Fellows Of The British Academy

"Following the financial crisis of September 2008 when the American investment bank Lehman Brothers collapsed, threatening to engulf the entire banking system, the British economist John Maynard Keynes returned to center stage. In the popular press and in the writings of many economists, Keynes featured prominently as governments around the world urgently sought ways to avoid economic collapse. (...) After only a brief delay, critics of Keynes’s ideas also began to appear; but the emergence of such critics only served to emphasize the fact of his return, for only a few years earlier Keynes’s name would not even have appeared in public debate about economic policy: his ideas were seen as having so little relevance that it did not even seem necessary to mention his name when discussing the performance of the economy."

"Historians now debate whether Britain had a ‘managed economy’ by 1939, the very term—die gelenkte wirtschaft—adopted by German economists in the 1930s to describe the Nazi economy."

"Industry was regarded entirely instrumentally by party, state and military, in terms of its ability to provide the sinews of war… The business community was characterized by a defensive opportunism in the face of state power."

"The outcome [of the Nazi economy] was a command economy, governed by military priorities, but run by a coalition of state officials, soldiers, party hacks and industrial technocrats."

"When the regime wanted additional industrial capacity or resources for the military economy which the private sector could not provide, it was created (or conquered) by the state… during the Third Reich state ownership expanded into the productive sectors, based on the strategic industries, aviation, aluminum, synthetic oil and rubber, chemicals, iron and steel, and army equipment. Government finances for state-owned enterprises rose from RM 4,000m in 1933 to RM 16,000m 10 years later; the capital assets of state-owned industry doubled during the same period; the number of state-owned firms topped 500."

"During the years that followed, Hitler and the Nazi movement were anything but the tools of German big business."

"Indeed, many businessmen seem on the evidence to have been wary of the closet anti-capitalism of the rank-and-file Nazis."

"Hitler was ‘an enemy of free-market economics’ and a ‘reluctant dirigiste.’"

"[T]here could be no guarantee in a free market that the interests of race or state as Hitler defined them would take priority over the interests of businessmen or consumers. After 1933 the role of the state in regulating and directing economic life increased sharply, first in order to encourage economic revival, then to divert economic resources to the growth of German military power… [which] led, in an unplanned, incremental way, to the establishment of a kind of command economy."

"In a remark made in 1932 to Otto Wagener, one of the party’s economic experts, Hitler observed that the business bourgeoisie “know nothing except their profit. ‘Fatherland’ is only a word for them.”"

"It has been estimated that about one-fifth of Nazi voters and members were drawn from the manual work-force. After 1933 the number of workers in the Nazi Party went up, a product of opportunism perhaps as much as conviction."

"Some big businessmen did contribute to the Nazi election funds but German capitalism cannot be regarded, on the evidence, as having collectively brought fascism to power in any direct sense. Fascism in Germany was a mass movement brought to power through collusion with a bankrupt but traditional elite, not as the puppet of big business."

"The [Nazi] regime was also able to use the state-owned multi-nationals as a ‘battering ram’ for entering economies that were not occupied territory."

"Göring industrial empire represented, in this sense, one of the major steps towards restricting private industrial capitalism and substituting a ‘völkisch’, state-run industrial economy."

"In the long run the [Nazi] movement was moving to a position in which the economic New Order would be controlled by the Party through a bureaucratic apparatus staffed by technical experts and dominated by political interests, not unlike the system that had already been built up in the Soviet Union."

"Nazi political hegemony in the end prevented German capitalists from acting as capitalists."

"Organizational design often focuses on structural alternatives such as matrix, decentralization, and divisionalization. However, control variables (e.g., reward structures, task characteristics, and information systems) offer a more flexible approach. The purpose of this paper is to explore these control variables for organizational design. This is accomplished by integration and testing of two perspectives, organization theory and economics, notably agency theory. The resulting hypotheses link task characteristics, information systems, and business uncertainty to behavior vs. outcome based control strategy. These hypothesized linkages are examined empirically in a field study of the compensation practices for retail salespeople in 54 stores. The findings are that task programmability is strongly related to the choice of compensation package. The amount of behavioral measurement, the cost of measuring outcomes, and the uncertainty of the business also affect compensation. The findings have management implications for the design of compensation and reward packages, performance evaluation systems, and control systems, in general. Such systems should explicitly consider the task, the information system in place to measure performance, and the riskiness of the business. More programmed tasks require behavior based controls while less programmed tasks require more elaborate information systems or outcome based controls."

