Enterprise Excellence 3

Here we interview people whose work has relevance to the vision and aims of Transforming Business.

The views of the interviewees are theirs alone - they do not necessarily reflect the thinking of Transforming Business.

Back Page Interview

Interview with Martin Wolf

As the Chief Economics Commentator and Associate Editor of the Financial Times, Martin Wolf has the ear of corporate leaders not only in the UK but around the world. He spoke to Peter Heslam at the newspaper's headquaters in London. A short review of his book Why Globalization Works can be found here.

You say in your book that you never rebelled against the values of your parents. Nevertheless you describe your progression away from their social democracy to classic liberalism. Why did you feel this shift was necessary?
My father gradually moved to a more liberal position and eventually became a supporter of Margaret Thatcher. Along with many others at the time, we both came to question the basis of the social democratic state with its high spending. It was proving far harder to realise than we had hoped. We became believers in the need for incentives. The hope that people would act responsively turned out to be false.

You argue that the market is a necessary, though not necessarily a sufficient, condition for democracy. What else, besides the market, is necessary for democracy?
That's a difficult question! Democracies have worked well in some poor countries. But whereas rich states are overwhelming democratic, poor states are not. Education is important - all rich countries have well educated populations. Political culture is also important. Politics mustn't be a matter of life and death and neither should it be the principle route to wealth. A society's history is also important. It helps if there are historical precedents for democracy. In China's history, the idea of a central autocratic state has been very prevalent and that is partly the reason that country is finding it hard to move towards democracy. Economic stability and the ease with which people can earn a living is a final factor I'd want to mention.

You say in the Introduction that your book is not one of academic scholarship but of persuasion. Nevertheless its credentials are similar to those of many books currently produced academics. What has been its reception in academic circles?
The book has evoked very little response from academics. Outside academia, economists have generally been favourably disposed to it. Some politicians say I've failed to explore the necessary political conditions for economic globalization to fulfil its potential. They feel there is too much weight given to economics and that what I present is too laissez faire.

You claim that the problem today is not too much globalization but too little. What then do you suggest is necessary to achieve more?
Developing countries need to provide a good investment climate within which private business can work. International agreements can help to achieve this, though this is a difficult and controversial area.

Another thing that's important is the quality of the resources, particularly the human resources. Some countries simply cannot provide a skilled workforce. Incidence of disease is high and education is poor. This inevitably means a lack of market opportunities; countries like this remain outside the world economy.

Your position at the Financial Times is bound to be very demanding. How did you find the time to write a book?
I wrote the book in our apartment in Italy in four months spread over two summers. My job actually helped as it meant I knew a lot of the arguments already and it had got me used to writing quickly and precisely. Most of the finished manuscript is identical to the first draft - I didn't have to change very much. My friends have joked that I didn't have time to write a shorter book!

Your book is clearly a response to the arguments of the 'anti-globalizers'. At the end of the last century and the start of this one there were frequent public protests against globalization on the streets of European cities. That all seemed to die away in the wake of 9/11. Your book came out in 2004. Don't you think your book may have somewhat missed the boat?
Yes, the timing was somewhat unfortunate. The idea for my book did indeed originate around the turn of the millennium. I didn't get to write it until 2002-03. Following 9/11 I seriously considered abandoning the idea. It was inevitable that the anti-globalization movement would die away eventually. It reflected the mood of prosperous young people keen to distance themselves from the perceived values of their elders. But on reflection I thought the case against them was still worth making, even though the nature of the debate had changed in the wake of the attack on America.

The street protests helped raise the profile of a new breed of youthful, bright and trendy left-leaning thought leaders such as Naomi Klein, Noreena Hertz and George Monbiot. They seemed to get backing from 'elder statesmen' critics such as George Soros and Joseph Stiglitz.  It took a while for contrarian voices to emerge from the classical liberal tradition. Besides yourself, I am thinking of writers such as Johan Norberg, Jagdish Bhagwati and Deepak Lal.
You're right, we can't claim that classical liberalism was been resurgent. Mind you, that line of thinking has been around for a long time. It has simply taken a while to state it in ways that answer to the specific criticisms of the anti-globalizers. I don't see much counter-response. None of them have reviewed my book. They seem to prefer to ignore it, pretending it didn't exist.

