Class Bias in How The UK Government Applies Cognitive Bias Mitigation Theory

17 06 2018

Class Bias in How The UK Government Applies Cognitive Bias Mitigation Theory

I was and remain a fan of behaviour economics and the other types of social science research that help us to think more clearly about thinking itself. I’m a fan because lots of evidence suggests that human decision-making is plagued by a range of biases that range from confirmation bias to the Ikea Effect and that we have the capacity to put in place countermeasures to the improve the quality of decision-making. It seems to me that behavioural economics is a rare area of social science research that gives practitioners guidance that isn’t trivial, is rooted has a strong empirical foundation, and which is non-intuitive. I’ve sought to apply various decision debiasing techniques in my own personal life, particularly with regard to food and exercise choices, and am at work on a paper on how we can reduce the likelihood of cognitive bias in researchers who do archival research.

As someone who was initially attracted to the concept of nudging and “libertarian paternalism”, I was pleased when I learned the Coalition Government here in the UK had established, in 2010, a unit within the government,  Behavioural Insights Team (BIT) aimed at helping government departments to develop policies that  take advantage of behavioural economics insights. The BIT, the so-called Nudge Unit, helped to design a variety of policies that were aimed at making small, incremental changes to how this country operates. These policies successfully encouraged a variety of forms of pro-social behaviour, from paying road tax promptly to reducing prescription errors in pharmacies. As a citizen of the UK, was actually quite proud that the British government signalled its commitment to evidence-based, social-science informed policymaking by creating this unit. Even though the underlying research was pioneered by Israeli and US academics, the UK became a global leader in applying Nudge Theory. The UK’s BIT inspired the Obama Administration to establish its own equivalent agency, but it had a much lower profile, didn’t do as much, and was immediately destroyed by the Trump Administration. Other countries and jurisdictions have used behavioural econ a little bit in their policymaking process, but the UK is the world leader in this area, at least to my knowledge.

Recently, I’ve become disenchanted with how the UK government is applying insights from the behavioural sciences. Simply put, the UK government displays a tremendous class and power bias in how it applies this theory: it loves to use behaviour economics findings to improve/de-bias the decision-making of poor people and of people who are too young to vote, but it doesn’t apply the same techniques to the decision-making of the rich and powerful (e.g, CEOs in the private sector or generals in the army), and particularly not to members of Theresa May’s own Cabinet!

Here’s an example of what I mean by this. We know that obesity is a growing problem in many advanced economies and that poor eating and drinking choices are more common in lower SES groups.  Since 2010, BIT has worked with other UK public-sector agencies to design policies (e.g., new types of food labelling) that will tackle this problem. For instance, behavioural econ principles were applied in a 2017 pilot project designed to improve eating decisions in three deprived London boroughs (see here). That’s a worthy project, especially since an individual’s poor eating choices do create some externalities for society as a whole (e.g., higher NHS costs in the future). I’m also that behavioural science has used to help design the package labels that now inform our food purchasing decisions. But why isn’t the BIT applying the same basic principles to traders in the City of London? After all, we know that financial decision-making, even by professionals is frequently plagued by systemic cognitive biases that can distort markets and have devastating consequences for whole societies?

Most importantly, we need to think about why behavioural economics research into how to improve decision-making isn’t being applied to the really big policy dilemmas currently facing decision-makers at the very top of the British government, such as the Cabinet’s debates over the relative merits of Soft Brexit versus Hard Brexit.  At the very least, my search of the UK government website have given no indication whatsoever that the BIT has been involved in helping to de-bias the decision-making process. Maybe the BIT has been involved behind the scenes. Maybe Theresa May has gone to them and said “I want to maximize the chances that I will make the right decisions about Brexit. What advice do you have for me?” However, I have seen zero evidence of that.

So here’s the pattern I see. The UK government’s willingness to apply lessons taken from behaviour economics to improving the decision-making of a group of people is a function of the lack of power of that group. Poor people? Obese children? Apply nudge away so that we can improve their decision-making. It is also acceptable to apply behavioural economics in influencing the decisions of motorists and ordinary supermarket shoppers. But we aren’t going to apply the same medicine to decision-making by well-paid people in the City.  We sure as hell don’t apply the treatment to political leaders. Many of us who have observed the debates within the Conservative Party over Brexit and how to handle it are basically a Festival of System One thinking: lots of gut instinct thinking, mood affiliation, hubris, motivated reasoning, logical fallacies, and pretty much every cognitive bias known in the literature have been on display in the public pronouncements of the relevant players. A few years ago, someone made a handy cheat sheet with all of the known cognitive biases in it. I sometimes think that all of these biases are in evidence in the decision-making process related to Brexit.

