Richard Turnbull: “Deeply Responsible Business” by Geoffrey Jones

Geoffrey Jones is Isidor Strauss Professor of Business History at Harvard Business School and a fellow of the Academy of International Business. He is the author of several books in the broad field of business ethics from a historical perspective.

The author offers us a fascinating and informative historical review of what he calls “deeply responsible business”, a term which provides the framework for the book but which is, perhaps, slightly overworked. 

Jones uses the term “deep responsibility” to characterize the set of values of those “who have seen business as a way of improving society, and even solving the world’s problems” (page 4). He distinguishes his approach from both those who seek to rewrite the rules of the game, as he puts it, and also from the now somewhat discredited approaches of corporate social responsibility (although I could offer some defence of philanthropy in this regard). His central thesis “is that deeply responsible business leaders are motivated by a set of values that shape their practice” (page 5). Some might find that defining characteristic rather weak, but I welcome it, because it enables a proper discussion of values-based business approaches in a realistic way, dealing with character, integrity, wisdom and spirituality, without embracing neo-Marxist opposition to the market economy per se. Indeed, Jones specifically contests any idea that a manager in a for-profit business could never be virtuous.

 The book brings several important and significant insights.  Its most noteworthy contribution is placing the quest for responsible business into a longer historical view. Jones comprehensively demonstrates that it is not simply a recent phenomenon, but one with a long history that has exercised business leaders since industrialisation. He also helpfully places “deeply responsible business” into a global context, reminding us of the pitfalls of a simply western focus.

The book consists of ten chapters divided into three parts. The first four chapters are encompassed together under the heading “A Question of Responsibility.” Here Jones looks at some significant historical figures in business leadership and history. He covers George Cadbury, Edward Filene (the Boston businessman and pioneer of credit unions), Robert Bosch and examples from India (J.N. Tata) and Japan (Shibusawa Eiichi). This is the strongest, most insightful and interesting part of the book.

The first two chapters tell gripping stories, one of which I am very familiar with, and the other of which I knew nothing about. The first chapter deals with the story of the entrepreneurial Quaker, George Cadbury, who together with his brother, Richard, pioneered a moral approach to business. As Jones argues, given “this emphasis on trust and honesty, it is not surprising that Quaker enterprises became some of the earliest examples of socially responsible business” (page 25). Jones notes the central role of spirituality (here and elsewhere in the book in various forms), the importance of housing, welfare and flourishing of the workforce, the challenges of raising capital and the ownership structure and Cadbury’s wider commitment to the community. Virtue, wisdom and spirituality lay at the heart.

The second chapter was less familiar territory for me but I was captivated by the story. Edward Filene, born in 1860, ran the family retail business in Boston with his brother, Lincoln, and pioneered many business practices. Among his ethical approaches, he introduced employee training, paid high wages whilst seeking to keep prices low and was actively concerned with not only employee welfare, but also employee involvement. He introduced health and illness insurance and banking services for employees. Although Filene did not share their faith perspective, there are several crosscurrents here with the Quakers.

Geoffrey Jones quotes Filene that the purpose of business was to:

“serve people, not merely to support the business man concerned in it. I was not an idealist. I wanted profits. I even had a strong preference for becoming rich. Nevertheless, this discovery of what business really is did strange things to me. It made me want to serve” (page 53).

Of real interest was the story of Filene’s involvement in the development and promotion of the credit union network, which is a much more significant feature of the American financial landscape than, for example, in the UK. He was involved in the 1914 launch of the Massachusetts Credit Union and helped draft a series of eight principles of good practice (page 64). He launched the Massachusetts Credit Union Association in 1921 to promote the idea of credit unions which spread rapidly, although there was always some tension between state and federal provision. Filene was elected the first president of the Credit Union National Association in 1935, with 3,600 credit unions and 750,000 members. Those numbers had grown to 7,500 retail credit unions with 92 million members by 2010.

Part 2, “Turbulence” begins with a fascinating chapter on the history of Harvard Business School and its second dean, Wallace Donham, who had called in 1927 for business leaders to adopt what he called a higher level of responsibility (a further and helpful reminder of placing these ideas in historical context). Further chapters deal with the desire to reduce wealth disparities as an aim of business leaders, consumerism and some other matters. In these chapters the book slightly loses its way. They are the least convincing part of the book and certainly, on occasion, fall into virtue-signalling around business leaders’ personal political objectives and detracted from the really significant insights of the book. In particular, chapter 9, entitled “Social Three-Folding”, seems quite disconnected.

In Part 3, Geoffrey Jones brings us back to more contemporary debates with three chapters dealing with the rise of value driven business right through to the issues around ESG (“environmental, social and governance”) and B Corps. He provides a balanced overview of the strengths and challenges of these movements. He is particularly helpful with his supportive critique of B Corps – though there was no mention of the UK’s B Corp movement, which has made some advances. 

In his conclusion Jones reminds us of the reason why his book makes a good and useful contribution:

“As we delved into the history of deep responsibility, we saw many examples of business leaders across time and space who combined making profits and pursuing positive social impact” (page 342).

Jones argues that deeply responsible business will select an industry which does no harm (though that might be easier to define in some instances than others), will engage with stakeholders with respect and humility and support communities. He notes that affecting “a single city might be less glamorous than “reimagining capitalism”, but it can greatly enhance the lives of generations of people” (page 345).

Jones should be congratulated for recognising that a values-based approach to business has a long and honourable history but is not a panacea and that there are weaknesses as well as strengths. In this he is a realist and enhances his overall arguments. He recognises the values which shape character, virtue and spirituality and the need to convince the mainstream of business rather than simply movements on the margin. This is a good book, which I recommend, albeit slightly disappointed with the middle chapters.


“Deeply Responsible Business,” by Geoffrey Jones was published in 2023 by Harvard University Press (ISBN: 978-0-674-91653-1). 431pp.

Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.





Neil Jordan: “Faith in Markets: Abrahamic religions and economics”, edited by Benedikt Koehler

In Faith in Markets, Benedikt Koehler (PhD), a fellow of the Institute of Economic Affairs, has brought together a series articles that consider the ways in which Christianity, Judaism and Islam have encouraged adherents ‘towards behaviours that tended to market economics’ (page 7). The collection discusses the three major Abrahamic faiths and also a contains a chapter looking at eastern religious traditions more broadly, but the focus in this review is on the Judaeo-Christian tradition specifically. The first part of the book considers the mutual influences of religious practice or belief and the market, with three of the chapters in this section being written by the volume editor himself. One of these shows how the teaching of Moses revolutionised the economic behaviour of the Israelites and was unique in basing economic norms on theology. Extending the Sabbath principle to economic life, together with a ban on usury, Moses implemented what amounted to an egalitarian approach to commerce and a de facto system of welfare. Of particular interest in this part of the book was Koehler’s chapter addressing the development of property rights in early and mediaeval Christianity. This piece provides a fascinating overview of the dispute between the Franciscans and the Papacy on the subject of ownership, showing how Pope John XXII established a view, supported by scripture, that grounded property rights in the divine will, independent of and prior to any rights granted by the state – a view which contrasted with the earlier tendency among both pagan and Christian thinkers to link property rights with human convention. Esa Mangeloja and Tomi Ovaska continue the examination of Christian thought in their discussion of the common-property-based economic and political system of Thomas More’s Utopia, showing that the work is in fact full of economic concepts and that Utopia lends itself to a proper analysis in economic terms, just like other economic systems.

The second part of the book consists of chapters that highlight difficulties or paradoxes in the teaching of each of the Abrahamic faiths as they interpret or apply ancient authorities and again, my focus is on the Judaeo-Christian context. David Conway’s contribution examines the manner in which, by rigidly applying the provisions of the Pentateuch regarding poor relief and education, Israel’s ultra-orthodox communities (Haredim) have created an unsustainable welfare burden for the state. This is the result of low labour market participation caused in part by publicly funded specialist schooling, in which men engage in near-perpetual religious study while ordinarily core subjects such as mathematics are not taught – thus exacerbating the employment problem. This arrangement is traced to the requirement in the Hebrew scriptures that those without means be provided for and that the Levites be supported by a tithe in return for their provision of education in national history and divinely mandated law. As honoured in contemporary Israel, however, these obligations place a huge strain on the public finances and ignore the spirit of the original laws themselves, which favoured economic activity, required recipients of poor relief to work where possible and sought to restore those who had fallen on hard times to economic independence and liberty as soon as possible.

