As Adam Smith knew, the experts think they know best, but what do the people say?

The high-powered experts who make up the LSE’s growth commission have proposed a blueprint for reviving Britain. To achieve its goals, though, we’ll have to get rid of those blasted MPs and councillors. What say we?

What makes economies grow? You could say it is the oldest question in economics: the complete title of Adam Smith’s foundational work is An Inquiry into the Nature and Causes of the Wealth of Nations.

It took Smith nearly a thousand pages to set out his formula. This past week, an independent “growth commission” convened by the London School of Economics provided a modern answer – albeit for the UK only – in a mere 36 pages.

Not that the LSE’s commission’s report ever risked being superficial. Its authors include a Nobel Prizewinner, a former chief economist of the World Bank and the first woman to become a deputy governor of the Bank of England. And its attempt to prescribe “the institutions and policies that should underpin growth for the next 50 years” is timely. For the past four years, the policy debate in the UK has been dominated by the question of how to escape from the slump induced by the financial crisis, yet few would deny that the UK needs a long-term economic strategy as well as short-term tactics.

So what is the commission’s answer to the question of what Britain needs to do to reinvigorate its economy in the 21st century? It identifies three critical determinants of prosperity in which the UK is deficient and which policy should therefore cultivate: skills, infrastructure and innovation.

On one level this sounds like a statement of the bleeding obvious. Can you win a Nobel Prize for working out that it would be a good thing if the workforce was better educated, railways and roads got an upgrade, and if private companies spent more on research and development? Where do I apply?

But we should cut the report’s authors a bit of slack. Yes, it is unfortunate that economists’ theories of growth are formulated at such an Olympian level of abstraction that by themselves they generate only the most platitudinous of conclusions. For this very reason, however, the test of a body such as the LSE commission is whether it is brave enough to advocate more specific policies – and on this score, it does not disappoint. The constraints it has identified may not come as much of a surprise; but the solutions it proposes are more controversial.

In secondary education, the authors endorse the academy model of more autonomy and greater centralisation of funding and accountability for schools. They advocate the creation of a National Infrastructure Bank. On innovation, they back proposals for an allowance for corporate equity that would remove the existing tax incentives to finance businesses with debt, and thereby encourage risky start-ups for which equity funding is the only realistic option. These are serious policy proposals, backed by detailed argument; they deserve a serious hearing from the government.

Unfortunately, the commission makes a further, overarching recommendation – one that is not just controversial, but positively dangerous. How, it asks, did Britain get into this mess in the first place? Why did it lose its historical lead in skills, infrastructure and innovation? The ultimate answer, it says, is simple: the root of our problems is politics.

The trouble with Britain is that it allows elected politicians to make policy. Worse still, we allow local politicians a say in things such as planning and schools. And, to cap it all, we have an unfortunate habit of changing our minds and electing different parties every few years. The result is a chronically unstable environment for long-term investment. Public priorities never stay the same for long enough to get anything done, and the private sector is at the mercy of Nimbys and the political cycle.

So, if we want to make Britain grow again, we need not only to make the right policy choices, but to take those choices out of the hands of politicians. We need a “new insti­tutional architecture” that can “put politics in the right place”. Only then will we bid farewell to interminable “flip-flopping”, the inevitable harvest of “political bickering”. Economic policy will at last be in the capable hands of independent experts: an infrastructure planning commission to decide, say, where nuclear power stations should be built, and a national growth council to dispense an industrial strategy.

It is a seductive view of what constitutes economic progress – one that has bewitched well-meaning technocrats down the ages, from enlightened imperialists such as John Stuart Mill, who argued for a “government of leading-strings” for Britain’s colonial possessions, to the socialist planners charged with the instant industrialisation of the eastern bloc’s developmental nation states. If only the benighted people and their annoying representatives would get out of the way, the impartial experts could get on with modernising the country.

The reality is that policies made by unaccountable experts are unsustainable – because they do not reflect what the people want. Only a democratic process, however flawed, can do that.

The LSE commission’s report was published in the same week as it was announced that it will take 20 years to complete the High Speed 2 rail link, in large part because of the need to follow time-consuming planning procedures. Such is the price of a democratic economy. No doubt unelected bureaucrats handing down compulsory purchase orders could do the job in half the time. But policy would no longer be reflecting people’s interests; it would be reflecting what the experts say their interests are.

