The Gypsy Economist

This chapter looks at Colin Clark’s early career. He was strongly influenced by his father, James, whom he emulated by becoming an entrepreneur in ideas, rather than merchandise. Clark attended Winchester College where his contemporaries, as later at Oxford, included Sir Kenneth Clark and Hugh Gaitskell. He won a scholarship to read chemistry at Brasenose College, Oxford before becoming entranced by economics. Clark fell into the orbit of former Guild socialist, G. D. H. Cole and was a member of the Cole group of young men and women formed after the 1926 General Strike to discuss the socialist issues of the day. Professionally, Clark was hired by William Beveridge, Director of the London School of Economics (LSE), as a research assistant for both him and Alwyn Young who, in turn, introduced him to the power of increasing returns. In 1930 Clark was appointed to the Economic Advisory Council because of his statistical prowess and watched some of Britain’s top economists grapple with the issue of the depression. He prepared figures for an early version of the multiplier which Keynes and Richard Kahn would use to justify the case for public works to address the British economic slump.

This chapter deals with Colin Clark’s time at Cambridge University, his friendship with J. M. Keynes who had recommended his appointment after Clark had resigned from the EAC after rejecting the idea of putting his name to a protectionist manifesto. The Cambridge appointment would be the making of Clark as an applied and statistical economist and allowed him a front row seat at the Keynesian revolution to which he provided some aggregative concepts. In the early 1930s Clark became private secretary to Clement Attlee, a junior minister within the Ramsay MacDonald’s Labour government. Apart from drafting Labour Party policy resolutions and its 1931 electoral manifesto, Clark provided statistical advice to Labour politicians. With his colleagues, Clark laid down the intellectual foundations for Labour’s socialist platform using Keynes’s new theory. He ran for a parliamentary seat in three general elections but markedly without success. In 1935 he married the love of his life Marjorie Tattersall and relinquished hopes of becoming a politician.

This chapter considers Colin Clark’s role as one of the leading creators of national income accounting. His first book, The National Income, 1924–1931, mapped the gyrations of the business cycle with quarterly estimates of national income. Making a distinction between national product and national income, it included the generation of total money income, its distribution among the classes and the contributions made by the productive factors. It also highlighted the increasing role of services in a modern economy. His next book National Income and Outlay (1937) measured aggregate economic activity for Britain over the three dimensions of income, expenditure, and production from the years 1929–1936. It presented aggregates such as output, consumers’ expenditure, investment expenditure, government revenue and expenditure and macroeconomic relationships. Intrigued by the interwar revival of Malthusianism Clark uncovered striking increases in agricultural productivity in developed and developing countries alike that queried the validity of that doctrine; it portended an interest about the true extent of world hunger as well as his intrinsic interest in demography and agricultural systems. Like Keynes, Clark held that population growth made for a vibrant and competitive society.

This chapter looks over the first period of Colin Clark’s career in Australia. It was his mentor Hugh Dalton who played a key role in persuading Clark to work there. After a brief and controversial assignment in New Zealand studying her national income statistics, Clark agreed to take an executive position with the Queensland Government. It meant a breach with Keynes and Cambridge. Clark defended his decision, telling Keynes that it was an ideal opportunity to put economic science into action. What also turned his mind was Queensland’s rural and small enterprise economy, its egalitarian distribution of income, generous social services, compulsory trade unionism, absence of strikes and centralised wage fixation. Moreover, Queensland’s political leaders favoured decentralisation which resonated with Clark’s growing interest in Distributivism; a philosophy that advocated a fairer distribution of property, ruralism and rejection of ills of urban life. Clark’s public utterances and occasional disagreements with his fellow economists hinted at a future estrangement with them.

Despite occupying important official positions with the Queensland Government, Colin Clark published three outstanding pieces of economic research over a five year period. A Critique of Russian Statistics (1939) was the first comparative statistical estimation of the Soviet experiment. He confirmed that Russian national income per head had barely risen until the late 1930s. Russia was ‘a poor and hungry country’ and socialism had, on the evidence, made little difference. Clark’s most definitive work The Conditions of Economic Progress (1940a) laid out the long-term essentials necessary for a country to achieve material progress. In doing so, he devised a means to measure the comparative real income per capita. Clark showed that the world was ‘a wretchedly poor place’ with a few developed countries producing most of the world’s output. His third work The Economics of 1960 (1942) used a basic econometric model to project the most probable course of world population, industrial development, prices, capital movements and interest rates until 1960. Given the increasing shortage of rural labour in many countries with attempts at industrialization, he predicted that the terms-of-trade would violently swing in favour of primary producing countries. The immediate post-war years would also be a period of an investment-led economic boom because of ‘capital hunger’.