In a very engaging chapter, Martin Rhonheimer considers the subject of social justice, beginning with the modern tendency to use this concept in the criticism of inequalities of wealth. The author agrees with F.A. Hayek, that the notion of ‘justice’ makes no sense when applied to the outcomes of economic systems because they are simply outcomes of a particular order and are not aimed at by any individual or group. However, he adds that it does make sense to talk about the systems themselves as just or unjust, insofar as they are devised or at least allowed to persist by human beings. In short, if the rules of the system are unjust – for instance by discriminating against a particular group such that that group cannot engage in economic activity on equitable terms – then we can change the rules in the interests of fairness. Moreover, we quite legitimately use the term ‘just’ in relation to freely acting individuals, insofar as their actions have some positive bearing on society. Rhonheimer’s point is that ‘social justice’ refers to the social or common good, and we would consider businesses, charities and voluntary organisations who contribute to this as being involved in the exercise of social justice as virtue. Thus, while the term ‘social justice’ might have no purchase in distributive terms (with reference to ‘outcomes’), it certainly can be applied to economic orders, organisations and individuals – and it is here that the tension in Christian thought emerges. Rhonheimer contends that the teaching of the Catholic Church has moved away from an understanding of social justice that is broadly compatible with this perspective, towards a view that is closer to the contemporary ‘distributive’ attitude. As such, it has in recent decades become more inclined to favour redistributive social policies and seems less inclined to take account of the very real benefits of a market economy in contributing to the common good. Thus, the Church’s traditional teaching recognised social justice as a moral virtue from which actions conducive to the common good flow, but we must now wonder how easily this sits with its increasingly ‘(re-)distributivist’ view of ‘social justice’ and the statism that this implies.

Overall, this collection contains several interesting studies and for the most part, the writing is very accessible, though some chapters – such as that considering Utopia – would require a degree of prior knowledge in order for the reader to fully appreciate the proffered analysis. More difficult is identifying a general argument or unifying narrative that runs through the book. The individual chapters have previously appeared in the journal Economic Affairs and some reflect the brevity of the article format, but more significant is the overall feeling that they have not been entirely integrated so as to compose a single, unified volume. As can be the way with edited collections, while each chapter is interesting, the book as a whole lacks a clear sense of overall purpose to pull the individual studies together. Perhaps, however, given the subject, this would be to ask too much in this case. Since it deals with three of the world’s largest religions and is not limited to a particular historical period or geographical region, it would be impossible to give more than a series of studies demonstrating different ways in which the Abrahamic faiths have steered their adherents towards practices that tend to market-oriented behaviours and outlooks. A unified account that shows how this occurred frequently and consistently over the centuries would require a much longer book – most likely in several volumes.

While perhaps lacking a sustained argument to bring the entire book together, as a collection that provides thematically organised snapshots of certain strains of thought and practice within major faiths, while considering tensions that have arisen in relation to market principles, this volume will appeal to those with interests in the overlap between religious and economic thought and practice.


‘Faith in Markets: Abrahamic religions and economics’, edited by Benedikt Koehler, was published in 2023 by the Institute for Economic Affairs (ISBN: 978-0-255-36824-7). 240pp


Neil Jordan is Senior Editor at the Centre for Enterprise, Markets and Ethics. For more information about Neil please click here.



Richard Godden: “The Power Law: Venture Capital and the Art of Disruption” by Sebastian Mallaby

In the UK at least, the public image of the private equity industry is not good: those involved in it are widely regarded as a secretive, avaricious, immoral plutocracy that needs to be reined in. One may, however, wonder how many people know enough about the industry to be able to assess it properly, and how many realise that the technological revolution of the past 50 years would not have happened without the capital provided by venture capitalists to thousands of companies, including household names such as Intel, Apple, Cisco, Amazon, Google and Facebook. Even fewer people have any idea about the way in which the venture capital houses do business.

The Power Law sets out to remedy this ignorance. Sebastian Mallaby says that the book has two broad purposes: first, “to explain the venture-capital mindset” and, secondly, “to evaluate venture capital’s social impact” (page 14). However, its biggest strength is that it will ensure that its readers are better informed. It provides a sweeping overview of the fascinating history of venture capital from the early days of the 1950s to today and it gives the reader a good feel of the culture of the industry by drawing out common themes as well as stressing the differences in the approaches of the various venture capital houses and changes over time.

Sebastian Mallaby is a journalist and it shows. The Power Law is very readable and includes many stories and a considerable amount of direct speech. This may annoy some readers and obviously raises a question regarding the reliability of what is stated. For example, it must be doubtful whether those involved in the meeting between Don Valentine of Sequoia and Steve Jobs and Steve Wozniak of Apple in 1976 can really accurately remember precisely what was said but this has not prevented Mallaby setting out nearly half a page of quotations as if from a recording of the conversation (page 83f). There is also clearly a risk that the account of the meeting and other incidents related by Mallaby contain exaggerations brought about by people’s memories filtering the ordinary and over-emphasising the extraordinary. There may even be mythology creeping in. However, Mallaby says that he conducted “some 300 interviews” (page 405) as well as using written sources and this should at least mitigate the risk of distortion.

The book adopts a chronological approach and focuses on the people and organisations involved. Among the venture capitalists, it focuses on people like Arthur Rock (who more or less invented the industry), Don Valentine (of Sequoia, the most successful venture capital house over a long period of time) and Tom Perkins (of Kleiner Perkins Caufield & Byers). Among the founder entrepreneurs, it focuses both on household names like Steve Jobs and Mark Zuckerberg and others who may now be fading from memory such as Leonard Bosack and Sandy Lerner (the founders of Cisco). Mallaby does not seek to explain legal technicalities of the industry but he gives sufficient information to enable the non-specialist to appreciate the significance of developments such as the advent of equity-only time-limited funds, the use of limited liability partnerships and the grant of stock to employees.

The picture of venture capitalists that emerges is very different from their popular image. Of course, their aim is to make money but Mallaby is at pains to disprove the view that they make it by luck or simply by turning up like a predator when they sniff it. Their common characteristic is a willingness to take what many would regard as absurd risks. As Mallaby puts it, they acknowledge “the logic of the power law” (page 47). Put simply, venture capitalists see their downside as limited (they can only lose the money they put into a venture) but the upside as unlimited in a world in which “success multiplies success” (page 7) and thus “The best way to manage risk [is] to embrace it fearlessly” (page 47).

Uninformed public comment often seems to assume that venture capitalists are involved in win-win situations but Mallaby provides a wealth of evidence to the contrary including the fact that Kleiner Perkins lost money on six of the fourteen investments in its first fund, with Tandem and Genentec providing 95% of the profit in that fund (page 79), and “counting venture funds raised between 1979 and 2018, the median fund narrowly underperformed the stock market index” (page 376).

Mallaby draws attention to various things that will surprise many. In particular, the role of venture capitalists has been “to provide not simply money but also managerial counsel, assistance with hiring, and tips on everything from marketing to finance” (page 29). Furthermore, the culture within some of the most successful houses (notably Sequoia) has been remarkably team based and supportive rather than individualistic and aggressive and this spirit of co-operation has even extended to co-operation with competitors, “coopetition” as Mallaby calls it (page 107). Indeed, it could be argued that the existence of a community of venture capitalists has been key to the success of the industry.

The book also stresses the differences in the style of different houses: some (like Accel) focussing on a single industry and some on multiple industries; some (like Peter Thiel’s Founders Fund) not believing in the mentoring of founders but others regarding this as a key element of the necessary package; some (Arthur Rock’s Davis & Rock being the prime example) requiring a high degree of control but others being prepared to back the founders almost no matter what.

Mallaby’s portrait of the founder entrepreneurs has an element of the tabloid press about it and it will reinforce the popular image of them as a bunch of irredeemable oddballs. Mallaby makes sure that Arthur Rock’s comment about Steve Jobs’s hygiene is not forgotten (“I’m not sure, but it may have been some while since he had a bath”, page 86) and most readers will be entertained by the story of Mark Zuckerberg and Andrew McCollum turning up at the Sequoia headquarters late and in their pyjamas (page 194). After learning this, the reader may well be inclined to agree with the view of Peter Thiel that the best start-up founders are “often arrogant, misanthropic, or borderline crazy” (page 211).

