Wynne Godley: A Biography

By Alan Shipman

This  timely biography of the economist  Wynne Godley (1926-2010) charts his long and often crisis-blown route to a new way of understanding  whole economies. It shows how early frustrations as a policy-maker enabled him to glimpse the cliff-edges other macro-modellers missed, and re-arm ‘Keynesian’ theory against the orthodoxy that had tried to absorb it. Godley gained notoriety for his economic commentaries - foreseeing the malaise of the 1970s, the Reagan-Thatcher slump, the unsustainable 1980s and 1990s booms, and the crises in the Eurozone and world economies after 2008. This foresight arose from a series of advances in his understanding of national accounting, price-setting, the role of modern finance, and the use of economic data, especially to grasp the interlinkage of stocks and flows. This biography also gives due attention to Godley's life outside academic economics – including his chaotic childhood,  truncated career as a professional oboist, equally brief stints as a sculptor’s model and economist in industry, and a longer spell as  as a Treasury adviser with a mystery gift for forecasting. 
This first full-length biography traces Wynne Godley’s long career from professional musician to public servant, policymaker, tormentor of conventional macroeconomics and creator of a workable alternative – all after escaping a childhood of decaying mansions and draconian schools, and rescuing his private world from the legacy of two Freuds.  Drawing on Godley’s published and unpublished work and extensive interviews with those who knew him, the author explores Godley's improbable life and explains the lasting significance of his work.

• Language: English
• Publisher: Palgrave Macmillan
• Release date: Apr 1, 2019
• ISBN: 9783030122898

Alan Shipman

Alan Shipman is the managing director of Group 5 Training Limited. He was the project editor for ISO/IEC 27701:2019 and is also the chair of IST/33/5, which is responsible for the UK's contributions to the work of ISO/IEC JTC1/SC27/WG5 which deals with identity management and privacy technologies. Alan has over 30 years’ experience of managing personal information, both as a data processor for a service organisation and as a data controller. He is a regular speaker at conferences, covering all aspects of information management. Alan has been involved in the development of BS 10008 throughout its life (first published as guidance in 1996), which deals with the management of electronic information of all types, including the conversion of paper-based information to electronic forms. His experience includes advising organisations in both the public and private sector on the implementation of BS 10008.

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© The Author(s) 2019

A. ShipmanWynne Godleyhttps://doi.org/10.1007/978-3-030-12289-8_1

1. Life Before Economics 1926–1955

Alan Shipman¹ 

(1)

Department of Economics, The Open University, Milton Keynes, UK

A proud ancestral record told of property, public service and fast tracks into prestigious social circles. But when the Honourable Wynne Alexander Hugh Godley arrived on the London scene, in 1926, there was little to pass down except the honorific title. High-flying ancestors had always dropped back down to earth.

In 1734, Mary, the daughter of County Armagh vicar Dr. William Godley, had married the Dublin-based trader Richard Morgan, an owner of land at Killegar near the village of Carrigallen in County Leitrim. Entrepreneurial skill ran no further in the immediate family, but their grandson John Godley reinforced the family fortune and estates through marriage to Katharine, a granddaughter of the Earl of Farnham. Ancestral land running scarce on the English mainland, the British Empire’s more recently ennobled often had to settle for tracts of Irish land without little assurance of its quality. But John was to turn his patch of ‘wet land in a very uninteresting boggy part of Ireland’ into ‘a handsome mansion house and a demesne of unsurpassed loveliness’, according to the notes of his great-great-grandson to come. Killegar House was completed in 1813 in the Georgian style, surrounded by gardens, lakes and forests that proceeded to withstand the tests of time rather more successfully than the stately home itself.

Wynne’s great-grandfather John Robert Godley (1814–1861) became the High Sheriff of Leitrim and in 1850 arrived in New Zealand to found the Canterbury colony—naming its capital Christchurch after the Oxford college from which he had graduated in Classics. Noblesse must oblige even in the grimmest of times, so it was a matter of family pride that, during the potato famines of 1845–1849, no one ever went hungry living on or near the now-extensive Godley estates. Indeed, John Robert was able to pronounce himself ‘exceedingly popular, from having done a good deal to procure employment and relief for the people’, in a letter to his fiancee Charlotte in 1845.