 

cognitive bias cheat sheet

Created by John Manoogian III. Source: http://bit.ly/bias-poster

 

 

Brexit is an Eton Mess, to allude to both the name of a dessert and the educational institution that formed some of the minds we have recently had a chance to peer into. The policy dilemmas occasioned by Brexit (e.g., “do we stay in the EEA?”) are clearly a situation that calls for intervention by experts in decision science who can introduce some cognitive debiasing techniques. However, we don’t see any evidence of “libertarian paternalism” being brought into play.

Why not? The clue is in the term “libertarian paternalism”. The whole nudge movement has been about elite people (e.g., slim, non-smoking, grad school social scientists) trying to improve the decision-making of low SES people (see here). It’s not about applying the same tools to the decision-making of their rulers.

I rarely use social class as a lens to understand politics, but in this case a bit of old-fashioned social class analysis helps us to explain who gets nudged and who doesn’t. I’m not saying that I accept all of the criticisms of libertarian paternalism that have been made by my Austrian economics friends (my priors are sufficiently different for me to embrace that line of reasoning) nor do I accept the view that Nudging is “soft totalitarianism.” However, I am certainly more sympathetic to their POV on this issue than I was a few years ago.

 

I don’t know if my class-based analysis of whose decisions are targeted by Nudgers has been anticipated by anyone else, but if it has, feel free to leave a link below.

 

P.S. I just saw that Gabriel Siles-Brügge, Associate Professor in Department of Politics and International Studies, University of Warwick has just published a new paper on experts, affects, and the making of UK trade policy in the post-Brexit era.

Bound by Gravity or Living in a ‘Post Geography Trading World’? Expert Knowledge and Affective Spatial Imaginaries in the Construction of the UK’s Post-Brexit Trade Policy

 





Christophe Bondy’s Advice to UK Policymakers

23 01 2018

The Canada Option is oftened mentioned in discussions about what the UK’s future relationship with the EU might look like. (It is often contrasted with the Norway Option). On 17 January,  the House of Commons Committee on Exiting the European
Union heard testimony from three expert witnesses who were deemed to be experts on the Canada-EU trade agreement (CETA).  They are Christophe Bondy, Public International Lawyer at Cooley (UK) LLP and former senior counsel to the Canadian on the CETA negotiations; Dr Lorand Bartels, University of Cambridge and Senior Counsel, Linklaters; and William Swords,  a retired banker who is President of the UK-Canada Chamber of Commerce. (Personally, I’m  not at all certain why Swords was invited, since he doesn’t appear to know much about the lengthy process that resulted in the CETA agreement). Christophe Bondy, in contrast, knows a great deal, as he was in the room during the negotiations.  You can read the full transcript of his excellent testimony here. I am excepting the most powerful section of his testimony below.

Stephen Crabb MP: What is the single most important piece of advice that
you can give to the UK Government about its starting posture?

Christophe Bondy: The single most important piece of advice is to study
what the benefits are that the UK draws from the European Union. Study
how it functions. You have been participating in this for the last 45
years. I do not think this is a surprise. It was a British person, it was
Baron Cockfield, who in 1985 set out in a White Paper 300 different
measures that would have to be achieved to achieve the single market,
which were implemented. As of 2006 with the Services Directive, there
has been progressive liberalisation in trade and services across the
European Union.

You have created, as I understand, something like 58 different impact
assessments. I do not know what they contained entirely, but some of
them contain, for each of those sectors, the laws and regulations that are
the European rules of the road that sectors across the UK depend upon to
do business. You are not moving from a situation like Canada in the EU,
where there was a big wall up that we have knocked down. You can now
step over the wall so there are opportunities. That is good. You have
been living in a system that has had that bridge in place. You have been
functioning with it in place for a long time and people depend upon it.
Figure out what it is that you depend upon and how much you are willing
to give up….

In March 2019, in technical terms, the UK will experience probably the
single biggest loss of free trading rates in human history, because you
will suddenly not have the benefit of all of the treaties that the EU has
entered into, in addition to losing access to the EU.

