THE SIX INVERSIONS

This is a useful post from Josh Hunt about what he calls "the great British inversion”

The British state can still do some things quickly. It can stand up a furlough scheme in a 
fortnight. What it can no longer do is build, plan, or reform at anything like the speed the 
new era demands. The evidence is not contested, it is simply tolerated.
No major reservoir has been completed in England since the early 1990s, in a country 
whose population has grown by ten million since. Grid connections are quoted in years 
and sometimes in decades, in a country proposing the largest electrification in its history. 
Our last nuclear plant has been under construction longer than the entire Victorian railway 
boom took to connect every major city in Britain. The planning application for a single 
road crossing of the Thames has cost more than Norway spends building actual tunnels. 
These are not anecdotes. They are the operating speed of the system.
The deeper problem is that the system’s design assumptions match the old era exactly. 
Annual budgets for compounding decadal pressures. Departmental silos for problems 
that cross every department. A Treasury that prices everything at this year’s cost and 
nothing at this generation’s. Political incentives with a four-year horizon facing inversions 
with a forty-year one. The machine is not broken. It is doing what it was built to do, 
superbly, for a world that has ended.

History offers a clear, uncomfortable lesson about how machines like this get rebuilt. 
They get rebuilt in crisis. The 1832 Reform Act passed under fear of revolution. 
The Edwardian welfare state was born from the national panic when half the Boer War 
recruits were too malnourished to fight. Beveridge required total war. The 1976 IMF crisis 
forced in a fortnight what a decade of argument had not. The pattern repeats abroad: 
Sweden and Finland built the most disciplined fiscal frameworks in Europe in the rubble 
of their early-1990s banking collapses.
Foresight is rarer, but it exists, and its examples are the most important data points in 
this article. Singapore planned its water independence and its housing system across 
half a century. Ireland in 1987, broke and bleeding emigrants, struck a social partnership 
that held across governments and turned the country around inside a generation. 
Estonia built a digital state from a standing start because it had no legacy machine to 
defend. The common ingredients are worth stating: an honestly named emergency, 
a coalition wider than one party, and mechanisms deliberately placed beyond the each of the annual political auction.
Crisis reform works, but it buys the same destination at a vastly higher price, paid in 
unemployment, disorder and lost decades. Foresight is cheaper. It is also, on the historical 
record, much rarer. The whole argument of this article is that Britain still has the choice, 
and that the window in which it has the choice is the next decade, not the next generation.

VI. Britain on current trend
Let me be concrete about where the current trend goes, using only published projections. 
None of this is prophecy. All of it is what the official numbers say happens if nothing changes.

Britain in 2036. A population of around 71 million that has stopped growing naturally and 
      now shrinks in three of its four nations. One person in five of pensionable age. 
          Hundreds more primary schools closed; the university sector contracting as the 
           small cohorts arrive. The NHS, if its own plan is delivered, employing one working 
          person in eleven, with the wider care economy absorbing something approaching 
          one in seven. Debt interest still a top-four spending programme. Defence spending 
          rising toward 3.5% of GDP under treaty obligation, every pound of it competing 
          with care. Taxes at or beyond the post-war record. The gilt market pricing all of it, 
          hour by hour, through lenders with no particular attachment to Britain.

Britain in 2046. The 1960s baby boom fully inside the care system, the over-85 population
 having roughly doubled, drawing on a workforce that has been flat or shrinking for a 
decade. Workers per pensioner heading toward the OBR’s long-run figure of 2.7, and on 
the honest count, workers actually in work per pensioner, materially lower. The state pension 
alone costing nearly 8% of GDP. The OBR’s current-policy debt path passing 150% of GDP 
on its way to a number nobody intends to reach, which means the correction, voluntary or 
imposed, has happened somewhere in between.
The honest way to read those two paragraphs is not as a prediction that they occur. It is 
as a measurement of the gap between the trajectory and anything survivable, which is to  
say, a measurement of the scale of reform that is coming one way or the other. 
That scale is the point. Nothing in any party’s current programme is within an order of 
magnitude of it.
VII. The case against this point of view
Now, I know what some will say, and the objections deserve better than a paragraph each,
 because some of them are partly right.
Declinism is Britain’s oldest cottage industry. True. The 1890s panicked about 
national efficiency and then won two world wars. The 1970s sick man joined the single 
market and boomed. The base rate for British doom predictions is poor, and I hold this 
objection seriously. But notice what rescued Britain each time: a growing population, 
cheap energy, an expanding world order, and fiscal room to manoeuvre. 
The rescues came from exactly the assumptions that have now inverted. Past declinism 
was wrong about a country with tailwinds. The question is what the same country does 
in headwinds, and that question has no historical answer yet.
Immigration solves the demographics. It has, so far, genuinely. Without it the workforce 
would already be shrinking. But three things bound the strategy. Migrants age too, 
so the fix must be perpetually renewed at growing scale. The political tolerance has 
collapsed, with net migration already down two-thirds from its peak. And the deepest 
bound: fertility is falling everywhere. The countries we recruit from are on the same curve, 
a generation behind. Importing working-age people is borrowing against other nations’ 
demographic futures, and the global lender is closing.
AI is the productivity dividend that pays for all of it. Possibly. It is the one genuine 
wildcard in this article, and intellectual honesty requires saying that a sustained AI-driven 
productivity boom is the single scenario in which the fiscal arithmetic repairs itself. 
But weigh the shape of the dividend against the shape of the need. The productivity gains 
arrive in cognitive services, which is where the tax base lives, and the demonstrated effect 
of automation on care, the actual binding constraint, is so far nil. A dividend that displaces 
our taxpayers whilst leaving your costs untouched is a strange kind of rescue. I would 
gladly be wrong about this.
Fewer people is fine, even good. Per head, perhaps, eventually, and the environmental 
case is real. Japan remains safe, clean and cohesive. But Japan entered its decline with 
net assets abroad, an industrial export machine, and government debt held almost entirely 
by its own citizens. Britain enters its decline as a net debtor, importing food and energy, 
owing money to foreigners and hedge funds. The same demography, with the opposite 
balance sheet.
Services specialisation is an asset in any world order. The surplus is real and growing, 
and it is the best card in our hand. But a services surplus buys goods only whilst the world 
stays open, and it employs the workers most exposed to the technology. An asset, yes. 
A foundation, no.
Each objection, examined, does the same thing. It extends the timetable. None of them 
changes the destination. That, in the end, is my answer to the optimists: you may be right 
about the decade. The argument of this article is about the direction.

