The great economist, who has died aged 72, refused to swallow orthodoxiesby / January 3, 2017 / Leave a comment
These days everyone knows we’ve got an inequality problem. Earnest executives will chat about Thomas Piketty’s Capital in the 21st Century at Davos, and the IMF will warn us all to mind the gap.
It is difficult, however, to get across to anyone who was not involved in economics before the crisis just how indifferent the discipline had become to the question of “who got what.” “Of the tendencies that are harmful to sound economics,” wrote the Nobel prize-winner Robert Lucas, “the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution.” As a young researcher starting out my career in the 1990s looking at the great income gap in Britain, I was very much aware that I was operating at the fringes of “economics proper.”
Luckily, all understanding of the subject did not disappear, because there were always one or two economists around who still remembered the last time when the discipline regarded the question of “who got what” as central to its business. Tony Atkinson, who has died aged 72, was foremost amongst them, and such was his rigor and his command of the data that nobody would ever have accused him of being on the fringes. He was exceptionally pleasant too, knitting himself into the heart of the social scientific community as the warden of Nuffield College, Oxford and an active scholar at the London School of Economics. No wonder that the obituaries have been so warm, and tributes from his LSE colleagues even warmer. Although I met and spoke with him several times, most recently when I interviewed his former American collaborator Joseph Stiglitz for Prospect, there is no point in me trying to improve on the eulogies of those who knew him far better.
But in the light of Atkinson’s death, two points strike me as poignant. The first is that, in the end, the truth has power. In frightening times when “truthiness” can seem to trump the actuality in election campaigns, it is inspiring to reflect on just how much it would eventually matter that Atkinson took the time to establish important facts in the way that he did. In the 1980s, he was aware that something profound was happening to the way Britain’s prosperity was being shared around—or rather ceasing to be shared. Even though the mood of times was, in the parlance of those days, to “stop obsessing about the way the cake is cut up, and worry about making it bigger,” Atkinson took the time to trawl through income tax statistics and trace the changing shape of the income distribution.
Later, together with international collaborators including his former pupil Piketty, he put together the World Wealth and Income Database so that researchers could easily compare how inequality varied across time and place. Initially, those figures were barely noticed by anyone except specialists, but after the crisis—and the connected runaway success of Piketty’s book—the data began to find its way into political debate, and even political slogans (“we are the 99 per cent!”).
The second big thing I take from Atkinson is to resist the world-weary lie that insists “There Is No Alternative.” However entrenched self-serving economic orthodoxies became in his last several decades, Atkinson never swallowed them. That century of income data from right round the world that he helped to compile had, after all, established that big things could change. Sure, the rich could get richer—but so could the poor. And for much of the post-war era they had. In his last book Atkinson showed—in careful arithmetic—how different political choices could very easily start to narrow the gap once again. Increasing the income taxes that Thatcher had cut, and boosting the benefits that she had squeezed could reverse much of the inequality she had unleashed.
That, however, was only one element of the Atkinson alternative. The rest of it relied not merely on the Treasury giving and taking, but on refining competition, technology and employment policies with explicitly egalitarian objectives in mind. Industrial democracy—which Theresa May recently flirted with, before giving up on—could, for example, help restrain top pay. Corporate mergers should no longer be nodded through on the assumption that lower prices for consumers were the only good: the needs of workers needed a look in too. And instead of drifting along with the tide of technology, public policy should attempt to control its direction. In all these cases there were, as Atkinson saw it, worthwhile alternatives to laissez-faire to debate.
Since the 1970s, however, all these alternatives have been out of fashion. The mantra that the “market knows best” has become deeply entrenched in the culture of economics, from the first year undergraduate textbook to the Whitehall cost-benefit analysis report on the minister’s desk. To change the intellectual climate, the next generation of egalitarian economists will now need to rewrite those text books without the help of Atkinson himself. But at least they can now set about the task inspired by his unbending confidence that there is, after all, an alternative to be had.