The Canterbury settlement scheme was partly a response to the dire poverty that has left many local families on the edge of starvation after the potato blight—the Godleys ’ largesse not stretching indefinitely beyond their boundary walls. It was also an experiment in a new self-sufficient, self-governing form of colonisation. John Robert campaigned to establish this throughout the British Empire on returning to the UK in 1852, having declined a nomination to govern the new province. He urged, in the first of three letters to Sir Colman O’Loghlen, ‘the necessity of Emigration on a very large scale from Ireland to Canada, in order to preserve vast numbers of our fellow-countrymen from perishing of want’ (Godley 2018: 3). He also remarked that such resettlement requires that emigrants be given state assistance to make the journey and find work, along with religious instruction ‘and other elements of civilization’. An almost casual mention that he had already outlined the plans to Lord John Russell, who served his first term as Whig prime minister in 1846–1852, highlights how vaunted the Godley political connections had become by this time.

Wynne’s grandfather John Arthur Godley (1847–1932) became the private secretary to William Gladstone (Whig prime minister 1868–1874 and 1880–1885) and was rewarded with a hereditary peerage (as Baron Kilbracken) for his supporting Home Rule for Ireland, without losing his attachment to the stately home there. He also served as Under-Secretary of State for India. It was in this capacity that, in 1909, he received the resignation letter of a junior employee called John Maynard Keynes , who was leaving the India Office to take up a post in the recently formed Cambridge Economics Faculty (Economist 2010). Finding diplomatic channels effective enough to remove any need for travel to the territories he administered, John Arthur lived mainly in the south-east of England where, in retirement, he would later entertain his infant grandson. The five-year-old Wynne noted on his grandfather’s desk ‘a pair of brass scales with rates of postage graven into it for all time… such a number of pence for India and the Colonies and so on’—affirmation that colonial governance was deliverable by post. John Arthur’s cousin, General Sir Alexander Godley (1867–1957), also performed distinguished colonial service, rising through the army to command the New Zealand Expeditionary Force during World War I, and surviving the traumatic engagements at Gallipoli and Ypres.

John Arthur’s ascent to Lord Kilbracken was a return to the glory of previous centuries, if a family tree traced by his descendants is ever proven correct. This names the bride of John Godley of Killegar as Charlotte, granddaughter of Charles Finch and Jane Wynne, whose son Charles took Wynne as the family name. The line then goes back to the Earl of Aylesford, son of Charles, the 6th Duke of Somerset. Four intervening generations connect him to Lord Hertford, son of the Lord Protector Somerset, with lines then going back to Queen Elizabeth I and King Henry VII. To outdo those English families that can ‘only’ trace their ancestry back to the Conqueror, this tree then connects via William I to Ferdinand the Great and Philip the Bold.

But deep roots were no shield against the out-of-character crosswinds. From these heights of administrative and military achievement, family fortunes began inexorably to slide. The second Lord Kilbracken, Wynne’s father Hugh John Godley (1877–1950), became a distinguished barrister and advisor to the Lord Chairman of the House of Lords Committees. He regained the Killegar estate, halting its decline if not beginning its refurbishment, and cultivated musical interests as an amateur viola player and frequent Bayreuth Festival visitor. But his offspring saw few of the benefits. ‘My father had all his fun well away from his family’ was the best of Wynne’s adult reflections.

Hugh’s behaviour and decision-making deteriorated under the influence of alcohol, with a similar effect on the family finances. So while viewed by the outside world as children of privilege, Wynne and his siblings had to fight their early way through looming aristocratic decay. The eldest, John Raymond Godley (1920–2006), inherited a Killegar House that steadily overwhelmed its occupants’ powers to renovate, or even heat the reception rooms in winter. John Raymond’s restoration efforts were set back by a serious fire in 1970, the damage from which was not fully reversed by the time of his death. His younger brother was destined to be passed around other childhood homes, which lacked the charm of Killegar’s surroundings and usually provided more heat than light.

Truncated Childhood

By the time Wynne, Hugh’s youngest son, was born in Paddington in 1926, his parents were already drifting apart. He remembered their occasional reunions as invariably stormy. The domestic disharmony was made worse by his older half-sister Ann’s bouts of mental illness. His grandfather, living a short walk away ‘in a large, ugly, overheated house called Hartfield’ where ‘every wall was dense with books’, became the inspirational figure for his first five years, providing much of the entertainment and education that was absent at home.

