It’s the Stupidity, Stupid!

Last September I wrote about the recent General Election and the unlikely elevation of Jeremy Corbyn to lead the Labour Party; the lack of a post since then has been, I now realise, the result of deep-seated dismay.  In Britain, the first half of 2015 was dominated domestically by the backwash of the Scottish Independence referendum; internationally, by the circus of the Greek debt crisis, where Tsipras would agree one thing in Brussels and then go home and disown what he had agreed on TV, as if nobody outside Athens watched Greek TV.

Scottish independence vanished from the public agenda of the SNP just over a year after the referendum, with the collapse of the oil price.  Scotland’s prosperity now clearly lies with the current terms of the Union.  Although it should be noted that when in 2013 it looked as though the Grangemouth refinery was to be closed, the real problem was that this one closure would take 10% of the Scottish manufacturing base with it.  In January 2016 Scotland’s non-oil and gas exports to the rest of the United Kingdom were four times that to the rest of the EU and increasing – exports to the rest of the EU had fallen 8% in one year.  So the idea that the path to prosperity lay through an independent Scotland was always a rather flaky idea.  Besides which, actually establishing an independent Scotland could well turn out as costly as the Darien project.

Much the same is true of the idea that Britain could prosper through leaving the EU.  As Philip Stephens has pointed out in the FT recently, the idea that Britain could “reclaim sovereignty” by leaving the EU is self-refuting: the possibility of leaving is itself confirmation of sovereignty.  Quite apart from the very rudimentary idea of “sovereignty” that those who make such arguments display, detached from any serious consideration of the relationships now existing between European states, or any comprehension of the government of modern polities.  Best estimates of the economic gains from membership of the EU run at about 10%: that Britain is now 10% better off than it would have been had it never been a member of the EU.  Detaching Britain from the EU, and reorganising our political, economic and social relationships with the world’s third-most important political bloc, could well chew through that in short order.  What the dawning new era would be like is anyone’s guess, but there is no particular reason to suppose that it would be any improvement on the present.

Scottish independence could well follow on from Brexit.  The turbulence of Spanish politics could well lead into Catalan independence given the reduced legitimacy of established parties.  In France there is a related lack of support for the mainstream parties of right and left, which only together seem capable of stemming the electoral advance of the Front National.  Similar stories of disaffected voters placing their faith in the politics of anti-politics can be told about Italy, Germany, Greece, The Netherlands, Denmark.  And on the other side of the Atlantic those with any commitment to serious politics look on aghast as a huckster channelling the ghost of Huey Long steadily treads his path to nomination as the Republican Party presidential nominee.

As Max Weber noted, modern politics requires the firm, slow boring of hard boards, united with passion and a sense of proportion.  Today many seem to think that passion is enough.  “People” are said to be disaffected from politics and political leadership; a new antipolitics is said to be abroad.  True enough, today some of the leading British parliamentary figures plumb new depths of shallowness.  David Cameron presents himself as an honest broker, but he seeks to save us from a mess he created in the first place by his casual approach to party politics. George Osborne, set on spending ever less to “restore our finances”, seems baffled by the way that the less “he spends”, the poorer the nation becomes.  Tariq Ali tells us in the last London Review of Books that Jeremy Corbyn articulates a national mood – clearly he does not get out much, nor has he noticed that it is Corbyn’s advisers who seem to do all the articulating, the Labour Party leader being mostly mute.

The practice of politics in a representative democracy is an unedifying sight.  Representative democracy is however what we have, and the alternatives – plebiscitary democracy, authoritarian democracy, monarchy, dictatorship, oligarchic rule, theocracy – are all much worse.  We should be grateful for what we have, not be surprised by how imperfect it is.  Our efforts should be directed to improving ourselves and those around us, not blaming remote others for not giving us what we want.  All of the countries and regions mentioned above belong to the wealthiest part of the modern world.  Even being poor in a wealthy country is very rarely much like being even reasonably well-off in a poor country, a point that Adam Smith made long ago.  Articulating this principle in discussion of Europe’s immigration crisis would be helpful.  Simply being alive is a privilege; being alive in a wealthy country confers enormous benefits on those who live there, benefits to which they themselves have directly contributed little.

There is no economic case for Brexit, but that is more or less beside the point.  Extending the line of argument above, being a citizen of an EU member state brings with it social and cultural advantages that, being taken for granted, are usually ignored.  Britain is now more like eg. Holland than it is like any other non-EU country in the world – not the same, but in many significant ways similar.  Only for tourists and a wealthy elite does the USA look anything like Britain.  The truth of this is confirmed by the progress of Donald Trump through the Republican primaries.  But even here we can find confirmation of Adam Smith’s analysis of commercial society: that its motor is emulation and vanity; translated into the political process, those who already have much of what they need respond to politicians who promise them more of what they already have, which they no longer even notice they have.

Democracy in Action?

In recent days much has been written and said about the election of Jeremy Corbyn, a Labour MP with no known experience of running anything at all beyond his own life, as leader of Britain’s Labour Party. He was elected through a process that was intended to be “more democratic” than the last democratic election process, but which seems to have produced a result at odds with the wishes of most active members of the Labour Party and almost all its MPs.  The new process permitted all kinds of people who had not even voted Labour in the recent general election to “have their say”.  Matters were not helped by the fact that Corbyn had so little support among Labour MPs that he only gained sufficient nominations to put himself forward as a candidate through nominations from MPs who wished the field to be “representative”.  This alone shows the poverty of imagination of those rightly dubbed “morons”, since the point of having a threshold is to exclude candidates who lack broad support.

It is not yet clear how things will turn out.  The only certain thing is that current punditry is well off the mark: the Labour Party of today is the same Labour Party of last week, except that it has a new leader.  Quite what this new leader will, or can, do with his unexpected elevation is unclear.  Anthony King, in Who Governs Britain?, has plausibly argued that the British Prime Minister has very limited power, and much the same is true of the Leader of the Opposition.  Quite what counts as “strong” or “weak” leadership should always be treated with scepticism.  Media preoccupation with “strong” leadership in politics, business and academia is generally linked to poor understanding of what leadership involves, and a focus on “words” over “actions”.  Max Weber wrote the book on all this during 1918-1919, and what he wrote then still stands as the most insightful assessment of politics in a modern parliamentary democracy.

