Mervyn King's economic inspirations

 

Mervyn King speaks to the BBC's economics editor Stephanie Flanders about the great thinkers of economics

Sir Mervyn King was an economics professor at the London School of Economics before joining the Bank of England in 1991, and becoming its governor in 2003.

He studied at John Maynard Keynes' old college in Cambridge in the 1960s at a time when Keynesian economics was in the ascendant, but about to come under attack from monetarist economists such as Milton Friedman.

To my knowledge, Sir Mervyn has given just three extended television interviews since becoming governor. Only one of these - last month, for Channel 4 - was broadcast live.

I sat down with him for this interview in late February 2012 for the BBC 2 series, Masters of Money - a documentary series about the lives and economic thinking of Keynes, Friedrich Hayek and Karl Marx which I have written about before. The last episode, on Marx, is broadcast on 1 October.

In this interview the governor of the Bank of England comments on each man's contribution to economic history, and the relevance of their ideas to recent events.

Sir Mervyn says that the last few years have given him a deeper understanding of some of Keynes' writing about the 1930s.

Before the financial crisis of 2008, Sir Mervyn says, he had struggled to comprehend how policymakers had allowed the economic disasters of the interwar years to take place. Now he understands all too well.

He credits Hayek with having given economists a valuable warning against hubris. We can't predict the future, he says. And we probably can't prevent more crises from happening. But we can try to make the system better at coping with them.

 
Stephanie Flanders Article written by Stephanie Flanders Stephanie Flanders Former economics editor

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  • rate this
    +1

    Comment number 189.

    188.feedbackloop

    There is a better system than Capitalism in coming years social media play integral part in re-shaping the current economic system that we know as Capitalism

    It is already having an impact for example

    New of World not closed by failure business model nor Government regs. It was closed by weight public opinion from social media and fear brands being associated

  • rate this
    0

    Comment number 188.

    174 - CO - its really only the neoclassical dim wits that have utopian claims for capitalism - and they are largely socialist reactionaries.

    Capitalism is and will for the time being remain the least worst solution.

    Utopia is for socialists, marxists and communists. History suggests it can only be approached over oceans of blood and yet never be attained.

  • rate this
    0

    Comment number 187.

    185.SW

    "all the world's a stage"

    Which - admit it - is just as you like it.

    :-)

  • rate this
    0

    Comment number 186.

    Ms Flanders, do you really think that Trier is in Southwest Germany ?

  • rate this
    0

    Comment number 185.

    @179.ComradeOgilvy
    "As an aside..."

    That was more of a soliloquy unless you insist that all the world's a stage.

  • rate this
    0

    Comment number 184.

    @180.Toby Chambers
    "We need more competition"

    Would it be going too far to refer the BoE to the Monopolies and Mergers Commission? What about referring the Monopolies and Mergers Commission to the Monopolies and Mergers Commision?

  • rate this
    0

    Comment number 183.

    #175 ah but I'm not of the left I'm of the right , so you are wrong there.
    as MARKS founbd in that woods once there r too many people to share resources someone has to own/control/passon etc and that where human nature comes in, just look at hilter, nepolean Genghis Khan et al and that is the problem,

  • rate this
    0

    Comment number 182.

    179 CO the overall trend is not downwards - if you draw the box arround the world not just arround the west, millions of workers in asia have been lifted out of poverty and net inequality has reduced. Unfortunately it has all be paid for by debt rather than retained earnings and the west cant service the debt.

  • rate this
    +1

    Comment number 181.

    180.TC

    Totally agree.

    Also would reduce excessive executive pay and lobbying powers and allow governments to step back (no rescues).

  • rate this
    +1

    Comment number 180.

    The problem 179 is the mega corporation sucked life out of small businness

    Take G4S It has huge almost monopoly as a large security contractor can then dictate wages etc

    Although look what happens when squeeze to far and end up with loads chiefs but no Indians to run the show

    We need more competition and less mega contracts that create need for mega corp

    Break them up more opportunities

  • rate this
    0

    Comment number 179.

    As an aside...

    The standard mantra says that capitalism brings benefit to everyone albeit unevenly. The evidence for this is dubious.

    Meanwhile, we're told that western workers have it too good and much accept cuts in order to compete with poorer nations that would otherwise undercut them. Thus the overall trend is downwards.

    Does that not put the lie to the standard model?

  • rate this
    0

    Comment number 178.

    Mr fallingtp

    May I remind you that those living in capitalist society actually elect government

    How many capitalist interest parties help sway the electorate?
    It is not gov that is bad but interest groups create bad gov is problem

  • rate this
    0

    Comment number 177.

    176.fTP

    Govt, laws, rights were based on those of the former imperial masters. Those things are still meddled with by western orgs. As for free trade, we've been exploiting these countries for raw materials for centuries.

    "Why"

    Chinese investment. Exploitation still but closer to a partnership than westerners.

    P.S. IR35_S a leftie? You have to be pretty far to the right to think that!

  • rate this
    0

    Comment number 176.

    174. It is not capitlaism that is the bareer for growth. It is poor govt, poorly defined property rights, poor contract law, lack of commitment to opening up to trade/ maintaining fiscal & financial stability etc

    Yet real GDP in Africa for 2000s was approx 5% a year, twice its pace in the 1980s & 90s. Why

  • rate this
    +1

    Comment number 175.

    "and there are too many people on this planted and I susspect that limit was passed b4 1750 "

    Ahhh welcome back Thomas Malthus; lovely to see you again. Why do those on the left always revel in gloom? More people live better lives now than at any point in history & it's getting better. Rejoice.

  • rate this
    0

    Comment number 174.

    172.fTP

    I've seen places exactly like that. I had Uganda in mind when I wrote that(dunno why) but other places exists.

    Most of Africa has been waiting a very long time for the benefits of capitalism to trickle down to them. And south America and parts of Asia too.

    How many centuries more must we wait for your prophecy of capitalist induced Nirvana?

  • rate this
    -1

    Comment number 173.

    Great programmes and very informative for a non economist.

    What gripped me was that each one thought they had the right theory but it was never a permanent solution for there are always those who exploit and destroy and the whole thing has to start again.

  • rate this
    0

    Comment number 172.

    "Inequality, poverty, short life expectancy, ack of social provision, high risk of war, archaic laws, semi-feudal leaders"

    Not places I widely recognise I'm afraid other than of course those dominated by religious zealots/despots aka Nth Korea, Cuba, Syria but chaps like you seem to wish poverty & pestilence on mankind so as to confirm your narrow them and us view of the world.

  • rate this
    0

    Comment number 171.

    No economist can be "right" in all circumstances and no economist can provide a unifying comprehensive theory which works in all circumstances.
    At best they offer differing perspectives, an explanation of why they got it wrong, and a way of thinking.
    People are irrational so do not fit comfortably into economic models.
    Alan

  • rate this
    0

    Comment number 170.

    In Masters of Money, where was the "invisible hand", which is surely the only way forward for economics, that is acceptance of the true market price (based
    within a legal structure, democratically legitimised). Although I accept that
    this would be more of a political challenge than an economic one?
    Was Mr Smith just too "historical"? In my defence, did read Political Economy at Glasgow.

 

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