| Editorial |
| This issue of our Journal is something of an allsorts, albeit economic rather than liquorice, and may be dipped into as takes the reader’s fancy. |
| First we have a Comment on the state of consumer and business confidence by John Gilbert, and he is of the ‘green shoots’ school. Based on his analysis of survey evidence he sees both as having improved in the spring but notes that the most recent readings have stalled; green shoots are tender plants and the economic weather remains unsettled. |
| Yet it is hard to go shopping these days without stumbling over another kind of green shoot – of the environmental and ethical variety. The essay by Philip Booth and Laura Whetstone, which was short-listed for last year’s Rybzcynski Prize, takes a cool look at the fair trade movement, and in particular as it is working in the coffee market. They, sadly, raise only half a cheer for it. They recognise that the fair trade model offers advantages to suppliers, but are concerned that it may exclude many of the poorest producers, who cannot afford to join, that it promotes a form of organisation, the co-operative, that is inflexible and inefficient and that, by supporting particular products, it may limit the deployment of resources more efficiently across the whole economy. They conclude that the movement should devote more of its resources to providing the support that it does well and less to promoting a political ideology about international trade. |
| The macroeconomy is also the concern of Norman Record, along with macroeconomics. His article is something of a battle-cry of a resurgent Keynesianism, offering a programme to reform both policy and the theoretical basis of policy. He argues that the present financial and economic crisis vindicates the Keynesian argument that fiscal policy is an essential tool, alongside monetary policy, in managing fluctuations in the economy, and marks the end of what he calls the ‘Free Market’ hypothesis, which holds that the market is always right and that, apart from maintaining financial stability, the state has no role in managing the economy. Indeed Record goes further. He also argues that the state should promote a re-structuring of the economy, to secure a larger manufacturing sector to counter the ‘imbalance of payments’ that has characterised the British economy recently, and which itself has been a source of financial instability. All well and good, but your Editor remembers the 1960s and 1970s, when similar ideas informed policy. The balance of payments was no less of a worry then, fiscal expansion was much used and the public finances wound up at the mercy of the IMF, inflation grew steadily worse, and British Leyland was the acme of British industry. Maybe it doesn’t have to be like that; maybe other problems, like the oil-price shocks, were to blame for the poor outcomes, but it would seem wise to think very carefully before reviving those policies. |
| The next allsort is plain liquorice, and of an altogether more domestic kind: the results of the Society’s salary survey. There was disappointment that fewer than ever replies were received, tinged with concern that perhaps more members found themselves ‘between jobs’ with no salary to report. For those who did reply the survey showed another year of modest prosperity, despite the turmoil in the financial services industry where so many of our members are employed. |
| Speakers’ Corner reports the Masterclass in behavioural finance con-ducted by Professor Richard Taffler, when we rationalised the irrational, as well as John Philpott’s examination of the part played by migrant workers in the UK economy which he found to be a modest blessing, and Stephen King’s analysis of how emerging market economies were indeed increasingly opening roads to prosperity less dependent on the developed world. |
| And our last allsort is our Book Review section, and it is one of those with layers of every hue, picking up some of the flavours in our others. Thus books are noticed by Akerlof and Schiller on psychology and economy, by Yasheng Huang on capitalism with Chinese characteristics, and by Timmerman on the sweatshops of the clothing industry – and why they are not entirely to be condemned. Martin Wolf’s work on fixing global finance focuses on imbalances as a source of instability, and we notice John Calverley’s new book on bubbles, whose reviewer, Bill Allen, remarks that “one of the most attractive qualities of capitalism …. is that it has the capacity to overturn the conventional wisdom of established experts.” That’s us told, then. |
| Jim Hirst Editor |
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