So this post is not about the end of the Labour Party as we know it, nor about the triumph of the popular will, nor about the rhetoric about the “hard left”, “centre” and “the right”.  I want to focus attention on the sheer poverty in public discussion of “democracy” and “leadership”.  For Corbyn’s election is not an isolated event in this context; this year we have seen the confrontation of EU officials and member states with Greece, a Scottish referendum, a Greek referendum, and the election of a new British Government.  Discussion of all of these has involved much muddled-thinking about “democracy” – principally, the illusion that there is such a simple and self-evident thing as “Democracy” that produces “popular results”.

“Democracy” is rule by the people; but who are “the people”?  For the Greeks who invented the idea, during a period around 400 BC political and judicial decisions were made by a collection of adult males who happened to attend on one day.  All debate and votes took place on the same day; women were excluded; slaves were excluded; all aliens were excluded; all children and young adults were excluded; all those free adult males who did not attend were excluded.  How those present made up their minds to vote this way or that was not really a matter of rational debate; this was always subject to the fluency of orators and their scriptwriters.  But it worked for a while; and some kind of “democratic process” has always worked better than the alternatives, because it creates a basic legitimacy and, very importantly, creates a system for changing the people who make the rules and make the decisions without resort to murder and civil war.  The importance of all this was presented in extenso four hundred years ago in Shakespeare’s History plays.  It remains an issue in the world today.  The downside is always that the process of democracy is messy, argumentative and a massive waste of everyone’s time; but those who deplore the windbaggery of the European Parliament and yearn for “strong leadership” should be careful what they wish for.

Democracy is not so much about “the popular will” (since the Greeks already demonstrated how indistinct that was) as about institutions and process.  As a student I was taught by Jean Blondel, whose Voters, Parties and Leaders (1963) had drawn attention to the way that democratic decision-making was generally dominated by a minority; that what looked like a “majority vote” was usually the outcome of a shift, for whatever reason, in the opinions of a very small number of people.  This gave birth to the idea of the “swing voter”, again, another poorly understood phenomenon since here statistical probability and random phenomena intersect.  When the opinion polls judged the Scottish Referendum “too close to call”, commentators forgot that this only ever means a range, and that 45/55 as it did turn out was in the circumstances predictable, especially since Glasgow and Dundee, in the only pro-independence results, had the lowest turnouts.  As with the Greeks above: if you do not turn up, you have no vote.

Another example is that of the current British government, which commands a majority of seats in parliament having won 36.9% of the votes actually cast, “trouncing” a Labour Party which won 30.4%.  Since one-third of those registered to vote did not do so, this would give the present Government the express support of about a quarter of all qualified voters.  In part this is the product of the electoral system, but there is no prospect of change to this since any reform would have to be implemented by a government whose majority was owed to the mechanics of the first-past-the-post system.  And there are many variants of proportional representation, and no perfect statistical system for matching voters to constituencies and parties, as US Congressional elections demonstrate.

Another aspect of the first-past-the-post system is the way that it randomly punishes and rewards small parties.  In the current UK Parliament, the SNP won 4.7% of the vote, and has 56 seats; the Liberal Democrats gained 7.9% of the vote, and have 8 seats.  UKIP, whose core vote seems always until recently to have been around 15% of the electorate, has yet to secure one seat through its own efforts (their one MP defected with his constituency from the Tory party).  it is arguable that thresholds for small parties, as with the German 5% of the total vote, are “more democratic”; but the basic arithmetic generated by the British electoral system is unlikely to change.

Which brings me back to a point no-one seems to have noticed about the Corbyn election.  If he does prove unsuitable as a leader, in whatever way, how could he be replaced by someone more centrist, given that he is the (unanticipated) product of the new rules?  He is a product of the rules, not of the Party.  Arguably, the Labour Party should elect its leaders in a process that involves the Party as a whole ranking candidates in an election, from which the Parliamentary Party then chooses the leader most likely to lead the Party with competence from among, say, the top five.  They will have a better idea of who would make a good leader than the electorate at large; but this thought is probably “undemocratic”.  What might this mean?

The Political Economy of Debt

In 1706 and 1707 Acts of Union joined the Kingdom of Scotland to the Kingdom of England. The two countries had in fact shared the same person as monarch since 1603, and there had been previous attempts to fully unite the two kingdoms. It was indebtedness that provided the final impulse: Scotland was virtually bankrupt, and its economic salvation lay in the Union. Adam Smith was safely at Balliol in Oxford when in 1745 the final Jacobite rebellion flared, and was then crushed. But the emergent Scottish Enlightenment of which he became a member had been firmly anti-Jacobite, and the Scottish intelligentsia of the later eighteenth century was broadly united in recognising that the Union had enabled the Scotland in which they lived to flourish.

German Unification has been rather similar; with the difference that the current German President and Chancellor were both born and grew up in the former GDR, a state eventually more bankrupt than Scotland had ever been. For most of the eighteenth century Britain’s monarchs were Hanoverian; its Prime Ministers were all English (not Scottish, Welsh or Irish). It would be hard to imagine an early eighteenth-century Britain ruled by a Scottish king and a Scottish Prime Minister. But that is where Germany is today.

German Unification was enormously costly for Germany – as I remarked in a previous post, winding up the economic restructuring alone cost the equivalent of half the contemporary British national debt.  While the GDR was to all intents and purposes a foreign country by the 1980s, West Germany was committed to integration, and was prepared to pay its price.  Twenty-five years later this has all but been forgotten – but in the context of the relationship of Greece to the EU and the euro, it bears remembering.