The book provides an excellent analysis of the balance of power between the venture capital houses and the founder entrepreneurs. Those who see venture capitalists as ruthless puppet-masters may be surprised by this. For many years, the balance lay with the venture capitalists and there are well-known examples of them flexing their muscles (notably in the sacking of Lerner from Cisco following a venture capital “coup” led by Sequoia). However, Mallaby charts the changing balance of power over time including what he terms the “youth revolt” (i.e. the attitudes of a new generation of founders 20 or so years ago) facilitated by the considerable amount of capital then available in the market and the willingness of some investors to yield total control to the founders.

How should we evaluate the venture capital industry’s contribution to society? Mallaby turns to this question in the final chapter of his book and his conclusion is, rightly, overwhelmingly positive: “venture capitalists as a group have a positive effect on economies and societies” (page 379). Unfortunately, however, his analysis of the key issues is brief (occupying less than 13 pages) and, whilst much of what he says is powerful and he may legitimately point to the rest of the book as further evidence in support of his conclusion it would have been good to see a more in-depth analysis. Many people consider the rewards both for the venture capitalists and the founder entrepreneurs to be obscene and consider there to be a lack of accountability and a need for regulation, evidenced by some of the spectacular failures of venture capital backed companies (including the notorious Theranos scandal, the failure of WeWork and the governance and cultural issues at Uber).

The issue of rewards needs to be addressed head-on. They are, in part, an unalterable feature of the modern global economy and “the power law” and, unless those involved are to be severely taxed (which would remove the incentive to take risk), the high level of reward will remain. More fundamentally, the important issue is not how great the rewards are but what the impact on society of the actions of the venture capitalists and founder entrepreneurs is. Put simply, should we care that Steve Jobs and his venture capital backers became very rich? Surely not: they revolutionised communications for billions of people around the world and the impact of this has been overwhelmingly positive.

The demand for regulation is also misplaced. What exactly needs to be regulated? As Mallaby rightly points out (page 380), it is necessary to distinguish between the possible need to regulate the businesses in which venture capitalists invest and the question whether the venture capital businesses themselves need more regulation. The case for regulation of the latter is weak. Any attempt to regulate their investment decisions would either involve some kind of substitution of a regulator’s judgement of risk for that of the venture capitalists or be little more than the imposition of bureaucratic requirements. It is hard to see that either approach would have societal benefits.

The scandals, governance failures and bankruptcy of companies in which venture capitalists have invested do not in any way alter this point. In some cases, the venture capitalists were doing the right thing not the wrong thing. For example, the venture capital houses of Silicon Valley refused to invest in Theranos and it was venture capitalists who forced management change at Uber. We should also not forget that the technology revolution has required, and continues to require, that great financial risks be run by investors and some of the risks will materialise. The failure of a company does not demonstrate a flaw in the underlying economic system. Indeed, it frequently reflects the vibrancy of that system.

Of course, the venture capital industry has had its problems but so do all human institutions. The bottom line is that, to quote Mallaby, “Business schools and finance faculties have conclusively shown that VC-backed companies have a disproportionate impact on wealth creation and innovation” (page 389). This is for the benefit of the whole of society.

Mallaby has done well in presenting the positive story of the venture capital industry in an engaging and accessible manner. The Power Law deserves to be widely read.


“The Power Law: Venture Capital and the Art of Disruption” by Sebastian Mallaby was published in 2022 by Allen and in 2023 in Penguin Books (ISBN-13:9780141988948). 404pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 30 years during which time he has advised on a wide range of transactions and issues in various parts of the world.

Richard’s experience includes his time as Secretary at the UK Takeover Panel and he is currently a member of the Panel. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the firm’s Executive Committee.


John Kroencke: “How the World Became Rich: The Historical Origins of Economic Growth” by Mark Koyama and Jared Rubin

In their recent book How the World Became Rich (published 2022), the economic historians Mark Koyama and Jared Rubin provide an accessible introduction to the best – often competing – explanations for sustained economic growth. The obvious difficulty of this approach is that it can seem scattershot, but Koyama and Rubin weave disparate threads into a cohesive lay of the land.

This is an important task. Academic economics has become increasingly inaccessible to those outside the field. The advanced methods used by practitioners on highly specific questions yield valuable insights in academic journals and books, but rarely inform popular narratives that in many cases offer more heat than light.

The book is divided into two main sections and eleven chapters. After an introductory chapter (including among other things the hockey stick graph of per capita income), the first section is divided into five chapters on the high-level explanations: geography, institutions, culture, demography, and colonisation/exploitation. The second section deftly weaves these categories of explanation and historical facts to explore four topics in chronological order: why did sustained economic growth that resulted in the world becoming rich occur first in Northwestern Europe, how was Britain’s Industrial Revolution different from what came before, the Second Industrial Revolution and the rise of the United States and Soviet Union, and Asian economic growth in the last seventy years.

The first section is as good an introduction to the existing explanations as one can hope for. In presenting these explanations, Koyama and Rubin exhibit the kind of judgement one fears they might not when they write that “the goal of this book is not to privilege our preferred theories at the expense of others” (page 10). They present the strengths of, for instance, geographical explanations for some types of variation in comparative economic development but also the obvious, fundamental problem of the timing of the rise in real incomes for geographical explanations.

On the controversial and increasingly influential debate on the role of colonisation and exploitation in the Industrial Revolution, the authors are quite firm: the most influential and most incendiary claims overpromise. Colonisation, especially in places like the Belgian Congo, terrorised and extracted wealth from natives and their land but provide little explanatory power for the great increase in the rate of innovation and real per capita income.

In the chapters on culture and institutions, the authors introduce explanations that were discounted by earlier (perhaps more familiar) materialist explanations. “To understand the causes of growth,” they summarise Douglass North as thinking “one has to study the incentives that led individuals in some societies to build factories and invest, to go to school, and to acquire new skills” (page 38). They then summarise the work of the last decades on the roles of various institutional features like the rule of law, property rights, and political institutions in economic growth.

On cultural explanations they show the weakness of broad arguments like, for instance, the supposed fundamental incompatibility of Islamic culture and economic growth while also showing the real, path-dependent effects of institutional features (like bans on printing presses, and the ability to use slave soldiers rather than cede power to feudal lords and parliaments) themselves influenced by cultural and religious features of Islamic society (the subject of Rubin’s previous book).

This is representative of a particular strength of the book: it is supported by contemporary research on economic history both before the Industrial Revolution and outside of northwestern Europe that is little known outside the field.

The book is most interesting in the second section, particularly in chapters 7 and 8. Rather than simply dismissing geography, colonisation, or demography in some quest for a monocausal explanation, the authors weave it into their nuanced chronological narrative about first how and why sustained growth began in Britain and then how it spread until much of the world had escaped poverty.

By the 18th century, the authors argue, there were a collection of preconditions for sustained economic growth in northwestern Europe most particularly in the Netherlands and Britain. For instance, many of the common institutional explanations for “Why Britain?” also apply to the Netherlands. These explanations are not wrong in the sense that they were necessary, but they were obviously not sufficient for the increase in commercially important innovations and then the resulting rise in real income per person. Among other things they show that, compared to the Netherlands, Britain was better able to fund wars (and therefore not smother economic growth with high rates of taxation) and better able to reform institutions to sustain an unprecedented rate of economically viable commercial innovation (as distinct from scientific discoveries, many of which were made elsewhere).

Drawing on recent research they show two of the main explanations for how Britain stood apart and turned these preconditions into innovation and industrialisation. Past periods of rising incomes were snuffed out by Malthusian dynamics (discussed in Chapter 5) and they stress the crucial difference in the 18th and 19th century Britain that allowed escape: “Above all else, the major revolutionary change during the Industrial Revolution was an increase in the rate of innovation” (page 150). One theory of this increase is a more materialist theory about it being the rational response to relatively high labour costs and relatively low energy costs. The second is more dependent on specific ideas and cultural attitudes about innovation, science, and human progress. While these ideas may have been widespread throughout Europe, only Britain had both the skilled craftsmen that industrial innovation required and the institutional preconditions.

Britain’s Industrial Revolution started the climb out of widespread poverty with positive knock-on effects for the rest of the world, but its cause is not the only important question covered in the second section. In the span of just 40 pages Koyama and Rubin race (perhaps too quickly) through the resulting benefits of innovation and industrialisation in Britain and then the (uneven) global diffusion of economic growth.

