Wynne Godley

This book brings together the ‘most important academic papers and journalism’ of Professor Tim Congdon, described in the blurb as ‘one of the City’s most well-known commentators’. Congdon’s provocative thesis is that ‘monetarism’, as adopted by British governments between 1976 and 1985, was a decisive success, but that the gains were lost when Nigel Lawson let things rip, causing a boom that had to go bust. The book falls into two parts. The first consists of articles which appeared in newspapers and journals between 1975 and 1989, focus and context being provided by a general introduction and prefaces to the individual essays. The second part, consisting mostly of conference papers, lectures and essays published in other books, is intended to provide the theoretical basis for Congdon’s views on policy. Its most important chapter, ‘Some Initial Theorising’, attempts, in Congdon’s words, ‘to set out, in loosely theoretical terms, how I think the economy works’. Why does Congdon present his views on economic policy in the form of disjointed newspaper articles a few hundred words long, written up to eighteen years ago, ‘many of them … at great speed, often to a newspaper deadline, in only two or three hours’? The most likely reason is that he is trying to convince us that his views are correct because his economic forecasts were borne out by events, which puts a heavy obligation on him to be sure, first, that nobody holding opposing views made equally good forecasts and, secondly, that his forecasts were right for the right reasons.

I have heard people say that the Budget was a bore. This may be true for those who had to listen to it or for those who are interested in minutiae. But as one interested primarily in economic strategy, I cannot remember a more intriguing situation. How can it possibly be right to propose a huge tax increase for next year, and an even larger one for the year after that, when by general consent unemployment is going to be in the region of three million and rising? I am going to argue that this Budget only makes sense on very special assumptions about the performance of the economy; and that if, a year from now, the situation is broadly unchanged – if, that is, output has not changed much, with unemployment still around three million and the balance of payments not in serious deficit – it will be every bit as wrong to raise taxes then as it would now.

I am in favour of Britain having much closer ties with other European countries, provided that appropriate institutions are created and the whole thing is brought under effective political control. But I have never been able to understand what it is that those who support the Maastricht Treaty think they are going to get out of it. Maastricht supporters are keen on ‘not being left out’. But left out of what exactly? How can people be so sure that a united Europe is something they want to be part of – particularly with the expensive, destructive and corrupt monstrosity called the Common Agricultural Policy sitting there as the single most important achievement of the EC so far? Matters were not helped by the frantic procedural manoeuvring in Parliament over ratification, and by the rather uncritical support which Maastricht has received from the opposition parties. The substantial questions have not yet been debated or criticised with any penetration, although the British people are deeply suspicious and would almost certainly have voted against ratification if there had been a referendum. Platitudes are not good enough. John Major thinks it means something to say that he wants us to be ‘at the heart of Europe’ but he must do far better than that to convince me. I suspect that his purpose is destructive, that all he really wants is to be inside the tent, pissing all over the shop.’

The United States is widely believed to have acquired a New Economy, having achieved the longest economic expansion in its history and the lowest unemployment rate for thirty years. Untold wealth has been created, productivity growth has accelerated and inflation has been dormant.

This is the story of a disastrous encounter with psychoanalysis which severely blemished my middle years.

I was about thirty years old when I found myself to be in a state of terrible distress. It was the paralysis of my will, rather than the pain itself, which enabled me to infer, using my head, that I needed help different in kind from the support of friends. A knowledgeable acquaintance...