Liberalism at Large
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A strange upshot of his argument was that positive changes were not being made by dissidents, but by the national communist parties themselves. Even in Poland, where trade union opposition to its rule was fiercest, the party ‘was probably still strong enough to suppress any opposition … if there is to be change it will be because the party has grown tired of refusing.’ This hardly matched the rhetoric about totalitarianism. Nor did he suspect his adversaries of being quite as spineless as his dialogue with some of them suggested. Beedham worried that Gorbachev was trying to dislodge West Germany from NATO, balancing out disintegration in his half of Europe. ‘If he succeeded, “the West” would no longer mean what it has meant for the last 40 years’; while the DDR in East Germany, its economy ‘long the best in the region’, its Politburo (whose members, implicitly, refused to talk to him) most in tune with its leader, Erich Honecker, ‘looks as if it could go on forever’.139 Less than six months off, he never imagined the fall of the Berlin Wall. Even after it crumbled, a sense of disorientation pervaded his articles. Rejecting the idea that history was at an end, as Francis Fukuyama first opined in 1989, Beedham pointed to real threats – from terrorism to Iraq to Russia – but without his trademark enthusiasm. ‘Perhaps history got its timing wrong’, he mused in 1990. ‘A generation later, the countries of democratic Europe might have been cohesive enough to cope with the consequences’ of the collapse of communism in Europe.140 Could the West retain its edge with no competitors? ‘The old war of principle, the contest between grand ideas, is over. The new politics is full of dull detail.’ Perhaps direct democracy could revitalize it, plebiscites counteracting apathy among voters in the new age of ideological vacuum, while fending off the armies of lobbyists, ‘freebooters of the modern political world’, ‘literally corrupting’ since ‘the many are harder to diddle or bribe than the few’.141 By 1993, his mood had darkened. Could it be that victory was purchased at the price of a decline in civic energies, and a descent into complacency and corruption?
Macrae was free from these gloomy afterthoughts, in part because the technological trends which interested him showed every sign of accelerating after 1989. Not for him the cloak and dagger of geopolitics or the millennial lifecycle of civilizations. History interested him less than the future, and it was as a frenetic prophet of progress that he skipped through the pages of the Economist. He too took personal delight in being on the winning side of a long, strenuous argument. ‘During the brief civilian working lives of us returning soldiers from the second world war’, he wrote in 1988, ‘we have added seven times as much to the world’s producing power as was added during all the previous millennia of Homo sapiens’ existence.’142 Given how unlikely that seemed on his joining the paper in 1949, he wondered how anyone younger could ‘dare to sound pessimistic’. As Beedham basked in the disgrace of communism, so Macrae gave notice to its feeble Western imitators.
‘A Future History of Privatisation, 1992–2022’ claimed co-credit for coining the term thirty years earlier, when, everywhere but in the Economist, privatisation seemed a ‘hopeless crusade’. In the 1960s, ‘it was hard to persuade even sensible people how wrong were those like Galbraith, who told eager politicians that the interests of the poor could be served best by spending much more of GDP through politician-dictated monopolies instead of market-leading common sense.’ In a normal enterprise, if a middle manager found his boss was ‘making a horlicks of his job’, he could leave and start a new firm; under state ownership in Britain, he could file a piece of paper and never be promoted; ‘in Russia he got shot’. In council houses, ‘life deteriorated into drugs, hopelessness, squats’ – a ‘vicious circle of hell’; state schools in poor areas turned kids into ‘drug-addicted delinquents’; welfare created ‘illegitimacy, dependency, lack of neighbourliness, crime, drugs, riot so as to loot’.143 Like Beedham, Macrae also proposed a timeline of important dates, but his stretched into the future: in a few years all but three coal pits would close; in five, the railways would be sold off, including the safety and signal controls, making them safer and more efficient, ‘rather like an airport’; the same went for power plants and the electric grid, whose new owners would innovate by ‘discovering ever cheaper ways of releasing energy from storage in matter’; telephones and TVs ‘will leave the public sector’ and in ‘tones similar to today’s lessons about 19th century child labour, sociologists will tell with horror of the exploiting classes’ device named the BBC’. Schools and health care would be privatized next, but in ‘some disguised form of the “voucher” system’. Between 2000 and 2010, prisons and police would also go private; the former paid more if their inmates did not recommit crimes, the latter permitted to release criminal records in order ‘to throw them open to investigation by many competitors’. Computers would replace expensive lawyers and error-prone judges, and companies would race each other to punish criminals, with the goal of preventing recidivism at attractive rates. In 2010, local elections would have ‘multinational corporations appear on the ballot’, campaign promises transformed into legal contracts.144