The authors rightly stress the important distinction between innovations, which determine economic growth at the frontier, and the diffusion of these productivity-enhancing innovations, which determines the ability of less developed countries to catch up with the wealthiest ones. Catch up growth is not simply a question of adopting new technologies, but rather (among other things) having the right set of institutions to enable their adoption. Chapter 10 delves some of the examples of successful convergence emphasising the culturally and politically contingent nature of reforms that enable it (and the past barriers to convergence).

Koyama and Rubin have managed to condense these and other issues into just 240 pages. This is mostly for the better. However, the limited length and scope of the work necessarily rules out a rich, compelling historical narrative. The prose does not stir and some conceptual references could be better explained, but these criticisms are insignificant compared to the successes of what the book does do. Its own claims and its assessments of existing work will be interesting to a wide range of readers.

Others may be disappointed by the lack of easy answers for the remainder of the world that still struggles with extreme poverty:

“We know what has worked in various historical contexts. But merely transplanting what worked elsewhere to poverty-stricken societies isn’t the solution. Context matters. Culture and the historical past matter. So do demography and geography” (page 224).

Koyama and Rubin don’t offer an easy answer; they offer to introduce readers to the best ideas surrounding some of the most important questions in human history.


“How the World Became Rich: The Historical Origins of Economic Growth” by Mark Koyama and Jared Rubin was published in 2022 by Polity Press (ISBN 13: 9781509540235). 259pp.

John Kroencke is a Senior Research Fellow at the Centre for Enterprise, Markets and Ethics. For more information about John please click here.





Kaetana Numa: “In Defense of Public Debt” by Barry Eichengreen et al.

Barry Eichengreen is Professor of Economics and Political Science at the University of California, Berkeley. His economic and economic history research focuses on monetary and financial systems, and he is an author of over 20 books, among them Golden Fetters: The Gold Standard and the Great Depression, 1919–1939, Globalizing Capital: A History of the International Monetary System, and The European Economy since 1945: Coordinated Capitalism and Beyond.

Eichengreen’s and his co-authors’ In Defense of Public Debt is organised into 14 chapters, tracing the history of public debt from its earliest origins in the Greek city–states and the Roman Republic, and arriving at the Covid economic scene (the book was published in September 2021). Each chapter focuses on a specific time period with its particular theme and relevant cases studies. For example, Chapter 3 “States and the Limits of Borrowing” recounts the fiscal and political developments primarily in the European states in the sixteenth–eighteenth centuries that augmented commitment to repay debts and enabled more borrowing; it also identifies certain ‘impediments’ (such as fiscal decentralization and competition) that limited states’ abilities to borrow more.

The book reads like a history of public debt, and in that respect, it presents a thorough historical account of the topic. In addition to analysing the overall levels of public debt, the authors also examine the development of the actual methods of public borrowing, creditors’ rights and representation, and the role of banks and various intermediaries. Readers may be pleased to find that the history of taxation and monetary systems are interwoven into this historical narrative of public debt.

In the introduction chapter, the authors promised to give a “balanced account” of public debt; curiously, “balanced” was meant as “placing more weight on the positive aspects than is typical of the literature” (page 5). Even so, the positive aspects put forward in this book are often vague. There is surprisingly little discussion of the use and efficiency of public debt, beyond the general recognition that states have historically relied on borrowing to fund wars, invest in infrastructure, social services, and, more recently, to bail out the financial sector and bankroll public services during a pandemic. The readers are expected to take it for granted that debt is used to fund vital causes. Yet are all uses of debt equally sound and defensible? This question is mostly ignored, except for some hints that spending on general consumption would not be as desirable as spending on investment. It admits that even though budget surpluses should be pursued to reduce debt when the economy is growing, this is difficult to achieve in practice. When it comes to generating primary surpluses, the book’s proposed answer is always higher tax, rather than spending cuts.

Eichengreen’s book leaves one with an impression that there is economic evidence of a positive relationship between public debt and economic growth. This relationship is meant to act as a “positive feedback” in the economic growth models, whereby “The link from public debt and its role in financial development to faster growth, and from faster growth back to financial deepening and economic development, is just such a feedback” (page 212). Among other things, we learn that with respect to foreign borrowing in the nineteenth century, “Countries that borrowed more invested more and grew faster on average, suggesting that issuing sovereign debt paid” (page 7), with a concession in the Notes section that evidence of a positive link “is weaker for the twentieth century” (page 228). However, a more balanced account of public debt would have had to mention the ample economic evidence of a negative relationship between high levels of public debt and economic performance. For example, most recent economic studies on this subject identified a negative link between high public debt and economic growth; there is also a tipping point threshold (in the range of 70% to 100% of GDP) when debt begins to have a significantly detrimental effect on growth (see, for example, De Rugy, V. and Salmon, J. Debt and Growth: A Decade of Studies).

This is not to say that Eichengreen’s book does not mention any negative aspects of public debt, as it does recount examples of heavy interest payments, defaults, and, in worst cases, loss of sovereignty. Yet even though the various debt default episodes make for interesting reading, they ignore the subsequent harm caused to society, and do not show the full extent of the social and economic miseries experienced during such episodes. Moreover, the negative aspects are often presented as examples of debt mismanagement or perils of public debt, even though they could in fact point to more systemic issues.

The question of morality of accumulating public debt does appear towards the end of this book, yet the moral arguments against public debt, as well as those making these arguments, are presented here in a dismissive tone: “They fret”, “worry”, “complain” (page 181). Readers appreciating the vital link between market and ethics may find it strange to see moral objections to public debt being dismissed outright as not belonging to the economic realm, with the authors suggesting that “there was also another view, in which debt was viewed in economic rather than moralistic terms, and where its issuance was seen as a solution to problems, not as their source” (page 182). Yet as already noted above, plenty of recent economic evidence shows high levels of public debt having a detrimental effect on economic performance; thus, even when analysed in economic terms, debt is hardly a solution. Meanwhile, moral issues stemming from public debt, such as the distributional and intergenerational justice issues, raise serious dilemmas that deserve to be answered.

The lack of a response to these moral arguments is but one of the questions left unanswered. Another one, just as problematic, relates to how to deal with rising debt in the future. This book does not engage with the alarming long–term projections of public debt. For example, the UK public sector net debt as a share of GDP is forecast to quadruple by 2070 to 418% of GDP (Office for Budget Responsibility Fiscal Sustainability Report – July 2020). Developed countries will be faced with growing social security and healthcare costs (which have not been pre–funded and are further hampered by unfavourable demographic circumstances), raising more issues for the policymakers. Even with respect to the immediate public debt situation, Eichengreen’s book concedes “there are no simple solutions” (page 223), noting the possibility of runaway inflation (even though the book was sceptical about such a development), the dangers of higher interest rates, and the limited prospects of economic growth or budget surpluses.

Unfortunately, the fears of sharp inflation and rising interest rates have already materialised by mid–2022. This brings us back to the moral issues with debt, namely, to the responsibility of architects of fiscal and monetary policy for the economic pain presently being inflicted upon the wider society. Eichengreen’s book referred to debt as a temptation to which politicians may succumb to. This demonstrates that there is more to public debt than pure economics, and that those seeking a way out of the looming debt crisis should not dismiss the ethical arguments against public debt after all.

Those looking for a truly balanced account of public debt will need to look elsewhere but there is much of value in this book for those interested in economic history.


“In Defense of Public Debt” by Barry Eichengreen, Asmaa El–Ganainy, Rui Esteves and Kris James Mitchener was published in 2021 by Oxford University Press (ISBN-13: 9780197577899).  320pp.

Kaetana Numa, PhD is Research Fellow at the Centre for the Study of Governance and Society, King’s College London.






 Andrei Rogobete: “Democratic Capitalism at a Crossroads: Technological Change and the Future of Politics” by Charles Boix

Charles Boix is Professor of Politics and Public Affairs at Princeton University. His primary research interests are in political economy and comparative politics, with a particular emphasis on empirical democratic theory. Previous notable publications include Political Parties, Growth and Equality (Cambridge University Press, 1998), Democracy and Redistribution (Cambridge University Press, 2003), and Political Order and Inequality (Cambridge University Press, 2015).

In Democratic Capitalism at a Crossroads Charles Boix seeks to explore both the historical chapters of democratic free-market tensions and current issues facing capitalism within western democracies. The author divides the narrative into three main eras: 19th century Manchester capitalism, 20th century Detroit capitalism, and the current 21st century Silicon Valley-based model of capitalism. The final chapters consider the implications of these forms of capitalism on the future workforce, in particular with respect to automation, the rate of technological change, income distribution and politics (or the role of government more broadly).