It is a critical distinction – and, as it happens, one of which Adam Smith’s Wealth of Nations remains the original exposition.

Felix Martin is a macroeconomist and bond investor. His book, “Money: the Unauthorised Biography”, will be published by the Bodley Head in June

Adam Smith. Image: Getty Images

Felix Martin is a macroeconomist, bond trader and the author of Money: the Unauthorised Biography

This article first appeared in the 11 February 2013 issue of the New Statesman, Assange Alone

Photo: Getty
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I’m in the kitchen with my children, finally learning how to sharpen a knife

For some reason, they have often given me sharp things as presents.

The children have been with me quite a bit lately: they are all going to be, by the time you read this, on their travels, and the Hovel is a useful staging-post for the start of their journeys. Staying here means an extra hour in bed when you have to take a coach from Victoria, or a plane from Stansted or, worse, Luton.

Their company never fails to delight, which is not how I imagined things would turn out. I was a surly clock-watcher at my own parents’ home, counting the days until I could cast off the oppressive yoke of having my meals cooked for me and my laundry done. That was how it was back then. Nowadays, parents try to close the gap between themselves and their children or, even if they don’t try, the gap seems to be closing anyway.

I suppose not being in situ for ten years, on the ground doing the daily heavy lifting, helps. I am not the monstrous, Freudian oppressor-figure: I am the messy layabout with a certain weird kind of authority but not one who assumes the moral high ground. But here they are, or were, and as they get older they get increasingly interesting, more pleasing to be with. And the interesting thing is that they now have skills that I can learn. The traffic of instruction is not one-way.

My daughter worked, for a while, in the kitchen of a restaurant in Berlin. She already knew how to cook, and how to get along with people, but there she also learned how to sharpen knives. I thought I could, but I can’t, not at all.

When you see a father – invariably a father – zinging a honing steel along the blade of a knife prior to carving the Sunday roast, he is not doing anything useful apart from establishing a sense of theatre, which is of debatable utility anyway. He might think he’s a cross between Zorro and Anthony Bourdain, the rather cool New York chef – there’s always a certain flourish in the wrist action – but the trained chef will raise an eyebrow.

For some reason my children have often given me sharp things as presents. For my first Christmas in the Hovel they gave me a Swiss Army Knife, which I still use, especially the corkscrew; one birthday they gave me a pizza-cutter in the shape of the original Starship Enterprise – which I still use. And last birthday, the boys clubbed together to get me a proper kitchen knife.

I had hitherto resisted the notion of getting one, despite the fact that I like cooking and also know how important a good knife is. Here is Bourdain himself, writing in his Les Halles Cookbook (the only one I ever use these days): “Your knife, more than any other piece of equipment in the kitchen, is an extension of the self, an expression of your skills, ability, experience, dreams and desires.”

I suppose this was why I put up with rubbish knives for so long: my dreams and desires were second-rate. I was cooking on an electric hob, mostly for myself; besides, I wasn’t going to be here forever. What the hell was I going to do with a decent knife? Also, I have a healthy respect for sharpness, and whenever I cut meat up with a good blade, I imagine that blade cutting into my own weak flesh, and see vividly, the wound it makes.

But a good knife needs to be looked after, and my daughter, who was given a Japanese chef’s knife as a parting gift from her fellow kitchen workers, learned how to use a water stone, and last weekend taught me.

It is fascinating, and soothing, sharpening a knife. You have to gauge the correct angle at which to place the blade against the stone. You have to feel, with the pads of your fingers, the sharpness of the knife itself, and the burr that results on one side of it after a few dozen passes over the stone. One is aware that sharpening is about shaving steel, almost by molecules at a time, a process that has no theoretical end, except when, one day, the knife itself is sharpened to invisibility.

I am reminded of the fabled measure of eternity: the bird who sharpens his beak against the rock of a mile-high mountain once every hundred years. When the mountain is worn down, a mere day of eternity will have passed.

Meanwhile, the daughter passes the knife across the stone, dips her fingers in a bowl of water, sprinkles it over the stone, and repeats the passing. The father sits there, absorbed in her skill, wondering at this inversion of the traditional learning process. “Here,” she says, handing over knife and stone. “You have a go.” 

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder