argument in an accessible form within a relatively compact work does not always work. It is weighed down by a British centric view of some issues especially the Eurozone and Britain’s vexatious relationship with the EU. Some arguments are over-simplifications, as in the internal politics of some middle east petrostates and the US energy complex. Irrespective, Disorder is a thoughtful and clear-sighted perspective on forthcoming challenges. Neither Daunton nor Thompson wisely does not offer solutions but defines the problems well.

These books all look backwards. There is a search of understanding of current dilemmas in history. There is a hint of rose-tinted glasses in which the past was preferable as problems were less difficult.

The works also highlight some discouraging trends, not only in the subject matter covered. As we now only have an economy rather than a society, there is a greater need than ever for a literature that allows the interested to garner knowledge to better inform frequently complex debates. These works should, ideally, provide an  understanding of history to frame the present and review current policies and thinking. They should be accessible for general readers. In a world of tweets (many blogs are now promulgated as multi-part X-utterances) and partisan polemics on all sides, that is now rare and may be impossible.

Major publishing houses, perhaps reflecting a shrinking market, mostly pursue different options – the ‘instant best-selling classic’. The hunt is for the celebrity author with a hyper active twitter account and tens of thousand followers. The writer is the product. The quality of the argument, factual basis of the hypotheses and the writing are largely secondary to marketability. Controversy, whether genuine based on intellectual innovation or a trumped-up conceit, is the aim. Publishers, who are in truth sales executives, believe, perhaps earnestly, that the only books that will sell are the above types. It ends up destroying potential readership which in turn reinforces the publisher’s prejudices. It makes for a depressing cycle.

Most of the titles mentioned are, interestingly, from well-regarded academic or university presses rather than trade publishers. This creates different biases – academic authors often with no worldly experience, a frequently stilted and unreadable writing style and a desire for rigour which means little more that voluminous notes (often longer than the text itself) which will never be read. These books, which are poorly marketed, will receive less coverage and will in the end only find a limited audience.

In the end, the decline (Yves’ ‘crapification’) accelerates Orwellian ‘un-knowledge’. It is now the case that we  have to make do with what Thucydides feared: “So little trouble do men take in the search after truth; so readily do they accept whatever comes first to hand”. It is now a struggle to get solid information on vital debates essential to their futures. The body politic is poorer for it.

© 2023 Satyajit Das All Rights Reserved

A version of this piece was published in the New Indian Express.