Editorial

It’s more than five years since the financial crisis broke over the “rich” countries of the world, shattering their record of growth and the confidence of voters and politicians. The mood now is different, with recovery underway on both sides of the Atlantic. A year ago (Prospect, January 2013) we set out “10 reasons for hope”; many of those have gained a lot of ground in just 12 months.

That new outlook, however, has opened up new problems to resolve. In Britain, Labour has seized hold of the political conversation with its assertion that wages have become decoupled from growth, resulting in a living standards crisis, and that it is the job of government to fix that. In a single speech, Ed Miliband has successfully defined the terms on which the 2015 general election will be fought. In our cover story, we point to that debate as one of the top dozen that will define the coming year. But as Paul Johnson, director of the Institute for Fiscal Studies, argues (p24), the record is not as simple a story as Miliband tells. The difficulty is partly that of raising productivity, and competition from globalisation. Oliver Kamm, an economist and columnist for The Times, in a searching review of the arguments (p44) and the record of these changes, argues that all politicians are wrong about what they can actually do. He offers some better answers.

The question of what kind of growth we now have, and who benefits, runs through two other ideas on the list—Larry Summers’s argument that we are experiencing “secular stagnation,” and the debate about what will happen as we come to the end of quantitative easing, which Richard Lambert, former member of the Bank of England’s Monetary Policy Committee, has called “the biggest monetary policy experiment in the history of the planet.” Crisis, collapsing banks—and countries—say some; don’t panic, that’s overblown, say others.

For the first time in years, economics offers more cheer than international relations, where the rising tension between Iran and Saudi Arabia hangs over the Middle East, amid growing pessimism about the will of countries to strike new big global deals. Conservation—the growing anger about the slaughter of Africa’s elephants to make trinkets for China’s middle class (p30) and about overfishing (p38)—will be one test of that in the coming year.

However, an antidote to the fearfulness comes from the display of innovation—even revolution—in medicine, news, and new kinds of businesses, such as the use of the web to reach customers to rent a car for a weekend or to set up a restaurant for a night. And if the prospect of the coming year seems too formidable, Prospect can offer you a diversion to the 15th century, in Sam Knight’s tale of the battle between Leicester and York to bury the bones of King Richard III. Or into a labyrinth of Christmas puzzles, set by Ian Stewart, who explains how a love of puzzles made him a mathematician, in his triumphant final offering of Enigma.