 

You can read more about Christophe’s impressive CV here.





David Davis Inadvertently Shows Why Transparency in All Forms of Research is Important

7 12 2017

Michel Barnier, Chief Negotiator and Head of the Taskforce of the EC for the Preparation and Conduct of the Negotiations with the United Kingdom under Article 50 of the TEU receives David Davis, British Secretary of State for Exiting the European Union.

In the last 24 hours, academics, executives, and other cerebral people here in the UK have been astounded by the revelation that the UK document did not actually produce the Brexit sectoral impact studies it had previously claimed to.have produced. The  earlier position of David Davis, the hapless minister in charge of exiting the EU, was that impact assessments for 57 or 58 different sectors of the economy did exist, but that he couldn’t show them to either the public or to his fellow MPs. Davis’s previous position had fed intensive speculation that the studies would show that Brexit would damage most or all of the 57 sectors surveyed.  Testifying before a parliamentary committee yesterday, Davis announced that no actual studies had been conducted. Davis remained sanguine that Brexit would be very good for the overall UK economy, and for all 57 sectors of it, but he refused to elaborate on what sort of research methods allowed him to come to this conclusion. Davis continues to maintain that Brexit will be a net benefit, although he seems to have modified his view that a hard Brexit (the so-called Canada Option) would confer more benefits that a soft Brexit (the so-called Norway Model). Of course, Davis never presented anything resembling a coherent social-scientific study regarding the costs and benefits of either of these models for structuring the future EU-UK relationship.

In fact, he declared that commissioning experts to write detailed forecasts and scenario plans was useless, since experts can’t really provide helpful advice to policymakers. He declared
I am not a fan of economic models as they have all been proven wrong. When you have a paradigm change as in 2008, all the models are wrong. As we are dealing with here [with a] free trade agreement or a WTO outcome, it’s a paradigm change.

Davis’s remarks, which are further evidence of rising skepticism about academic expertise and “System 2 thinking” more generally, have generated a storm of debate, particularly from those of us who believe in evidence-based policy.    Davis’s remarks were a reminder of Michael Gove’s now infamous statement that the UK had had “enough of experts” and the people who prioritize feeling, “gut instinct,” and faith over science and reason in dealing with issues ranging from GMOs to global warming.

The non-existence and non–publication of the 57 sectoral studies is certainly an important issue, since such reports can help to guide policy decisions (e.g., the choice between the Norway and Canada models) and provide valuable information to investors, firms, and households that can allow them to adjust their own strategies prior to Brexit. [If the reports said that a hard Brexit would likely destroy jobs in car manufacturing but would likely create them in fish-processing, that intel could be valuable to estate agents in Sunderland or to young peoople currently deciding which skill sets to acquire]. Governments can help markets to work better by supplying people with useful information. However, I’m not writing this post to point out the various ways in which commisioning and publishing the 57 studies would improve either policy decisions or the functioning of markets. Instead, I want to make a more fundamental point about why increased transparency in all forms of research, academic and governmental, is desirable.

By increased research transparency, I mean the people who present findings need to show their work– to show in greaters detail than has hitherto been the case how they arrived at a given set of conclusions, whether those conclusions are “Brexit will be good for the UK economy” or “avoid carbs” or “CO2 emissions will likely cause sea levels to rise”. Norms in many academic disciplines and in  policymaking have shifted in recent years in favour of greater transparency.

For those academics who do research that informs public policy and/or private-sector (that includes me in a modest way, as today’s hearings at the Supreme Court of Canada show) increased research transparency is doubly important. In my own field of business history, I have been advocating for Open Data and the adoption of a form of Active Citation. Andrew Nelson, a qualitative researcher at the Lundquist Center for Entrepreneurship at the University of Oregon, has been advocating more or less the same thing in his home field, which is organization studies (see here).

2017_am_banner-1-960x345

For several years, the Berkeley Initiative for Transparency in the Social Sciences has been working to promote the adoption  of more rigorous research transparency institutions in the social sciences. Their annual conference, which concluded yesterday, included a paper that deals with precisely the issues that have been raised by David Davis’s shambolic performance in parliament yesterday, namely the ways in which transparency and reproducibility can increase the credibility of policy analysis. The  paper, which is by Fernando Hoces de la Guardia, is about the US context and the battles over how to interpret the results of Seattle’s famous experiment with a $15 per hour minimum wage, but there are lessons of broader applicability that should be observed by both, or rather all sides, in the various debates related to Brexit. More importantly,  it supports my contention that all researchers, whether academic or in government, need to be more transparent if we are to re-gain the trust of stakeholders.