VIII. Governing the inversion
So what would a country that took all this seriously actually do? Not a manifesto. A sketch 
of the categories, with one worked example, because the point of the article is the shape 
of the response, not its every line item.
First, it would measure the new era. You cannot govern what your instruments cannot 
see. Publish an annual intergenerational account alongside the Budget, as New Zealand’s 
Treasury does, so that every Parliament sees the forty-year cost of its four-year decisions. 
Report the effective dependency ratio, workers actually working per pensioner, not the 
flattering official one. Count the care economy, paid and unpaid, as the national infrastructure 
it is.
Second, it would take the compounding decisions out of the annual auction. 
The most successful adaptations abroad share one design: automatic stabilisers placed 
beyond yearly politics. Sweden’s pension system contains a brake that adjusts payouts 
to demographic and economic reality without requiring any politician to commit career 
suicide. Denmark and the Netherlands index the pension age to longevity by formula. 
Britain instead re-fights every parameter, every year, in public, and loses. A serious country 
would legislate the formulas once, honestly, and let arithmetic do what courage cannot.
Third, it would rebuild the energy foundation as the first-order national project, on 
the simple ground that energy is the economy and everything else in this article sits 
downstream of its price. That means treating grid connections, nuclear delivery and 
the planning system as a single national-security programme with wartime priority, 
because the alternative, attempting history’s largest electrification at the developed 
world’s highest power prices, is not a plan. It is a queue.
Fourth, it would govern the care economy as a system rather than a staffing problem, which brings me to the worked example, because it shows what inversion-native policy actually looks like.
Consider the multi-generational household. For two centuries the whole drift of housing,
welfare and planning policy assumed dispersal: the young move away, the old age alone, 
and the state and market fill the widening gap between them. In the old era of abundant 
workers and cheap money, that was affordable. In the new era it is the single most 
expensive assumption Britain holds.
Because look at what one household arrangement does to the arithmetic of three different
 inversions at once. The grandmother in the annexe receives much of her care as a 
byproduct of household life rather than consuming a paid carer’s shift, easing the 
second inversion. The same grandmother provides the childcare that releases her 
daughter into the workforce, easing the first, and on the international evidence, families 
with grandparents nearby find it easier to have the children they already wanted, easing 
it at the source. The household needs one larger home rather than two or three small 
ones, which changes the shape of housing demand rather than simply adding to it. 
No new workforce is hired. No new tax is raised. The largest care provider in Britain 
is already the family, five million unpaid carers strong, providing a second NHS for free. 
The policy task is not to build something new. It is to stop punishing the thing that is 
already holding the system up.
And we do punish it, comprehensively. Council tax surcharges on annexes. Stamp duty 
structured against combining households. Benefit rules that treat sharing a roof as a 
fraud risk. A planning system in which a granny flat is a battle. California liberalised 
accessory dwellings by right and watched tens of thousands appear in a few years. 
Britain could do the same within a Parliament, at a fiscal cost of approximately nothing, 
and it would be the first policy in decades designed for the country we are becoming 
rather than the one we were.
I offer it not as a panacea but as a proof of category. Inversion-native policy exists. 
It tends to be cheap, because it works with the new grain rather than against it. There 
are equivalents waiting in every domain: Buurtzorg-style self-managing care teams 
that deliver more care per worker by removing the management layer rather than 
adding robots; defence procurement that buys magazines of munitions rather than 
museum pieces; a migration policy honest that it is a bridge with a closing far end, 
and priced accordingly.
Fifth, and hardest, it would tell the truth about the era, because every successful 
adaptation in the historical record began with a country being levelled with. Ireland in 
1987 was told it was broke. Singapore was told it could be extinguished. The national 
efficiency panic of 1906 began with the publication of one honest, horrifying 
recruitment statistic. The precondition for foresight is a shared, named emergency. 
Britain’s emergency does not yet have a name. This article’s wager is that naming it, 
the Inversion, accurately and without partisan blame, is the first act of governing it.