This chapter looks at Colin Clark’s changing spiritual and philosophical attitudes during the Second World War. Clark opposed the centralisation of federal power when the Curtin Labor Government commandeered income taxation from the states. After 1945, his views on post-war reconstruction differed markedly from Australian economists. He also disowned his earlier Fabian beliefs. This sea-change in Clark’s philosophical outlook came with his conversion to Roman Catholicism in 1940. It marked a critical change in his career, especially in social and economic outlook. He became friendly with Australian political activist B. A. (Bob) Santamaria, sharing a regard for Distributivism, traditionalism, a longing for an idyllic rural society and hostility to communism. Having chosen to align himself with extreme doctrinal elements within the Catholic Church, Clark would face a continuing tension between scientific integrity and his faith. He rejected a collective form of social security for post-war Australia, arguing that she should exploit its resource endowment as a primary producer to feed the world and enjoy high commodity prices from doing so.

This chapter looks at two issues with which Colin Clark was preoccupied in the post-war years: the role and optimal size of cities and the fiscal limits of taxation. Originating in his research on location theory, transport and urban economics, Clark entertained an interest in improving urban design and living. He argued that the principal function of a city was the provision of the full range of services, including commercial, educational and cultural facilities, all predicated upon an effective transport system. Another concern of Clark’s related to the proposed post-war expenditures on welfare and associated fears of over-taxation. Drawing on a brief observation made by Keynes in 1923, Clark found an empirical relationship between excessive taxation and inflationary pressure. He contended, that at full employment, the state could collect, at the most 25% of national income in taxation; if states tried to extract more an inflationary process would be triggered making the exercise self-defeating. While most economists disagreed with the figuring behind his hypothesis it formed an integral part of his attack upon the Leviathan of big government.

This chapter looks at Colin Clark’s growing disconnect with conventional economics, including proposals for a rural nirvana and opposition to tariff protection and wage rigidity. Clark disagreed with post-war planners’ dreams of an industrial Australia and considered that prospects of becoming a net exporter of manufactures unrealistic given prevailing conditions. Clark wanted Australia to reduce its tariffs to kill off inefficient industries and free resources for more productive ends. In 1942 Clark became the unofficial economic advisor to B. A. Santamaria and his National Catholic Rural Movement (NCRM). Consistent with the NCRM’s philosophy, he proposed an extraordinary migrant co-operative land settlement plan for Queensland. It envisaged the formation of settler co-operatives to allow the creation of farming communities supporting some 250,000 European settlers on the agricultural and pastoral areas of the state. Given his belief that Australia’s inflation problem was due to excessive taxation he favoured lower public spending, especially on welfare. Higher taxes simply led to demands for higher wages which employers would willingly grant. This meant that wages rose faster than real production, causing prices to rise and perpetuating inflation.

This chapter looks at Colin Clark as one of the first international consulting economists in what became the new field of development economics. He continued to refute neo-Malthusian beliefs that had captivated post-war British and American minds noting how agricultural productivity was rising annually due to modern methods of cultivation and greater than the increase in global population. The shortage of food was due to a lack of labour, not land. He accused agriculturally bountiful countries, such as Australia and Argentina of needlessly starving their agrarian sectors of resources by engaging in ill-advised industrialisation policies which contributed to a worldwide shortage of food. Clark resigned from the Queensland Government in 1952 because it did not share his views on decentralisation and the promotion of primary industry. In Australia he became a voice in the wilderness as he publicly lamented the over-development of manufacturing, fiscal federalism and the imposition quantitative import controls in 1952. Oxford came to his salvation in the same year.

This chapter looks at Colin Clark’s work as Director of the Agricultural Economics Research Institute at Oxford, his observations about the British economy but also his continuing interest in Australia. In his seventeen years as Director of the Institute (1953–1969), Clark interpreted his research duties very broadly, looking at wider issues of demand, prices, international trade, resource allocation and the location of economic activity and human settlements. His position furthered his understanding of the processes of economic growth, more particularly the role of agricultural sector in that process, as well as the economics of irrigation and the dynamic interaction between food supplies and global population. Under his leadership, the Institute expanded its interest in the field of development economics without neglecting its basic research task. As well as journal articles, reports and essays, Clark published four major academic works in the 1960s spanning demography, irrigation, subsistence agriculture and economic development. He had returned to work in Britain at a critical period in its economic history with great concern about inflation, the balance of payments deficit and anaemic rate of economic growth. By this time, Clark had become one of the first radical conservatives, later describing his philosophy as classical economic liberalism. He spoke out against the post-war Keynesian consensus and assisted in the creation of the Institute of Economic Affairs.

