I wanted to enjoy
Tony Judt’s Ill Fares The Land. His history of Europe, Postwar, is one of the
best narratives of modern history I’ve ever read. I know his humane and
always-interesting views from his essays and interviews. And of course it is
well-known that Judt was already impaired by his final illness, and facing his
death when he dictated this book. Impossible not to approach it as a
sympathetic reader. But I was disappointed overall, although it’s even so a
worthwhile and thought-provoking book.

The first sign
that this book was going to irritate as much as it inspired came in a section
reproducing a series of graphs from The Spirit Level by Richard Wilson and Kate
Pickett. This book – reviewed on this blog – has been controversial with much
of the controversy politically-motivated. Conservative groups have attacked the authors’ claim that inequality causes all
kinds of ills and is bad for the rich as well as the poor. However, some of the
critiques of the book – including mine and John Kay’s – have come from people
who are broadly sympathetic but point out the misuse of statistics. Wilson and
Pickett make the Stats 101 mistake of muddling causation and correlation, and
even in their correlations cherry-pick the observations that support their
hypothesis. There are many correlations presented which can be changed by including a different selection of countries.

So the Wilson and
Pickett argument might be true but they show no data to prove it. On the slender
reed of their book, Judt goes on to hang some strong claims about the US and UK.
Although I agree with some of his observations, many are massively overstated
with no evidence. For example, he writes of the UK’s “vestigial” system of
public education; 93.5% of children in the UK attend state schools (including
my own). Standards could be higher; “vestigial” is a ludicrous description.
Similarly he compares Norway’s 1991 welfare reforms to the 1834 New Poor Law in
Britain. I know nothing about Norway but this cannot be a factually sensible claim. And he
asserts that economic growth always leads to greater inequality. Again,
incorrect. Sometimes it does, depending on the country and its political
institutions and choices. He seems to think some NHS hospitals have been
privatized. I could go on – the point is that there are so many inaccuracies
and wild overstatements as to undermine the general argument.

I also differ
with the argument here about the importance of economics in causing the crisis.
Judt draws the now-familiar but of course interesting link from the Austrian
refugees such as Hayek and Schumpeter to Chicago economics and the efficient
markets theory. He quotes with approval Keynes on the influence of defunct
economists. This quotation continues with some less familiar lines:

“Madmen in
authority, who hear voices in the air, are distilling their frenzy from some
academic scribbler of a few years back. I am sure that the power of vested
interests is vastly exaggerated compared with the general encroachment of
ideas.”

Well, I don’t
know how to weigh the influence of one against the other, but do think this
greatly underplays the role of vested interests. Surely one should not downplay the power of the banking industry lobby? Perhaps I’m an old Marxist
without having realised it.

Having said all
this, Ill Fares the Land did make me think. It convinced me even more of
something that’s a strong theme of my forthcoming The Economics of Enough. That
is that we’re mistaken to think of state and market as either ‘opposites’ or
the only choices in arranging the organisation of the economy. Judt certainly
argues here that markets have demonstrably failed and therefore we need to
return to a more statist economy. In doing so he hardly touches on the reasons
for the swing away from state economic management in the 1970s and even
downplays the economic failures of central planning.

However, it’s become
increasingly clear to me that governments and markets tend to fail in the same
contexts and for the same reasons, such as asymmetric information or
non-rivalry. Market failure and government failure go hand in hand, which is why moving some task from one to the other so often ends in disappointment. We need to think of them as complementary social institutions. For example, governments can 'design' markets to function better.  We should
consider also a much wider array of institutions, usually overlooked in debates
about economic policy, although celebrated by the Nobel Prize awarded to Elinor Ostrom and Oliver Williamson.

This shouldn’t
entirely put you off reading Ill Fares the Land, even if only as an act of respect for a
marvellous public intellectual. And it is indeed a good, provocative
read, one which will inspire those who already agree. I’m just a bit disappointed in somebody I so greatly admired.