Political necessity has forced Boris Johnson to notice that towns want to be taken seriously, as distinctive places. It is high time economists caught upby Paul Collier / July 16, 2020 / Leave a comment
Even the faintest acquaintance with economic history is enough to know that the passage of time is important—a factory worker in the earliest days of the industrial revolution was lucky to have shoes and hungry most of the time, whereas a factory worker today is more likely to feel pinched by the cost of running a car or a Sky TV subscription. Why? Societies develop new technologies, learn how to do things more efficiently and make themselves richer in the process. Mainstream economists recognise this, and build rising productivity and “know-how” into their models. But if time is something economics can cope with, it has—at least until recently—shown much less interest in space.
There are vast and persistent differences in incomes across countries, regions and cities, and yet economics has not found a general way of approaching this. Despite the advances of “behavioural economics,” which has belatedly acknowledged that we are not guided purely by rational calculations but also by the framing of choices and cultural expectations, the discipline remains stubbornly wedded to the individual as the unit of analysis. In reality, our productivity is determined collectively, by the communities in which we live, and these are in turn defined just as much by place as by time.
The last few years have made plain, too, how place matters for our political views: witness the Brexit rebellion of provincial England and Wales. In truth it might be that, as much as anything else, which has finally shaken mainstream policy wonks into realising that it is worth giving some thought to communities, and the way we belong to them.
I was pleased to be asked by Prospect to write about Martin Sandbu’s The Economics of Belonging as I have just finished writing a book with John Kay on what I thought was the same topic. The field involves a challenging synthesis of economics with recent work in evolutionary biology, political science, neuroscience, moral philosophy and decisions under uncertainty: the more people who are attracted to work on it the better. Unfortunately, if John and I have written a book on the economics of belonging, Sandbu hasn’t. His book is modestly useful as far as it goes, but it is confined to…