Especially in the light of the kind of argument advanced by Thomas Piketty (Die Zeit 8 July 2015) that Germany benefited from debt writeoffs during the interwar years and in 1953, suggesting that Germany is today in no position to refuse Greece similar debt writedowns.  Although Piketty shows in this interview a very sketchy understanding of the postwar political, monetary and economic order, he does at least recognise that Marshall Aid and debt relief occurred because it was in the general European interest; without it, economic recovery could not continue.  German recovery was central to the recovery of the European economy.

The international economic significance of Germany is commonly misunderstood.  Students I taught in the 1990s presumed that Japan, whose population was about half the size of Germany’s again, was also a more significant exporter.  This was not true: while Germany was a smaller economy than Japan, it exported far more – including very large quantities of machine tools, chemicals and pharmaceuticals that the consumer never sees.  The World Bank’s Development Report for 1998/99 shows that Portugal and Greece had a similar population and roughly similar GDPs; but that Portugal exported 35% of its GDP, and Greece 13%.  Germany exported 29% of a GDP nearly eighteen times larger than that of Greece, with a population less than eight times as big.

Today the common European interest turns not on the problem of restarting international flows of goods and services, since in any case the Greek economy never has been a significant contributor to this.  The common interest is linked to the problems of a flawed currency union to which Greece should not have been admitted, even if it had not massaged its national statistics.  This flawed currency union exists because of the political ramifications of German Unification.

Plans for a common European currency date back at least to the early 1950s, became in 1969 an explicit objective of the European Community, but were then stalled by the collapse of the international postwar monetary order in 1973.  The idea was revived in the wake of German Unification by the French President, François Mitterand, as a means of chaining down Germany and the leading European currency, the Deutschmark.  Margaret Thatcher, poorly advised and preoccupied by some very strange ideas about modern Germany, lent her support to Mitterand before her fall in November 1990.  It could therefore be said that the Euro originated as a French plot, aided and abetted by a truly “perfidious Albion” which gave a helpful push to a project which it then refused to join.

The institutional weaknesses of the euro were exposed in the wake of the 2008 financial crisis, and the ship, now launched, began the process of being rebuilt at sea – not that unusual in the eighteenth century, but technologies were very different then.  Having developed procedures and institutions that lent the union a degree of coherence, it has been derailed once more by the need to bail out an economy that has some modern features, but which is in essence as bankrupt as the GDR.  While Greece is smaller than the GDR was, it cannot simply be annexed by the European Commission, since its population has in any case expressed its will in a referendum that rejected the only real plans anyone had for Greece’s future.  That these are the only existing viable plans was then immediately confirmed by the Greek government, which adopted them as the basis for its “new plan” at a time when a bad situation had become even worse.

And so the dilemma faced by eurozone states is that Grexit has an economic logic but dreadful political ramifications, for the Greeks as much as anyone else.  A monetary system that had begun to emancipate itself from the problems of its flawed political origins is now being asked to pursue ends that are essentially political, contaminating decision-making in the Eurozone.  Politics and economics are always interwoven in complex ways, but they are not the same thing.

In these times much use is made of the word “democracy”, without however much regard for how modern democratic orders actually function.  The recent Greek referendum was a travesty of democratic decision-making in the very country that invented the idea of democracy.  What can be said is that Germany is the model of a modern federal parliamentary democracy.  Its constitution was largely shaped by the Western allies: in fact, largely shaped by Britain, since Germany has a President who functions as an elected constitutional monarch, whereas the French have a President who functions more like an elected monarch of the more traditional kind.  The current divisions between the French and the German governments over the proper approach to Greece as a member of the eurozone are as much an effect of the differing political dynamics of the two countries as anything else.

“Utilitarianism, the Moral Sciences, and Political Economy: Mill-Grote-Sidgwick” Istvan Hont Memorial Lecture, St Andrews 11 May 2015

You can listen here to the lecture I recently gave in St Andrews that outlines the direction my work will take over the next few years, exploring the transformation in economic thinking over the period 1870-1930.

Since I am talking to a Powerpoint presentation it might be helpful to look at this MGS Presentation while listening to the lecture, especially in respect of the flow chart that I introduce early on.  As you will gather, I drew lines and arrows on the screen while talking to this image. The crucial part here is the bifurcation around Mill: straight on to Grote-Sidgwick-Marshall, deviation to the left with Jevons-Edgeworth-Wicksteed.  My point is that this deviation is generally regarded as a dead-end; that Marshall successfully suppressed any influence that Jevons might have had, securing the development of economic thinking in Britain for the next fifty years as fundamentally Marshallian.  I argue otherwise, that this line comes back during the 1930s to cut this legacy off; in the hands of Robbins and Hicks, the Jevonian version of utilitarianism is deployed to reshape economics as a formalised enterprise, and to block off the conception of economics as a moral science.

It is this conception that I wish to explore, since I regard the neoclassical approach inaugurated in the 1930s and to which Hicks and Robbins contributed as itself a dead-end.  More interesting is the scope that the moral sciences lent economic thinking; in which Sidgwick’s Methods of Ethics (1874) reappears as a work that draws heavily on Grote’s critique of Mill, in which the political economy of Mill needs to be reconsidered, which reconsideration can then approach Sidgwick’s work not simply as “modern moral philosophy”, but as fundamental to the understanding of moral sciences long lost to view.  For entirely understandable reasons Marshall struggled to detach economics from this framework; but in so doing he created the undoing of his project, while at the same time contributing to the reorganisation of the rump of the moral sciences in Cambridge as modern philosophy.


Brecon Beacons, 1 March 2015 gridref SN 8263 2325

01032015 Brecons 3By the time we reached the trig point on Fan Brycheiniog (2606 feet) the wind from the SW was strengthening into a gale, so that walking NW along the edge leaning into the wind made it easy to imagine how a sudden gust could take a walker over. As we descended to the Lancaster crash site at SN 8356 2180 the wind was at our backs, but shortly after we reached the site at 1315 it began to rain heavily, blowing across the open hillside where in 1943 a Canadian-crewed Lancaster on a night-time training flight had simply flown into the ground at 1560 feet, below Fan Foel.