The possibilities for privatization were as varied as the human experience. By 2015, children and the old, sick, or disabled would take out insurance on their ‘conditions’; charity would be replaced by ‘bidding for contracts to try to help “endangered people”’. War could use rationalizing too. Southeast Asia was a lesson in what didn’t work: ‘the inefficiency of state spending was shown when the mighty United States began to lose a war to slightly ridiculous North Vietnam.’ The Gulf War was instruction in what did: a coalition, using automated, precision-guided rockets. By 2020 this alliance would fold together NATO and the former Warsaw Pact, import cheap bombs from Japan, vet arms sales to the global south, and recruit soldiers from ‘the cheapest high-quality markets: Gurkhas, Britain’s SAS, sons of old soldiers from villages with fighting in their blood’.145 Some of these musings read like reworked science fiction narratives, only cheerful, and without a shred of social critique – as if the 1987 film Robocop were told from the perspective of the corporation that built cyborgs to police Detroit. In fact, Macrae’s predictions have mostly come true, or look like they will.
If the new era caused him fewer pangs than Beedham, Macrae too showed signs of being out of step with it. Asking famous minds to assess ‘Mrs. Thatcher’s place in history’ in 1989, the paper carried a revealing note from him. (In strangely appropriate proximity to Anthony Burgess, author of A Clockwork Orange, who dismissed ‘ten years of a middle-class lady with an affected accent who chills the heart’.) ‘Margaret Thatcher and Ernie Bevin are the only two I have known’, Macrae wrote warmly, ‘who have always in government simply asked: “which decision do I think will have the best effects?” That is why they are most intensely disliked by exactly the same sad sorts of people.’146 An eccentric vantage-point on a half-century: praise for a rightwing trade unionist boss and Labour bully at the time Macrae joined the Economist in 1949, and the union-busting leader of the Conservatives when he left it. By 1990, Macrae even had unflattering things to say about banks, whose irresponsible behaviour was to blame for an upsurge in financial crises in the past decade – over-investing in Latin American debt, then corporate buyouts, now property loans. ‘For bankers’, he predicted, who were sure to be overexposed when the latest real estate bubble burst, ‘the future has to look bleak’. Their coming unemployment would be wholly salutary, reducing risky bets (abetted by national deposit insurance schemes), and downsizing the global financial sector – at 10 per cent of world GDP, grown too big for its own good. ‘In the 1980s bright graduates streamed on that conveyor belt into banking and financial services. Their prospects, by the time they retire, seem on par with those of 1950s coalminers.’147 This prediction was not just at odds with the editorial bottom line, but spectacularly wrong. Endorsing fresh-faced Bill Clinton in 1992, ‘standard-bearer of a new Democratic party: fiscally responsible, socially hard-headed’ – and set to fatten the Wall Street banks with repeal of the Depr
ession-era Glass-Steagall Act and thin the welfare rolls – the new generation of Economist journalists were all aboard for the new world order.148
This eBook is licensed to Karim Mamdani, karim.mamdani@gmail.com on 12/02/2019
8
Globalization and Its Contents
The Economist reached the last years of the twentieth century on a high. The money pouring into finance seemed to vindicate its stance on Big Bang at home, while the fall of communism did the same for its long slog on behalf of Western liberalism abroad. At the same time, it rapidly gained readers and influence in the US, which became its home away from home. Pennant-Rea stepped down in 1993 just as the ‘new economy’ of the Clinton years got underway – to its boosters a break from all precedent, as information technology unleashed investment and growth alongside low inflation, low unemployment and near-constant productivity gains, which were bound to attenuate or even eliminate the business cycle itself.1 Since then, three points have connected the constellation of liberal ideas at the Economist: the planetary primacy of finance, vast enough to be shared out between Wall Street and the City of London; the American Empire, as both policeman and journalistic training ground; and globalization, its precondition the prior two, as cornucopia for former colonies and satellites. In all these years, no other publication articulated these points with greater authority, passion or geographical range.
