The Scourge of Monetarism

The publication of these lectures gives me an opportunity to pay tribute to one of the most remarkable men whom I had the good fortune to encounter in the course of a long professional life. Lord Radcliffe became Chairman of the Royal Commission on Taxation of Profits and Income (which preceded the Committee on the Working of the Monetary System) at an early stage in the life of that Commission, of which I was a member, and this brought me into contact with a truly exceptional mind; he had the rare quality of making one feel on the top of one's form in discussions with him. Lord Radcliffe was a lawyer, not an economist, but the subject-matter of the Commission's work, the principles of taxation, involved economic theory at an intricate level and in its most variegated aspects. Lord Radcliffe's capacity to absorb the methods of reasoning of economics struck me on many occasions as astonishing, and this personal judgement was in no way impaired by the fact that we fundamentally differed on what economists call valuejudgements -- that is, the political objectives which the chosen system of taxation should serve. Radcliffe was a Conservative in the best English sense of that term -- he cared very much about liberty and he believed that liberty and fair treatment can only be secured by stable institutions and particularly by stable laws which define and circumscribe the limits of individual freedom in relation to society. I, on the other hand, was deeply convinced that the ultimate objective of policy must comprise equality as well as freedom; and that a system of taxation should aim at fairness not only as between different individuals in the same economic circumstances but also as between individuals in different circumstances -- between rich and poor, between capitalists and workers. This meant that in the end I was constrained to write a minority report -- despite the fact that we worked together closely and harmoniously over years, reviewing the complex technical aspects and anomalies of the tax system.

From that point of view it is a matter of regret that our collaboration should have been on the tax commission and not on Lord Radcliffe's second great Committee of Enquiry, on the Working of the Monetary System -- when there would have been no such differences between us in terms of either means or ends. This is shown by the fact -- to which Roy Harrod has drawn attention¹ -- that the views put forward in the Committee's Report bear, as Harrod put it, 'a certain family resemblance on critical issues' to the arguments and conclusions put forward in my memorandum prepared at the request of the Committee in June 1958.²

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