Besides the scar where the plane had hit, the only signs left of the crash were a memorial to the crew, and some shattered engine components – cylinder blocks and a twisted crankshaft. We set off again, this time SE uphill, with the rain blowing horizontally across our front. By now the wind must have been a steady 40 mph or more. The rain turned first to sleet, then hail, then snow. Apart from my hands, I was warm, dry and not that uncomfortable, apart from being battered by the constant wind and rain.

After about fifteen minutes I felt a sudden change; I felt my body drain from head to feet. Before I collapsed I was helped to the ground, a shelter put around me, two first aiders left with me after the group leader gave us a grid reference and called Mountain Rescue, returning two hours later, shortly before the Mountain Rescue Team itself. We were two hours from the nearest road or track. The Sea King came about 1615; the winchman/paramedic jumped out, was briefed on my condition, laid down beside me and told me they were taking me to Swansea.

I was helped into the Sea King, passed through the passage from the cockpit to the hold space, and laid down on the floor. It was extremely noisy, and I was very disoriented. Duncan covered me with a thermal blanket, put a headset on me, buckled himself to a safety line since we were taking off and the door was still open, and ran through my symptoms again. He told me that they had been halfway through watching the rugby, the England-Ireland match when they got the callout.

Soon we landed on the pad at Swansea Hospital, perhaps 25 miles away. Duncan handed over to the air ambulance people, I was pushed into a cubicle at about 1645 and quickly prepped by a nurse – wired up to a monitor, a catheter put in my right arm, a wristband printed and put on my left wrist, my details taken. My wife arrived at about 1815, having driven the 120 miles from home – we had called her while we were waiting on the hillside. I was discharged at 1915.

There seemed to be little identifiably wrong with me by now, besides an indication that my immune system was overactive. In the few hours since I collapsed I had been expertly assessed and looked after, then given a ride in a Sea King to the nearest A & E. In 2013 three soldiers died in the Brecons in circumstances not that dissimilar to the circumstances I had suddenly found myself in. Although there did not seem to be a lot wrong with me after all, without all the help I had received the story could have turned out very differently. Throughout, all that anyone asked of me was my name, date of birth, whether I had any allergies and was I on any medication? I filled no forms, I signed nothing.

In the photo of the Sea King you can see “RAF Rescue” painted on the front. That will soon be gone. Some years ago the Ministry of Defence decided that they could not afford to replace the Sea King, and that Search and Rescue would be contracted out. Since then a good part of the cost of new aircraft has been spent on consultancy fees; the first tender was scrapped and then they started all over again. Among all the costly and useless vanity projects dreamed up by UK governments both Labour and Conservative – Trident replacement, two aircraft carriers, HS2 – one would have thought that the relatively modest requirements of RAF Search and Rescue might be preserved. In any case, one could add to the vanity projects the way in which contracting out and privatisation (almost) mysteriously pile up future costs. The Private Finance Initiative and Network Rail were invented as cunning ways of providing public sector goods without the costs appearing to be government debt; only to be compelled a few years later by European rules to add them back on to public debt after all. Student Loans are going the same way, the sale of the loan book being presented as a way of making a quick return on what is actually a very large long-term liability that will not be helped by the sale of the loan book. This is where loose talk of “balancing the books” gets you, instead of calmly assessing what goods and services should be provided, by whom, and how.  It is after all up to the government to decide on the line between public and private provision.  But the capacity to make consistent decisions seems today very limited.

More positively, on 1 March I benefited from the skills of several well-trained and very competent people. When I collapsed Barry, the group leader, knew exactly what to do. He left me in a shelter with two first aiders, Sian and Peter; as a professional rowing coach I was trained in resuscitation and first aid, so I appreciated all the more just what they did for me. The volunteer Mountain Rescue was soon on the way to carry me out; the wind was initially thought too strong to land a helicopter, but the front moved through, the rain stopped and then the wind abated somewhat. Obviously I had interrupted the RAF’s afternoon watching the rugby. If it had not been for me they would have seen England beaten by Ireland. In any case, the Mountain Rescue would reach me on foot, and did. There is an economy in such a degree of redundancy in the deployment of all these resources: it is called efficiency. And it has nothing to do with markets and competition.

The Economy of the Word

EW jacket“There is an algebra of language far more wonderful than the algebra of mathematics” (Max Müller, “No Language without Reason – No Reason without Language”, Nature Vol. 36 No. 924 14 July 1887 p. 251)

In my new book I argue that the proper object of the “history of economic thought” is the analysis of economic language; and that, therefore, this should be conceived primarily as a philological practice.  While the “economy of the word” can be read as an enterprise addressed to verbal rather than mathematical representations of economic argument, it is also another way of describing the object of philological studies: the organisation and arrangement of language.  Placed together, these two ideas shape the book: that “economy” has a range of historical and contemporary meanings, and that exploration of these meanings requires that we pay attention to the organisation of language, and the production of meaning through such organisation.

This orientation to economics and to language is sketched out in the first and last chapters.  The remainder of the book seeks to demonstrate the results gained by adopting such a stance: examining the shifts in meaning of “economy” over two and a half millennia; the work involved in transforming the concept of “national dividend” into a number now known as GDP; Adam Smith’s treatment of international trade in his Wealth of Nations; the transformation of Smith’s writings into the object of modern scholarship via the “Adam Smith Problem”; the manner in which Karl Marx first encountered political economy and how this encounter shaped Capital Vol. I; and exactly where “Walrasian Economics” comes from.  Throughout, there is is an interest in the way in which texts are constructed – physically, as books; conceptually, as arguments placed in relation to prior sources, seeking the manner in which these sources are preserved, displaced, transformed, rearranged, possibly merely repeated.  By treating this as a complex process of linguistic recovery and repetition it is possible to show quite how we might read texts “in context”, hence the emphasis upon philological scholarship.