 

How Transparency and Reproducibility Can Increase Credibility in Policy Analysis: A Case Study of the Minimum Wage Policy Estimate
Fernando Hoces de la Guardia

Abstract: The analysis of public policies, even when performed by the best non-partisan
agencies, often lacks credibility (Manski, 2013). This allows policy makers to cherrypick between reports, or within a specific report, to select estimates that better match their beliefs. For example, in 2014 the Congressional Budget Office (CBO) produced a report on the effects of raising the minimum wage that was cited both by opponents and supporters of the policy, with each side accepting as credible only partial elements of the report. Lack of transparency and reproducibility (TR) in a policy report implies that its credibility relies on the reputation of the authors, and their organizations, instead of on a critical appraisal of the analysis.

This dissertation translates to policy analysis solutions developed to address the
lack of credibility in a different setting: the reproducibility crisis in science. I adapt the Transparency and Openness Promotion (TOP) guidelines (Nosek et al, 2015) to the policy analysis setting. The highest standards from the adapted guidelines involve the use of two key tools: dynamic documents that combine all elements of an analysis in one place, and open source version control (git). I then implement these high standards in a case study of the CBO report mentioned above, and present the complete analysis in the form of an open-source dynamic document. In addition to increasing the credibility of the case study analysis, this methodology brings attention to several components of the policy analysis that have been traditionally overlooked in academic research, for example the distribution of the losses used to pay for the increase in wages. Increasing our knowledge in these overlooked areas may prove most valuable to an evidence-based policy debate.

 

 





How to bury the lede: Nick Crafts on the postwar British productivity failure

27 11 2017

Nick Crafts (born 1948), who is a very senior and respected economic historian at the University of Warwick, has published a new paper on the postwar British productivity failure. It examines why productive grew at a slower rate in the UK than in similar Western European countries in the three decades after 1945, which were, of course, a period when the UK remained, for various reasons, outside of the EEC.

Abstract: British productivity growth disappointed during the early postwar period. This reflected inadequate investment in equipment and skills but also entailed inefficient use of inputs. Weak management, dysfunctional industrial relations, and badly-designed economic policy were all implicated. The policy framework was partly the result of seeking low unemployment through wage restraint by appeasement of organized labour. A key aspect was weak competition. This exacerbated corporategovernance
and industrial-relations problems in the British ‘variety of capitalism’ which sustained
low effort bargains and managerial incompetence. Other varieties of capitalism were better placed to achieve fast growth but were infeasible for Britain given its history.
Keywords: competition; productivity; relative economic decline; varieties of capitalism

In my view, the most interesting and policy-relevant part of this paper appears at the very end. Prof. Crafts has effectively “buried the lede” by tucking this information down near the end, where he writes that the main features of the postwar period of British economic history were

 

ineffective competition policy, nationalization, and protectionism including remaining outside the EEC. This exacerbated problems of corporate governance and industrial relations inherent in the British ‘variety of capitalism’ as the economic rents that were generated helped to sustain low effort bargains and managerial incompetence.

(Bolding added by AS)

This paper builds on Craft’s earlier estimate (2016) that joining the EEC raised the level of UK GDP by about 8 to 10 per cent through increasing the volume of trade and strengthening competition. You can also read his short piece on what history says about Brexit here.

 

 

 





Commonwealth Trade and the Brexiteer Imagination

25 03 2017

empiregoods.jpg

In previous blog posts, I have discussed how the Commonwealth looms large in the imagination of many advocates of Brexit.  The coalition that supports Brexit is, of course a diverse one that included libertarian millionaires to hard-core leftists who see the EU as a capitalist plot. However, one important strand of the pro-Brexit thought holds that when Britain joined the European Economic Community in 1973, it was severing its historic ties to the economies of the Commonwealth. People in this camp seem to think once Britain leaves the EU, it will be easy for the country to capitalise on the goodwill that exists towards Britain in the Commonwealth by negotiation free trade agreements with these nations, some of which have large and fast-growing economies.  As I and other commentators noted before the referendum, whenever people on the right-wing of the Conservative Party mention Brexit, the word “Commonwealth” is never far behind (see here).