IX. The choice
Let me end where I began, with the threshold we cross this year.
A nation that buries more people than it christens is not necessarily a nation in decline. 
Japan is proof that it can be orderly, even graceful. But it is, unarguably, a different kind 
of nation, running on different arithmetic, and it cannot be governed by the habits of the 
old kind. Every inversion in this article will be managed eventually. Care will find its 
workers or its substitutes. The debt will find its buyers or its restructuring. The energy will 
be rebuilt or rationed. The defence will be funded or abandoned. The only open question, 
and it is the largest question in British public life even though it appears in no manifesto, 
is whether these adaptations are designed or suffered. Whether they arrive by foresight, 
on our terms, over decades, or by crisis, on the market’s terms, in months.
History says crisis. History is usually right. But not always. There is a version of this 
country that treats the Inversion the way it once treated the threat of invasion, as a fact 
that reorganises everything, that dissolves the luxury of the old quarrels, that makes the 
impossible reforms merely necessary. A country that measures the new era honestly, 
automates its hardest decisions, rebuilds its energy foundation, houses its generations 
together, and tells itself the truth. We used to be that country in our worst moments. 
The task now is to become it in time. The old era did not end with a bang. It ended in a 
maternity ward, quietly, on an ordinary day, sometime around now. The new era began 
the same way. Nobody noticed. That part, at least, we can still fix.

And the highly recommended Novara site offers this discussion about 
how the UK can’t build anything
 

Seven More

Five years ago I posted about “Future Politics” by James Susskind to which I now return Future Politics - living together in a world transformed by tech (2018)

Politics in the twentieth century was dominated by a central question: how much of our collective life should be determined by the state, and what should be left to the market and civil society? For the generation now approaching political maturity, the debate will be different: to what extent should our lives be directed and controlled by powerful digital systems—and on what terms? This question is at the heart of Future Politics.

In the next few decades, it is predicted, we’ll develop computing systems of astonishing capability, some of which will rival and surpass humans across a wide range of functions, even without achieving an ‘intelligence’ like ours. Before long, these systems will cease to resemble computers. They’ll be embedded in the physical world, hidden in structures and objects that we never used to regard as technology. More and more information about human beings—what we do, where we go, what we think, what we say, how we feel—will be captured and recorded as data, then sorted, stored, and processed digitally. In the long run, the distinctions between human and machine, online and offline, virtual and real, will fade into the background. This transformation will bring some great benefits for civilization.

Our lives will be enriched by new ways of playing, working, travelling, shopping, learning, creating, expressing ourselves, staying in touch, meeting strangers, coordinating action, keeping fit, and finding meaning. In the long run, we may be able to augment our minds and bodies beyond recognition, freeing ourselves from the limitations of our human biology.

At the same time, however, some technologies will come to hold great power over us. Some will be able to force us to behave a certain way, like (to take a basic example) self-driving vehicles that simply refuse to drive over the speed limit. Others will be powerful because of the information they gather about us. Merely knowing we are being watched makes us less likely to do things perceived as shameful, sinful, or wrong. Still other technologies will filter what we see of the world, prescribing what we know, shaping the way we think, influencing how we feel, and thereby determining how we act.

Those who control these technologies will increasingly control the rest of us. They’ll have power, meaning they’ll have a stable and wideranging capacity to get us to do things of significance that we wouldn’t otherwise do. Increasingly, they’ll set the limits of our liberty, decreeing what may be done and what is forbidden. They’ll determine the future of democracy, causing it to flourish or decay. And their algorithms will decide vital questions of social justice, allocating social goods and sorting us into hierarchies of status and esteem.

The upshot is that political authorities—generally states—will have more instruments of control at their disposal than ever before, and big tech firms will also come to enjoy power on a scale that dwarfs any other economic entity in modern times. To cope with these new challenges, we’ll need a radical upgrade of our political ideas. The great English philosopher John Stuart Mill wrote in his Autobiography of 1873 that, ‘no great improvements in the lot of mankind are possible, until a great change takes place in the fundamental constitution of their modes of thought.’ It is time for the next great change.

Stealing Horses to Great Applause – the origins of the first world war 
reconsidered Paul Schroeder (2025)

With a preface by the great Perry Anderson, this text promises much

The Decisionist Imagination – sovereignty, social science and democracy in the 
20th Century ed Daniel Bessner and Nicholas Guilhot (2018)
An unusual take on the making of decisionsYesterday – the UK from Thatcher to Covid Brian Harrison (2026) 1100 pp

Some Afterthoughts How far, then, was the UK in decline between 1990 and 2020?
 We must first summarize the conclusions so far reached, in roughly their order of 
discussion in the previous subsection (Current Realities). Because the Church of 
England was never disestablished, it had long been integral to the UK’s stability. 
With the loss of faith since the 1960s, however, its political role slowly became 
primarily ceremonial, declining only to the extent that the state declined. 
Opposition to birth control was among the controversial interwar religious 
standpoints, but thereafter other issues seemed more important, the controversy 
cooled and both standpoints succumbed before sexuality’s secularization. 
The UK’s relative economic decline was inevitable to the extent that less developed 
societies were bound to catch up, but it is absolute decline that brings trouble, 
and in the nation as a whole, this was averted. Not everywhere, though: 
economic growth was very patchy, both by region and by type of manufacture 
or service. Science-based industries flourished in several parts of the UK, 
and the North Sea witnessed remarkable advances in turbine manufacture, 
wind power and extraction of oil and gas; there were also simultaneous and 
related advances in environmental consciousness.