Philology went out of fashion in the early twentieth century, and became treated as a superseded antiquarianism.  James Turner’s argument that philological studies actually transmuted into the modern humanities (Philology, Princeton UP 2014) does have elements both of overreach and occlusion; but this has, predictably, been met with the kind of condescension that academics reserve for antiquarians and amateurs (Colin Burrow reviewing Turner in London Review of Books 6 November 2014).  It would be more fitting to recognise that much of the past fifty years of “criticism” (from Foucault, through Derrida and Baudrillard, to Moretti) has done rather less than is generally supposed to advance our understanding beyond positions already established more that one hundred years ago:

Philology seeks to ascertain the fundamental forms and most general expressions of thought which recur in the grammars of all languages, and investigates the laws of the development of language as illustrated by literatures, and thus on its objective side becomes a means of throwing light on historical science. (J. Scot Henderson, reviewing Conrad Hermann, Die Sprachwissenschaft nach ihrem Zusammenhange mit Logik, menschlicher Geistesbildung und Philosophie (1875) in Mind Vol. 1 No. 2 (1876) p. 261)

This captures the basis of philological work, language as text, displaced in the early twentieth century by a new linguistics that re-directed attention to the structure of contemporary speech rather than the historical sources of contemporary language use; a modern linguistics whose elementary building blocks were commandeered by cultural critics who then used them to read the world as “text”.  It is time to go back to the historical sources of language.

As I outline in my concluding chapter, “knowledge”, both formal and informal, has since the 1970s been reconceived as “social practice”: however, the “linguistic turn” never did pay much attention to language as such, treating it primarily as a reflection of social practice.  I argue that, in the domain of the histories of the sciences, of formalised, organised knowledge, the emphasis on mode of organisation has come to obscure what it was that was organised.  I note that between the “why” and the “what” of language, the latter lost out to the former.  But, it turns out, Hermann got here first:

Besides tracing the way in which language has come to be what it is now, as a historical or natural product, it is necessary to inquire into the actual contents or the what of Language, so far as it is the revelation or outward expression of the inner principles of the human intelligence.  It has been one of the most misleading errors of modern times to deal with thought and language as if they were mutually independent of and altogether distinct and separate from each other. (J. Scot Henderson, idem.)

Mind was the first academic journal to begin regular publication in Britain.  Philosophy is today a very restricted version of what that journal then represented.  The title would translate into German as Geist.  And in its early volumes we encounter psychology, the study of language, moral philosophy, education and epistemology all on an equal footing.  In turn these formed part of the moral sciences; and, as such, part of the history of economics.


German Unification

The last time I was in Berlin was for a conference,  scheduled for 8-10 November 1989.  I had lived and worked there from 1968 to 1972, and it was then “West Berlin”.  My parents lived off the Heerstraße, near the Corbusierhaus and the Olympic Stadium; I worked during vacations at Smuts Barracks, an old Horse Transport barracks used by the British Army for its squadron of Centurion tanks (they didn’t bother to station any Chieftains in Berlin) and as the maintenance centre for all the civilian and military buildings it occupied in the British Sector.  In the summers there would be the odd sonic boom, as the Soviets maintained their low level harassment; and of course the East Germans ran the S-Bahn throughout Berlin, a cheap but very rackety urban railway.  We lived on the fringe of the Grünewald, a vast wood in the centre of Berlin between us and the Wannsee, on which I rowed during the summer vacation.  Of course, you could only go into East Berlin with a military car and driver, because the Wall separated West from East; so you never ran across anyone who lived outside West Berlin.

My beautiful picture

Bernauerstraße, Winter 1970

In November 1989 I was attending a conference at the Wissenschaftszentrum, and staying with friends (the Meilings, with whom I had rowed on the Wannsee) down in Dahlem.  Early on the morning of 10 November I got the U Bahn to Kurfürstendamm, walking the rest of the way to the Landwehr Canal and the Wissenschaftszentrum.  There was hardly anyone around, but then a man asked me where the Kurfürstendamm was.  A strange question, since it was just behind me.  But he looked a bit out of place, dressed rather differently to the average West Berliner; he was German, but not knowing where the Kudamm was?  So I pointed the way.  Then someone asked me where he might change some money; I suggested a bank.  And then what I immediately recognised as an East Berlin radio taxi came around the corner, and I knew that something very strange indeed had happened.

During the morning a constant stream of people followed the Landwehr Canal to the Kudamm, a place they knew about but which was not on any of their maps of the city.  At lunchtime we took a break and walked across the Tiergarten to see the Wall, a very busy place with people sitting on it, film crews interviewing them; I saw Willy Brandt at the Brandenburg Gate.  I had left my Nikon in Dahlem.  By the evening joy riders in Trabants had penetrated to the suburbs, doing a tour of a city they had heard of, but never visited.

I was in Mannheim during December 1990 for the first post-Unification election, and a depressing affair it was.  Helmut Kohl was riding a wave of popularity; Unification, he said, “would not cost a single pfennig”.

Well it did.  When they wound up the Treuhand a figure roughly equivalent of the GDP of Austria was added to German public debt in one go.  Looked at another way, this sum was roughly half contemporary British public debt.  The only bright spot was that the infrastructure of the former GDR was in such a poor state that it had to be replaced wholesale, a one-off upgrade at an important point in the development of new technologies of communication and environmental safeguards.  The former FRG economy swallowed all this without blinking much, along with a major influx of “ethnic Germans” from the former Soviet Union whose numbers dwarfed those bandied about today in UK immigration debate.  This was nothing new: in 1950 some 20% of the population living in the territory of the FRG were refugees and stateless persons of one sort or another.  Every few years some pundit or other writes about the impending “slowdown” of the German locomotive.  Some locomotive.

Kohl was never a great strategic thinker.  François Mitterand on the other hand did have a plan: to maintain French influence and bind Germany into the new Europe by creating a single currency, in which Germany would have to surrender the Deutschmark, a currency that had retained and increased its value more or less continuously from 1950 to 1990.  Critically, Mitterand had the support of his friend Margaret Thatcher on this.  1992 was the year in which the Single Market Programme terminated; at Maastricht in February 1992 Kohl agreed to move directly on to the creation of the euro.

