The Economist Who Hoped

There are surely few economists who began their career as a Fabian socialist and disciple of John Maynard Keynes and ended it being viewed as a proto-Thatcherite and booster of Milton Friedman. Such was the trajectory of the Anglo-Australian scholar Colin Clark (1905–1989). Arguably one of the 20th century’s most important economists, Clark’s contributions have been largely neglected since his death in 1989. That inattention has now been thoroughly corrected, thanks to a comprehensive and well-written intellectual biography The Gypsy Economist: The Life and Times of Colin Clark (2021) by the historian of economic thought, Alex Millmow.

It’s hard to know where to start when listing Clark’s achievements. They include being an economic statistician of genius proportions who pioneered the concept of Gross National Product (GNP) as a basis for studying national economies, a primary founder of development economics, the identifier of precise causations between levels of taxation and inflation, and the first lay economist ever to be footnoted in a papal encyclical.

Clark also had a prophetic side. As early as 1939, Clark was arguing that claims about the Soviet Union’s purportedly impressive economic performance were based on shaky statistics. He also predicted that China and India would emerge as leading economic powers years before anyone else. Perhaps most significantly, Clark thoroughly debunked the neo-Malthusianism associated with the biologist Paul R. Ehrlich and his 1968 bestseller The Population Bomb, decades before the rest of the world realized just how spectacularly wrong Ehrlich, the World Bank, the United Nations, and other over-population alarmists had turned out to be.

Fabian and Keynesian

Clark’s social background was that of the late-nineteenth-century British commercial class. The son of a Scottish merchant who made and lost two substantial fortunes in colonial Australia, Clark won a prized scholarship to Winchester, one of Britain’s most prestigious public schools. There he rubbed shoulders with people like the future art historian Kenneth Clark and the future Labour Party leader Hugh Gaitskell.

Clark also won a scholarship to Oxford where he initially studied chemistry but attended classes by the famed economist Lionel Robbins. Eventually Clark switched to economics, partly under Robbins’ influence but also because of his involvement in the University Labour Club. Here he encountered left-wing dons like the economist Harold Laski and the economic historian R.H. Tawney.

By this stage, Clark was already demonstrating a formidable dexterity with statistics and data. This and his involvement in Labour Party politics resulted in his appointment as research assistant to Prime Minister Ramsay MacDonald’s Economic Advisory Council. He also sat in on meetings of MacDonald’s Committee of Economists. Here Clark witnessed the epic debates between Robbins and John Maynard Keynes as they argued about how to respond to the Great Depression, and became dismayed as opinion on the Committee shifted in protectionist directions.

It was, however, thanks to his friendship with Keynes that Clark got his start in academic life when Keynes arranged a lectureship in economic statistics for him at Cambridge. This gave Clark “a front row seat in the Keynesian revolution.” Clark sympathized with much of this project and his work in statistics influenced some of the aggregate concepts upon which Keynes’s rethinking of economics relied. That owes something to the fact that Clark emerged as “the world’s leading economic statistician” during these years. The concept of GNP was first articulated in Clark’s second book National Income and Outlay (1937), thus making Clark the first to measure national product. Hitherto, economists had only sought to measure national wealth.

Clark’s interests extended beyond these type of questions fairly early in his career. According to Millmow, he never considered economics the master discipline. For Clark, history was a more important social science because it necessarily took a wider view of human affairs. This may explain Clark’s growing interest in discerning long-term economic patterns. One such subject which garnered his attention was population.

Clark’s skepticism about neo-Malthusian theories first surfaced in the 1930s. Contra much of the received wisdom of the time (a good portion of which was joined at the hip to the pseudo-science of eugenics), Clark regarded population growth as a net economic positive and considered claims of an impending resource and food crisis to be far-fetched. Throughout his life, Clark underscored that he approached these questions on strictly empirical grounds. This point became ever more important to stress in the wake of a major change in Clark’s life.

Australia and Conversion

In 1937, Clark accepted a sabbatical position at the University of Melbourne. He expected to return to Britain within five months, but ended up living in Australia until 1952. Clark was attracted to the country’s politics, social dynamics and physical beauty, but it also helped that he was made an offer that he couldn’t refuse. In March 1938, Clark was appointed the most senior public servant in the state of Queensland, simultaneously holding the positions of Director of the Bureau of Industry, State Statistician, and Financial Advisor to the Queensland Treasury. His salary was much higher than the state premier’s.

Ideas also played a role in this career change. Though Clark remained a mild socialist with Keynesian leanings, Millmow shows how these commitments became overlain with Clark’s growing interest in Distributism. This economic outlook, often associated with the writers Hilaire Belloc and G.K. Chesterton, stressed the widespread distribution of property, the importance of decentralization, and the virtues of a rural existence. Being a state seven times the size of the British Isles with an economy orientated around mining and agriculture, Queensland must have seemed ideally suited for experimenting with such ideas.

Government service did not mean that Clark ceased contributing to economic thought. He continued to write prolifically in academic and popular publications. That included his 1940 book, The Conditions of Economic Progress. Today it is widely regarded as helping give birth to the field of development economics. Clark’s book opened up, Millmow writes, “a whole new vista of applied economics about the determinants of growth and distribution in the long run.” Lionel Robbins called it one of “the great books of this century” while F.A. Hayek cited the text in his Road to Serfdom (1944) and praised Clark’s skill with statistics. Pope Paul VI referenced the book in the footnotes (no. 27) of his 1967 encyclical Populorum Progressio.

That last citation probably would not have eventuated without Clark’s conversion to Catholicism in 1940. Millmow notes that Clark never said much about this event publicly. From what few comments he made, it was an intellectual conversion insofar as it emanated from Clark’s careful study of the alternatives and his conclusion that Catholicism was true.