"We struggle to manage complexity every day. We follow intricate diets to lose weight, juggle multiple remotes to operate our home entertainment systems, face proliferating data at the office, and hack through thickets of regulation at tax time. But complexity isn’t destiny. Sull and Eisenhardt argue there’s a better way: By developing a few simple yet effective rules, you can tackle even the most complex problems."

"Agency theory is an important, yet controversial, theory. This paper reviews agency theory, its contributions to organization theory, and the extant empirical work and develops testable propositions. The conclusions are that agency theory (a) offers unique insight into information systems, outcome uncertainty, incentives, and risk and (b) is an empirically valid perspective, particularly when coupled with complementary perspectives. The principal recommendation is to incorporate an agency perspective in studies of the many problems having a cooperative structure."

"Recent organizational approaches to control (e.g., Ouchi 1979) suggest two underlying control strategies. On the one hand, control can be accomplished through performance evaluation. Performance evaluation refers to the cybernetic process of monitoring and rewarding performance. This strategy emphasizes the information aspects of control. Namely, to what degree can the various aspects of performance be assessed? Alternatively, control can be achieved by minimizing the divergence of preferences among organizational members. That is, members cooperate in the achievement of organizational goals because the members understand and have internalized these goals. This strategy emphasizes people policies such as selection, training, and socialization."

"A 'popular libertarianism' might ... feel all that needs to be done to bring the world to justice is to institute the minimal state now, starting as it were from present holdings. On this view, then, libertarianism starts tomorrow, and we take the present possession of property for granted."

"The history of economic thought is irrepressible. It would survive even if it were banned … it would be carried on in secret in underground organizations. Many economists denigrate the history of economics as mere antiquarianism but, in fact, they have deluded ideas about the history of their own subject. After all, whenever anyone has a new idea in economics, whenever anyone hankers to start a new movement or school of thought, what is the first thing he or she does? Why, it is to rummage the attic of past ideas to establish an appropriate pedigree for the new departure. … Smith, Ricardo, Marx, Marshall and Keynes all drew on the history of economics to show that they had predecessors and forerunners; even Milton Friedman, when he launched the monetarist counterrevolution against Keynes, could not resist the temptation to quote David Hume over and again. The history of economic thought cannot be abolished and, were its study declared illegal, it would be studied in basements behind locked doors."

"Why did his interest in the concept of spontaneous order and the history of the doctrine of unintended social consequences undergo very little development after the 1960s? All of his political writings are in fact amazingly repetitious, exploring a small number of big themes which, however, are not further refined or extended in new contexts. As organizing concepts, they held, I am convinced, enormous potentialities but nevertheless Hayek himself failed to realize them."

"Hayek's career raises many puzzles and sometimes takes on the appearance of an endless trail of unresolved or only partly resolved issues."

"There were many Hayeks: Hayek, the political scientist; Hayek, the economist; Hayek, the philosopher of social science; Hayek, the psychologist. Even in these different roles, he played many parts."

"Modern economics is “sick”. Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences. Economists have gradually converted the subject into a sort of social mathematics in which analytical rigor as understood in math departments is everything and empirical relevance (as understood in physics departments) is nothing. If a topic cannot be tackled by formal modelling, it is simply consigned to the intellectual underworld. To pick up a copy of American Economic Review or Economic Journal, not to mention Econometrica or Review of Economic Studies these days is to wonder whether one has landed on a strange planet in which tedium is the deliberate objective of professional publication. Economics was condemned a century ago as “the dismal science”, but the dismal science of yesterday was a lot less dismal than the soporific scholasticism of today."

"The Lange idea of managers following marginal cost-pricing rules because they are instructed to do so, while the central planning board continually alters the prices of both producer and consumer goods so as to reduce their excess demands to zero, is so administratively naive as to be positively laughable. Only those drunk on perfectly competitive, static equilibrium theory could have swallowed such nonsense. ... in all the recent calls for reform of Soviet bloc economies, no one has ever suggested that Lange was of any relevance whatsoever. And still more ironically, Lange’s “market socialism” is, on its own grounds, socialism without anything that can be called market transactions."

"Modern Austrian economists go so far as to suggest that the Walrasian approach to the problem of multimarket equilibrium is a cul de sac: if we want to understand the process of competition, rather than the equilibrium end-state achieved by competition, we must begin by discarding such static reasoning as is implied by Walrasian GE theory. I have come slowly and extremely reluctantly to the view that they are right and that we have all been wrong."

"Despite entries on socialism, socialist economics and market socialism, and biographical entries on Oskar Lange and Ludwig von Mises, the Socialist Calculation Debate, so crucial in the revival of general equilibrium theory and the rise of modern welfare economics in the 1930s, is nowhere discussed at length in The New Palgrave."