Unification laid waste to the economy of the former GDR, the “Wild East” as it became known.  In August 1991, driving cross-country from Erfurt to Marburg, you could still tell where the border had been by the state of the roads and of the villages you passed through.  But that is all long gone.  At the time it was less certain how quickly and thoroughly this would happen, and in early 1992 I drafted a paper on all of this, commissioned for a collection on the politics and economics of Unification that never materialised.  It is a period piece, but all the same, one that makes a serious attempt to assess the impact of Unification on the economy of the former GDR: Unification

Rewarding Failure: The Swedish Riksbank Prize in Economic Sciences

While it is generally true that economists “failed to foresee” the recent near-collapse of the world’s financial system, the contention involves so many assumptions and qualifications that its point easily gets lost in claim and counter-claim.  It is not so much that economists “did not see the crash coming”: instead, the real problem is that the crash was the direct outcome of policies aligned with the way in which, since the 1970s, most economists had come to think about competition and regulation.  And the way they had come to think was a direct consequence of what they had been taught as students.  Economists are therefore part of the problems that became obvious in 2008, and so not obviously part of any solution.

This is not a story that sits easily with the view of economics promoted by the annual Riksbank Prize in Economic Sciences, which was awarded in mid-October 2014 to Jean Tirole for his work on regulation and competitive processes.  Tirole has been a leading figure in the study of industrial organisation since the 1980s.  This post does not seek to advance arguments, positive or negative, about the merits of this work.  Rather, I want to draw attention to the arguments advanced for the award.  In the press release accompanying the announcement of the 2014 award, the Committee stated that, up until the 1980s, “research into regulation was relatively sparse”, and that “traditional economic theory” does not deal with markets “dominated by a few firms that all influence prices” – the case of oligopoly.

There are two problems with this account of the development of economic thinking about markets, competition and industry structure.  The first is that it is quite wrong about the history of economic analysis.  The analysis of oligopolistic competition was well-advanced by the 1930s, but was sidelined in the 1950s by an approach to competition and markets that saw no need for anything other than the concepts of perfect competition and monopoly in market analysis.  This approach has proved remarkably resilient as an ideology of market functioning, exemplified in a recent article by Peter Thiel in the Wall Street Journal (“Competition is for losers”, 12 September 2014).  Moreover, the Committee awarded the 1982 Riksbank Prize to George Stigler for his vigorous promotion of exactly this ideology, which they now treat as the “traditional” approach.

Secondly, the issues of asymmetric information arising in the regulation of oligopolies and natural monopolies, issues to which Tirole has addressed much of his work, have proved remarkably resistant to the application of contemporary economic theory.  It can be plausibly argued that all of the major British utility privatisations involved at least one major structural defect, and different in each case.  Rail privatisation failed so catastrophically that the government had to dissolve the first industry model and allow a new one to develop.  Many of the mistakes made in designing a new “competitive” structure arose from the contractual relations established between its various elements; exactly the area that Tirole’s work is supposed to have addressed.  And as translator of Tirole et al. Balancing the Banks (2010) I could extend this argument to the area of financial regulation, but that is not my purpose here.

The problem is rather the way in which economists think of competition, and the way in which this is transmitted into a public realm.  There were really no formal models of competitive processes until the later nineteenth century, when Cournot’s treatment of duopoly began to have some impact.  In 1838 Cournot had imagined a situation where two producers of bottled water shared the market; he examined the way in which two producers would come to share this market.  This was in a context where industry structure was not seriously considered to be an aspect of price formation outside of the idea that “competition” was preferable to “monopoly”.  In 1912 Pigou introduced the idea of “monopolistic competition” (Wealth and Welfare Bk. II Ch. X), but it was primarily in the United States during the 1920s that ideas about price and competition in different industry structures developed.  This was for the very good reason that, since the 1890s, there had been vigorous public debate around the “Trust Question” and the impact of Supreme Court rulings on cases related to the Sherman Act of 1890.  A significant literature on railway rates and regulation also developed at this time.  (Nobody involved in the privatisation of British Railways during the 1990s seems to have been acquainted with the vast literature on railway administration and regulation).

“Perfect competition” was first named as such in the context of an “imaginary society” and itemised in Frank Knight’s Risk, Uncertainty and Profit (1921, pp. 76ff.).  In 1927 Knight published a translation of Max Weber’s Allgemeine Wirtschaftsgeschichte, and in the mid-1930s ran a Chicago seminar on Weber’s methodology attended, among others, by Milton Friedman and Edward Shils.  It is not therefore a stretch to suggest that this itemisation of “perfect competition” was intended as a Weberian ideal type – a set of characteristics employed to organise thinking about social phenomena, not isomorphic with them, and certainly not a specification of “ideal” competitive conditions.

In the later 1920s Harold Hotelling developed ideas of competitive conditions that were suggestive of the kind of suboptimal conditions that “free competition” generates, such as a reduced range of choice and convergence on a (possibly rather average) standard product.  At the same time, Edward Chamberlin completed a Harvard PhD thesis that began from Cournot’s duopoly model, eventually published in 1933 as The Theory of Monopolistic Competition.  In fact, this was not as the title suggests an elaboration of Pigou, but an account of the persistence of oligopolistic conditions in modern markets.  Chamberlin reduced perfect competition to one essential characteristic: that the perfectly-competitive firm was a price-taker.  A monopoly was by contrast a price-maker.  He then placed these two market characteristics at the poles of a continuum, and proposed that most market behaviour could be characterised as an attempt to secure monopoly conditions.  Since it is very hard to envisage a perfect monopoly – there are generally near-substitutes at different price ranges, and various factors conspire to undermine monopoly powers – efforts by firms to secure control of markets were constantly challenged and undermined.

