A clutch of essays in which economic experts assess Britain's post-war performance makes engaging reading, reports Kate Barker.
The Challenge of Change; Edited by Jim Hirst; Profile; pounds 12.99; MT price pounds 9.99
Published to mark the 50th anniversary of the Society of Business Economists, this book takes a lively and accessible look at a wide variety of relevant themes over the perspective of the past half-century. Having worked as a business economist for 15 of those 50 years, I found The Challenge of Change an interesting tour around the preoccupations of the profession. Indeed, I have direct experience of many of the issues; like Richard Freeman, I found businesspeople in the late 1980s reluctant to recognise that the business cycle still existed. And like John Walker, I have often explained why, despite its limitations, economic forecasting is still valuable to business.
The essays, written by impressively expert authors, look at three main themes: the changing nature of the UK economy, the changing role of government in relation to business, and the contribution of economists to business. It concludes with a history of the Society - which, as those who think of economics as the dismal science may be surprised to learn, held most of its early meetings in a pub. Not all change is for the better!
Among the range of topics covered, three struck me particularly. Neil Blake gives a clear account of the UK's growth performance, bringing out the importance of demographics, often overlooked. This makes the familiar point that the UK's efforts to improve productivity have not been very successful; and the less familiar point that, nevertheless, our performance has recently improved relative to other major economies.
There is an incisive account of monetary policy from Charles Goodhart, with a pithy history of the post-war ebb and flow of ideas about how policy should be conducted. And John Kay has a thought-provoking piece on the vital role of economic rent in business, setting out views with wide application for regulators as well as business economists.
A strength is that at the end of several essays the authors consider the future from the relevant perspective, though (wisely) they are not ambitious enough to look forward 50 years.
Since most pieces also start by looking back to the 1950s, this provides an opportunity to reflect on how thinking about the economy has progressed in some areas, but in others seems to have come full circle. So Sam Brittan expresses concern about the possible return of old errors, mainly based around the adoption of an over-regulated business environment, especially with regard to employment. The theme of future growth in regulation, reversing the deregulatory trend of the 1980s and '90s, is also raised by Colin Robinson.
On the other hand, UK monetary policy - which I am rather interested in - has been an area of considerable progress. But both Roger Bootle and Goodhart suggest that the present state of play may not prove to be the end of the journey. Bootle argues for the possibility that a radical change of policy framework may be needed to avoid fluctuations in asset prices (though this is not a conclusion I would share). Goodhart, while sanguine about the continuation of the role of the central bank in setting interest rates, points to the likelihood that financial markets, assets and institutions will change rapidly as new means are found to unbundle transactions and diversify risks, and as credit becomes ever more widely available.
There might have been more about the changing nature of business itself, rather than a focus mainly on the environment in which firms operate, and one or two of the essays are weaker in content. But overall, this is a most engaging read that conveys an excellent picture of the major changes in the UK's economic structure and policies, and the consequent environment for business, over the past 50 years. And many readers will share my interest in the stimulating glimpses of the future.