At John Arthur Godley’s imposing ex-colonial desk, Wynne learnt to draw and rub brass, was read stories ranging from Struwwelpeter (Hoffmann 1845) to Fanfan la Tulipe (Bilhaud 1895), and tested the permissible limits of picture book learning, ‘an illustrated book of Chinese tortures’ sticking especially in the memory. The two also enjoyed rural escapes with the help of his grandfather’s chauffeur Leany, who often drove them to one station in the Wolseley limousine and met them outside another, at the end of their steam-train ride. When he died in 1932, triggering a life insurance payout of ‘some hundreds of pounds’, Wynne was the only family member to whom ‘Grampapa’ left a small legacy. But the more enduring gift was a small wooden model of Redwing, a yacht, which was to accompany him on all subsequent travels.

Less satisfactory escape was provided by long spells in the care of other nearby relatives and friends, in whose luxurious houses Wynne experienced strict discipline and long spells of isolation. A serious infection, which largely destroyed the hearing in one ear, also delayed the start of formal education. This finally began at age 7, when he was entrusted to the respectable but often brutal regime of southern English preparatory schools. A year at nearby Ashdown House was followed by four years at Sandroyd, then occupying a stately home in Cobham, 40 miles south-east of London.

Here, Wynne’s Latin exercises—delivered by the brother of the novelist Robert Graves—included educational verses penned by his grandfather’s cousin Alfred Denis Godley (1856–1925). ‘ADG’ is perhaps best known for The Motor Bus, a modernised mnemonic for the five declensions, beginning:

What is it that roareth thus?

Can it be a Motor Bus?

Yes, the smell and hideous hum

Indicat Motorem Bum!

Implet in the corn and high

Terror me Motoris Bi […]

Despite his lighter verse sealing his fame, Wynne recognised Alfred as a serious classicist and poet, unfairly overshadowed by his more prominent uncle. As Oxford University’s Public Orator, ADG’s other unsung achievements included the eulogies composed in Latin for honorary degree ceremonies. Recipients of these bespoke benedictions included French Foreign Minister Clemenceau, composer Richard Strauss and pianist turned Polish President Paderewski. Wynne carried with him into later life a copy of ADG’s Ad Lectionem Suam, a reflection in English on the perennial challenge of delivering familiar lessons with the necessary semblance of novelty:

When Autumn’s winds denude the grove, I seek my Lecture, where it lurks

‘Mid the unpublished portion of my works,

[…]

Though Truth enlarge her widening range, and Knowledge be with time increased,

While thou, my lecture! Dost not change the least.

While the prep schools’ teaching permitted such jest and was of generally high standard, their regime was also brutal, with ‘an awful lot of beating’ to instil respect in their young charges (Godley 2008). Outside the school term, home life grew slightly calmer. The affair that wrecked his father’s first marriage led quickly to a new partnership, and Wynne got on well with his new stepmother, Nora. He managed to juggle this with rediscovered attachment to his artistic mother Elizabeth during her infrequent visits, while sharing teenage discoveries (including rum) with his older sister Kathleen. They and older brother John were ‘cocooned, during the school holidays, in total complaisance by a full complement of servants, gardeners, handymen and farm hands, of whose irony I was never conscious’ (Godley 2001: 4). Despite exposure to the other side of the property division, when visiting the labourers on his grandfather’s estate, the expectation of receiving domestic service would prove hard to shake off. Ten years later his close musical friend Richard Adeney observed that however sincere his wish to renounce aristocratic connections and make his own way, he still ‘treated waiters and servants as if he owned them’ (Adeney 2009: 114).

Although elder brother John was called up for service on an aircraft carrier, Wynne was too young for conscription and remained largely insulated from World War II. When Nora despaired of her husband’s reversion to alcohol, she began an affair with William Glock . A multiple instrumentalist and cultural journalist who later transformed the post-war broadcasting of classical music at the BBC, Glock (1908–2000) gave Wynne his first serious musical exposure and awakened his interest in orchestral instruments, particularly the oboe.

Wynne’s private school experience finally improved when, at age 13, he gained a place at Rugby in Warwickshire. It was here that he refined musical interest into genuine talent, willingly trying any instrument but gaining special proficiency at piano and oboe. Devotion to these, which drove a rapid ascent towards orchestral standard, limited the time spent on academic subjects. English, Classics and chess were the only ones to arouse real interest. The first two, fortunately, ranked high on the curriculum required for admission to top universities, while the skills of the third would prove useful for survival in the life beyond them.

