Government and Institutions

The continuing influence of unreflecting centralism

This article is a sequel to ‘The continuing power of intuitive or do-it-yourself economics (DIYE)’. It draws on Chapter 3 of David Henderson’sInnocence and Design: The Influence of Economic Ideas on Policy’ (Blackwell, 1986), the published version of David’s 1985 Reith Lectures.

Unreflecting centralism has two mutually supporting elements. One is the disposition to assume that outcomes have to be planned and decided by governments. Second is the tendency to think of governments and states as the principal, or even the only, actors on the economic scene, and to attribute to them roles and functions which are not necessarily theirs.

One aspect of this centralism is the belief, or presumption, that when transactions take place across national boundaries the state is necessarily involved. Hence states are taken to have ‘trading partners’, while cross-border economic competition is seen as being between states.

An area in which centralist presumptions have long held sway, not least in Britain, is official energy policies. Long ago now, a former senior British government official, Peter Vinter, observed that ‘As a nation we have not yet succeeded in setting up an effective nuclear reactor construction company’. I think his point was a fair one then, and perhaps he would have said the same today. But why should it be the collective responsibility of ‘we as a nation’ to establish a nuclear reactor construction company? Why should such a company, if indeed there is a place for it, not emerge from the impersonal competitive selection process of markets?

Here as elsewhere, the collectivist first person plural is featured; it is We who must decide and act, through the agency of official bodies which identify and give effect to what We require. Generally, the responsible agencies are national governments, but if ‘We’ are the people of the world then ‘the international community’ can be invoked.

In the particular context above, it is worth noting that the history of British nuclear power programmes, from as far back as 1955, provides a depressing example of unreflecting centralism in action – stoutly reinforced, I might add, by other forms of what I have labelled as DIYE (Do-It-Yourself Economics).[1]

A common rationale for centralism, which applies in energy policy and a number of other fields, is the uncritical acceptance of essentialist ideas. In the case of energy, each country is perceived as having identifiable (and predictable) needs which must be met, and each national government as having an inescapable responsibility to anticipate and provide for those needs. A past example, which could find many echoes today, is provided by David Howell, from his period (1979-81) as Secretary of State for Energy:

‘The Government, in my view, must ensure that we have enough energy in the future to heat our homes and power our industries. Failure to achieve this could mean lower living standards for us all and a very severe constraint on our society’.

So essentialism leads naturally to unreflecting centralism­. Also here in its place on the DIYE stage is what I have called Micawber’s dichotomy: either we-as-a-nation have enough energy, or we do not. But who is to say how much is enough?  You will search in vain in official White Papers and statistical publications for figures showing national energy needs, for the simple reason that the concept can be neither defined nor measured. If you ask someone who uses the term what are the current or prospective energy needs of the United Kingdom, the only answer you will get is a figure which relates to demand – in other words, to actual or prospective purchases of energy products. Demand is identified with needs, for no better reason than that energy, like food or housing or water, is cast in the DIYE soap opera script as essential.

New instances of centralist presumptions remain a day-by-day occurrence. Here are just a few examples that I happen to have noted at the time:

  • Turkey, ‘…a state that already sells to 137 countries…’ (FT, 22 September 2014).

  • ‘Bagehot… accepts the Chancellor’s main argument that China is now too big a power for a global entrepot economy like Britain not to embrace’ (The Economist, 26 September 2015)

  • ‘The UK faces a series of choices about energy’ (Sir Mark Walpole, Chief Scientific Adviser to HMG, quoted 2 November 2015).

  • ‘We have got to build a new West Coast Main Line…’ (David Cameron, interviewed on 29 September 2013).

  • ‘‘The UK has been incapable of building enough houses’ (same source).

  •  ‘India… urgently needs to provide its inhabitants with new schools, good teachers, toilets, sewage treatment and health care…’ (Victor Mallet, FT 23 January 2015).

  • ‘We’re only producing about half the number of engineers we need…’ (Dame Anne Dowling, President of the Royal Academy of Engineering, as quoted in the FT Weekend Magazine, 4/5 October 2014).

Like other forms and ingredients of DIYE, unreflecting centralism is timeless, and it is embraced uncritically by leaders as well as led.

Prof David Henderson is a member and former (founding) chairman of the Global Warming Policy Foundation’s (GWPF) Academic Advisory Council. He was formerly Head of the Economics and Statistics Department of the OECD.

[1] A brief summary of this history of failure, and of the reasons for it, is contained in a piece of mine which appeared in May 2013 in the journal Nuclear Engineering International.