You include 'church groups of all denominations' in the antiglobalization phenomenon you describe. Why do you think that is true of such groups and have you met any Christian individuals or groups that are more supportive of the free market?
Not all Christians oppose globalization and, yes, some Christians have shown support for my arguments. Indeed, one in particular expressed how uncomfortable he was with the perspective espoused by Christian Aid. It is remarkable, however, that no Christian leader has sought to critique my book or engage with me about the arguments. Chief Rabbi Jonathan Sacks is the only religious leader to have shown any interest. He had me round after the book came out and we spoke for a couple of hours. It makes me wonder who Christian leaders are speaking to about economic issues. After all, in my position at the FT I pretty much represent 'the establishment' when it comes to economics. And yet none of them beat a path to my door.

I am very aware of the church's blind-spot towards the commercial sphere. Sometimes I wonder whether it's a legacy of the time when theology was the queen of the sciences. There seems still to be a residual sense amongst professional theologians that to do good theology is to do good economics. They write a lot about poverty but rarely feel the need to turn to economics for help in understanding it.
Theology was indeed the queen of the sciences. But times have changed. Economics has become a discipline in its own right. It's madness for the Church not to take it seriously. And to reject the market as a solution to poverty is sheer folly.

But ever since the usury laws there's always been a tense relationship between Christianity and the market. Often it seems that if an action is not motivated by altruism then it isn't valid. But we mustn't argue that the world needs to be organized as if we're all saints. Maybe it is the eschatological dimension of Christianity that means theologians fail to grasp this. Judaism hasn't had such a problem with self-interested behaviour. Christianity demands selflessness. But it's impossible to run an economy on this basis.

The irony is that a good deal of what you write seems to me to have good theological underpinning, even though you don't express it in those terms. To quote just one example, you say in your book 'the fundamental value that underpins a free society is the worth of the active, self-directing individual. It is a belief in individual freedom. It is not a belief that the individual is somehow outside or above society. The individual, being human, is always embedded within society. Human beings are cultural animals.' (p. 24).

This reflects, to my mind, some key theological beliefs about human beings: they have dignity, freedom and are essentially relational and spiritual beings.

In view of all this, would you be able to give any merit to the claim that much of what you describe in secular liberal terms is deeply rooted in Judeo-Christian tradition?
Most definitely. The secular liberal idea is firmly rooted in the Judeo-Christian worldview. For me Christianity represents a deep synthesis of the Jewish view of the relationship of the individual to God and the Greco-Roman view of citizenship. As such, Christianity is the most complete synthesis of Judaism and Hellenism. This synthesis was preserved through the Dark Ages and into modern life. We cannot conceive of the individual without the Judeo-Christian context in which the concept arose. Secular thinkers like Kant were deeply indebted to Christianity.

Some dismiss liberalism because they say it reserves a central place for the self-seeking individual. But the Enlightenment tradition that goes back to Locke places the individual firmly in society. Liberalism does recognise social obligations. Its difference with left-leaning thought is not the nature of social relationships but the legitimacy of state coercion.

It's now three years since your book came out. Are there any things in it that you see differently now?
If I were to re-write it I would address the issue of what kind of policies would ensure that economic integration was more full and deep. In other words, how the global economy can best be governed. I'd also address climate change, the architecture of global finance and migration. I'd also give more attention to the countries that are economically 'in the middle' such as in South America.

These issues wouldn't change the thesis of the book. In fact, there's nothing in it I'd want to delete.

Do recent developments make you more optimistic than when you wrote your book, or less?
I'm a little less optimistic. The challenge of sustaining a moderately cooperative global political order is bigger than I'd thought. The role of China and Russia on the world raises particular concerns. We could be facing a break down of the international order comparable what happened in the 20th century.

Martin Wolf spoke to Peter Heslam at the FT's London headquarters.