Oxford, Berlin and Paris

Despite his variable motivations towards study, Wynne negotiated the school-leaving exams successfully and gained a place at Oxford. New College, so-called because it was founded over half a century after the university’s first (in 1379), was the creation of William of Wykeham, King Edward III’s chief minister and Bishop of Winchester, whose eponymous school he also created a few years later. It was the first Oxford college to admit undergraduates and, when Wynne arrived in October 1943, offered a congenial mix of serious tuition, music and the company of students who have been similarly spared the call-up to World War. Wynne had been admitted to read for the degree that began as Modern Greats, but evolved into the now famous philosophy, politics and economics (PPE). In contrast to the time that preceded them, the four years in Oxford proved to be ‘supremely happy’ (Godley 2001: 4), but did nothing to mark him out as one of the social sciences’ rising stars.

Happiness was reinforced by an overlap in studies with brother John, who arrived at Balliol in his mid-twenties after serving for five years, and had another four to go before becoming the third Lord Kilbracken. Also studying economics, John’s habit of reading late paid unexpected dividends when, in March 1946, he dreamt of reading horse-racing results in the next day’s evening paper. While living a typically impecunious student life among the spires, John’s inheritance still stretched to a credit account with a bookmaker in London. An accumulating bet placed on two horses whose names he remembered from the dream, and found in the morning paper, paid off handsomely: both ran home as winners at odds of 6:4 and 10:1. Speaking on a television documentary almost thirty years later, by the occultist Colin Wilson, John recalled Wynne joining him in the walk to buy the evening paper that broke the news of the win.

The prescient dreams remained sporadic, but John had another when he, Wynne and Catherine were visiting their father and stepmother at Killegar in the summer of 1946. This time the nocturnal horse’s name did not match the one that the village postmistress (speaking by phone five miles away) found in the columns of the only available newspaper. According to John, still sceptical of any paranormal powers, it was the more enthusiastic Wynne who suggested putting all their spare change on the one that sounded least dissimilar. It won, at 100:6, netting them £60—enough to have paid off their loans if student life had then required them. John next slumbered to a winner when borrowing Wynne’s New College room for extra study during the Oxford ‘long vacation’. By this time, frustrated by the bookie’s low credit limit, he tried to sell the names as tips to a newspaper, phoning them through ahead of the race to demonstrate their reliability. While the Sunday Pictorial offered a paltry 30 shillings, the Daily Mirror bid a more substantial 25 guineas, followed by the offer of a job that was his breakthrough to a journalistic career. The twilight tipster then deserted him for ten years until a dream in wintry Monte Carlo—stored until the English summer—nets him the Grand National winner at 18:1.

Aside from these experiments in slim probability, Wynne’s strongest Oxford recollections were of fierce intellectual engagements with the philosopher Isaiah Berlin and historian Lord David Cecil. Berlin’s habit of using unarguable propositions to drive him into absurdly elaborate counter-arguments induced ‘the stupendous effort which, over a period of 15 months, was to transform my intellect’ (Godley 2001: 4). His economics tutor, Philip Andrews , turned out to have put the questions that would ultimately spark the most productive search for answers. But that fuse was distinctly slow-burning. Music continued to eclipse other areas of study, and Wynne played regularly in the college and other local orchestras, concentrating on the oboe while keeping up his skills across the woodwind section. Despite graduating with a First—casting doubt on his later claim to have struggled with Berlin’s logic and learnt no economics—he decided to go to Paris for professional training at the Conservatoire, having also won a two-year scholarship funded by the pioneering film producer Alexander Korda. His more influential teachers there included Nadia Boulanger, the renowned pianist, organist, conductor and composer, now returned from wartime sanctuary in the USA.

Surmounting early anxieties over public performance, Wynne quickly gained work as an orchestral oboist on returning to Britain. Post-war London delivered regular opportunities for live performances, while radio and television were expanding as new sources of concert demand. His professional career path appeared settled when he was appointed principal oboist by the BBC Welsh Symphony Orchestra in 1951. Richard Adeney , whose career as a leading flautist took off at around the same time and who shared much social as well as performance time, later recalled a confident figure who ‘mixed very high intelligence with jovial sociability’.

