Preface

FOR OVER a decade the Institute has conceived studies of subjects it considered had been overlooked, or on which there was an imbalance of research and writing, commissioned the best available economists to work on them, and published their work in lengths varying from short papers to full-length books. It has often been asked to show how the policies emerging from these economic analyses could be put into practice, and why some had seemed to influence thinking in business and government while others seem to have been ignored.

The reply is strictly threefold. First, there is, and should be, division of labour between the economist who analyses, the politician who judges, and the administrator who implements. Second, the economist is not equipped, and he has no authority, to judge which of his conclusions are ‘politically practicable’ (or ‘administratively feasible’). Third, if he allowed himself to be influenced by such considerations he would risk pre-judging the relevance or efficacy of his prescriptions and, worse, avoid pursuing his analysis on lines that are considered, rightly or wrongly, ‘politically impossible’ (or ‘administratively impracticable’).

The Institute has therefore no intention of venturing beyond severe economic analysis into judgments on political acceptability or administrative feasibility. Its constitution as a charitable trust would in any case preclude it from such a close concern with public policy.

What is within the competence and relevance of economists is to consider why economic prescription is adopted in some circumstances and neglected in others, why economists are heeded or ignored, why economic advice is fruitful and why it is abortive. How important are the possibly wide range of influences that bear on the formation of policy: from ideas to financial interest, with expediency, fashion, even personalia and others between the extremes? The circumstances influencing or deciding the translation of analysis into action will be the object of a new series, named after the best-known Institute Papers, the Hobart Paperbacks. The length will typically be between that of a Paper and a book, and the authors will be concerned, strictly as economists, with the interplay between ideas and policies.

The Hobart Paperbacks are intended to extend into political economy the economic analyses of the Hobart Papers. They will aim to maintain the authority, independence and lucidity for which the Hobart Papers have established a well-earned repute. Their authors are chosen for their optimum combination of these qualities. They will be asked to write unambiguously, not to avoid ‘difficult’ issues, and to be unremitting in pursuing their analyses and thinking to their conclusions.

The new series reflects two further tendencies in opinion among economists which have varied from period to period. The late Professor A C Pigou taught that the object of any inquiry ‘may be either light or fruit, either knowledge for its own sake or of knowledge for the sake of good things to which it leads ...

‘In the sciences of human society be their appeal as bearers of light never so high, it is the promise of fruit and not of light that chiefly merits our regard.’ The English classical economists were regarded as concerned not with ‘economics’ but with ‘political economy’. They were interested in the politically decided legal and institutional framework of society as well as with the economic relationships conducted within it. Hence the concern of the old economists, from Adam Smith to John Stuart Mill and beyond, with the scope for individual activity in the national economy. In the last third of the 19th century, roughly from Stanley Jevons onwards, through Alfred Marshall and Edwin Cannan, economics was regarded as austerely confined to economic relationships. A more recent school of economic thinking, originating amongst some young American economists, J M Buchanan, Gordon Tullock, Anthony Downs and others, has applied economic analysis to the operation of political institutions, studying politicians as entrepreneurs aiming to maximize returns in votes from their allocation of resources among competing electoral claims. The new political economy thus studies the economic system as a bi-cameral mechanism responding to the citizen as consumer in the market and as elector in the polling booth.

These are the broad spheres of study that the Hobart Paperbackswill seek to illuminate and illustrate, in terms of their significance for the British economy in general, and also for government and industry in particular. The first Hobart Paperback is a discussion of the fundamental relationship between the evolution of economic ideas and their translation into policy. What makes some economic thinking ‘politically possible’ and other not?

This is the subject which Professor W H Hutt, a South African who spent most of his life teaching in Cape Town and now writes in the USA, discusses with examples from Britain, America and South Africa. Professor Hutt has often been right during the past 40 years on many fundamental issues: labour, money, economic planning and others. He is too modest to say that he has been belatedly acknowledged long after a piece of writing considered at the time to be unacceptably heterodox or unrealistic. His Theory of Collective Bargaining contained in 1930 truths about the power of trade unions too little acknowledged until recent years. His Economists and the Public, 1936, told truths long before their time. His Plan for Reconstruction, 1943, indicated a way of liberalizing a centrally-directed economy by easing out the interests that had become entrenched in it. His thinking on Keynesian thought in The Theory of Idle Resources, 1939, has recently been acclaimed by Professor Axel Leijonhufvud as a locus classicus on a central weakness in Keynesianism.¹

Professor Hutt develops the original suggestion that, since economists should not think or act like politicians but should not preclude their judgment from being heeded by politicians, they should present their conclusions and advice in two stages. The former in its undiluted form should be the best that economics can teach, the latter in the ‘second best’ form diluted by political judgment. It could then be seen that the failure to act on economic advice is that of the politicians, who may sacrifice the best that economics can teach by misjudgment of what is ‘politically possible’.

It may be that this assessment of an absorbing review of economic thinking, economists’ advice and politics since the 1930s will also be regarded as coming long before its time. Whatever Professor Hutt writes is the work of an independent scholar, uninhibited by apprehensions about whether his opinion will be found palatable or not. His new work should begin a new argument among economists on the form in which they should make their judgments to those who could profit from them. Whether he is heeded in the short run or the long run, his work will have been vindicated.

The Institute wishes to thank Professor G. C. Allen, Emeritus Professor of Political Economy, University of London, and Professor A A Shenfield, Visiting Professor of Economics, Rockford College, Illinois, for observations on an early draft that Professor Hutt has borne in mind in his final revisions. The constitution of the Institute requires it to dissociate its trustees, directors and advisers from the analyses and conclusions of its authors, but it offers Professor Hutt’s essay as an original examination of the avoidable political frustration that often confounds the contribution economists can make to policy.

EDITOR

May 1971