"Nothing is more difficult than to turn and entire discipline around, asking itself to jettison its own history over the last 200 years."

"Joan Robinson's much-awaited textbook in “modern economics” perfectly exemplifies the typical attitude of Cambridge economists to micro-economics. The whole of traditional price theory is covered in one chapter … [some] prices are formed by conventional mark-ups on prime costs, the level of the mark-up itself being left unexplained. Apart from this chapter, the book is doggedly macro-economic in treatment … A striking omission from the book is any mention of the closely related concepts of externalities and public goods, which most economists would nowadays regard as the basic ingredients of “market failure” that has come to be fruitfully applied … to problems of pollution and congestion."

"Cambridge theories of value and distribution themselves suffer from the very malady which they hope to cure: rhetoric apart, they are deeply infected by static, equilibrium analysis of maximizing economic agents, acting with full information in a world of perfect certainty, as in the orthodoxy they deplore. … If there is something wrong with neo-classical economics – as there may well be – the Cambridge theories share all of its weaknesses and practically none of its strengths."

"Lionel Robbins's The Great Depression (Macmillan, 1934) is one of the great economic works of our time. Its greatness lies not so much in originality of economic thought, as in the application of the best economic thought to the explanation of the cataclysmic phenomena of the Great Depression. This is unquestionably the best work published on the Great Depression. … To his work, Robbins brought a clarity and polish of style that I believe to be unequalled among any economists, past or present. Robbins is the premier economic stylist."

"I picked up a copy of Lionel Robbins’s 1934 book The Great Depression in a used book shop in Norwich. It's quite revealing: judicious in tone, full of tables and facts, clearly meant to be seen as the work of a wise observer – indeed, a Very Serious Person.And utterly, utterly wrongheaded"

"I shall always regard this aspect of my dispute with Keynes as the greatest mistake of my professional career, and the book, The Great Depression, which I subsequently wrote, partly in justification of this attitude, as something which I would willingly see be forgotten. […] Now I still think that there is much in this theory as an explanation of a possible generation of boom and crisis. But, as an explanation of what was going on in the early ’30s, I now think it was misleading. Whatever the genetic factors of the pre-1929 boom, their sequelae, in the sense of inappropriate investments fostered by wrong expectations, were completely swamped by vast deflationary forces sweeping away all those elements of constancy in the situation which otherwise might have provided a framework for an explanation in my terms. The theory was inadequate to the facts. Nor was this approach any more adequate as a guide to policy. Confronted with the freezing deflation of those days, the idea that the prime essential was the writing down of mistaken investments and the easing of capital markets by fostering the disposition to save and reducing the pressure on consumption was completely inappropriate. To treat what developed subsequently in the way which I then thought valid was as unsuitable as denying blankets and stimulants to a drunk who has fallen into an icy pond, on the ground that his original trouble was overheating."

"It has been the object…to show that if recovery is to be maintained and future progress assured, there must be a more or less complete reversal of contemporary tendencies of governmental regulation of enterprise. The aim of governmental policy in regard to industry must be to create a field in which the forces of enterprise and the disposal of resources are once more allowed to be governed by the market.But what is this but the restoration of capitalism? And is not the restoration of capitalism the restoration of the causes of depression?If the analysis of this essay is correct, the answer is unequivocal. The conditions of recovery which have been stated do indeed involve the restoration of what has been called capitalism. But the slump was not due to these conditions. On the contrary, it was due to their negation. It was due to monetary mismanagement and State intervention operating in a milieu in which the essential strength of capitalism had already been sapped by war and by policy. Ever since the outbreak of war in 1914, the whole tendency of policy has been away from that system, which in spite of the persistence of feudal obstacles and the unprecedented multiplication of the people, produced that enormous increase of wealth per head…. Whether that increase will be resumed, or whether, after perhaps some recovery, we shall be plunged anew into depression and the chaos of planning and restrictionism—that is the issue which depends on our willingness to reverse this tendency."

"The economist studies the disposal of scarce means. He is interested in the way different degrees of scarcity of different goods give rise to different ratios of valuation between them, and he is interested in the way in which changes in conditions of scarcity, whether coming from changes in ends or changes in means—from the demand side or the supply side—affect these ratios. Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses."

"Time, as we experience it, is continuous; it contains no discrete “events.” The events are put there by reflection on the past. As the past becomes more remote the remembered events become fewer in num­ ber and more limited in kind. It is for psychologists to say just why we remember this and forget that, but at the end of the day, the remembered past reflects our interests. It makes us what we are now."