But the heavy orchestral schedule, which included up to five weekly performances and international tours, began to take a toll on this joviality, which was also shaken by the family elders’ sudden and painful decline. His father died penniless and isolated in hospital, his mother was immobilised by a stroke, his half-sister was committed to high-security psychiatric care, and his stepmother shot herself. Unable to retreat into music, Wynne began to suffer stage fright and conceded the impossibility of continuing to play to large audiences. He gave his last orchestral concert towards the end of 1952 while continuing with ensemble and solo performances to smaller gatherings throughout his life, as well as serenading early-arriving colleagues with practice sessions in the office before starting work.

Looking for a steadier and less emotionally draining job, Wynne joined the Metal Box Company in 1954 as an economic analyst. The demands of the new role were well within his capabilities, though there were occasional opportunities to revive and apply his earlier economics training. The company was the UK’s main producer of tin cans, alongside its (then highly profitable) printing operations. So his duties soon extended to short-term forecasting , of tin and other mineral prices and of consumer demand.

Ironically, across the Atlantic, another aspiring conservatory-trained musician born in 1926 was suffering similar anxieties about performance and reaching the same conclusion about the need for career change. A promising career as a jazz clarinettist and tenor saxophonist had been derailed first by a brush with tuberculosis and then by the arrival in the same ensemble of a younger sax player by the name of Stan Getz. Playing alongside this prodigy improved the older player’s technique, but immediately made him realise he would never be a performer of the same class. The despairing saxophonist was Alan Greenspan , who also chose instead to pursue a career in economics (Greenspan 2008: 25–28). In 1987, Greenspan would be summoned from his consulting firm by President Ronald Reagan to become Chair of the Federal Reserve, the US central bank—and the target of merciless criticism from the erstwhile oboist. Greenspan became a lifelong preacher of the macroeconomic orthodoxy that Wynne would work systematically to knock down and replace. Although Greenspan was to outlive him, the Godley perspective could claim the last laugh, Greenspan’s tenure at the Fed (until 2006) making him indelibly the architect of monetary policies which Wynne foresaw, long before most others, would lead to the global financial crisis that began in 2007.

The Art of Marriage

Having spent several summers at Killegar as a child, Wynne still returned to Ireland frequently in his twenties, lodging in the ancestral mansion despite the gradual decay that had made some rooms uninhabitable. He also slotted easily into London artistic and cultural life, even after abandoning the orchestra, joining the lively social circles that had formed around a post-war generation of players and thinkers. Bachelor life came to an end at a party thrown by the philosopher Alfred (AJ) Ayer, on meeting his equal in terms of artistic talent occluded by oppressively illustrious family roots.

Kitty (Kathleen) was the elder daughter of the sculptor Sir Jacob Epstein and his long-time partner Kathleen Garman, a gifted pianist who had fled to London with her younger sister to escape a disciplinarian father (Rose 2002: 124). Although entrusted to foster care for a time in the 1930s, Kitty had spent her teenage years surrounded by her father’s artwork in a Chelsea townhouse (Rose 2002: 229)—training at London’s Central School of Arts and Crafts and harbouring ambitions for her own art until discouraged by her mother’s criticism. She was on her own again after a mercurial partnership with the young visual artist Lucian Freud. Kitty and Lucian had married in 1948 (when she was 22 and he 25), but divorced in 1952 after Freud embarked on what is to become a long series of affairs and overlapping partnerships. Although rarely accompanying Freud on his Dublin escapades, Kitty owed her first meeting with Wynne to the ferry ride across the Irish Sea. Her return to Epstein’s London home with her two daughters, Annie and Annabel , had helped to insulate the surviving family from recent traumas. Her younger sister Esther took her own life while suffering from depression, and her brother Theo died while being restrained during a similar affliction.

Wynne’s marriage to Kathleen Eleonora Freud was announced in The Times on Thursday 9 December 1954. It took place (‘quietly’, according to the same paper) on 3 February 1955 at Chelsea registry office, a short walk from their respective homes (Wynne’s at 4 Stanley Mansions, Park Walk, and Kitty’s at Hyde Park Gate). Reaction within the immediate family was mixed. Wynne’s mother, disinhibited by neurological damage, condemned it with an anti-semitic rant (Godley 2008). But his new father-in-law, whose estranged wife Margaret (to whom he had stayed close) died in a fall in 1947, was finally inspired to tie the knot with Kitty’s mother Kathleen, formalising over 30 years of cohabitation. They married at another quiet registry office ceremony four months later (Rose 2002: 259).