Financial deregulation, and the boom in equities it fuelled, was the unmistakable leitmotif of this period. Global stock markets soared in value from under $3 trillion in 1982 to over $30 trillion in 2000. As the boom gained pace on Wall Street, financial profits rose threefold in the five years to 2000, reaching $21 billion. In some of the riskiest, most profitable lines, London outpaced New York – dominating not just foreign exchanges, but with 43 per cent of over-the-counter derivatives markets, 20 per cent of the hedge fund market and 57 per cent of European private equity business by 2006.2 In a pattern of divergence dating back to the turn of the twentieth century, interest and exchange rates stoked this speculative frenzy even as industrial production sank yet further. Britain lost 4.1 million manufacturing jobs between 1979 and 2011: from 26 to 22 per cent of total output during Thatcher’s reign to 18 per cent under Major to just 11 per cent at the end of New Labour.3 The City, in stark contrast, added over 70,000 well-paying jobs up to 2008, as the financial sector went from 7 to nearly 10 per cent of GDP. Equity market turnover, roughly equal to the national product in 1997, was three times greater a decade later.4
The City had not enjoyed this kind of prominence since 1914. Geography alone made it relevant to the new world order, with a trading day that straddled time zones in the US and Asia, while its berth in Europe made it a capital market of choice for states ‘transitioning’ from communism in the east. The Economist could not have ignored these developments if it tried. Hedge funds set up shop in St James and Mayfair, pulling up West End office prices to the highest in the world. Fund managers flapped through Economist Plaza, and some moved into its tower. A Japanese concept restaurant opened up on the premises, co-owned by a Russian oligarch’s son, the perfect spot to do a deal over smoky plum negronis.5 In an attempt to reach the same class of people, and advertisers, Economist Group executives launched Intelligent Life, since rebranded 1843, a luxury lifestyle effort to show ‘The Economist in evening dress, on holiday, and at leisure’.
The stature of the Economist rose along with that of finance, enmeshed in its central nervous system as never before. Editors departed to join banks, as others arrived from government bodies meant to regulate them. Rupert Pennant-Rea renewed the ‘community of interest’ between the paper and Bank of England, becoming its deputy governor in 1993; when the Bank was freed to set rates five years later, the paper cheered. Clive Crook, then the paper’s powerful deputy editor, had started his career at the Treasury writing speeches for ministers and senior civil servants. Experience of finance was, and remains, all but required to be a contender for the top job – whether at a private bank or multilateral lending institution, in Tokyo, London or New York. Though not as well-paid as their banking peers, the editor-in-chief can aspire to perks few other journalists can match – with lucrative stock options, bonuses and pensions, but also speaking fees, board memberships, book deals, reverential TV appearances, prime billing on the global forum circuit, the odd secret society invitation.6
Despite the new cosmopolitanism of the City, at least one aspect of its gentlemanly capitalist social character remained: the presence of the ancient universities. Graduates of Oxford and Cambridge were more numerous than ever at the Economist. From the latter, deputy editor Ed Carr, and ex-Europe head Gideon Rachman, now a Financial Times columnist, were vetted for the top job in 2006. Many others would continue to rise through the ranks – from the US editor John Prideaux (Cambridge) to Washington bureau chief James Astill (Oxford) to the former New York bureau chief Patrick Foulis (Cambridge), to younger recruits such as Jeremy Cliffe (Oxford) and Emma Hogan (Cambridge). But this cloistered cross-sample actually overstates the academic diversity of the staff. Just one Oxford college (out of thirty-eight), enrolling no more than 600 students (out of some 22,000), has churned out a hugely disproportionate share of the most important Economist editors.