"In a 1967 article, “Virgin Birth,” Leach astutely foreshadowed the reflexivity of the late 1970’s and 1980’s, calling attention to the fact that anthropologists call their own practice religion but assert that other peoples practice magic. In the present volume he presents the dramatic case of the fabrication of the Aryan invasion, which shows how profoundly the seemingly objective academic endeavors are af­ fected by the mentalité of the culture to which they belong. Leach de­ scribes how cherished but erroneous assumptions in linguistics and anthropology were accepted without question. If the mentalité of the academic culture was in part responsible for the fabrication, geo­ politics was even more responsible for upholding the Aryan invasion as history. The theory fit the Western or British vision of their place in the world at the time. The conquest of Asian civilization needed a mythical charter to serve as the moral justification for colonial ex­ pansion. Convenient, if not consciously acknowledged, was the Aryan invasion by a fair-skinned people, speaking the so-called Proto-Indo-European language, militarily conquering the dark- skinned, peasant Dasa (Dasyu), who spoke a non-European language and with whom the conquerors lived, as Leach puts it, in a “system of sexual apartheid.” The first civilization in India, thus, was built by the Aryan invaders. A remarkable case of Orientalism indeed."

"The Aryan invasions never happened at all. Of course no one is going to believe that."

"Yet here is precisely where anthropologists might make a useful contribution, if only their scholarly associates would stop thinking of the Rig Veda as a garbled history book."

"The origin myth of British colonial imperialism helped the elite administrators in the Indian Civil Service to see themselves as bringing `pure' civilization to a country in which civilization of the most sophisticated (but `morally corrupt') kind was already nearly 6,000 years old. Here I will only remark that the hold of this myth on the British middle-class imagination is so strong that even today, 44 years after the death of Hitler and 43 years after the creation of an independent India and independent Pakistan, the Aryan invasions of the second millennium BC are still treated as if they were an established fact of history."

"Because of their commitment to a unilineal segmentary history of language development that needed to be mapped onto the ground, the philologists took it for granted that proto-Indo-Iranian was a language that had originated outside either India or Iran. Hence it followed that the text of the Rig Veda was in a language that was actually spoken by those who introduced this earliest form of Sanskrit into India. From this we derived the myth of the Aryan invasions. QED."

"The details of the theory fit in with this racist framework. Just as each member of the total family of Indo-European languages is lineally descended from one or another of a number of extinct “protolanguages,” so also are the speakers of these languages; hence the people who speak any particular language constitute an independent racial stock."

"Where the Indo-European philologists are concerned, the invasion argument is tied in with their assumption that if a particular language is identified as having been used in a particular locality at a particular time, no attention need be paid to what was there before; the slate is wiped clean. Obviously, the easiest way to imagine this happening in real life is to have a military conquest that obliterates the previously existing population!"

"Why is this sort of thing attractive? Who finds it attractive? Why has the development of early Sanskrit come to be so dogmatically associated with an Aryan invasion? In some cases the association seems to be a matter of intellectual inertia."

"The Allchins, in their archeological capacity, have consistently emphasized the continuity that links the residues of the Indus civilization with those of the later classical India in the Ganges basin and further south. Furthermore, they repeatedly emphasized that archeology provides no clear evidence of any mass movement of peoples from Central Asia into northern India. So why do they continue to pay deference to the “racist” notions of nineteenth-century philologists in this way? (Incidentally, there is no “general agreement that the Indo- Iranian languages . . . were originally spoken in the steppes of Eurasia”)"

"At one time social anthropologists used to complain that their archeologist colleagues had no sense of the overall coherence of human societies. Now, under the influence of Dumézil, who was himself in­ fluenced by Durkheim and Granet, most of the prehistorians who have specialized in India and Pakistan and most of their Indo- Europeanist philological colleagues have become committed to a functionalism of a wholly naive sort. They seem to assume that cultural systems and language systems are bonded together and intrinsically stable over long periods of time. If societies are left alone, they stay put; otherwise, they roll across the landscape like impermeable billiard balls. If the archeological record shows that in fact changes have occurred, their occurrence is always explained as the consequence of a movement of population that carries with it the products (both material and immaterial) of a preexisting, alien, self-contained culture. As a rule, the alleged movement of people takes the form of a military conquest. The mythology of the Dorian invaders of ancient Greece who reduced their Ionian predecessors to serfdom matches point for point the mythology of the Aryan invasion of northern India."

"Why do serious scholars persist in believing in the Aryan invasions?"

"In other words, the prominent place given to horses and chariots in the Rig Veda can tell us virtually nothing that might distinguish any real society for which the Rig Veda might provide a partial cosmology. If anything, it suggests that in the real society (as opposed to its mythological counterpart), horses and chariots were a rarity, ownership of which was a mark of aristocratic or kingly distinction."