Wynne’s artistic interests and photogenic looks ensured an immediate rapport with his new father-in-law, who soon asked him to sit for a sculpture. This was later used as the head of St. Michael in a commission for the new Coventry Cathedral, installed on an external wall next to the entrance in 1958, a year before Jacob’s death at the age of 78. The sculpture shows Michael as a winged angel, holding a spear, towering above the felled figure of Satan. Wynne always insisted that his angelic presence extended no further than the head, the rest of the saint having been modelled on ‘an athlete who worked as a quantity surveyor’ (Financial Times 1992). Close-up viewers of the statue of John Robert Godley (by Thomas Woolner) in Cathedral Square, Christchurch, identify a family resemblance in the great-grandson—though the Coventry embodiment has so far been spared the forced relocation of John Robert, after dethronement by the Christchurch earthquake in 2011.

Wynne had already got to know Lucian Freud , via his artistic connections in London and Ireland, when the painter was still married to Kitty. After the divorce and her remarriage to Wynne, the musician and the painter continued to meet. Their exchanges are usually competitive and often acrimonious. Long-running arguments extended to the right style of upbringing for Lucian’s children, and often reignited in front of them, Annie later recalling ‘absolutely terrifying’ disputes between father and stepfather (Freud 2015). But besides their simmering frictions over Annie and Annabel , Wynne and Lucian had numerous shared interests—notably in fine art and high-stakes gambling. The economist’s bets were generally not as frequent or reckless as those of the artist (Greig 2013: 195–203), and those directed at financial markets were to benefit from a growing understanding of the way they worked. In 1978, ending an economic report for the stockbroker Vickers da Costa, Godley admitted that he had just quintupled his money through a short-term punt on Japanese oil shares (Financial Times 1978).

Into the Treasury

Metal Box provided a steady salary and useful insights into business management and international commodity markets. But Wynne’s relatively narrow and rarely demanding tasks did not hold much hope for a long-term career. His short stay in private industry may also have alerted him to the relentless structural changes already encroaching on the UK economy, as steady demand growth and full employment —the holy grails of pre-war policy—unleashed technical progress in industry and exposed it to new foreign competition. Metal Box PLC remained a successful diversified business, with strong lines in canning and printing, until the 1970s, surviving traditional sectors’ decline by diversifying into building materials and hardware to serve the growing DIY market. The construction operations were eventually spun off as Caradon, and the higher-tech industrial controls business as Novar, leaving the original name to be immortalised by rebellious rock musicians.

In 1956, answering an advert in the New Statesman, Wynne secured an interview at the Treasury , which is gradually expanding its team of economists and still open to applicants who had stepped into the real economy. He later claimed to owe his offer of the job to knowing ‘something about the price of tin’ and some fortuitous last-minute homework on national income accounting (Godley 2008). It may have been a lucky break, but the good fortune would be felt on both sides.

References

Adeney, R. (2009). Flute: An Autobiography. Shaftesbury: Brimstone Press.

Economist. (2010, May 29). Obituary: Wynne Godley.

Financial Times. (1992, July 28). Godly Godley, p. 15.

Freud, A. (2015, June 27). Annie Freud Interview: Why I’ve Finally Embraced the Family Name, Interviewed by Susanna Rustin. The Guardian. Online at https://​www.​theguardian.​com/​books/​2015/​jun/​27/​annie-freud-interview-why-ive-finally-embraced-the-family-name.

Godley, J. R. (2018). Three Letters Upon Irish Colonization Addressed to Sir Colman O’Loghlen Bart. Delhi: Fasimile Publisher.

Godley, W. (2001, February 22). Saving Masud Khan. London Review of Books, 23(4), 3–7.

Godley, W. (2008, May 16). Interview on the Life and Work of Wynne Godley [video file]. University of Cambridge. Online at https://​www.​repository.​cam.​ac.​uk/​handle/​1810/​198374.

Greenspan, A. (2008). The Age of Turbulence (2nd ed.). London: Penguin.

Greig, G. (2013). Breakfast with Lucian. New York: Farrar, Straus and Giroux.

Rose, J. (2002). Daemons and Angels: A Life of Jacob Epstein. London: Constable & Robinson.