Charles Boix’s thesis is that, “the consequences of today’s technological changes […] are not set in stone. They will work their way into the economy through their direct (although, at this point, still uncertain) impact on the demand for different types of labour and on the cost and ownership of capital.  Yet they will also depend on the institutional and political strategies we follow in response to those technological transformations” (page 3).

The book is well-written and comprehensively researched. The author does a commendable job of avoiding the clichés that often surround the topic of technology and maintains both nuance and a satisfactory degree of objectivity. We will touch upon some of the more intriguing points made throughout the book.

Chapters 1-3 explore the impact of technology on society and politics from a historical perspective. Chapter 2 dedicates a fair amount of attention (and rightly so), to the first industrial revolution. Boix points out that automatization brought by a new class of comparatively poorly skilled labour that replaced “…an old class of artisans and highly skilled operators” (page 57). In 20th Century capitalism however, the advent of technology (and automisation more specifically), led to a further replacement of low skilled workers with semi-skilled workers – albeit in much lower numbers. This new workforce of semi-skilled labour was needed to oversee, maintain, and repair the machinery in operation. Yet perhaps the most important consequence of the process of automisation was the arrival of “… new layers of white-collar, relatively well-paid jobs – from accounting departments to car dealerships” (page 59).

This in effect resulted in a new form of Corporatism whereby the relationship between employees, trade unions and the employers are far more interwoven than before. An interesting point is made in chapter 3 whereby the continual development of a company’s human capital became a vested interest for the company itself. Henry Ford for instance invested heavily in the education of his workforce. He established the Ford English School to teach English to recently arrived immigrants and he even established a “…Sociological Department, with about two hundred employees, to ensure that the family lives and overall behaviour of his factory workers did not deviate from a clear set of norms such as thriftiness, continence, and basic hygiene” (page 78).

Chapters 4-6 move the conversation to the contemporary debate around technology, artificial intelligence (AI), and its impact on the labour markets and consequently, on democracy itself. Charles Boix rightly points out the difference between simple AI and machine learning. The key form of impact here is that while computers/AI displaced routinable jobs at a large scale, they have “…hardly replaced nonroutine jobs” (page 103). Though this may be changing with machine learning.

Boix acknowledges in Chapter 6 that, ultimately, we cannot predict the impact of technological change or indeed “…depict the society it will give birth to…” (page 180). Therefore, any future policy responses must be made in a piecemeal fashion (ibid.). The chapter concludes the book with a few tentative proposals for reform. Rather unexpectedly, Universal Basic Income (UBI) is presented as one such proposal – yet the arguments made against UBI seem more convincing than those in favour. For instance, the author claims that UBI has two main advantages: “First, it may free individuals from routine, repetitive tasks, allowing them to engage in more creative and inventive professional paths. Second, it should reduce poverty and arguably, equalise conditions” (page 206). Perhaps the keywords here are ‘may’ and ‘should’ – one cannot help but feel that this is mere wishful thinking.

On the challenges of UBI, Boix acknowledges a rather lengthy list: UBI cannot be tailored to individual needs, it distorts the incentives that people have to work, it may keep the pre-existing structure of inequality in place, it reduces the need for schooling, it enables firms to offer lower wages, it affects the inner motivations and ambitions of youngsters, it can create antagonism between those that are earning against those that are not (pages 207-208). We don’t have space to go into further detail here, and surely each reader will make up their own mind – but it is a strange and slightly disappointing end to an otherwise interesting book.

In summary, Democratic Capitalism at a Crossroads is an engaging read about the impact of technological change on the transformation of labour markets, society and indeed, democratic systems themselves. It is accessible to the educated reader and while some might take issue with certain sections of the book, the author does a laudable job of curtailing his more subjective opinions by also presenting the counterarguments. One result is that some readers may find the counterarguments more compelling than the main arguments themselves (UBI is a case in point). This might not necessarily be a bad thing. The book is a recommended read to those looking to expand their knowledge of the intersection between technology, the economy, and democracy.


“Democratic Capitalism at the Crossroads” by Carles Boix was first published in 2021 by Princeton University Press, ISBN: 9780691216898, 272pp.

Andrei E. Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.





Lord Griffiths: “The Future of Capitalism” by Sir Paul Collier

The Future of Capitalism tackles one of the big issues of our time. Its impressive author, Sir Paul Collier, CBE, FBA is a distinguished member of the Blavatnik School of Government at the University of Oxford and a seasoned practitioner in development economics for which he received a knighthood. He is convinced that capitalism is the only economic system which can generate mass prosperity. Regrettably it has also divided societies, created dysfunctional democracies and posed risks to the planet. More than that he claims it is morally bankrupt. The challenge he set himself in this book is how to restore ethics within capitalism to prevent it drifting into either a totalitarian state (China) or populist nationalism (East European countries). In doing so, he eschews ideology claiming that all his policy prescriptions are based on evidence, analysis and pragmatism.

The inspiration for the book was Anthony Crosland’s The Future of Socialism, published in the 1950s, which set an agenda for the social democracy of the post war years in the UK. (To some readers Anthony Crosland might seem a minor figure out of a history book, but in his heyday he was the leading UK intellectual of the centre left and a Cabinet minister in the Wilson and Callaghan Labour Governments attempting to put his ideas into practice). Collier claims that the Crosland agenda worked well between 1945-70, even at one point describing it as the “miracle period”. It failed however because it neglected its roots in the ethical foundations of the nineteenth century cooperative movement.

 It was replaced by a combination of Utilitarian technocrats (mainly economists) intent on redistributing income to those below the poverty line (however defined) and lawyers committed to John Rawls philosophy which promoted the rights of disadvantaged groups based on race, gender, sexual preference and so on, which has become the basis for identity politics.

Both of these philosophical approaches emphasise the individual not the collective and differences between groups based on either income or disadvantage rather than the needs of persons and families. Each elevates a single moral prescription, “the greatest happiness of the greatest number” and “laws in a society must be designed for the most disadvantaged groups”. However, they neglect the normal moral instincts and values of people such as loyalty, fairness, obligation and desert which were central to the cooperative movement.

The philosophical foundation which Collier builds on is found in the writings of David Hume and Adam Smith (especially The Theory of Modern Sentiments) and the Pragmatism of nineteenth century American philosophers such as William James and Charles Peirce. After laying this down he devotes four chapters to restoring ethics within the state, firm, family and world. Then, in the final section he presents a plethora of ideas for restoring an inclusive society.

To tackle the geographical divide, he proposes taxing the metropolis and regenerating broken cities and regions through establishing local banks, local universities and business zones. Families can be strengthened by preventing them   from falling apart in the first place, supporting children in the early years, from pregnancy to the first day of school, raising standards of teaching in schools, offering improved post-school vocational education and extending home ownership. Tackling the negative effects of globalisation requires redistribution of resources to those areas which have lost out through free trade and technology.

In putting forward all these proposals he is not afraid to be controversial. He is scathing about the greed of investment banks. He argues for taxes on financial transactions and raise taxes on the incomes of highly skilled workers especially in finance and law. He wishes to see a new criminal law comparable to manslaughter which he calls bankslaughter. He backs immigration controls, strengthening traditional two parent families from whom they are genetically descended and having less state intervention through social policy dealing with the needs of children.

Although it is not fundamental to the main theme of the book I question Collier’s judgement that the period 1945-70 was as successful as he claims. It is certainly true that the new social contract devised by Beveridge, Temple and others which produced the post war Welfare State and mixed economy lasted the course. However, by the 1960s inflation was back accompanied by rising unemployment, prices and incomes policy were a failure and the nationalised industries were mired in the red, while by the end of the 50s the social infrastructure began to show signs of fraying through increased violent crime, illegitimacy and addiction. Meanwhile, some of Crosland’s policies were proving destructive; “If it’s the last thing I do, I’m going destroy every fucking grammar school in England. And Wales. And Northern Ireland”. By the time of his early death (58 years old) he became so disillusioned with the crisis of capitalism that he thought the creation of a ‘serious revolutionary socialist party’ was worth thinking about.

One question which needs to be asked is whether he has succeeded in the task he set himself, namely restoring ethics to firms, families and states. In the case of firms he devotes an interesting chapter to the way in which ethical firms of the past which he mentions – Imperial Chemical Industries (ICI), Cadbury, The Halifax Building Society – have given way to the vampire squids of today which are held in contempt as greedy, selfish and corrupt.