For the time being, I will leave aside the issue of whether there is actually much goodwill towards Britain in the countries of the New Commonwealth, as opposed to the Old Dominions, where most of the population is of British stock. I’ll also leave aside the issue of whether it is possible for Britain to have strong ties with both the Commonwealth and the EU: the fact that Winston Churchill fought to preserve the British Empire and advocated the creation of a United States of Europe suggests that ties to the two blocs are not mutually exclusive. I’ll also leave aside the question of whether it is worth sacrificing the access the UK has to nearby access in the hopes of negotiation potential trade deals with distant markets. Instead, I will direct your attention to an excellent recent piece on Vox.Eu on the 1930s, when Britain and the Commonwealth countries negotiated a series of deals designed to redirect trade so that it remained within the boundaries of the Empire-Commonwealth. In the piece, which summarizes a full-length paper, Alan de Bromhead, Alan Fernihough, Markus Lampe, and Kevin O’Rourke shows that the protectionist trade policies introduced in the wake of the 1931 Ottawa Economic conference did indeed help to redirect British trade towards Commonwealth countries and away from foreign countries , including its neighbours in continental Europe. The authors conclude that tariff policy matters a great deal more than earlier economic-historical research had suggested. Earlier studies had suggested that the policies implemented after 1931 were not responsible for the shift in British trade towards Commonwealth countries and that other variables explain the shifts.  The new research shows that trade policies mattered more then and likely is more important as a determinant of international trade patterns in the present than we used to think.

So what is the significance of this research to the ongoing debate about the likely impact of a hard Brexit on intra-EU trade?  If trade policy matters more than previous thought, it suggests that a hard Brexit would have more implications for firms than some appear to believe.

 

One school of thought I have encountered recent goes like this: “Sure a hard Brexit in which we leave the Single Market isn’t ideal, but it’s not going to affect trade too much. Trade policy does affect trade that much- our trade pattern is pretty much a function of underlying fundamentals. For the last 200 years, the UK had done about half of its peacetime trade with Europe and about half with the outside world and that’s just dictated by geography.  Trade policy and membership in the Single Market can move the needle a little bit, but overall isn’t doesn’t matter. Therefore, relatively little trade with the created or destroyed by the distortions that would result from a change in trade policy.”

The new research shows why this seemingly plausibly line of reasoning, which I’ve heard from many smart people, doesn’t really work. A great deal of money at stake here and we need therefore need to redouble our efforts to ensure that the UK remains in the Single Market, or at least the Customs Union.

 





Race, “Civilization,” and International Business: Why We Need a History of Trading With “The Other” More Than Ever

21 11 2016

We don’t normally associate economic policy (tariffs, trade deals, monetary policy) with identity politics (think of Black Lives Matter, the politics of religious minority, migration and the Clash of Civilizations thesis). Trump’s election illustrates the connections between these issues and should inspire a range of scholars in Business History, International Business, Economics, and other fields to get to do more research on the microfoundations and consequences of these linkages.

The linkages between identity politics and international trade are real and are increasingly recognized by the policywonks who are normally more comfortable talking about the Basel Accords, GATT, or Richard Baldwin’s Great Unbundling. Consider Adam Posen, who is a respected American economist. Posen is President of the Peterson Institute for International Economics, a thinktank in Washington DC. He has served as a member of the Monetary Policy Committee of the Bank of England and in many other prestigious roles.  On 15 November, he was speaking about the likely impact of Trump’s election on US trade policy at a conference run by UBS, the Swiss bank. Under Obama, the US had negotiated a variety of trade agreements, including the Trans-Pacific Partnership and a free trade deal with the EU. Carolin Roth of CNBC reported that Posen made this following remark about which of trade deals might survive a Trump presidency:

adam-posen-trump-trade-with-white-people-twitter-search

Adam Posen: “Donald Trump may actually keep TTIP alive if he decides he likes to trade with white people”

Posen’s throw-away line contains an important truth– the politics of international trade is very much influence by identity politics, be they ethno-racial, religious, or whichever other division is most salient to actors at the moment. The academic literature in many disciplines mentions this phenomena, although the literature hasn’t been developed as much as I would like. In his controversial book, The Clash of Civilizations, Samuel Huntington remarked that “Americans react far more negatively to Japanese investment than” European investment.

