Barry Supple

It is a nice question whether Britain’s economic institutions or the attempts of economists to explain why they do not tick are in a greater mess. Every now and then, albeit with decreasing regularity, a government minister will tell us, as the Chief Secretary of the Treasury does in the collection of essays on The 1982 Budget, that there is a new dawn over the hill, that, before our very eyes, ‘things are improving’ – only to be contradicted by some even more authoritative voice, although it hardly needs the CBI to remind us of the frailty of political positive thinking. Yet the present administration has at least made Britain’s economic sickness superficially more accessible to reason by specifying both the disease and its putative cure in radically simple terms.

In April 1935, with the staple industries stagnating and over two million people out of work, Harold Macmillan rose in the Commons to press for a radical policy of industrial reconstruction and public investment. What, he asked, were the arguments against public capital expenditure? ‘What is the case of the Treasury, the people who really govern England from the Box that is outside?’ His answer was that the Treasury was immobilised by fear of ‘artificial’ expansion, a consequent collapse and an increased burden of debt. As an answer it hardly did justice to the agile complexity of the Treasury’s slightly precarious commitment to economic and fiscal orthodoxy. But it adequately reflected what has since become the thinking man’s prejudice on the subject: that an increase in public expenditure (without a matching increase in taxes) could only have ameliorated Britain’s economic misery between the wars; and that the principal obstacles to a Keynesian (or Lloyd-Georgian or Mosleyite) recovery programme were the prejudice and ignorance of the Treasury knights, who, again in Macmillan’s words, ‘see the error which may be committed by doing something, and therefore…say “let us commit the crowning error of not doing anything at all.” ’