Way forward


The New Economics: a bigger picture David Boyle and Andrew Simms


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hile unemployment has not – yet – risen as much as was feared, the credit crunch of 2008-09 has led to the worst global economic slowdown since the 1930s. Fragile banking systems have appeared to come close to collapse, and the crisis has resulted in a surge in government borrowing, leading to savage cutbacks in public spending.


Enquiries as to what has caused this slump will doubtless go on for many years, but the unquestioning application of “free-market economics” must take a large share of the blame. Indeed, even Alan Greenspan, former head of the US central bank and high priest of unrestrained “market forces”, now accepts that real-world economies do not operate as the textbooks say they do. The flaws of conventional economics are set out well in The New Economics: a bigger picture.


Economics may have begun as a branch of


Unemployed people wait in a queue for entry to a job fair. Photo: CNS


originally by Ruskin via Cardinal Manning … At its heart was the redistribution of land and property so that everyone had some – on the grounds that small enterprises, smallholdings and small units were the only basis for dignity, independence and liberty.


moral philosophy, but it ignores the moral aspects of humanity, and other human aspects, as inconvenient for its theories. The result is a narrow economic system, which fails to reflect the real world, and is hurtling towards human and environmental limits.


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24 | THE TABLET | 6 November 2010


The book describes how standard economics is even coming under pressure from its own students for the increasing way it seems detached from the way real economies, and real people, actually work. It also criticises policymakers’ unquestioning reliance upon these flawed models, and the way economic analysis has become the Government’s main analytical tool in areas like the health service, where it was previously unknown. The authors should be praised for the clarity of their writing, and you certainly don’t need fluency in higher mathematics to understand their book, unlike most economics texts. However, the emphasis of The New Economics is not criticism of standard economic theory but, rather, to chronicle the rise of “new economics” over the last 30 years or so which, rather like Adam Smith’s pioneering studies of “political economy”, seeks simply to understand what factors generate social wealth in its broadest sense.


What probably struck me most about this book is the way that its authors repeatedly talk about a “moral” or even a “spiritual” crisis. At first sight, such talk of morality seems surprising; while it might be expected from conservative politicians, it should be noted that the new economics comes from a radical “left-wing” viewpoint where these terms are more rarely used. However, what is even more surprising, given this starting point, is the book’s statement that the origins of the new economics derive from Catholic Social Teaching when publicised by Chesterton and Belloc as “Distributism”.


The one twentieth-century movement that embedded elements of what is now the new economics was Distributism, inspired by Hilaire Belloc’s 1912 book The Servile State, an influential diatribe against big business and Fabian collectivist policies. Distributism knitted together the old Catholic social doctrine of Pope Leo XIII that was so close to Belloc’s heart, inspired


Indeed, The New Economics shows how these ideas of Chesterton and Belloc are the roots and foundations of the new economics. The book’s warnings about the negative impact of large supermarket chains would have delighted Chesterton, who repeatedly warned against big shops and “greedy grocers”. Its policy recommendations of stringent anti-trust legislation to break up large corporations also come straight out of the Distributist campaign manual from the 1920s. The New Economics advocates breaking up the large banks whose speculations got us into this mess, ideas that are increasingly being taken up by regulators around the world. If there is one writer whose ideas inspired the recent boom in new economics, it was probably Fritz Schumacher and his famous 1973 book, Small is Beautiful. The authors note his preference for local-based economics, just like the Distributists, and also where he got the idea from.


An overarching principle for the movement of goods and services was described by Schumacher as “subsidiarity”. It is an idea he took from the Catholic Church that means things should be done at the lowest, or most local, practicable level with the aim of maximising social, economic and environmental benefits.


It is probably fair to state that both the public and the authorities around the world are looking for new ideas on how the economy should be run following the evident failure of free-market economics in recent years. The New Economics certainly provides plenty to think about in this context. Russell Sparkes


OUR REVIEWERS


Robert Carver has travelled extensively throughout the former Ottoman Empire.


Russell Sparkes is the author of Socially Responsible Investment. Nicola Smyth is an author and journalist.


Nick Garrard is a freelance writer living in Manchester.


Jonathan Wright is editing a volume on the suppression of the Jesuits. Sarah Lawson is a poet and translator.


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