In order to achieve change he believes competition is an important discipline on business but increasingly limited because of the power of networks (electricity, water, railways) and the role of technology in creating unregulated natural private monopolies (Facebook, Amazon, Google, eBay and Uber). The conventional responses to these problems are regulation and public ownership, but both have severe limitations. As an alternative he suggests taxing economic rent, which by definition does not discourage productive activity or risk taking; reforming corporate law so that concern for the public interest should be mandatory for all board members, such as Public Interest Companies in the US; and introducing the new criminal offence of bankslaughter.

The problem with all these, which he recognises is that regulations can be got around by talented management, taxes reduced by clever accounting and laws fudged by legal argument.  After acknowledging that the cupboard is fairly bare he puts forward the novel suggestion that society needs to build a critical mass of ethical citizens who can judge the behaviour of companies, favourably or not. This is less than a specialised sub-police force and more a form of neighbourhood watch strengthened to have teeth. This may seem fanciful but the achievement of the women’s movement and climate change protests, based on evidence of discrimination or degradation show that great oaks grow from acorns. Post COVID-19 many questions will be asked about the future of our society, so his proposals may not be so fanciful.

To restore ethics to the state he rejects ethnicity, religion and shared values as a way to create shared identity because they are incompatible with modernity, despite the showing of how popular Judeo-Christian based ethics still remain. He plumps for a sense of belonging to place, something which is hard-wired in our psyche, especially the place in which we grew up and which we call home. Unlike Nationalism, Patriotism is an inspiring concept and he claims a good example of it is found in the politics of President Macron. A major raison d’etre of politicians should be to create narratives of shared belonging. To restore the ethical family, he suggests a greater acceptance of mutual obligations by parents in raising children rather than one focused on their own individual, personal success in work.

The one surprising weakness of the book is its treatment of religion. The book contains four references to religion and six to religious fundamentalism. All are wholly negative: religion leads to cultural separation, marriage is tainted by its religious association, it is the basis of a new nationalism, heir to fascism. Religion is almost always qualified by the adjective “extreme”. Jihad pogroms and other cultic, barbaric practices deserve the treatment he delivers and the Christian religion has many shameful episodes in its history. However, if restoring ethical behaviour in business, politics and society requires ethical citizens, ethical politicians and ethical family members, a rejection of self-aggrandisement, ‘freedom is not bound in servitude to the self but in escape from the self’ (p. 108), and strengthening a sense of obligation, surely a religion based on transcendence and true humanism must be a help to the cause.

On the evidence of nineteenth century history in the work of Gertrude Himmelfarb and Christie Davies, the irony is that ICI, Cadbury and The Halifax Building Society were deeply rooted in a late nineteenth century Christian culture, especially non-conformist, which was also an inspiration for the cooperative movement, friendly societies and the social reforms of the period. Non-conformity would also at this time have been a major force in Collier’s beloved Sheffield.

I enjoyed book but at the end it left me with a nagging question. It certainly respects the evidence, applies analysis to good effect and makes a number of interesting practical proposals. However, its conclusion is that religion has no place in the future of capitalism. In its neglect of the positive contribution of the Christian faith on British life and culture I fear it has strayed across the boundary of social science into ideology.



“The Future of Capitalism: Facing the New Anxieties” by Sir Paul Collier was published in 2018 by Harper Collins (ISBN 978-0062748652). 256pp.

Brian Griffiths (Color)

Lord Griffiths is the Chairman of CEME. For more information please click here.








Andrei Rogobete: “The Populist Temptation” by Barry Eichengreen


Populism seems to have taken centre stage in today’s public discourse. Whether it’s the election of Donald Trump or Brexit, media outlets, academics, and indeed, the politicians themselves seem to be pointing the finger towards populism. Yet what exactly is populism? Which social and/or economic conditions might give rise to populism? Can populism be countered and if so, how? These are a few of the timely questions that Barry Eichengreen attempts to explore in his book, “The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era”.

Barry Eichengreen is an American economist and Professor of Economics and Political Science at the University of California, Berkeley. An economic historian by background, Barry’s previous notable publications include, “Golden Fetters: The Gold Standard and the Great Depression”, “The European Economy since 1945”, and “Globalizing Capital: A History of the International Monetary System”.

Throughout his works Barry Eichengreen displays a strong command of global economic history and his latest work The Populist Temptation is no exception to the rule. Divided into twelve chapters, the structure is more akin to a collection of essays than the traditional narrative format. Paradoxically, the book is both straightforward yet dense, making the reader take far more time on any given chapter than he or she would have done so otherwise. It reads like a history book with a particular emphasis on economics and while many of the historical remarks are factual, much of the interpretation is subjective. Here it is worth touching upon some of the more contentious issues that can be found:

The author sets out the aim of the book from the onset, that is, to look back at Western history and attempt to identify under which “economic, social, and political” circumstances populism tends to take hold and what are the most effective policies to combat it (page ix). In this pursuit, Barry Eichengreen argues that “populism is activated by a combination of economic insecurity, threats to national identity and an unresponsive political system” – but can be “quelled by economic and political reforms that address the concerns of the disaffected” (page x). We will touch upon some of these reforms shortly.

Chapters 1-3 therefore open up with a conceptual discussion on populism and a historical account of populism in the United States and the United Kingdom. Barry Eichengreen defines populism as, “a political movement with anti-elite, authoritarian, and nativist tendencies” (page 1). He rightly points out that both left and right-wing populism can take on these characteristics – albeit the former focuses hostility toward the so-called ‘elites’, while the latter towards minorities and immigration (ibid).

Another interesting point made is that populism is also a political style. Populist politicians portray themselves as ‘no-nonsense’ leaders, ready to listen and speak directly to the people (page 4). They also make highly effective use of social media by undercutting the traditional media outlets. Most importantly however, populist leaders are able to capitalise on economic uncertainty coupled with a ‘low-trust’ society where significant demographic groups feel that the system is rigged against them (page 10).

Chapters 4-6 turn the attention toward Germany and the socio-economic reforms of Otto von Bismark in the late 19th century but also the American ‘associationalist way’ in the first half of the 20th century. The chapter highlights the positive role of government welfare measures in combating economic uncertainty. This included a combination of the social insurance state and tariff protection for both agriculture and industry that led to an effective suppression of anxiety about economic change on both the “left and the right” (page 57).

Chapters 7-9 bring the historical narrative to the post-war era. The so-called ‘baby boomer’ generation benefited from a period of relative stability and moderation where most of the economic growth was more widely shared (page 102). The problems started from the economic slowdown of the 1970s and exacerbated by the OPEC oil shocks of 1973 and 1979 (page 104).

Barry Eichengreen argues in chapters 9 and 10 that the rise of Trump in the US and Brexit in the UK built against more than just economic insecurity (post the 2008 financial crisis). Trump’s election reflected deep national, social, and personal insecurities that were only exacerbated by economic insecurity – conditions which in turn fed opposition to immigration (page 117). Similar things can be said about Nigel Farage and Brexit in the UK which the author discusses in Chapter 10.

Therefore, what are the solutions to rising populism? Chapters 11-13 explore several possibilities. A return to economic growth and rising wages would perhaps be the first and most important change (page 146). Others include investment in education and skills, and a more inclusive economy where firms could be given “tax incentives to adopt employee stock option plans. […] and a curbing of [corporate] excesses” (page 148). Reforming the immigration system could also be effective in combating populism yet the author acknowledges the deep disagreements in the best way to go about it (page 158-159). The EU could also take more steps to being more democratically accountable and closer to the people, such as nominating the president of the Commission by popular vote (page 176). However, the book acknowledges in its ending that both the US and the Europe will remain susceptible to populism and that neither “admit to easy solutions” (page 187), yet understanding the underlying problems is a starting point.

In concluding The Populist Temptation by Barry Eichengreen is a worthy addition on a topic that seemingly engulfs our time. The book is dense which makes it informative but may prove to be a rather slow read for some. No doubt the reader will walk away with a greater perspective and sense of understanding of populism. The problem however remains on the author’s subjective interpretation of government initiatives and their direct impact on controlling populism. Provided that the reader views the ‘government and/or regulation is the solution’ dogma through a critical lens, The Populist Temptation is certainly a worthwhile read.


“The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era” by Barry Eichengreen was first published in 2018 by Oxford University Press (ISBN-9780190866280), 244 pp.

Andrei Rogobete

Andrei Rogobete is the Associate Director of  the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.