To my knowledge, the IR and International Political Economy literature hasn’t really developed this idea. Mainstream scholars in International Business have not dealt with this issue either (I stand to be corrected– this isn’t my home field). These gaps or silences in the literature are extremely unfortunate in light of current developments, which include a well-documented rise of ethnic nationalism across the world as manifested by Donald Trump’s adviser Steve Bannon, who declared that there were too many Asians in Silicon Valley. When an interviewer pointed out to Mr. Bannon that measures to reduce the role of Asians in this sector might damage the economy, Bannon replied “A country is more than an economy. We’re a civic society.” (For coverage of the reaction in India to Bannon’s remarks, see here).

We have something similar in the UK– at least one part of the coalition currently pushing for the UK to leave the EU is inspired by the idea of the Anglosphere, an identity that links Britain to its overseas offshoots and which would prefer a customs union with Britain’s alleged “kith and kin” overseas than to the continental Europeans on the other side of the Channel. As the FT’s Martin Wolf has noted, the idea of a special free trade agreement linking the US to other so-called “White Anglo-Saxon nations” is supported by elements within Trump’s base of support, particularly those who has what Wolf refers to as “retrogressive” views on the internal politics of ethnicity.

 

It seems to me that business historians are uniquely well positioned to develop our understanding how the increasing salience of ethnic, racial, and religious identities might influence international business. We could do so by looking at previous episodes in the history of globalization when the salience of such divisions was increased by cultural shifts that increased the extent to which different cultures were Othered.  In the humanities and the social sciences, there is a vast literature on Othering and it is widely understood that the salience of ethno-racial and religious identities is not constant but has fluctuated. Historians have written about how such identities have been created and how the salience of ethno-racial identities was intensified by such phenomena as the late 19th century rise in pseudo-scientific racism. We know that such identities had a significant impact on the diplomatic history of the period (e.g., the growing popularity of the concept of the Anglo-Saxon race promoted Anglo-American rapprochement) see here and here.

Unfortunately, relatively little has been written by economic historians how such identities affected commercial ties across the imagined boundaries separating ethnic, racial, and religious groups. Even less has been written using corporate archival data and firm-level studies, the preferred methodology of most business historians.  One work that does address this question is “Empire and Globalisation: Networks of People, Goods and Capital in the British World, C.1850-1914” by Gary Magee and Andrew Thompson. This study, which blends cultural and economic history, considers how the identities of Anglo-Celtic economic actors influenced trade and investment in the British World, a territory that included the British Isles, Australasia, Canada, and, more ambiguously, the United States. This book is based on aggregate date (e.g., trade flows) rather than firm-level data, but based on these data, the authors argue that a shared sense of Britishness distorted commercial decisions and promoted trade between these countries. This conclusion implies that these growing salience of these identities also impeded economic exchange between the predominantly English-speaking countries and those who were deemed non-Anglo-Saxon, and thus inferior. Magee and Thompson suggest that the ideologies of Anglo-Saxonism and Britishness promoted trade between the Anglosphere nations. I’m more interested, actually, in the international trade that didn’t happen or which was made more difficult by these ideologies. Moreover, how were firm strategies affected by such ideologies? Did the growing salience of such identities influence levels of trust and the willingness to lend capital to individuals who were deemed to be “Other”? What do firm records say?

It seems to me that business historians can make a useful contribution here to our general stock of knowledge. Anyone who would be interested in collaborating with me on a grant application or some other project related to the investigation of this theme should contact me. I’ve recently been kicking some ideas around with other business historians I respect. If you are interested in being part of this conversation, let me know.

 

 





One Business Historian’s Thoughts About Theresanomics

6 10 2016

The recent Conservative Party Conference in Birmingham may likely be regarded by future historians as a turning point in the British Conservative Party, the moment when the party repudiated the individualist/free-market Hayekian ideas of the Thatcher era and moved towards in a more illiberal era. Along with the Brexit vote, it may also be regarded as a turning point in the history of global economic integration and the beginning of another de-globalization era. There is some evidence in the trade data and investment flow data to suggest that de-globalization began with the 2008 financial crisis, but I’m more interested in the erosion of the cultural foundation of globalization represented by the recent turn of events in the UK (see here, here, and here).

