Starting with the dumb, professional commentators, authors, telly experts, think tank bods and what not frequently attach far too much importance to ideas. And so it was this morning on Radio 4, which broadcast some bloke who’d written a book and Will Hutton wittering on about the credit crunch.
Obviously I’d not fully woken up, but from what I can remember both appeared pretty certain the credit crunch will prove an intellectual watershed comparable to the perceived death of Keynesianism in the 70s and its subsequent replacement by the Anglo-Saxon model of capitalism.
For me this is the Hollywood version of events, except rather than some grave injustice being righted in a courtroom by some handsome and/or beautiful lawyer in the final ten minutes, over the next few years academics, regulators, governments, bankers and so on are presumably going to see the error of their ways and adopt a more touchy, feely, fluffy notion of capitalism.
The reality of course is that the righting of wrongs is so unusual it’s worth making a film about it when it happens. Similarly, comparing now with the 70s illustrates why the credit crunch is unlikely to have a Hollywood ending. For one thing (and ignoring Scandinavian as well as French and German notions of social democracy), thanks to Milton Friedman and Keith Joseph, the UK in the 1970s had a readymade alternative intellectual foundation for economic policy waiting to take over.
By contrast, right now, we simply don’t have an alternative of any substance. Indeed, the efforts of say a James Purnell to encourage the adoption of god knows what kind of political philosophy illustrates how Labour for one isn’t even in the right ball park.
For another the exorcism of Keynesianism was as much an institutional process as it was an intellectual one. So while this morning’s discussants cited 1970s style industrial relations, they forgot to acknowledge the very real changes made to their substance and conduct that were so integral to Thatcherism. Put simply trade unions were booted out of the polity and left sitting on increasingly restricted sidelines throughout much of the 80s and 90s.
By contrast the bankers and financiers who caused the credit crunch are still in place and still able to influence policy, give or take a few meaningless public gestures and the odd early retirement. I reckon this institutional stasis alone will prove enough to limit the significance of any changes. So sure undergraduate degree options that focus on financial crises will prove popular for the next few years or so, but apart from that so feckin what?
The dumberer bit refers to the masturbatory navel gazing some academic economists appear to be engaging in. Must finish that bit off tomorrow.