Richard Turnbull: “Poverty and Compassion” by Gertrude Himmelfarb


Gertrude Himmelfarb was married to the late Irving Kristol and together they formed a formidable intellectual partnership in the reassertion of conservative ideas. Himmelfarb, a historian, in this book, brings to the table the debate around poverty in Victorian England. The book was first published in 1991, but represents an important strand of thinking and, indeed, of methodology.

One of the many complexities in the polarisation of political and public discourse is that it becomes impossible to have a rational discussion or debate without being compartmentalised into one position or another. We seem to have lost the ability to debate ‘ideas’.  Gertrude Himmelfarb’s intellectual history of the ideas, notions and responses to poverty in the Victorian era is broad-reaching, incisive and gripping in both scope and content. The reassertion of the history of ideas – from all parts of the spectrum – would be a great service in our public life.

The great strength of the book is in its breadth. Himmelfarb’s twenty-three chapters range from the work of the social statistician, Charles Booth, to the Salvation Army’s, William Booth, from the rather worthy Charity Organisation Society, to Toynbee Hall and the settlement movement. Himmelfarb comes into her own in dealing with the moral ideas of poverty and compassion and how the Victorian era understood these concepts and responded to them both practically and intellectually. So, her assessment of, and interpretation of, the statistics of poverty and what that meant, the literature, the personalities, religious and moralistic responses and the impact of the rise of socialism in various guises are all central features of her exposition of the idea of poverty.

Himmelfarb puts this Victorian world under a microscope. A key building block is that “the moral imagination of the late Victorians…was neither sentimental nor utopian” (page 4). This is rather startling as many might think that the very epitome of Victorian ideas was indeed sentimentality. True compassion, she argues, is actually doing good rather than feeling good. The true Victorian philanthropist was moral and humane, interested in the good, not only of the self, but of society, and was shaped by ends that were realistic rather than utopian. This principle allows Himmelfarb to appreciate the extensive variety and range of responses to poverty in Victorian England, and we should thank her for that.

The book is divided into five parts, each with a number of chapters.

Part 1, “The Arithmetic of Woe”, is a fascinating introduction to the social statistics of the age, the complexity of poverty in late Victorian London, and the particular issues of housing and employment. Conditions had unquestionably improved from the mid-Victorian period and in the discussions around the Bitter Cry of Outcast London, Himmelfarb makes the point that the debate is not whether the ‘abject poor’ had dreadful housing conditions but whether this was generally true of the working classes; indeed, as Lord Shaftesbury’s evidence to the Royal Commission of 1884 suggests, this may indeed not have been the case. Himmelfarb suggests that the Royal Commission failed because it did not deal with this distinction and hence, she argues the question of housing became a social rather than a moral problem and, hence, “a legitimate subject for state intervention” (page 67).

Part 2, “Life and Labour of the People in London” develops these themes further including consideration of the work of the social scientist, Charles Booth. In this section Himmelfarb also reflects on some the religious influences upon the debate as well as dealing with what she refers to as “special subjects”, including women and children.

Part 3, “The ‘Time-Spirit’: Charity and Philanthropy”, introduces the Charity Organisation Society and the development of benevolence into a science of charity, or at least, as the name implies, its systematic organisation. In this part we also see some of Himmelfarb’s breadth with reflections as diverse as upon the Salvation Army and Toynbee Hall. Himmelfarb argues that if “the mission of the Charity Organisation Society was to organize and professionalize philanthropy, that of Toynbee Hall was to humanize and ‘civilize’ it” (page 243). All of this reflects Himmelfarb’s neo-conservative interests in practical outcomes alongside the debate of ideas.

Parts 4 (“Social Philosophy and Social Reform”) and 5 (“’We Are All Socialists Now’”) returns us to the nature of social, economic and philosophical debate at the end of the Victorian era.

Essentially, Himmelfarb’s argument is that a proper response to poverty is to recognise that it is a moral question. By moving away from dealing with abject need to the more general situation of the working class, the question of poverty is removed from being a moral problem to a social or political issue. Consequently, the real questions are frequently not dealt with. She argues (capitals in original), that “the ‘DE-MORALIZATION’, as it were, of the problem of poverty was accompanied by a ‘relativization’ of the problem” (page 384).

The book cannot be described as an easy read but it is an engaging and wide-ranging one. Indeed, the book makes you think and I had to stop at several places to do just that, think about what I had just read and its implications. My only criticism is that she does not really deal to any extent with Evangelical Christian responses to poverty concentrating more on the development of Christian socialism, which is rather odd given that Himmelfarb was concerned with practical responses as well as theoretical ones. The Victorians are not presented as a solution to today’s problems, but on their own terms, speaking for themselves, in ways we may not have really appreciated because we read back our own presuppositions. She reminds us that poverty “is as protean and diverse as the remedies proposed for it” (page 388).

This is a fascinating book which I recommend. Our contemporary discourse would be much improved if we could debate these ideas, their breadth, diversity and their implications, across the traditional political divides, restoring the debate to its proper moral basis.


“Poverty and Compassion” by Gertrude Himmelfarb was published in 1991 by Vintage Books, New York (ISBN-13:978-0-67-974173-2). 475 pp.


Richard%20Turnbullweb#1# (2)Dr Richard Turnbull is the Director of the Centre for Enterprise, Markets & Ethics (CEME). For more information about Richard please click here.






Richard Godden: “Bourgeois Equality” by Deirdre McCloskey

The past 200 years have seen a huge increase in aggregate global wealth, which has benefited the vast majority of people around the world. Conservative estimates suggest that average real wages have increased ten-fold and the increase in wealth has probably been considerably greater than this (perhaps thirty-fold or even a hundred-fold). Why has this happened? Why are we now so rich? This is the fundamental question that Deirdre McCloskey seeks to address in Bourgeois Equality, the final volume in her trilogy relating to bourgeois values.

Those who have not read it may doubt that we needed yet another book about “the causes of the Industrial Revolution”. Those who have read it will disagree. Its scope is breath-taking: in which other book about economic development would you find 20 pages of analysis of the novels of Jane Austen, two chapters relating to the historical change in the meaning of the word “honest” and its equivalents in other languages, a discussion of the economic impact of post-millennialism and comments on subjects as diverse as the philosophy of the mind and the economics of the temple systems of the Ancient Middle East? McCloskey is Distinguished Professor of Economics, History, English and Communications at the University of Illinois in Chicago and her inter-disciplinary approach to her subject is anything but conventional.

She begins by attacking almost all of the widely accepted explanations of what she calls “The Great Enrichment”: trade and export lead growth (whether or not accompanied by political domination); the accumulation of capital; consumer lead demand; the scientific revolution; the growth in modern institutions; and much else. The role of some of these things is dismissed in summary terms, often with a quotable quote. Other factors (such as property rights, the accumulation of capital and trade) are recognised as being, to some extent at least, necessary for economic growth but dismissed on the ground that they are historically commonplace. As McCloskey puts it, “Oxygen is necessary for a fire but it would be at least unhelpful to explain the Chicago Fire of October 8-10, 1871 by the presence of oxygen in the earth’s atmosphere” (page (xiii)).

In place of the normal list of explanatory factors, McCloskey puts “ideas”. The book is subtitled, “How ideas, not capital or institutions enriched the world” and McCloskey asserts that the key thing that changed in the period leading up to the start of The Great Enrichment was “ideology” (page xxii). Her claim is “that the initiating change leading The Great Enrichment was in words” (page 235) and she spends hundreds of pages defending this thesis. She argues that aristocratic values were replaced by bourgeois values (“The new ethic was of betterment, novelty, risk taking, creativity, democracy, equality, liberty, dignity”, page 279) and this led to the wave of innovation that she calls, “trade-tested betterment”, which directly resulted in The Great Enrichment, first in the UK and then elsewhere.

So is McCloskey’s theory simply Max Weber revisited? Although, unsurprisingly, McCloskey dismisses Webber’s view of the role of anxiety caused by the doctrine of predestination, her approach is clearly related to that of Weber, probably more closely than she would admit. It is based on ideas rather than material causes and recognises the profound role of religion in the creation of the relevant ideas. However, there are important differences between Weber’s and McCloskey’s approaches including their opinions as to precisely which religious beliefs gave rise to the key ideas and the relationship between, on the one hand, these ideas and, on the other, psychology and sociology.

