The last army to invade Britain was so small it would have struggled to fill the home ground of Bath City Football Club, had it been built 900 years earlier. This left the Duke of Normandy – then still hoping to establish a reputation as William the Conqueror – with the problem of ruling a country of two million people with fewer than 8,000 soldiers. But William was in luck: the structure of power he inherited from the Anglo-Saxon kings had a relatively sophisticated system of property rights that were centralised in the hands of the Crown. This would become important in the centuries that followed.
Feudal Europe operated on a very clear system of worker exploitation. If a French knight wanted more wealth, he would simply demand the peasants hand over more grain. The only constraint was that if the peasants all starved to death, they wouldn’t be doing much farming and then there wouldn’t be any grain at all. In England, the land didn’t belong to the peasants. It was the king’s land, shared through a complex system of tenancies. To get more out of workers, the aristocracy therefore had to find ways to make them more productive. And so the British were driven to invent things – and eventually to colonise and industrialise – by the market, land values and power structures that had been laid by the witans of our Anglo-Saxon past.
If we accept this reading of history, this was the moment the economy – the interplay between wealth, labour and knowledge – really began, and with it the art of trying to understand it. In the 18th century that art became a science, formalised by thinkers such as David Ricardo, Thomas Malthus and Adam Smith, and in the 19th century it became the “dismal science”, when in an 1849 essay Thomas Carlyle attempted to justify his racism (and to argue for the reintroduction of slavery) by appeal to economic arguments. The essay was the end of Carlyle’s career, but it began a long tradition of dressing up politics as simple accounting. When a government spends on schools or defence, it does so through moral conviction; when it wants to cut benefits, it does so to meet the fiscal rules. The economy, that formless beast, must be appeased or it will rush from its lair, sack everyone and double the price of a Freddo.
There is therefore a valid public service to be done in explaining to the general reader what the economy is up to, what temper it is in and whom it might eviscerate next. This has been Cahal Moran’s business for some time. As a student at Manchester University in the aftermath of the global financial crisis, he and his peers felt the subject focused too much on “abstract mathematical theory, detached from the real world”, and since then he has campaigned for a more realistic study of financial relations and what they do to people. He was a co-author of The Econocracy: The Perils of Leaving Economics to the Experts and runs a popular YouTube channel called Unlearning Economics, on which he will, for example, breezily dismantle Marx’s labour theory of value while playing video games.
This is a particularly important project at the moment, because in the wake of the Truss-Kwarteng omnishambles, when news stations displayed some violent-looking graphs and the economy threatened to devour everyone’s pension, politicians are even more dedicated to pretending that they are simply making the numbers add up in the only way possible. They do this so consistently that the economics profession itself has become increasingly annoyed at its conclusions being used to justify policies such as the two-child benefit cap or the cut to the winter fuel allowance. People from the Institute for Fiscal Studies protest that they are being falsely credited with running the country.
But this is a problem economists have created for themselves by claiming to be objective – politicians will pick up anything presented as fact, and misuse it. Moran writes that his new book, Why We’re Getting Poorer, is “a realistic and grounded explainer” of an uneven and dysfunctional global economy, and for the most part, it is. Moran has a talent for putting subjects such as monetary policy, unequal inflation and credit creation into snappy, short sections with a good sprinkling of references to The Simpsons. But is it objective?
The book begins by asking who is really essential to the economy. The farmer of medieval England is the ur-essential-worker, the person on whose labour others depend. The investment banker, not so much. “People notice train strikes in a way they wouldn’t notice an investment banker strike,” Moran writes, and as someone who doesn’t exactly save lives every day, it is hard not to feel seen. A strike by financial journalists (or academic economists, for that matter) would not cause planes to fall from the sky. Not immediately, anyway – but in the long term it might, because both of these jobs help inform people’s economic activity. Without them, people and businesses make worse decisions and the economy becomes corrupt and dysfunctional; a large-scale test of this premise is currently under way in the United States.
“We do not rely on investment banks to deliver any of our physical human needs: healthcare, food, shelter, clothing,” Moran writes. An investment bank would argue that we rely on them for all of those things. The cost to the world’s biggest pharma companies of developing a new drug is more than $2bn. The build cost of the new homes completed by private housebuilders last year was about £55bn. Capital markets provide the finance for such endeavours (also clothing factories and farm equipment). Without broad access to capital, the only people who could build anything would be those with wealth: the aristocracy. Without the financial sector, only the wealthy could do things like buying a home or retiring. We all agree that bankers are overpaid, but to describe them as free riders is a political statement, and a revealing one.
On both sides of the political divide, some jobs are seen as useless and probably harmful. For the left – in a view that has its apotheosis in David Graeber’s 2018 book Bullshit Jobs – financiers, management consultants and property developers help themselves to the value created by those on what Moran calls the “front line” of the economy. On the right, figures such as Elon Musk regard civil servants and teachers with contempt. Kemi Badenoch thinks those who work in HR are “running the economy” with namby-pamby regulations and rainbow lanyards. Both sides can summon evidence. There are financiers who steal a (very nice) living from client fees, and local government workers who couldn’t administrate their way out of a wet paper bag.
Traditional economics refrains from admitting that it is better for one person to succeed than another; that is the job of politicians. But as Moran explains, one person’s opportunity to use a house as a secure and affordable home really is more important than another person’s opportunity to use a house (maybe the same one) as a financial asset. It really is more important that a family of farmers use land for growing food than it is for a family of non-farmers use it to avoid inheritance tax. Lightly regulated financial markets make economic growth possible, and they also make it possible for some to rapidly monopolise whole sectors, wiping out their rivals and imposing higher prices on the rest of us, to force change on consumers rather than winning it fairly. If you conduct economics on the basis that the economy can be good or bad, you have to discriminate against some people – or capitalism will do it for you.
Allowing the market to pick its winners – or rather, allowing some people to develop extreme market power – has delivered great successes in human prosperity. All it cost us was our economic stability, a thousand-fold increase in the extinction rate and perhaps democracy. It’s a real swings-and-roundabouts situation. For optimists such as Steven Pinker, the net benefits of a world in which extreme poverty is declining and people have more access to medicines and education outweigh the negatives. Moran’s argument is not so much that we inhabit a disaster – despite his repeated claim that the economy is “broken” – but that it could be better still. The book’s premise that most of us are “getting poorer” is measured against the economy we could have, if it were run in a more regulated and egalitarian manner.
Of course, not everyone would agree. Some people like being unreasonably rich, and if they feel a twinge of guilt at their own grasping rapacity they can always pretend they’re doing it for the good of mankind. For a dispassionate economist there’s no reason not to argue for volatile capitalism, deregulation and extreme inequality, as long as they produce the right numbers. But of course there is no such thing; economics, for all its equations, is always based on some idea of how things should be. It is politics by another name.
Why We’re Getting Poorer: A Realist’s Guide to the Economy and How We Can Fix It
Cahal Moran
William Collins, 400pp, £20.90
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This article appears in the 19 Mar 2025 issue of the New Statesman, The Golden Age