Managing the Economy, Managing the People: narratives of economic life in Britain from Beveridge to Brexit

by Jim Tomlinson (University of Glasgow)

 

book‘It’s the economy stupid’, like most clichés, both reveals and conceals important truths. The slogan suggests a hugely important truth about the post-1945 politics of the advanced democracies such as Britain: that economic  issues have been crucial to government strategies and political arguments. What the cliché conceals is the need to examine what is understood by ‘the economy’, a term which has no fixed meaning, and has been constantly re-worked over the years. Starting from those two points, this book provides a distinctive new account of British economic life since the 1940s, focussing upon how successive governments, in seeking to manage the economy, have sought simultaneously to ‘manage the people’: to try and manage popular understanding of economic issues.

The first half the book analyses the development of the major narratives from the 1940s onwards. This  covers the notion of ‘austerity’ and its particular meaning in the 1940s; the rise of a narrative of ‘economic decline’ from the late 1950s, and the subsequent attempts to ‘modernize’ the economy; the attempts to ‘roll back the state’ from the 1970s; the impact of ideas of ‘globalization’ in the 1900s; and, finally, the way the crisis of 2008/9 onwards was constructed as a problem of ‘debts and deficits’. The second part focuses in on four key issues in attempts to ‘manage the people’: productivity, the balance of payments, inflation and unemployment. It shows how in each case  governments sought to get the populace to understand these issues in a particular light, and shaped strategies to that end.

One conclusion of the book is the grounding of most representations of key economic problems of the post-war period in Britain as an industrial economy, and how de-industrialization undermines this representation.  Unemployment, from its origins in the late-Victorian period, was largely about the malfunctioning of  industrial (and male) labour markets. De-industrialization, accompanied by the proliferation of precarious work, including much classified as ‘self-employment’, radically challenges our understanding of  this problem, however much it remains the case that for the great bulk of the population selling their labour is key to their economic prosperity.

The concern with productivity was likewise grounded in the industrial sector. But outside the marketed services, in non-marketed provision like education, health and care, the problems of conceptualising, let alone measuring, productivity are immense. In a world where personal services of various kinds are becoming ever more important, traditional notions of productivity need a radical re-think.

Less obviously, the notion of a national rate of inflation, such as the Cost of Living Index and later the RPI, was grounded in attempts to measure the real wages of the industrial working class. With the value of housing as key underpinning for consumption, and the ‘financialization’ of the economy, this traditional notion of inflation, measuring the cost of a basket of consumables against nominal wages, has been undermined. Asset, especially housing, prices matter much more to many wage earners, whilst the value of financial assets is also important to increasing numbers of people as the population ages.

Finally, the decline of concern with the balance of payments is linked to the rise in the relative importance of financial flows, making  the manufacturing balance or the current account less pertinent. For many years now Britain’s external payments have relied on the rates of return on overseas assets, exceeding those on domestic assets held by foreigners. We are a very long way indeed from 1940s stories of ‘England’s bread hangs by Lancashire’s thread’.

De-industrialization has not only undercut the coherence and relevance of the four standard economic policy problems of the post-war years, but has also destroyed the primary audience that most post-war economic propaganda was aimed at: the industrial working class. While other audiences were not entirely neglected, it was the worker (usually the male worker), who was the prime target of the narratives and whose understandings and behaviour were seen as the key to the projected solutions.

A recurrent anxiety of this propaganda was the receptivity of those workers to its messages. This anxiety helps to explain much of the ‘simplified’ language of this propaganda, as well as its patterns of distribution. More fundamentally, this anxiety rested upon uncertainties about what kind of arguments would a working-class audience find congenial; there was perennial debate about the efficacy of appeals to individual as opposed to the ‘national’ interest. Above all, there was a moral message of distributive justice which infused much of the propaganda, ultimately grounded in the belief that working class culture had within it ingrained notions of  ‘fairness’ that had to be appealed to.

While ethical appeals continued to inform economic propaganda into the twenty-first century, the fragmentation of the old audience accelerated. In addition, given the upward lurch in inequality in the 1980s, and the following period of continuing growth of incomes right at the top of the distribution, appeals to ‘fairness’ have become much more difficult to make credible. Strikingly, concerns about inequality emerged across the political spectrum after the 2007/8 financial crisis, at the same time as the narrative of debts, deficits and austerity had driven post-crisis policies that increased  inequality. Widespread talk of ‘reducing inequality’, whilst having obvious political appeal, especially after Brexit, would seem to be largely rhetorical.