Clark became publicly known as a forceful critic of the over-population doomsayers who dominated discussion of population, resource and food-supply issues from the 1950s until the early 1980s.

One result of this was an immediate end to Clark’s socialist proclivities in light of Catholicism’s explicit condemnations of socialism. But the transformation also led to much awkwardness and incomprehension from friends and colleagues. Millmow reports that Keynes allegedly greeted the news with the remark that Clark “was always gullible.” At the same time, Clark’s outspoken opposition to over-population alarmism was increasingly attributed to his Catholicism, despite his protestations that he was merely following the evidence and had held such views long before his religious conversion.

Another consequence of Clark’s conversion was his growing involvement with B.A. (“Bob”) Santamaria and the various Australian Catholic political movements seeking to stem Communist influence in trade unions and the Australian Labor Party. A traditionalist, corporatist, and distributist who extolled the virtues of rural life, Santamaria relied heavily on Clark for economic advice. Many of Clark’s fellow economists subsequently believed that he was increasingly subordinating his economic thought to his religious commitments. All these factors, plus Clark’s taste for speaking his mind, appear to have impeded his efforts to secure full-time academic appointments in Australia when he fell out with Queensland government leaders in the early-1950s.

Oxford, Economic Liberalism, and the Vatican

By this stage of his career, Clark had become very vocal about the deeper problems characterizing the mid-20th century Australian economy. These included its heavy reliance on protectionism, an uncompetitive manufacturing sector pumped up by subsidies, and excessive wage rigidity. Millmow shows that Clark’s concerns coincided with his steady march towards economic liberalism, just as the world headed in the opposite direction.

This shift in thought owed much to Clark’s return to Britain to take an academic position at Oxford. His new appointment followed a five month sojourn at the University of Chicago in 1952 where he was befriended by Milton Friedman. Upon moving to Britain in 1953, Clark was appalled by the state of Britain’s economy. He was especially perturbed by Clement Attlee’s postwar Labour government’s dramatic expansion of the welfare state, nationalization of key industries, and imposition of high taxation. Most of these changes were left untouched by the Conservatives following their return to power in 1951.

Clark subsequently became involved in the first modern free market think-tank, the Institute of Economic Affairs, when it was founded in London in 1955. He also penned several publications calling for dismantling the welfare state, major reductions in taxation and government expenditure, and a swifter return to free trade. Few, however, were interested in these ideas in 1950s and 1960s Britain.

By the 1970s, times had changed. Clark was now seen as a progenitor of supply-side economics and small government and found himself feted by free market Tory politicians like Sir Keith Joseph. In the end, however, Clark was disappointed by Margaret Thatcher’s failure to tackle the welfare state. He also lamented the general failure of conservative governments around the world to reduce public spending in substantial real terms.

If these positions was not controversial enough, Clark became publicly known as a forceful critic of the over-population doomsayers who dominated discussion of population, resource and food-supply issues from the 1950s until the early 1980s. On several occasions, he effectively forced the Food and Agricultural Organization (FAO) to revise some of its claims on these topics as well as the statistics on which they were based. His acknowledged expertise on these questions are likely why he was appointed by Paul VI as one of the 72 members of what was popularly known as the “Papal Birth Control Commission.”

Millmow suggests that Clark’s participation in the Commission’s work and his public defenses of Catholic teaching on contraception proved costly. “Critics,” Millmow states, “drew an easy association between his views on population” and Clark’s Catholicism. Clark’s demolition of the Club of Rome’s catastrophic forecasts about population and its insistence about the need to limit economic growth was, for instance, often portrayed as reflecting his religious commitments rather than resulting from Clark’s dispassionate economic analysis of a topic he had studied for more than forty years. The economist Julian Simon—another critic of the over-population and resource exhaustion thesis—even stated that it probably meant that Clark was never seriously considered for the Nobel Prize, although he was nominated several times.

Twilight and Vindication

For financial and personal reasons, Clark returned to Australia in 1969 and lived there until the end of his life. During this period, Clark continued to press his now pronounced supply-side views on academic and political audiences. In a return to his study of long-term economic trends, one of Clark’s last published works argued that the economic boom between 1950 and 1973 was driven by trade and investment flows rather than Keynesian policies.

This didn’t mean that Clark had completely repudiated his old mentor. Clark insisted that Keynes himself had sought to address specific problems of the 1930s and that many of his disciples had made the mistake of using Keynes’ particular remedies for these time-bound challenges as the basis for a completely new approach to economics. Keynesian prescriptions were, Clark thought, sometimes appropriate as short-term remedies. However, for economic policies focused on the long-term, Clark believed that Friedman was broadly correct. Here Millmow is surely right to remark, “No doubt both sides would have felt Clark was naïve.”

Naïve or not, Clark lived long enough to see many of his positions vindicated. Revelations in the 1980s concerning the U.S.S.R.’s deep economic problems showed that he had been right in questioning decades of Moscow’s statistical claims which had been uncritically used by many Western economists. He also witnessed the comprehensive discrediting of neo-Malthusian views on population and its predictions of dwindling resources

Certainly, Clark was disappointed that his ideas about decentralization went nowhere. But Clark likely experienced some sense of satisfaction as Australian Labor governments in Canberra in the 1980s dismantled tariff barriers, liberalized financial markets, cut spending in real terms, ran budget surpluses, smashed inflation, and thereby gradually addressed some of the fundamental problems that Clark believed had long burdened Australia’s economy.

From this perspective, the man who Millmow describes as a “gypsy economist” who wandered between hemispheres and across the fields of economic policy illustrated that, in the long run, public accolades aren’t so important. As an economist, Clark turned out to be far more right than wrong in the long-term. As a man of faith, Clark likely saw this as evidence of good reason to hope. And hope is, after all, a theological virtue.