An informal agreement between a fellow of Magdalen, the historian R. W. Johnson, and Andrew Knight, had transformed that college into a sort of Economist prep. ‘Knight called me in 1970 to help him recruit talent.’ ‘If they’re really good, let’s take them straight away instead of sending them to the provinces first’, Knight told Johnson, who ‘only gave him really top flight people’ like David Lipsey, Stephen Milligan and Chris Huhne – respectively becoming a Labour life peer, Tory MP and Liberal Democrat Cabinet minister. It got so packed with them, a joke circulated about a possible candidate for editor in 1993. ‘Don’t worry’, one Economist staffer said to another, ‘she only went to Wadham.’7 Former Magdalen men included the Mid-East and Africa editor Chris Lockwood (one of two Economist journalists that Prime Minister David Cameron named under oath as friends and advisers at the Leveson Inquiry into press standards), and Matt Ridley.8 The 5th Viscount Ridley and Baron Wensleydale, as Ridley is also known, made a splash as science editor from 1983 to 1992 – and continued to do so later from the House of Lords, with popular non-fiction titles purveying feel-good social Darwinism for the Economist audience.9 Most striking of all was the record at the top, with the last editor but one, his nearest rival as deputy editor, and the editor before that all members of the ‘Magdalen mafia’: John Micklethwait, Clive Crook, and Bill Emmott.
Bill Emmott and the Modern Greats
Emmott was born into fairly humble circumstances in 1956. His father was a public accountant, whose family had owned a sweet shop in Lancashire, and who met his mother while working for a local council at the end of the Second World War. Raised in London, he went to Latymer Upper in Hammersmith, at the time a selective grammar school, after which he won a spot at Magdalen to study the standard cursus for future editors – Philosophy, Politics and Economics. At Oxford’s Nuffield graduate college in 1978, as part of ‘a cunning plan to combine an academic career with freelance writing’, he began a dissertation inspired by current events in France, where an alliance between the Socialist and Communist Parties, the Union de la gauche, seemed on the cusp of victory at the polls; prodded by R. W. Johnson, then working on his Long March of the French Left, Emmott delved into the French Communists’ previous spell in government from 1944 to 1947 in search of clues as to its future behaviour.10
Johnson also passed his name to Knight, who recalled their first interview: ‘Emmott was a very nice, smart chap, just not particularly ebullient.’ Johnson remembered a more severe judgment: ‘He’s useless, no spark, no spirit!’ Johnson insisted, and Knight finally relented – just as Emmott was due to leave for the Paris archives in 1980.11 Chris Huhne, two years Emmott’s senior at Magdalen (and at the start of a lucrative career in finance and politics, ultimately cut
short by matrimonial lies about a speeding ticket), was leaving for the Guardian, and Dick Leonard proposed Emmott take over the European desk. Giving up the doctorate, Emmott changed his ticket for Brussels, where he covered the European Economic Community (EEC) until 1982. After a stint as economics correspondent in London, in 1983 he set off for Japan on an assignment that altered his life and outlook.
Land of the Rising Pun: Japanese Lessons in Finance
By then, Japan was no longer an undiscovered country. After stuttering at the start of the 1980s, its industrial engine roared back to life, promising to add another decade to its thirty miraculous years of growth since the war. In large part because of the turn to deficit finance under Reagan, Japanese exports increased at the average rate of 9.5 per cent from 1979 to 1985, and to the US alone at 23 per cent per annum. More striking were the current account surpluses these generated, which made Japan for the first time the largest creditor to the Americans.12