In education there was expansion and innovation at every level, spurred on by international comparison, and led by world-beating schools and universities. Although computerization in the UK was early and widespread, its record in computer manufacture was disappointing. In its media aspects, however, the UK was notably resourceful and recreation boomed and diversified after 1990, as never before. Behind all this lay a party-political situation whose stability required controversy to be publicly aired—political stability being in itself an economic asset. By 1990 the Wall’s fall had dampened Marxian fires: riots thereafter were mostly consumerist, and were contained. Containment was not cost free if only because of the UK’s relative enthusiasm for removing delinquents from the workforce into imprisoned work-free idleness. Helpful to the economy, however, was the move of both Labour and Conservatives after 1979 towards the centre, while the adversarial party system maximized opportunities for public debate. The worldwide credit crunch of 2007 was serious, however, and the UK was relatively slow to recover from it.

In international relations the UK’s world influence was probably at its peak in the 1880s, rather than in 1918 when the empire’s land-mass was at its peak. Henceforth the UK was a ‘satisfied power’ in need of alliances, and despite being on the winning side in 1945, diminishingly convincing as a ‘great power’. There followed decades of unsuccessful face-saving formulae and more frequent attempts to deny failure. By the 1970s the UK’s former international status was beyond recall, and it was a sign of the UK’s ongoing decline that so much was made of the Falklands victory in 1982. Having joined the EEC in 1973 in the hope that membership would revive the UK’s status, British governments seemed determined to minimize the benefits of joining, and on leaving the EU in 2020 the UK seemed only to sink further.

As for the empire/Commonwealth, it had originated in a powerful combination of idealism, commercial energy and wishful thinking. The twentieth-century prevalence of the third and waning of the first and second help to explain the empire/Commonwealth’s decline. Missionaries, in their idealistic and moralistic fervour, had helped to advance colonial frontiers, but their denominational diversity, with each component fervently held, could only erode faith by fostering irreligious relativism.

In 1989 K. O. Morgan’s preface to the first edition of his The People’s Peace (1990) saw the period 1945–90 as possessing ‘a unity of its own’. Not a situation prevailing between 1990 and 2020. In domestic politics these years include the long middle period (1997–2010) of Labour government, bounded at each end by periods of Conservative-dominated government, so no integrating theme there. Alternatively these years co ld be identified as a period of reflection and digestion, whereby the long-term implications of Thatcherism, especially within the British labour movement, were at last grasped. The difficulty in choosing this uniting theme, however, is that Thatcher’s impact has not yet ended. Or the period could be seen as a peaceful interval between two periods of ‘cold war’, beginning with the fall of the wall and ending with Putin’s invasion of Ukraine; but again, the end of Putin is not yet in sight. Some will complain, however, that there is more to life than politics. Besides, independent nations do not need to be fixated upon arbitrary international rankings—still less did it depend upon rankings based on military or power-political criteria. The decades between 1990 and 2020 have not acquired any distinct label, nor should they: a decade, or even three decades, are arbitrary periods, and if they have any distinctive feature, the label can be detected or confected only in retrospect.

Politicians at any level tend to make exaggerated claims for what they can achieve—claims that are pumped up during general elections, and even verge on chauvinism. ‘I want Britain to be seen as the best’, Major told Conservatives in March 1992, ‘not only in our eyes, but in the eyes of others. First and first again—a world leader—that is where I want us to be, and to stay’. On 30 September 1997 Blair described ‘our goal’ as being ‘to make Britain the best educated and skilled country in the world, a nation, not of a few talents, but of all the talents’. The two-party system carries with it the drawback of encouraging rebuttal rather than empathy. Wise politicians, however, do not exaggerate their powers and still less do they take national setbacks personally. Foreign Secretary Hague was portrayed in 2012 as ‘intoxicated by the aroma of office’: finding some regime ‘unacceptable’, he is ignored, stamps his foot on the world stage, but ‘only stubs his toe’. Not even Palmerston in his Victorian prime could get away with such conduct, and was at least accountable to an evangelical and nonconformist conscience, whereas in present-day UK politics there is no such conscience, nor have we a Cobden to rise up from the back benches to offer the necessary corrective. The UK today in the international arena may, however, see merits in Cobden’s mid-Victorian hallmark: combining empathy with example-setting. Heath, assuming a decidedly Cobdenite stance, reminded parliament in 1993 of the link between success at home and influence abroad: when the UK tells other countries what to do, ‘people politely ask, “What about Northern Ireland?”’ and specify recent terrorist incidents ‘on our own doorstep’. Ashdown in 1998 thought that what became the Good Friday agreement would make Blair more credible in pursuing his wider diplomatic ambitions.