Nonetheless, the important message here was that “perfect competition” had very limited use as a conceptualisation of market conditions, for this was a condition firms actively sought to evade or escape.  In so doing, market behaviour became oligopolistic, firms paying more attention to the behaviour of their competitors than to that of their customers.  From this brief sketch it should be clear that Chamberlin opened up a conception of a market as a set of negotiations between agents seeking to create or retain autonomy of decision.  The game theoretic implications of this are today obvious, underlined the following year by the publication of Heinrich von Stackelberg’s Marktform und Gleichgewicht (1934), which not only argued that competitive markets lacked a mechanism imposing a unique equilibrium of price or quantity, but that the more “perfect” the market, the more unstable it became.

That is a conclusion that resonates today; for deregulation and privatisation have been aimed at the creation of “ever more perfect” markets, presuming that in so doing the engine of economic growth would be fuelled.  But as we have seen, Stackelberg was on to something: the freer the market, the greater the instability.  The era of sustained stable postwar growth had many sources, but liberal economic policy comes a very long way down the list.  The millennial fantasy that well-informed economic policy could put an end to the “cycle of boom and bust” that had developed in the 1970s only lasted as long as the current boom that was supposed to be the new normal.  So what happened to the kind of thinking about markets and competition developing in the 1930s?

My attempt to answer the question can be accessed here: EUI-93.  The development of neoclassical economics in the later 1930s, and its consolidation in the later 1940s and early 1950s, meant that the attention of economists shifted from real markets and industries to the properties of competitive models.  Oligopolistic market models are relatively intractable in this framework, since price formation depends to a great extent on a range of factors such as the nature of the product or its raw materials, industry structure, geography, and income distribution, among others.  In this situation, one appealing property of perfect competition is that it requires no knowledge of any of this.  If the firm is a price taker, decisions made by the firm and industry structure are irrelevant.  Strictly speaking, there can be no neoclassical theory of the firm, since the decisions of the firm merely reflect market conditions.  Correspondingly, in a neoclassical world deviations from perfect competition are represented by “imperfect competition”, a category representing only the presence of features that prevent the realisation of perfect competition.

None of this would matter that much if it were made clear to students that perfect competition is a way of beginning to think about competition, prices, and markets that will subsequently be left a long way behind; that it is a logical step in their training, not an ideal condition.  Further, that markets are characterised by agencies actively seeking to control them; so attempting to analyse markets in terms of perfect competition makes no sense at all.  To understand market processes, one needs to command a great deal more than an understanding of market models.  Alfred Marshall conceived the training of economists as a process in which students assembled a mental “toolbox” from which they could take instruments for the analysis of economic problems and the formation of policy.  He implied that judgement was needed, both in the choice of tools and in their application; that, therefore, the training of economists did not involve the simple inculcation of technique, but the cultivation of powers of judgement.  “Prediction” is not really so important here; rather, an informed view on likely outcomes in given situations.  And it would help if a healthy regard for the unpredictability and instability of markets ranked rather higher in such thinking.


Mike Hailwood and the Sports Motorcycles Ducati

In 1978, at the age of 38, Mike Hailwood made his comeback to motorcycle racing.  He had started racing in 1957, was world champion several times, riding for Honda through the 1960s.  He later switched to cars, eventually retiring to New Zealand in the 1970s.  He was always a very popular figure; you can still see his trademark helmet colours, a wide gold stripe edged with red on a white helmet, on bikers today.

Hailwood made his comeback on an 860cc. Ducati prepared by Steve Wynne of Sports Motorcycles.  This was not the obvious bike with which to go up against Hondas and Kawasakis, but perhaps Hailwood still had bad memories of the Honda 500 he had raced.  This was more camel than bike, and at one demonstration to Honda executives in Japan Hailwood is said to have stopped in front of them, unbolted one of the rear dampers, and demonstratively hurled it into a lake.  Well into the 1980s, Japanese bikes were generally thought to be indifferent when it came to steering and stopping, compared with British bikes, and especially when compared with Italian bikes.

Hailwood raced the Ducati in the Isle of Man and won Formula 1.  At the international follow-up race at Mallory Park he showed how he had done this on a very different circuit to the Island’s public roads.  He was never a showy rider, but a thoughtful one.  You can see this in this video, since Mallory is a small circuit and it is easy to follow almost every moment of the race.  His style is old school: at one with the bike, not moving around it, biding his time.  As the commentator says, one blink of an eye and you lose a fifth of a second; coming from the 37 miles of road in the Island, Hailwood masters Mallory’s short circuit too.

As you can see from the video, Mallory is a very simple track.  The start is followed by a 190 degree constant-radius bend whose end you cannot see until it is well past the time to be exiting.  There is a short straight, then a right through the Esses and up to a hairpin.  Likewise when you enter this you cannot see the exit.  There is a fast downhill left-hand sweep, the Devil’s Elbow, and you are back to the starting grid.  That is all.  I have ridden on the Oulton Park track and Mallory, and I really enjoyed Mallory.  It is simple, but its simplicity means that you have to get everything exactly right, every time.  This is what you can see Hailwood doing in this video.

Ducati first developed their V-twin racer from a 750cc. road bike.  Paul Smart track-tested the machine at Modena in 1972, having just got off a flight from Atlanta.  He had been racing Kawasakis in the USA, was short of money, and his wife fixed up a deal for him to ride for Ducati; he went because they sent him a plane ticket and promised to pay him £500.  He was unused to the broad powerband of the Ducati and its rather slow steering, since the big V twin motor dictated a fairly long wheelbase.  But a 90 degree V twin in line is the ideal layout for a motorcycle: the width of a single, the power of a twin, without the vibration of a single or a parallel twin.  Jet-lagged at Modena, at the end of the session Smart noticed that the mechanics in the pit were very lively.  It turned out that on his first outing on an unfamiliar bike he had broken Agostini’s lap record.  He went on to win the Imola 200 on the bike.

This was the original version of the bike Steve Wynne prepared for Hailwood.  He came back from retirement, won in the Island and at Mallory, then settled near Birmingham and started up the dealership where I later bought my own Ducati.  He was killed with his daughter in 1981 in a road traffic accident.  A truck U-turned on a dual carriageway and ran into Hailwood’s Rover while he was on the way to the local fish and chip shop.