 

Managing the Economy, Managing the People: narratives of economic life in Britain from Beveridge to Brexit is edited by Oxford University Press, 2017,  ISBN 978-019-878609-2

To contact the author: Jim.Tomlinson@Glasgow.ac.uk

PRE-REFORMATION ROOTS OF THE PROTESTANT ETHIC: Evidence of a nine centuries old belief in the virtues of hard work stimulating economic growth

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Cistercians at work in a detail from the Life of St. Bernard of Clairvaux, illustrated by Jörg Breu the Elder (1500). From Wikimedia Commons <https://en.wikipedia.org/wiki/Cistercians&gt;

Max Weber’s well-known conception of the ‘Protestant ethic’ was not uniquely Protestant: according to this research published in the September 2017 issue of the Economic Journal, Protestant beliefs in the virtues of hard work and thrift have pre-Reformation roots.

The Order of Cistercians – a Catholic order that spread across Europe 900 years ago – did exactly what the Protestant Reformation is supposed to have done four centuries later: the Order stimulated economic growth by instigating an improved work ethic in local populations.

What’s more, the impact of this work ethic survives today: people living in parts of Europe that were home to Cistercian monasteries more than 500 years ago tend to regard hard work and thrift as more important compared with people living in regions that were not home to Cistercians in the past.

The researchers begin their analysis with an event that has recently been commemorated in several countries across Europe. Exactly 500 years ago, Martin Luther allegedly nailed 95 theses to the door of the Castle Church in Wittenberg, and thereby established Protestantism.

Whether the emergence of Protestantism had enduring consequences has long been debated by social scientists. One of the most influential sociologists, Max Weber, famously argued that the Protestant Reformation was instrumental in facilitating the rise of capitalism in Western Europe.

In contrast to Catholicism, Weber said, Protestantism commends the virtues of hard work and thrift. These values, which he referred to as the Protestant ethic, laid the foundation for the eventual rise of modern capitalism.

But was Weber right? The new study suggests that Weber was right in stressing the importance of a cultural appreciation of hard work and thrift, but quite likely wrong in tracing the origins of these values to the Protestant Reformation.

The researchers use a theoretical model to demonstrate how a small group of people with a relatively strong work ethic – the Cistercians – could plausibly have improved the average work ethic of an entire population within the span of 500 years.

The researchers then test the theory statistically using historical county data from England, where the Cistercians arrived in the twelfth century. England is of particular interest as it has high quality historical data and because, centuries later, it became the epicentre of the Industrial Revolution.

The researchers document that English counties with more Cistercian monasteries experienced faster population growth – a leading measure of economic growth in pre-modern times. The data reveal that this is not simply because the monks were good at choosing locations that would have prospered regardless.

The researchers even detect an impact on economic growth centuries after the king closed down all the monasteries and seized their wealth on the eve of the Protestant Reformation. Thus, the legacy of the monks cannot simply be the wealth that they left behind.

Instead, the monks seem to have left an imprint on the cultural values of the population. To document this, the researchers combine historical data on the location of Cistercian monasteries with a contemporary dataset on the cultural values of individuals across Europe.

They find that people living in regions in Europe that were home to Cistercian monasteries more than 500 years ago reveal different cultural values than those living in other regions. In particular, these individuals tend to regard hard work and thrift as more important compared with people living in regions that were not home to Cistercians in the past.

This study is not the first to question Max Weber’s influential hypothesis. While the majority of statistical analyses show that Protestant regions are more prosperous than others, the reason for this may not be the Protestant ethic as emphasised by Weber.

For example, a study by the economists Sascha Becker and Ludger Woessman demonstrates that Protestant regions of Prussia prospered more than others because of the improved schooling that followed from the instructions of Martin Luther, who encouraged Christians to learn to read so that they could study the Bible.

 

‘Pre-Reformation Roots of the Protestant Ethic’ by Thomas Barnebeck Andersen, Jeanet Bentzen, Carl-Johan Dalgaard and Paul Sharp is published in the September 2017 issue of the Economic Journal.

Thomas Barnebeck Andersen and Paul Richard Sharp are at the University of Southern Denmark. Jeanet Sinding Bentzen and Carl-Johan Dalgaard are at the University of Copenhagen.

 

Keynes and Actual Investment Decisions in Practice — The NEP-HIS Blog

Keynes and Wall Street By David Chambers (Judge Business School, Cambridge University) and Ali Kabiri (University of Buckingham) Abstract: This article examines in detail how John Maynard Keynes approached investing in the U.S. stock market on behalf of his Cambridge College after the 1929 Wall Street Crash. We exploit the considerable archival material documenting his […]

via Keynes and Actual Investment Decisions in Practice — The NEP-HIS Blog