Governments must always make national security their first priority, but intelligently mobilizing soft power and collective security can in the long term outmanoeuvre populist sabre-rattling. In 1960 the sociologist Michael Young saw ‘no necessary connection between power and greatness’: nations could be ranked in possession of weapons, he wrote, but also in art, intellect and social concern. Young would have gone further, favouring a stouter British backing for the UN: ‘we could find a pride and purpose, not as the smallest of the Great Powers but as the greatest of the Small Powers, in helping to lead the world towards the renunciation of national sovereignty’. Self-advertisement is difficult to reconcile with an allegedly British modesty and understatement, but the UK with its world-beating universities and its world-pervasive language has potentially strong foundations. Hugh Seton-Watson in 1977 held up France as a model: lacking after 1815 ‘the military, industrial or manpower resources of a firstrate power’, the worldwide cultural missions of the French made their language ‘the instrument of civilized men all over the world’. Here, too, the UK is in a strong position.

When Joseph Chamberlain was seeking in 1903 to overturn Cobden’s achievement by promoting protection through tariff reform, he claimed that ‘the day of small kingdoms with their petty jealousies has passed. The future is with the great empires, and there is no greater empire than the British Empire’. Twenty-first century perspectives beg to differ. Among the few benefits of possessing nuclear weapons is their capacity to ‘freeze’ the status of declining countries, thus causing small countries to proliferate. ‘The hydrogen bomb is a great leveller’, said Julian Amery: ‘It cancels out the disparity between population and big areas of territory and smaller ones’.

The histories of Switzerland, the Netherlands and Scandinavia show that significant world influence requires neither the bomb, nor even a large landmass. The UK’s world influence reached its height well before preoccupation with the empire’s land-mass attained its ultimate extent, and we—more readily than many Victorians—acknowledge that formal annexation carries many burdens in its train, and that collective self-defence can be more effective than grandiose patriotic pretension. Smallness does have its advantages.

Political Realism in Apocalyptic Times Alison McQueen (2018)

A consideration of how sound this concept is – with amazing documentation

The Return of the Great Powers Brendan Simms (2026)