I’m struck by the increasingly illiberal rhetoric of the Conservative Party. In this context, I am using liberal in the strict sense to refer to a world view that favours open markets and borders and the liberalization of international trade. At the Conservative Party conference, Theresa May presented what some observers regarded as an inconsistent mixture of left-wing economic and right-wing cultural ideas.  I’m inclined to agree with ITV’s Robert Peston that her cocktail of policies can be regarded as an intellectually consistent system, albeit one that it is profoundly at odds with the individualism espoused by the Conservative Party in the Thatcher Era. In his analysis of her speech, he kept referring to it as “illiberal”.

Theresa May presented an economic agenda that would have been regarded as unacceptably leftwing for even a Labour Party leader just a few years ago, when the last embers of 1980s-style neoliberalism were still burning faintly. Her conference speech, which was explicitly designed to appeal to working-class Englishmen and Englishwomen, spoke of heavier taxes on companies, tighter restrictions on immigration, and, of course, direct worker representation on corporate boards, an astonishing innovation in Anglo-American corporate governance. On top of this, she appears to favour a “Hard Brexit,” a policy opposed by almost all large firms in the UK.  As journalists have noted, her rhetoric on these economic issues was essentially left-wing.  Theresa May also spoke of a law and order agenda and of cracking down on criminals, particularly the foreign born.  Someone I know who hails from a large country in Continental Europe quipped that May’s agenda was “national socialist.” It’s a farfetched comparison and one I found faintly offensive, as the UK remains a deeply liberal country in every sense of the word. (UK Tories are immensely liberal compared to say, the Trump Party of the United States or the truly xenophobic parties of the Accession States in the eastern parts of the EU). However, there is a grain of truth about this joke about our direction of travel.

Here is a sample of the rhetoric from Theresa May’s speech.  I’ve put certain words in bold for emphasis.

tax is the price we pay for living in a civilised society. Nobody, no individual tycoon and no single business, however rich, has succeeded on their own. Their goods are transported by road, their workers are educated in schools, their customers are part of sophisticated networks taking in the private sector, the public sector and charities. We’ve all played a part in that success. If you’re a tax-dodger, we’re coming after you.

the central tenet of my belief is that there is more to life than individualism and self-interest.We form families, communities, towns, cities, counties and nations. We have a responsibility to one another. And I firmly believe that government has a responsibility too… the Government I lead will be driven not by the interests of the rich and powerful, but by the interests of ordinary, working class people.

Only time will tell whether Theresa May’s government is, in practice, radically different in its economic policies than its predecessors, the brief Cameron majority, the Coalition, and the New Labour and Conservative governments before that. The rhetoric, however, is strikingly different from that of any party of government in Britain since the 1970s.

I see two connections between the trends in political culture represented by Theresanomics and the strands in my research portfolio. The first of these connections relates to my research on the impact of deglobalization on business culture and strategy. One of my research themes is about the tension between liberal and cosmopolitan and illiberal/nationalist sentiment in British business culture in the early twentieth century. As Charles Jones persuasively argued long ago in an unfairly neglected work, the years immediately prior to the First World War witnessed the fragmentation of the transnational bourgeoisie associated with the Era of the Free Trade and classical liberalism: the rise of economic nationalism within and around business communities promoted the rise of more intense national consciousness on the part of business people. The mid-Victorian liberal dream of a world economy in which national borders and citizenship was eclipsed in this era. I have a couple of paper projects that relate to this period, which saw the end of the pre-1914 era of globalization and the inauguration of several decades of deglobalization.

The second connection between Theresanomics and my research relates to the Prime Minister’s adroit use of the past, or, in the parlance of many organization studies scholars, her “rhetorical history.” Part of my research is now about how companies use history and I am therefore fascinated by how Theresa May has used historical figures and heroes to stake out her own identity as a Tory collectivist. It is no coincidence that the Conservative Party conference was held in Birmingham, the home of Joseph Chamberlain, the Conservative politician who pioneered a series of left-wing policies, including municipal socialism and who later came to advocate an end to Britain’s policy of Free Trade. Chamberlain was a deeply polarizing figure in British politics in the first decade of the twentieth century, the era I have been researching in the business-historical papers discussed above. Theresa May regards Joseph Chamberlain  something of a role model (see here and here).

P.S. The excellent Evan Davis presents a radio programme called The Bottom Line. This week he was speaking to four business leaders about “Theresanomics.” I’ve borrowed that term, which was also used by The Economist, for my blog post,