© The Author(s) 2019

A. ShipmanWynne Godleyhttps://doi.org/10.1007/978-3-030-12289-8_2

2. Under Treasury Rules 1956–1964

Alan Shipman¹ 

(1)

Department of Economics, The Open University, Milton Keynes, UK

Economists were still a rarity among civil servants, even in the Treasury , when Godley joined in 1956. Except in the exigency of war, academic or industrial experts were usually called in for advice on specific policy issues and then sent home. There was little perceived need to retain a more than a small group of professionally trained economists, even when a rising number began to emerge from leading universities. The ancient universities’ establishment of modern economics faculties may even have reduced the pressure to bring economists to Whitehall, since professors (or their star students) were now more readily available at a distance. Since economics, and especially its use of statistics, were still developing from a low knowledge base, such outsourcing often seemed the only way to get the necessary expertise. When applicants like Godley were recruited, it was as much for their real-world knowledge and perceived all-round ability as for any past enthusiasm or achievement in academic economics.

Whereas the collection of economic data continually expanded—with a census of production launched in 1907 and conducted regularly from 1928, and cost-of-living data collected from 1914 (Ward and Doggett 1991: 8), many of the economists recruited to work on planning or intelligence in the 1940s were let go when the war ended in 1945. The collection of statistics might be a core need of post-war public administration, but their economic interpretation was not. The Economic Section still had fewer than twenty permanent posts when it moved from the Cabinet Office to the Treasury in Great George Street at the end of 1943. Even these were often the brief stepping stone to more prestigious posts in industry, academia or newly created multilateral institutions like the International Monetary Fund (IMF) and Organisation for European Economic Cooperation (later the OECD ). Although a number of Oxford economists including Maurice Scott , Ian Little and Roger Opie passed through as advisers in the early 1950s (Cairncross and Watts 1989: 136–137), along with Robert Neild from Cambridge, they tended to join small groups that worked on specific problems and then disband. Chancellors of the Exchequer generally preferred retaining one senior adviser, giving definite answers to key policy questions, to a team that might proffer varying solutions, especially if dispersed across government departments.

The Economic Section had finally been created in late 1939, expressly to assist preparation for the war that had been declared on 3 September. It was initially closely linked to the Cabinet Office and the new Central Statistical Office (CSO), which Churchill (as prime minister from May 1940) created to ensure the consistent compilation of key data before its circulation to ministers (Cairncross and Watts 1989: 29). Gathering data from the various ministries that collected them, and checking their reliability, was an immediate challenge for both groups. ‘Particularly in the early days, the statistics in many Departments were in an appalling state and we had to do a lot of work, first making contacts and then tidying up the figures to get them consistent’, according to Donald (later Lord) MacDougall (1987: 23), who was called in from Leeds University to head the new statistical section. That call had come from Churchill’s scientific adviser, Frederick Lindemann (Lord Cherwell), and it was alongside natural scientists and engineers that economists began to show their usefulness to wartime mobilisation. Although its immediate task was to provide data and analysis to support the military efforts, the Committee on the Machinery of Government (1943) identified a permanent role for the Section, as a core group of economists analysing the trends and conditions that formed the backdrop for policymaking, distinct from (and longer-serving than) the economic policy advisers recruited by particular governments.

Numerous economists (including Keynes ) who had been seconded to Whitehall departments returned to their academic posts when the war was over. But the Section’s second director, James Meade , successfully argued for the retention of a core of full-time staff who could advise ministers of all political shades and ensure some policy continuity when administrations changed. Another early recruit was Bryan Hopkin , who joined on the strength of his Cambridge economics degree and would later become Chief Economic Adviser to the Treasury (1974–1979), interspersing public service with an academic career. Wartime experience enabled Meade to argue that the government had been handed the power to steer the economy—maintaining full employment and price stability—through a combination of demand management and industrial policies to boost supply. That task would be much harder as wartime controls were lifted and industries diversified away from defence-focused production. So the skills of economists would be needed to manage the growth of household demand, steer industrial investment to more productive uses and keep external trade balanced, without the direct interventions that a national emergency had allowed. For Treasury insiders, the premium on these skills increased in the 1950s because of the swing in their political direction, away from the keen interest in economics shown by Dalton, Cripps and Gaitskell . ‘Nearly all the Tory Chancellors who held office until 1962 were highly non-expert. Not merely were they innocent of economic complexities, but they did not even have the practical financial flair that one might reasonably expect from a party with business links’ (Brittan 1964: 163).

But in the interregnum after Meade’s departure around half the staff left, including most of the more experienced members (Cairncross 1989: xi). So the Section remained small, comprising 10–12 economists and support staff. Other economists worked directly for ministers and their departments, and major elements of economic strategy were referred too specially convened committees. Some of their reports had an immediate but ephemeral impact,