Futures of Socialism Colm Murphy (2023)
Murphy starts in iconoclastic form by tracing the origins of left discourse about 
globalisation to the Alternative Economic Strategy (AES) developed by the 
Labour left in the 1970s and early 1980s (this explains the unusual starting year 
of 1973 in the book’s date range – when Labour’s annual conference famously 
first adopted a programme heavily influenced by the AES). As Murphy points out
, a key premise of the AES, based on bitter reflection on the 1960s Labour 
government, was that the rise of multinational corporations and international 
finance had hollowed out the power of individual states to secure full employment, 
narrow inequality and boost economic growth. The remedies that the left 
prescribed for this malaise were obviously very different from what became 
New Labour’s economic strategy. Roughly speaking, the left sought to increase 
the state’s power to control the British economy through measures such as 
increased public ownership (especially of financial institutions), planning 
agreements with private enterprise and import controls. 
But the underlying economic analysis – that the post-1945 model of economic 
management was no longer viable amid a globalising capitalism – was essentially 
very similar to the rhetoric rolled out by Blair and Gordon Brown much later. 
Murphy demonstrates that one wing of the Labour left, led by Stuart Holland 
(the key theorist of the AES), did eventually lose confidence in a strategy 
based on socialism in one country. Instead, Holland and his colleagues invested 
considerable intellectual energy during the 1980s in arguing for a more 
interventionist economic strategy at a European level. 
This too flowed into the formation of a modernised Labour vision that firmly 
distanced itself from the Euroscepticism that was common currency on the 
British left in the 1970s. Murphy is clear that the Labour leadership’s 
entanglement with the discourse of globalisation after c.1994 drew on 
influences besides the AES (he mentions the writings of figures such as 
Anthony Giddens and David Held as one alternative source). 
But he argues that an important reason that internal critics found it hard 
to push back against the Blair/Brown account of globalisation was that 
they had already signed up to the idea that a traditional social-democratic 
economic strategy had been ruled out by the rise of giant corporations and 
fleet-footed global capital flows. A wide cross-section of the party had been 
primed by the preceding twenty years of internal debate to accept that 
‘globalisation’ required Labour to retool its economic policy. 
Murphy makes a similar observation with respect to ideas about the 
decentralisation of economic and political power. During the 1970s and 
1980s a very large number of political actors on the left and centre of British 
politics became convinced that the model of centralised state-driven socialism 
associated with Labour’s heyday in power in the 1940s was out of step with 
modern Britain. Political formations as various as the New Left, leading trade 
unionists, disillusioned Labour revisionists, left-led Labour councils, 
Scottish and Welsh nationalists, the Liberal Party and the emergent SDP 
all agreed that there needed to be greater economic and political empowerment 
below the level of the UK state. Initially this was often framed in socialist terms 
as the extension of economic democracy through worker participation in 
industrial decisionmaking and trade unionists taking seats on company boards. 
But these ideas quickly widened (or perhaps moderated) to include passing 
power on to consumer and community groups, local councils (with Ken 
Livingstone’s Greater London Council as a model) and co-operatives. 
At a theoretical level, these decentralising tendencies were forged into what 
Murphy dubs the ‘neo-corporatism’ advocated by David Marquand and Paul Hirst. 
Marquand and Hirst envisaged a British economy that looked a lot more like the 
West German social-market model, by combining federal constitutionalism with 
a more collaborative and long-term industrial culture. All of this was premised 
on the assumption that Labour’s traditional political vision was too top-down 
and statist and thus out of step with a less deferential, more individualist society. 
This was said to be the vulnerability in Labour’s earlier model of socialism that 
Thatcherism had exploited, by offering a right-wing vision of individual economic 
empowerment that widened private property ownership and increased disposable 
incomes through direct tax cuts (a point that had been presciently made by 
Stuart Hall even before the Thatcher government was elected in his 
famous 1979 Marxism Today essay ‘The Great Moving Right Show’). 
But it was ultimately constitutional rather than economic decentralisation 
that achieved more traction within the Labour leadership in the 1990s. 
John Smith’s victory over Bryan Gould in the 1993 Labour leadership election 
was one important moment here. Murphy shows that Gould had been a key 
advocate of a form of economic modernisation that drew on ideas about 
diffusing economic power, whereas Smith was more engaged by 
modernising Britain’s democracy. 
A second key moment was Blair’s dalliance with the ideas of Will Hutton in 1996. 
Hutton’s The State We’re In (1995) was a brilliant popularisation of the 
neo-corporatism espoused by Marquand and Hirst, which caught the political 
zeitgeist as the Conservatives imploded, ultimately selling a remarkable 
250,000 copies. But the small circle that controlled Labour’s economic policy 
was reluctant to sign up to Hutton’s wide-ranging economic vision, 
which Brown and Ed Balls regarded as a dangerous hostage to electoral 
fortune (and an attempt by Blair to loosen their control over economic strategy). 
Murphy shows that, instead, a discourse of constitutional reform, somewhat 
influenced by the work of Charter 88, emerged to fill the space where debates 
about economic democracy and corporate governance might otherwise have 
gone. Murphy’s point is not to downplay the significance of constitutional reform. 
On the contrary, he (rightly) thinks that we should view this period of debate 
on the constitution within Labour, and the watered-down version of reform 
that was enacted after 1997, as a historic episode of political reform. 
Thanks to the massed ranks of the leftist intelligentsia mobilised through 
Charter 88; the Scottish Constitutional Convention; and a generic left-wing 
rhetoric that disparaged the Thatcher government for pushing through radical 
reforms ‘undemocratically’, Labour’s account of modernisation encompassed 
constitutional changes such as devolution, incorporation of the ECHR into 
domestic law, freedom of information and (limited) House of Lords reform. 
This was despite the lack of enthusiasm for these measures among Blair 
and other key figures in the PLP. As Murphy notes, this demonstrates both 
the success of Charter 88 and others in forcing the Labour leadership to 
adopt a set of measures that they were fundamentally ambivalent about, 
but also shows why, in the end, there was little appetite in Labour high 
command to go any further in deepening and rationalising these individual 
reforms into one overall coherent package of constitutional change.   
In that case, we might ask, how should we characterise Labour’s 
economic strategy by 1997? Surely that was neoliberal? 
Again, Murphy complicates the picture. He points out that Labour had long 
thought of its economic policy as aimed at modernising the British economy 
through state intervention on the supply side. This was, after all, the 
central political pitch of Harold Wilson in the 1960s and again of Neil 
Kinnock in the 1980s: that a Labour government was better suited than 
the Conservatives to drive investment into British science and industry
 and to use the state to adapt Britain’s economy to new technologies 
and methods of production. The real innovation in Labour’s economic 
worldview, Murphy shows, was that during the 1990s supply side 
modernisation was conceptualised as less about revitalising the 
manufacturing sector and more about increasing investment in education, 
training and infrastructure. This was the rise of ideas about a 
‘knowledge-based economy’ or ‘human capital’, influenced by American 
New Keynesian economists such as Robert Reich (in his earlier, New 
Democrat guise) and Lawrence Summers (who had taught Ed Balls at 
Harvard). These ideas – which legitimised public investment in education 
and training as a means of boosting economic growth – intersected with 
the growing awareness among Labour policy-makers that the British 
economy was now increasingly dominated by service-sector employment 
and thus had become ‘deindustrialised’.
 For one group within the party, it was essentially the greatest peacetime 
government in history (or perhaps should be ranked equal with the 1945 
government), led by one (or perhaps two) of the best politicians Labour 
ever produced. For another group, it was a moral disgrace that sold out 
Labour’s basic principles, led by a shifty opportunist with only the 
shallowest connection to Labour’s traditions. 
Futures of Socialism makes a powerful intervention in this discussion 
because it shows that Labour needs a more rational debate about what 
the party got right after 1997 and what it got wrong, not to mention a 
more detailed appreciation of how the social and economic context has 
changed since 2010. It is arguable that a discussion along those lines 
took place among Democrats in the US, for example, after 2016. 
Shocked by the victory of Trump, the Biden administration came into 
office determined to build on the Obama years but also to take some 
more strongly left-leaning stances on economic and social policy. 
Labour should follow suit. There is no better starting point for politicians, 
commentators and academics who want to contribute to the debate on 
Labour’s past and future than Colm Murphy’s book.  Ben Jackson

Three More

 This is the day I celebrate 2 million clicks! 