Speaking generally, it would be reasonable to assert that McCloskey believes that the crucial change between 1600 and 1800 was a cultural change. However, she vigorously objects to this characterisation of her view, saying that calling ideas “culture” is “the vague way people talk when they have not actually taken on board the exact and gigantic literature about ideas, rhetoric, ideology, ceremonies, metaphors, stories and the like since the Greeks or the Talmudists or the Sanskrit grammarians” (page 122). She also, and perhaps with more justification, is at pains to point out that she is not asserting that there was a psychological change but rather that there was a sociological change.

McCloskey writes passionately and this passion points to a key issue: deep down, this book is not about the causes of Industrial Revolution but about how we should behave today in order to ensure that The Great Enrichment does not stall. McCloskey says that she is an optimist but she is clearly worried that things could go badly wrong. As she puts it, “Modern politics is a four-way tug of war between liberalism in the sensible part of the elite, socialism in the rest of the elite, traditionalism in the peasantry, and populism in the proletariat” (page 136). She turns aside from her central thesis to attack the left’s focus on equality of outcomes (and specifically the Gini coefficient), the power of the state to secure economic betterment (which she contemptuously dismisses), the idea that mechanisation and betterment causes poverty rather than wealth, regulation in general and what she refers to as “well-intentioned but erroneous policies that make us feel helpful even when they in fact damage the people we intend to help” (page 73).

She reserves her most savage comments for what she calls “the clerisy”, a term that she uses to refer to academics and intellectuals who sneer at Bourgeois values and promote either socialism or, on the other side of the political spectrum, nostalgic paternalism or worse: “The liberty of the bourgeoisie to venture was matched by the liberty of the workers, when they got the vote, to adopt growth-killing regulations, with a socialist clerisy cheering them on. And the dignity of workers was overmatched by an arrogance amongst successful entrepreneurs and wealthy rentiers, with a fascist clerisy cheering them on. Such are the usual tensions of liberal democracy. And such are the often mischievous dogmas of the clerisy” (page 404).

A book written with such passion and having such a broad scope inevitably has its defects. McCloskey has a tendency to overstate things (e.g. her assertions regarding the ubiquity of the rule of law including, surprisingly, in the empire of Genghis Khan, page 111, cannot go unchallenged); many other academics could legitimately feel bruised by the strength of the language with which she attacks them; and the book is too long, the final 150 pages in particular containing much material that repeats earlier points. There are also less important issues: errors of fact (e.g. Rev John Newton was not a Quaker as it stated on page 306); ex-cathedra statements that many will dispute (e.g. “Ordinary Europeans in the Middle Ages were barely Christian”, page 333); and statements that will only be comprehensible to a minority of readers (e.g. the reference to Ian Botham hitting a six, page 126).

However, these defects should not put anyone off. The book is essential reading for those who want to broaden their perspective on the causes of our current prosperity and to consider possible solutions to current economic and societal issues in the light of the lessons of the past. McCloskey’s passion is justified by the importance for her subject for the modern world. The onus is now on those who disagree with her arguments to answer them and on those who agree with these arguments to refine them.




“Bourgeois Equality” by Deirdre McCloskey was published in 2016 by The University of Chicago Press (ISBN-13:978-0-26-52793-2). 650 pp.

Richard Godden is a Lawyer and has been a Partner with Linklaters for over 25 years during which time he has advised on a wide range of transactions and issues in various parts of the world. 

Richard’s experience includes his time as Secretary at the UK Takeover Panel and a secondment to Linklaters’ Hong Kong office. He also served as Global Head of Client Sectors, responsible for Linklaters’ industry sector groups, and was a member of the Global Executive Committee.








Andrei Rogobete: “The Wealth and Poverty of Nations” by David Landes


American essayist and novelist William Styron once said that “A great book should leave you with many experiences, and slightly exhausted at the end.” If we judge the late David Landes’ ‘Wealth and Poverty of Nations’ by this criterion, it most certainly fits the bill of a ‘great book’. It is a majestic display of his deep insight and vast knowledge of global economic history. It comes as no surprise, therefore, that the book has been all but universally acclaimed by literary critics.

David Landes was Professor of History and Emeritus Professor of Economics at Harvard University.  His other works include Bankers and Pashas, Revolution in Time, The Unbound Prometheus and Dynasties. As one might expect, therefore, ‘Wealth and Poverty of Nations’ is no short and easy read: half a millennia of global economic history are covered in over 600 pages and 29 chapters.

Landes’ primary aim in the book is to better understand how nations have evolved to reach their current state. Landes’ main thesis of the book is that cultural traits and cultural values play a key role in determining whether a country fails or succeeds economically. As he points out in the Preface, the analysis is not one of a “multicultural, anthropological sense of intrinsic parity: all peoples are equal and the historian tries to attend to them all. Rather, [to]…understand how we have come to where we are, …[through] making, getting, and spending” (page xi).

In this sense, ‘The Wealth and Poverty of Nations’ provides a fascinating and distinctive historical angle that considers the cultural circumstances, as well as the economic trends of the time – thus, viewing economic history through a cultural lens.

Landes opens up the discussion with the premise that the old dichotomy of the West vs. the East, or better said, West vs. the ‘Rest’ has largely dissolved (page xx). The more pertinent split in today’s ‘globalised’ world is between ‘Rich’ vs ‘Poor’ countries. The common thread of questioning that is present throughout the entirety of the book is this: why have some countries come to be so poor and some so rich?

In the opening chapters Landes presses the idea that the technological and cultural advancements enabled the (relatively small) nations of western Europe to significantly punch above their weight (page 137). The Industrial Revolution in Europe brought technological innovations that had tremendous long-term impact on economic development. Basic advancements cotton manufacturing for instance, enabled the creation ‘washable’ clothes. This in turn led to better personal hygiene and therefore, better health and an increase in life expectancy. The technological advancements improved all areas of life in the Continent

Landes also points out that throughout the late 17th Century and 18th Century, England’s relative open society enabled it to flourish at a faster pace than its European counterparts, many of whom were deeply embattled with religious persecution (page 223). As a result, England managed to ‘profit from other nation’s self-inflicted wounds’ (ibid).

Yet arguably one of the most powerful and convincing arguments of the book is raised in Chapter 12 (page 175 – 181). Here David Landes reinstates Max Weber’s thesis on the Protestant work ethic. The core argument here is that the Protestant revolution in Europe brought with in a change in the role and responsibility of work. The influence of Protestant thinking encouraged people to value, creativity, hard work, timeliness, and free-thinking. This in turn acted as a catalyst for economic growth not only in Europe, but also in the early development of America (CEME’s Director, Richard Turnbull, wrote on the impact of Quakers in Quaker Capitalsim: Lessons for Today)

The latter half of the book bring the discussion back to the impact of culture on economic performance and how the two are intrinsically linked. In Thailand for example, young men are encouraged to spend a few years in religious (Buddhist) monasteries before entering the world of work. Landes argues that this sets their priorities right – and makes them more effective once the do enter the ‘materialistic’ world of work, where money plays a major role (page 517).

Landes concludes the book with a discussion on the current tensions between globalisation and the nation-state, but also the merits of free-trade and some of the benefits and dangers of international aid (Page 519-521). In a nutshell (and without giving too much away), the book argues that free trade between nations is disproportionately beneficial and foreign aid can do as much damage as it does good. Landes overarching conclusion is that the adoption of a free market economy (especially by poor countries) is the surest and safest way to long-term economic development and wealth creation.

‘The Wealth and Poverty of Nations’ leaves its reader with a completely new, and unique understanding of the role that culture plays in the historic economic development of countries. Finding criticism for this book is a challenge in itself, I have found myself nit-picking at best. One possible observation is that, even in 600+ pages, it remains difficult to comprehensively capture half a millennia of world history.

Some may say that it is too Eurocentric. Yet the book’s apparent Eurocentrism is part of the presentation and hypothesis that is put fourth – it is the angle that the author adopts rather than an inherit bias. In response to this perceived ‘Eurocentrism’ and being a ‘Westerner’, Landes himself acknowledges that, “I feel surer of my ground” (page xxi). Nonetheless, one could argue that the cultural intricacies of each geographical region can, and deserve to be explored in greater depth.

‘The Wealth and Poverty of Nations’ has become a staple in the field of economic history.

A definite read.


“The Wealth and Poverty of Nations” was published in 1999 by Abacus, ISBN-10: 0349111669, 672pp.

Andrei RogobeteAndrei Rogobete is a Research Fellow with the Centre for Enterprise, Markets & Ethics. For more information about Andrei please click here.