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Review – Martin Daunton: "The Economic Government of the World 1933-2023"

What drives the Economic Government of the World? Are 1,000 Pages enough to clarify?

Dr. Oliver Roll's review of "The Economic Government of the World 1933-2023"

A thousand-page tome on the response of the economic powers to the Great Depression, the rise and fall of the Bretton Woods regime; the evolution of the world economy after the demise of the gold standard; what it means for FX, trade, GATT and WTO; the history of the IMF and World Bank; the history of 'Keynsianism' and market liberalism ('Keynes vs. Hayek'); the interplay of manifold economic systems and regional blocs vis-à-vis an economic 'superpower'; inflation and stagflation of the 70s; the emergence of European Union and the Euro; the impact of the Big Financial Crisis; TTIP (anybody remember?) - and lastly the economic consequences of the Corona pandemic…. If you are intimidated by 850 pages of closely printed text (plus over 100 pages of notes, readable only with a magnifying glass), then this book is not for you. However, considering only my much abbreviated line-up of topics: how would you expect it to be dealt with in fewer pages?

I recommend handing this book as a gift to your chief economist, or CIO, but not without the heartening encouragement: "Can we discuss the contents next week?" Well, as I had no vacation time, it took me all evenings of almost three weeks to devour this opus, which has had – as is made clear in its very first sentence – "…a long gestation period". I would think a very long time: 2004 – 2022. Professor Martin Daunton (University of Cambridge) is of course ideally suited to tackle the Herculaen task of writing such a history, having spent a lifetime and academic career with all these matters.

Your chief economist, CIO, and most of us do know of course a lot of this story, and its protagonists, not only for having experienced the impact on our professional and personal lives of the course of the more recent years ourselves, but also because we tend to ask: how come things are the way they are? History, typically, provides a first good answer. Therefore, to have it all in one detailed narrative, to learn about how the framework of our global economy came to work this way, was something I was looking forward to very much, welcoming the opportunity to understand what "economic government" is, and how it is connected and contingent on political history, geopolitics, and central banks policies. The title makes you wanting to discover more about the roles the protagonists played in shaping the outcomes, and what the political, ideological, or macro-economic drivers were. Maybe you would also like to read about the ideological and philosophical controversies shaping this time, such as derived from either political collectivism, or liberal individualism.

All this warrants presenting and reviewing this 'brick' of a book here. Alas, our review must be a very critical one. It is obvious that perseverance was required to keep going with 1,000 pages, nay even discipline. Dry reading. However, economic history doesn't have to be like that. Remember Liaquat Ahamed's "Lords-of-Finance" history of central bankers? What a page-turner in comparison. The book by Daunton evolves in style and character as you read through the 27 chapters (no wonder with more than 20 years of gestation), and it gets better from chapter 20 and the 70s onwards. His own views and positions come through only in the last sections, and even though you may disagree with the author, this begets better reading.

The book starts off with, and in its course keeps the focus on economic conferences. In trying to be balanced and to present the different views of the participants, extensive quoting from discussion papers and working groups is presented as if this were the history of the specific event. Even if quoting primary sources is the historian's virtue: can we expect quotes from papers of political statements, sometimes couched in bland diplomatic wording, to substitute a good narrater? Besides, the endless discussions of what the 'combatants' put forward, contested, retracted, and finally agreed upon, makes it quite often impossible to follow the time line, i.e. reflect the real sequence of events. Which is to say, the history is not presented in a manner that makes you capture the sequence of events easily.

When it comes to contents of what is being discussed or at stake, we had the impression that without prior deep knowledge you would often miss what the issues really were. If taken as a university text for experts – or those becoming experts – this may be a viable approach, but the book does not assist the general reader to grasp what was at stake in the storyline. As a consequence, the book is not making it easy for you to pick a section or chapter, and learn about some aspects of the economic governments' history – which is a real pity, as the book covers so much. It is not a history to be read selectively. I think you need to opt for either 850 pages from beginning to end, or nothing.

Last, but not least, some flaws in the fundamental premises of this history need mentioning. This book is decidedly one-sided in its portrayal of the Anglo-Saxon view of things. On the first couple of hundred pages you wonder whether anybody outside the UK and the US was engaged in economic activity at all. To give only four examples: (1) A handful of pages on the Indian economy will certainly not help to achieve even a hint of better understanding of the economic development in the 'largest democracy'. (2) The whole communist/socialist block was trying to 'govern' all economic activity. You will not find anything but a few words on all that. China is covered, yes, and even made the candidate for becoming one of the dominant economies. But that is not investigated, justified, derived – it seems a simple extrapolation of recent growth. (3) Arguments brought forward against (!) the Euro are so aged, outdated, and worn-out, you would expect much better in such a work. Here, I am not speaking of telling the history of what was being discussed – to which these old debates belong – but of the author's appraisals, and his expectations going forward. (4) The book seems to belong to a well-know tradition of some streaks of Anglo-Saxon academia, always indulging in a disparaging attitude of everything 'German' as either completely inane, morally despicable, or simply wacky.

The latter could be seen as my personal criticism. Yet, you don't find an answer to the question of 'what drives' the world economy, or all attempts to 'govern', influence, control, and steer it. Maybe this should have been better anchored in an analysis of geopolitics and social change, rather than presenting the economic history as a sequence of 'conferences' and 'meetings'?

Das Buch: "The Economic Government of the World 1933-2023"
Allen Lane/Penguin Books, 2023. XXXIV + 986 S.

Der Autor: Martin Daunton

Der Rezensent: Dr. Oliver Roll ist Niederlassungsleiter Deutschland der norwegischen Pareto Asset Management und Strategie- und Vertriebsberater (4AlphaDrivers).