And it’s still only 18th June, showing 295,000 clicks compared with 258,000
 last month! So onwards and upwards!

Waves of War – nationalism, state formation and ethnic exclusion in the 
modern world Andreas Wimmer (2013) 

The Making of Modern Economics Mark Skousen (4th ed 2022)

The history of modern economics is a cunning plot that can match the best of historical novels. The running story line is man’s search for wealth and pros-perity and the economic model that best serves the needs of the common man.

The main character is Adam Smith, a child of the Scottish Enlightenment, and the philosophy he represents, the self-regulating system of natural liberty and competition. Our hero has gone through untold triumphs and tragedies in the unfolding of over 200 years of economic history. Sometimes he appears lifeless following the blows of his opponents. But he always recovers.

A QUICK OVERVIEW

The plot begins in dramatic fashion in 1776, when a London publisher printed Adam Smith’s monumental work, The Wealth of Nations, the intellectual shot heard around the world. Smith’s captivating philosophy of natural liberty and the invisible hand rapidly became the central character of modern economics as the Industrial Revolution and political liberty exploded on the scene, and created a new era of wealth and economic growth over the next two centuries. The enlightened Scottish model of prosperity quickly spread to France (via J.-B. Say and Bastiat), America (via Thomas Jefferson), and the rest of the Western world. Yet the optimistic world of Adam Smith was almost immediately chal-lenged by Robert Malthus and David Ricardo, two serious scholars who propound the gloomy doctrine of the iron law of subsistence wages and the permanent misery of the working class. These pessimistic forecasts were fol-lowed by the appearance of John Stuart Mill, who vacillated between liberty and socialism as utopian communitarianism reached its zenith of popularity.

Introduction.

Then, in the middle of the nineteenth-century Industrial Revolution, Karl Marx suddenly strode onto the scene with talk of exploitation and alienation among the industrial workers, and plunged economics into a new dark age. The rise of socialism would be the biggest challenge Smithian capitalism would face over the next century.

THE MARGINAL REVOLUTION

Fortunately, a new light appeared to counter the dark forces of social engi-neering. This “marginal” revolution gave new life to our main character, the invisible-hand model of Adam Smith. It came from three sources in the early 1870s—from Carl Menger in Austria, Léon Walras in Switzerland, and Wil-liam Stanley Jevons in England. Eugen Böhm-Bawerk, a colleague of Menger, was the frst economist to take on Marx with a devastating critique of his labor theory of value and exploitation. Through the textbooks of Alfred Marshall in England, and Frank Taussig and Irving Fisher in the United States, the Smi-thian model of modern economics was rebuilt. Thus resuscitated, it made an effective counterattack on the growing socialist movement. Scientifc econom-ics had come of age.

Nevertheless, the late nineteenth century was the era of big business and the giant trusts of Carnegie and Rockefeller. Institutionalists like Thorstein Veblen swayed the crowds of cynics with their warnings of conspicuous con-sumption and monopoly power, while German sociologist Max Weber wrote of the religious underpinnings and the “iron cage” of capitalism.

KEYNES AND THE GREAT DEPRESSION

But the biggest blow to Adam Smith’s world of free-market capitalism came with the 1929 crash and the Great Depression of the 1930s. Neoclassical econo-mists comprehended the nuances of supply and demand, but failed to grasp the mysteries of the “money nexus,” the vital connection between the micro economy and the macro economy. The great Yale professor Irving Fisher made bold attempts at solving the missing link between micro and macro in the early twentieth century, and the Austrian Ludwig von Mises, relying on the pro-found work of the Swede Knut Wicksell, fnally bridged the gap in his Theory of Money and Credit. But the Mises—Wicksell theories didn’t take hold in aca-demia or the halls of government, and by the early 1930s, banks collapsed, businesses failed, and millions of workers begged for a living wage as gov-ernments around the globe struggled to overcome the decade-long fnancial nightmare.

Who would save capitalism? The battle lines were drawn between the classical economists who defended the policies of laissez faire, and the Marxists and socialists who demanded a revolutionary overthrow of the old order. Amid the global intellectual confict appeared John Maynard Keynes, the economist as savior. This Cambridge don proposed a new, sophisticated model based on a “fnancial instability hypothesis” inherent to the capitalist system. This “new economics” required government intervention in the monetary and fiscal arena to stabilize the market economy. Yet, unlike its chief Introduction rival, Marxism, the Keynesian model did not require nationalization or micro control of supply and demand. The classical model of thrift, balanced budgets, low taxes, and the gold standard was relegated to periods of full employment, while the Keynesian prescription of consumer demand, deficit financing, progressive taxation, and fat money played out during periods of economic recession and unemployment. It was viewed as the ideal compromise and soon college instructors, their heads buried in a popular new textbook by MIT wunderkind Paul Samuelson, were teaching students strange new tools—the multiplier, the marginal propensity to consume, the paradox of thrift, aggregate demand, and C + I + G. Keynesian economics reflected the high tide of macroeconomic theorizing and mathematical modeling.

