Rachel Reeves certainly knows her mind. She is also, as the title of this original book suggests, a passionate and convinced feminist. Any number of great female economists from across the political spectrum helped create the discipline she loves. They suffered misogyny, sexism and prejudice – to an extent that sometimes made this male reader squirm – yet they won through. Their contribution is too little recognised and acknowledged. Reeves is determined to right that wrong and does so persuasively.
But this book has a double interest. It is written by Britain’s chancellor-in-waiting, who if elected would be the first woman in the job – as she reminds us. She not only offers a personal and intellectual portrait of a succession of intriguing and sometimes forgotten female economists, she delivers crisp, no-nonsense verdicts on their ideas. Values matter in economics, she writes, which is not a value-free science, agreeing with one of her heroines, Joan Robinson. You are left in no doubt about Reeves’s values. And although not acknowledging the copying of up to 20 of her sources without attribution as the FT reported – a mistake as her publisher acknowledges and which will be corrected in later editions – the judgments, overall style and opinions expressed are palpably Reeves’s own.
She is a progressive, pragmatic Keynesian, keenly aware of the imperfections inherent in a capitalist economy, from its instability to its proclivity to monopoly, and committed to being the external change agent that will make it work better and more fairly. She deplores gender pay inequality – at the current rate of improvement she will be 80 before there is pay parity, she writes – and considers the everyday economy (of care, cleaning, transport, food production and retail) as vital as tech and financial services to underpinning the whole. All have to be got right.
She is fair in her judgments. She strongly disagrees with Harriet Martineau, for example, who proselytised about the virtues of free trade, free markets and the small state in her bestselling 19th-century magazine series Illustrations. But she recognises Martineau’s astonishing achievement in popularising political economy given the rank prejudice she faced – and that a commitment to the total free market had some saving graces. It made her an aggressive campaigner against slavery and for equal pay.
She concedes the significance of both Anna Schwartz, the co-author of the theory of monetarism with Milton Friedman (whose sexist readiness to accept the Nobel prize when Schwartz did some half of the work for which it was awarded is breathtaking) and Carmen Reinhart, who tried to prove with Kenneth Rogoff that once certain thresholds of national debt are breached economic growth gets choked off. But then she goes on crisply to dismiss both theories as intellectually faulty, and tellingly, she points out, so was the manipulated data behind their theories. It only further reinforces Reeves’s scepticism about rightwing economics.
Treasury officials as they prepare for her chancellorship, beware. Their probable new boss will come unambiguously from the left. She certainly knows the detailed arguments, say, for and against development aid or what caused the Great Depression – unlike, I suspect, the current chancellor. But she also knows who were members of the 1930s “Cambridge Circus” and that it is the second Sunday every January that Rosa Luxemburg’s murder is commemorated in Berlin’s Friedrichsfelde central cemetery.
Four economists have made a particular impression – Beatrice Webb, Joan Robinson, Janet Yellen and, for me at least, the much less well known Mary Paley Marshall, the put-upon wife of her famous economist husband, Alfred. While Beatrice and Sidney Webb struck up a partnership of equals, the same could not be said for the Marshalls. Paley Marshall’s Economics of Industry made her name (plunging Alfred into a protracted jealous fit) and in Reeves’s view the book remains seminal. It is an explanation of the economics of dynamic industrial clusters, where essentially growth becomes self-reinforcing because geographical proximity brings all the factors driving it – skills, finance, supply chains, exchanging knowledge, spotting new markets – together. Labour’s green prosperity plan will draw on Paley Marshall’s still relevant insights to build high-growth clusters of green industries – from hydrogen to tidal power.
Reeves, a longtime Fabian, thinks Beatrice Webb one of the greats. Her dissenting minority report in the 1905-1909 Commission on the Poor Laws and Relief of Distress, insisting that welfare should be national, non-means tested and extend to education and health, so influenced William Beveridge that it became the foundation of the British welfare state. If she wins office, Reeves declares she aims to build a welfare system that “Webb and its founders would once again be proud of”.
Joan Robinson, despite a flirtation with Maoism and the Cultural Revolution that was “inexcusable”, is another key influence. Her coup was to show that a free market of many competing firms – the utopia of free-market economists – is impossible. Instead the market is populated by firms who act as mini-monopolists because it is shot through with all kinds of imperfections of power and knowledge. Her work only redoubled Keynes’s view – Reeves’s hero – that the doctrine that capitalist economies can be relied upon to find the best possible outcome is baloney. It was typically criminal that men did not award her the Nobel prize.
And last Janet Yellen, pragmatic Keynesian, former chair of the US Federal Reserve and now US treasury secretary. She is the economist turned effective practitioner that Reeves aims to be – and just as convinced as Reeves that economics’ treatment of its too-few women is a disgrace. Yellen is the intellect behind “Bidenomics”, the decisive break with the neoliberal past and its multi-trillion commitment to making green technologies and a rejuvenated infrastructure the spearhead of an American industrial renaissance. Reeves is again clear and unambiguous. She aims to do the same.
Reeves and Yellen are obviously right to damn the misogyny that has saturated economics – but how much different would economics have been had it been gender equal? The moral philosopher Mary Warnock used to say that there was no such thing as male and female philosophy or mathematics – just philosophy and mathematics. Some economic concepts, such as the multiplier effect or opportunity cost, do seem gender neutral – but by the end of this book Reeves had convinced me. It’s not only that so many male/female economist working partnerships turn out to be structurally unfair, it is that economics is not value free. Women look at the world differently having been at the wrong end of gender inequality and are more intimately involved with the everyday economy; they want better. Having a woman – and a progressive woman – as chancellor will matter. Britain, and the opportunities for British women, will be all the better for her.
• The Women Who Made Modern Economics by Rachel Reeves is published by Basic Books (£20). To support the Guardian and Observer order your copy at guardianbookshop.com. Delivery charges may apply.
