Wynne Godley, who died in 2010, worked at the Treasury between 1956 and 1970 before becoming a fellow of King’s College, Cambridge and director of the university’s Department of Applied Economics. He was the author, with Marc Lavoie, of Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth. He is often credited with anticipating the mass employment of the early 1980s, the problems with monetary union in Europe (in ‘Maastricht and All That’, published in the LRB in 1992) and the 2008 financial crash. Briefly a professional oboist in his youth, he was later a director of the Royal Opera House. He described his ‘disastrous encounter with psychoanalysis’ in a much praised piece in the LRB.
The implications for Britain of EEC membership are rapidly becoming so perversely disadvantageous that either a major change in existing arrangements must be made or we shall have, somehow, to withdraw.
The Government’s financial policy in Britain during most of the post-war period has been based on ‘demand management’: the attempt to maintain total spending on a smooth upward trend, thereby preserving a high and stable level of employment. This basis for policy, correctly called Keynesian, has recently been displaced by the adoption of targets for money and other financial variables on the basis of a doctrine, monetarism, of which the central contention is that employment cannot in the long run be influenced much by financial policy, and that attempts to change the level of employment from what is dictated by market forces will only cause inflation.
A lot of people throughout Europe have suddenly realised that they know hardly anything about the Maastricht Treaty while rightly sensing that it could make a huge difference to their lives. Their legitimate anxiety has provoked Jacques Delors to make a statement to the effect that the views of ordinary people should in future be more sensitively consulted. He might have thought of that before.
For thirty years after the war Britain had full employment, stable (if slow) growth, low inflation, and a welfare state that was widely admired. And it was common ground that governments could...
Godley and Cripps devote their first seven seven pages to acknowledging the storms that are raging around the subject of macroeconomics. Deteriorating economic performances, and monetarists,...
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