THE RETURN TO MARKET ECONOMICS

The final chapter in our story begins after World War II. Through the monetarist counterrevolution, led by Chicago’s Milton Friedman, economists began to focus more on the instability of government macro policies. Fried-man, relying on empirical work more than abstract model building, demonstrated how the Federal Reserve, a government creation, was the principal culprit in causing the Great Depression. By adopting a stable monetary policy, the self-regulating market economy of Adam Smith could once again flourish. The Chicago School became the driving force behind the return to classical economics and the need for empirical evidence to support theory. Soon other schools of free-market economics—supply side, rational expectations, and Austrian—challenged the Keynesian monolith.

The triumph of the market reached its zenith of success with the collapse of the Soviet economic system in the early 1990s. The Austrian economists Ludwig von Mises and Friedrich Hayek had predicted the demise of socialistic central planning for years, and now their prediction was finally fulfilled. The failure of the socialist paradigm ushered in a new era of free trade, denationalization, and privatization throughout the developing world. Our story of modern economics ends here on an optimistic note, even as battles are still being fought over the right kind of economic policies to pursue in the face of fnancial crises, war, uncertainty, and globalization. In many ways, this final ichapter of modern economics foreshadows the continuing battle between two paradigms, laissez faire versus socialist interventionism, and Adam Smith’s world of imperfect capitalism appears to be challenged again.

STRANGE AND TORRID LIVES 

Yet our story is not just an account of conflicting ideas. It is also an amazing tale of idle dreamers, academic scribblers, occasional quacks, and madmen in authority. The lives of economists are often just as exciting and unusual (even bizarre) as those of most famous people. In these pages, you will fnd the story of:

• A professor of moral philosophy who burned his clothes, then burned his papers before dying; Introduction

• A Cambridge economist who may have been a secret agent for the Soviet Union during World War II;

• A revolutionary who, though his income was in the top 5 percent in Europe, constantly begged for money and speculated wildly in the stock market;

• A government advisor who was so fascinated with people’s palms that he had casts made of his friends’ hands;

• A multimillionaire who lost everything during the stock market crash of 1929;

• A wealthy economist who was murdered by his housekeeper;

• A utilitarian thinker who demanded that his preserved body remain on display at the University College of London;

• A free-market advocate who invented income tax withholding to help fnance World War II;

• A multimillionaire broker who gave all his wealth to his three sons;

• An economist who spent two months in jail, charged with blasphemy against the Virgin Mary;

• A philosopher who learned Greek at age three and suffered a mental breakdown at age twenty;

• An economist who fancied himself as an informal consultant to Italian dictator Benito Mussolini;

• A famous minister of fnance who paraded around the streets of Vienna with two prostitutes and later became president of the American Eco-nomic Association;

• An American economist who refused to use a telephone, make his bed, do the dishes, or clean his clothes, and gave all his students the same grade, regardless of their work;

• A European professor who was determined not to use charts or graphs of any kind in his voluminous writings, and who was a confirmed bachelor until age fifty-seven.

Welcome to the bizarre world of academic economists!

Why study the lives of the economists, and not just their ideas? It would be unfair to dismiss a philosopher’s theories simply because he may have been a bad husband or a drunk. We may fnd Karl Marx’s life reproachful, but does that mean his theories of alienation and exploitation are wrong? Ideas must stand on their own merit, not on the basis of who invented them. Yet we study and judge the actions of our heroes and villains, not just to prove or disprove their philosophies, but to better understand them, and why they said what they said.

The history of economic thought is not normally taught this way, but then this book is not a normal history. It is, candidly, an irreverent, passion-ate, sometimes humorous, and often highly opinionated account of the lives and theories of famous economists, from Adam Smith and Karl Marx to John Maynard Keynes and Milton Friedman.

To enhance the readers’ interest in the book, I’ve added a variety of side-lights, including photographs, diagrams, boxed commentaries, and even classical music selections appropriate to the different chapters.

The Big Three in Economics – Adam Smith, Karl Marx and John Maynard Keynes 
Mark Skousen (2007)
The stories and ideas of these Big Three economists are told in context of a larger 
history I have described in greater detail in “The Making of Modern Economics”. 
In the introduction to that work, I describe two possible approaches to writing about 
the lives and ideas of economists, what I term the spectral versus the hierarchal 
approach. The most popular method of analysis I describe as a pendulum, by 
which historians place each economist somewhere along a political spectrum, 
from extreme left to extreme right. Simple though it is, I see several problems 
with the spectral approach. First, it treats Karl Marx and Adam Smith as coequals