The race lasts a little under 18 minutes.  To fully appreciate the reason for Hailwood’s success you will have to be patient, as he was.  He does not take the lead until about two-thirds through the race.  Then he just rides away from them all.

Translating Kafka

A sense of the flow, rhythm and simplicity that we associate with the writing of Franz Kafka is evident in the opening lines of The Castle:

Es war spät abend als K. ankam. Das Dorf lag in tiefem Schnee. Vom Schloßberg war nichts zu sehn. Nebel und Finsternis umgaben ihn, auch nicht der schwächste Lichtschein deutete das große Schloß an. Lange stand K. auf der Holzbrücke die von der Landstraße zum Dorf führt und blickte in die scheinbare Leere empor.

That is the entire first paragraph, describing how K. arrived late at a castle wrapped in fog and gloom, in contrast to the deep (white) snow under which the village lay; implying also here perhaps a deadening of sound. And in the next sentence we read that not even a glimmer of light indicated where the castle might stand. K. stood for a long time on the wooden bridge, looking up into the apparent void.

So few words, so much meaning. And this is not just a matter of lexical simplicity; there is the sibilance in the third sentence, the lack of two grammatical commas in the fourth sentence. How one translates Kafka presents the translator with many interesting problems.

I was reminded of this by a review in the TLS by Carolin Duttlinger of Michelle Woods’ Kafka Translated and Susan Bernofsky’s new translation of Die Verwandlung (Metamorphosis) (TLS 22/29 August 2014, p. 32). Duttlinger’s endorsement of Bernofsky’s translation cites the opening lines of the story, in the decision to translate “Ungeziefer” as “insect”, rather than “vermin”, which as the “literal translation of Ungeziefer, is too rodentine in association.” This is a good point, and demonstrates how a translator can steer a reader away from inappropriate association; there is no license taken here, since after all in the last sentence of the first paragraph we read of Gregor Samsa’s many horribly thin legs, dancing before his eyes.

However, the second example of Bernofksy’s translation that Duttlinger introduces highlights a questionable translation, and adds to it a questionable commentary. Bernofsky, Duttlinger writes, “instils Kafka’s text with new resonances.” This should by rights be an amber warning, but it seems to be intended as a recommendation. Gregor Samsa has returned to his room, his sister has slammed the door shut, shouted “At last!” to their parents and turned the key in the lock. He finds that he can no longer move, but he feels relatively comfortable:

Er hatte zwar Schmerzen im ganzen Leib, aber ihm war, als würden sie allmählich schwächer und schwächer, als würden sie schließlich ganz vergehen.

Bernofksy renders this as:

Admittedly his entire body was racked with pain, but it seemed to him as if it was gradually becoming weaker and weaker and in the end would fade away altogether.

Duttlinger notes that Bernofsky has shifted “Schmerzen” into the singular “pain”, hence widening the scope of the pronoun “it” to include both the pain and the entire body in what comes next – growing weaker and weaker. This is an odd reading: anyone would translate the German plural with an English singular, since that is just a property of the way English and German people talk about “pains”. In German I have “headaches”, in English “a headache”, or alternatively in German the equivalent of “my head hurts me”. This often happens in translation, that the source language uses a plural for something that in the target language is referred to in the singular – that is why French people speaking English might talk about “some informations”. Duttlinger’s comment about this translation of Schmerzen is misconceived in this respect, but she also apparently fails to note that there is no license at all in Kafka’s text for the move that follows. Kafka is quite unambiguous – it is the pain that is growing weaker and weaker, the plural pronoun “sie” referring to the pains, not the body, which is singular and a masculine noun. And so Bernofsky has introduced an ambiguity into Kafka where there was none.

Furthermore, the idea that his body was “racked with pain” is also Bernofksy’s invention; Kafka writes just that Samsa had pain in his whole body. And it would be better translated as “He did have pain in his whole body, but…”, qualifying the last word in the previous sentence, “behaglich” – comfortable, cosy. The interpolation of “zwar” downgrades the qualification slightly from something rather clumsy, like “Obwohl er Schmerzen im ganzen Leib hatte”, which would be a retranslation into German of Bernofsky’s own rendering; and shifting it clearly into a subordinate clause, which checks the flow of the text that Kafka wrote.

Quite how a translation might be “accurate” is therefore a complex question.  As I wrote in my “Note on the Text and Translation” in Fichte’s Addresses to the German Nation (Hackett, 2013 p. xxxiv), commenting on a very different writer of German, an “authentic” translation of Fichte’s florid prose might well end up making a translation as unintelligible to a modern English reader as Fichte is today for an average German reader. He was not writing for philosophers, but for Germans. I justified my approach by referring to the communicative context in which Fichte was working, reading out addresses that he had previously written, and whose prime audience was not those who attended the presentations in Berlin, but those who would subsequently read the text throughout Germany. Quite how one conveys a source text into a target language has to take into account the motivations of the target readers: why would they wish to read this text?

When it comes to works of political or economic theory, the prime flaw is often not so much a matter of style, but the simple imposition of a modern conceptual framework.  Older writers are presumed to be addressing their own problems in a manner similar to the way in which we would think about them today – recent translations of Serra and of Cantillon are clear examples of this problem. The problem of translating past texts such as these is however the precise opposite: trying to establish how problems were once conceived, and so seeking a vocabulary and style adequate to this.

As we can see from Kafka, that is only the beginning of issues about accuracy.  We read Kafka because of the way he writes, not for what he writes about.  But in thinking about the way that Kafka writes, and how that might be translated, it is easier to see the many levels of decisions that have been taken in a “good translation”.  Indeed, an over-enthusiastic translator, seeking to make a text “relevant”, or “readable”, can entirely destroy its narrative purpose.  Many years ago, I read a translator’s note to Gogol’s short story “The Overcoat”, in which the translator had eliminated many deviations, repetitions and hesitations, seeking to clean up Gogol.  But as Boris Eichenbaum made clear in his essay, “How Gogol’s Overcoat is Made”, the deviations, repetitions and hesitations were the point of the story, replicating the oral delivery of an unreliable narrator.