Young Marvin

The author of A Tenured Professor is not only a famous tenured professor of economics but, unlike many of the breed, an elegantly witty writer. From time to time he demonstrates his versatility by turning out a novel. This one is, in part anyway, an unimpassioned satire on the recently fashionable school of economic thought that deals in Rational Expectations.

The idea, I’m told, is that, generally speaking, agents in an economic system have an understanding of it which ensures that on balance they will get their predictions right. This doctrine became powerful in the Seventies, flourished in the Eighties, and had some practical implications, such as that governments need not and should not do anything to affect – upset – the workings of the market: and some that were on the face of it implausible – for example, that unemployment is essentially voluntary, being caused by misunderstandings of the Real Wage. Many economists, and presumably almost everybody else, think these ideas to be for the most part dotty.

Galbraith obviously thinks so, though he does not enter directly into the matter of Rational Expectations. Instead he tells us of a young economist who, like his creator, has found evidence, from tulipomania and the South Sea Bubble to the market crashes of 1929 and 1987 and the current US banking crisis, which suggests that the Rational Expectationists are about 180 degrees off-course, and that the Expectations investors are habitually animated by are, in fact, totally Irrational.

Pursuing an orthodox academic career as an expert on the economics of refrigerator pricing, Professor Marvin leads at first a quite normal life, enjoying the amenity and security of Harvard and expeditions to Berkeley and Cambridge, with side-trips to Oxford – milieux here described with knowing affection and only a touch of derision as pleasant, even hallowed surroundings, in which comfortable topics of discussion include the ins and outs of sexual harassment, the follies of economists, and the legitimacy of the extracurricular activities of the professoriat, especially Marvin’s.

Keen to do some good in the world, not least for himself, young Marvin needs the security of tenure, and produces a solid thesis to that end. But one day in Heffers he picks up a book and reads about Bernard Cornfeld. Inspired by that example, he studies the many comparable historical instances of investors’ madness. At Harvard he had studied economics with people who ‘assumed rationality’. Dismissing that assumption, he reflects that when a lot of people lose a lot of money, there must be others, anonymous, who simultaneously make a lot of money.

The irrational euphoria prompting individuals and corporations to such absurd behaviour should be measurable, so Marvin sits down at his computer and builds a model which can predict the point at which the euphoria would peak, so that he and his very able wife could get in and out before that point was reached, and, when appropriate, re-enter at the bottom. On her own initiative, his wife acquires a profitable stake in the booming Bank of America, soon to fall. But the Marvins’ major achievement is IRAT, their index of Irrational Expectations. Still keeping a reasonably modest academic lifestyle, the Marvins grow very rich indeed, especially after the Great Correction of 1987.

They devote some of their wealth to the furtherance of Mrs Marvin’s women’s causes (an Executive Gender Survey), but have plenty left over to end a Harvard headache by buying out the university’s controversial South African investments. Growing in confidence, they then decide to acquire armament firms and turn swords into ploughshares. This brings them under the scrutiny of the Securities and Exchange Commission. Next they form an even more ambitious plan to match the ‘honoraria’ of the politicians with grants to candidates for Congress who will undertake to oppose this well-established method of ensuring military requisition. How Marvin responds to the challenges of high politics, or low politicians, and how Harvard and, even more important, Washington respond to Marvin, is the remainder of the story. There is some genial padding, and the whole thing is good fun, stylishly written and altogether civilised.

Cyril Connolly is famous for having wanted to be the author of a totally civilised stylish masterpiece. In all the circumstances such a production would have to be a novel, a genre for which his gifts do not appear to have been ideally suited. He worked at this one for years, leaving it unfinished for what must have come to seem good reasons – for example, that his talents were for silvery prose and high-spirited parody rather than for sustained narrative. He uneasily adapted methods proper to the detective story and tried to unite them with a more congenial inheritance from Petronius Arbiter, Peacock and Aldous Huxley, with a soupçon of Firbank.

Peter Levi, who was a friend of Connolly’s and married his widow, has brought the tale to an ending, making his task possible by briskly disposing of all the clues Connolly himself had perhaps despaired of explaining in the last section. ‘I do not believe,’ Levi very credibly writes, ‘that Cyril had worked out his solution in full detail.’ He further notes that the book’s chief reason for existence was to accommodate a huge set-piece about a dinner party. This occurs on the eve of the birthday of the great novelist, Sir Mortimer Gussage. There is a diagram of the table arrangement and the menu is specified in curious detail. The table-talk is wonderfully recherché and mostly about French 19th-century literature. A mild example:

‘La table élégante est le dernier rayon de soleil qui caresse les vieillards,’ whispered Sacharissa. ‘Grimod?’ said Curry Rivel. ‘No, le Marquis de Cussy, whom Baudelaire admired – or was it Custine?’

There is also a lot of talk about Roman emperors, their feasts and their last words.

The great novelist uses one such last word as the title of his own farewell performance, Eyes, look your last, a work in which he means to celebrate all the people he has most admired – and a very long, very upmarket list it is. This undertaking will require him to construct prose poems ‘round their attributes, like the Epistles of Horace set to the music of Pelléas and Mélisande’. The other guests listen to a long rhapsody on this scenario, enounced in a voice as ‘spell-binding as Casals’ cello’, and then go on lecturing one another on all manner of subjects, from the most extreme refinements of pomiculture to an ancient law called ‘Le Congrès’, which entitled discontented French wives to compel their husbands, accused of malformation or impotence, to couple with them before witnesses – a virtually impossible feat, as Queen Teotoberga must have known when she required it of her husband, the Emperor Lothair.

The dinner ends with murder, and most of the suspects turn out to be survivors of a forgotten Oxford dining club, secretly preserved with an object it is decent, as well as convenient, not to reveal. The hero is an Aldous Huxley-like journalist, erudite enough to join in the game of spotting quotations from Madame de Sevigné and Mademoiselle de Lespinasse, but still juvenile and susceptible enough to provide some amorous interest. He falls for the novelist’s daughter but beds his wife.

Peter Levi has a good try at keeping up the tone – ‘High above my head the moon melted in beurre blanc among vestigial points of fire’ – but it was certainly closing time in this particular garden of the West, and Levi’s job was less a matter of tending the plants than of locking the gate. The blurb forgivably calls Shade those laurels a minor masterpiece, but it seems appropriate that the great novelist at its centre – not, as it turns out, really a novelist at all – should leave his magnum opus incomplete after terminal overindulgence in passion fruit.