This chapter looks at Colin Clark’s criticisms of the post-war economic orthodoxy in Britain, especially the welfare state and how his critique made him one of the progenitors of neo-liberal thought. In Welfare and Taxation (1954) Clark stated that high tax rates enfeebled the economy by undermining entrepreneurial spirit and effort. He was equally alarmed at the rate at which government spending was rising, especially the cost of the welfare state; it was already exceeding the economic growth rate with much of the public revenue obtained from taxing low-income families. Families, he held, should be left to manage their own affairs. Clark can be seen as a progenitor of neo-liberal thought with his pamphlet marking the first intellectual reaction against the welfare state and foretelling upon how a new political movement would rise up against it. Clark continued his criticism of the British welfare state in The Cost of Living (1957), where he argued that protectionism and high taxation had become ‘a complete, utter, howling, disastrous failure’. Britain was afflicted by poor productivity, high taxation and protectionism but also inherently inflationary because of the commitment to over-full employment. Clark held that the ‘strongest’ argument for assisting the British farm sector was in dispersing the nation’s population. He assigned great cultural value to a healthy rural sector which enriched the nation’s social and cultural life.

This chapter looks at two pamphlets written by Colin Clark in the 1960s which outlined his criticisms of British economic policy. In Growthmanship (1961), Clark assailed the popular convention that Britain simply needed to invest more to achieve higher growth rates. Capital, he argued, was created by growth rather than growth being a function of investment. Moreover, productivity growth came more from ‘human factors’ such as knowledge, organisation, education and enterprise. All this this meant a revival of the competitive spirit, fewer restrictive practices and lower taxation. In Taxmanship (1964). Clark recycled his views that high taxation impaired productivity and aggregate supply, as well as his espousal of the 25% tax limit. Elsewhere he was aghast that the British Labour Party was embracing ‘ancient errors’ such as the idea that services ‘do not really count’ and that ‘only material goods constitute the national product’. Clark was unimpressed with the Wilson Government’s espousal of planning and growth targets, likening it to reducing economic policy to medieval alchemy or witchcraft. He was also sceptical about the efficacy of incomes or wages policy.

This chapter looks at Colin Clark’s work in development economics, especially on population and resources which alleviated fears about mass hunger within the developing countries during the postwar era. Clark perceived enormous potential for growth in agricultural productivity within developing countries. As such, he would lead the crusade against neo-Malthusian pessimism about food and resources, arguing that population growth pushed farmers to improve their production techniques and lift output. Clark criticised the Food and Agriculture Organisation’s estimates of the extent of world hunger which, he argued, were designed more to give support to Western farmers to produce large, uneconomical surpluses of grain. Where there was malnutrition the problem was attributed to political and distribution hurdles, not resource constraints. In The Economics of Subsistence Agriculture (1964) Clark explored how the bulk of the world’s population, living within traditional agricultural settings, lacked basic amenities such as clothing, housing, medicine, education and transport. Transport was identified as the overriding factor holding back agricultural productivity. Population Growth and Land Use (1967) conveyed Clark’s views about the interaction between population, the world’s resources, urban settlement and economic growth. He surprised many by saying the real problem facing humanity was finding space for housing and recreation. He also elevated the issue of economic and regional stratification within societies.

This chapter considers how Colin Clark confronted the 1970s zeitgeist of doom-laden prophecies revolving around resource depletion, population growth and pollution. Over his life Clark had seen several prophets of doom come and go, invariably telling people that the world was running out of food, resources, water, land or energy. He sought to overturn this prevailing mood of negativity by scientific and empirical persuasion. He believed it was important to confront such prophecy since widespread disillusion about the Earth’s future, coupled with a low level of scientific education, spread anxiety about the future and lay behind falling birth-rates. Besides contesting many of the claims by the zero population growth movement, Clark also confronted the Club of Rome on its environmental pessimism and preconceived idea of food production falling behind population growth and related fears of the world ‘running out’ of resources. It irritated Clark that much of this literature of environmental doom and over-population had all been rebutted in the past. Since 1964 Clark had been involved in the early stages of discussions that would culminate in the 1968 Papal Encyclical on birth control which banned Catholics from practicing artificial forms of contraception. It was argued that Clark’s work on the Papal Commission damaged his academic objectivity.

This chapter looks at Colin Clark’s return to Australia and his subsequent appointments at Monash University, the Institute for Economic Progress and The University of Queensland. It was abbreviated by a brief foray in London working for a libertarian think-tank. In October 1969, Clark took up a position at Monash University. The Catholic Church in Melbourne funded a research institute for him to pursue his interests in population and economic development. He also resumed his controversial media profile writing about economic and political issues including inflation, environmentalism, urban issues, decentralisation, population and world hunger. He engaged in public debate with leading feminist, Germaine Greer on abortion and with the controversial biochemist, Paul Ehrlich on zero population growth. With inflation stirring, Clark linked it with high-taxing, high-spending governments. The solution, he argued, was to suppress the level of public spending followed by a reduction in taxation to restore private demand. In 1976 Clark spent time in London with the Centre for Policy Studies set up to broadcast of neoliberal ideas. He continued his work on welfare reform including the possible introduction of negative taxation. However, the Conservative Party leader Margaret Thatcher, steered clear of his radical reforms to welfare and a disheartened Clark returned to Australia.