Another War and
a Fresh Start
FOR PIGOU, AS FOR SO MANY OTHERS, the interwar years formed a period of uneasy intermission, over the course of which he grew increasingly reclusive and, until the late 1930s, directed himself toward an ever-narrowing audience. World War II itself served as the culmination of an extended period of loss. The war emptied Cambridge of friends and students, replacing them with affiliates of the LSE and decamped government agencies. And on reaching the age of mandatory retirement in 1943, he lost his post as professor.
These personal events unfolded against a global backdrop Pigou watched with disgust and horror. Though the war did cement the practical importance of economists as advisors to the government, everywhere else Pigou looked, cherished foundations of his comfortable life were threatened or crumbling. Pigou himself had reached an age at which he found his own energies waning. Nevertheless, with the arrival of war, he began to search assiduously for things to do. So reticent to work for the government during the first war, he asked for “any” job to help the war effort during the second, composing reports for the government and eventually teaching for a stint at Harrow. He wrote constantly, trying new subjects and tones, in the hope of widening his scope to appeal to a general audience, a move he made initially simply because he had no other option.
However, as the dust settled over Europe and Pigou confronted a changed Britain, he would find redemption, or at least consolation. And he would find it in a very unlikely place: the state. Moderated largely by his continuing friendship with Philip Noel-Baker, now a prominent Labour politician, Pigou took an active interest in politics and after years of disgust with the government, found himself again believing not only in a cause but also in a political program. He supported Labour, but more importantly, he came to believe that the party’s sweeping policy initiatives would bear fruit. Remarkably, this seed of hope grew until it changed Pigou’s very relationship with people as a category. Throughout the late 1940s and early 1950s, his disdainful tone changed. His words softened. As he came to terms with his own position as a professor emeritus and with the new government in power, Pigou demonstrated, both publicly and privately, an entirely new relationship with the common man.
The Home Front
When the war came to Cambridge, it found Pigou, then over sixty, in a state of great personal bitterness. From his rooms at King’s, he was still fruitlessly fighting to prevent Keynesianism from becoming the school’s dominant methodological approach, sniping at Keynes and Robinson over their zealousness and insufficient respect for older theories. To Noel-Baker, now a high-ranking member of the Labour Party, Pigou presented a different face, one acrimonious about different things, but hardened to his own lot and to the possibility of war. His first letters after the declaration of war in September 1939 were filled not with hope or fear, but `with bile laced with characteristic dismissiveness. In his private correspondence with his closest friends, the decorous prose reserved for his public writings vanished. Writing to Noel-Baker of the head of the Labour Party, Clement Attlee, Pigou noted, “I listened to your great leader last night on the wireless: a pleasant second-rater with no personality.”1 At the time, Pigou was grimly pessimistic about Labour’s future. Attlee, he predicted, would “never make a prima donna.”2
Complaints to Noel-Baker about Pigou’s immediate situation at Cambridge soon followed: “Cambridge has been made (1) an evacuation area for other Universities and children to come to. (2) A First-class military objective by filling several colleges with air cadets and arranging to put the ministry of Economic Warfare into Trinity, instead of, as personnel would suggest, into Bedlam.”3
Under Pigou’s gruff exterior, however, was a much more sensitive and aching despair. In the epilogue written in November 1939 to a revised edition to his Political Economy of War, he excused himself for not treating topics of postwar recovery. The reason, he wrote, was that once again: “The young and gallant, our children and our friends, go down into the pit that others have digged for them. . . . We wait and watch and—those who can—we pray. As an economist I have not the power, nor, as a man, the heart, to strain through a night so black to a dawn I shall not see.”4
The old Great War commitments to the work of the Quakers reemerged as well. Late in 1939, Pigou donated “£100 to help the friends” and reported to Noel-Baker that other, more recent former students (including Wilfrid Noyce, who would remain a lifelong friend) had joined the Ambulance Corps.5 He also wrote on behalf of conscientious objectors, asking Noel-Baker to “stand up” for non-combatives who would be forced into “Labour battalions just as . . . in the last war,” an assignment as good as suicide.6
As the war progressed, Pigou realized he had concerns much closer to home. Though the town of Cambridge prospered economically during the war, university life ground to a near halt. Cambridge was rarely bombed, but air raid sirens were a constant feature of wartime life. While others ran to shelters, the stubborn Pigou stayed above ground, hauling a deck chair out onto King’s lawn and reading a newspaper in contemptuous defiance of the Luftwaffe.7 Cambridge would play host not only to evacuated children but also to a number of distinguished scholars—many Jewish—fleeing Europe as well as to servicemen from a nearby American airbase.8 King’s became not only “an armed camp” but also the home of all sorts of displaced individuals. Keynes reported, “one has to expect to see in residence the LSE, the women, the blacks and a few other oddments.” The Front Court was “full of military motor-cars.”9 Others were leaving the university, both to fight and to be interned. Keynes and Pigou anxiously corresponded about the fate of Sraffa, who as an Italian national, might be “pinched.”10
To escape the hubbub, Pigou relocated to Lower Gatesgarth, but by mid-1940, he was restless, “sitting doing nothing in this funk-hole.” He wrote to Keynes to note that with Cambridge closed for the next term, “I must make a serious effort to get something to do: I can’t just sit here and eat the . . . food.”11 He made enquiries about a job with the code breakers at Bletchley Park and about “teaching at a school,” but these led nowhere. He was concerned enough to ask Keynes for a job doing “anything,” to which Keynes replied sympathetically but not helpfully. “All Government Departments seem to be pursuing the same policy about employing people,” Keynes wrote. “They are in a state of intense muddle, overwork and understaffing. But nothing will induce them to take anyone fresh.”12
This may have been true, but it was also true that during World War II, economic knowledge was prized by state administrators, a lesson that had been learned slowly during the last war. Pigou finally landed a part-time position in 1941, writing economic analyses for Arthur Greenwood, the deputy leader of the Labour Party and a member of Winston Churchill’s War Cabinet, which was formed in mid-1940 and included ministers from the three major political parties. Greenwood was intimately involved with the state’s efforts to bring in and concentrate economic expertise. At first, he headed the Production Council and the Economic Policy Committee, but he proved a poor leader, and Churchill disbanded both groups. By the time Pigou joined him, Greenwood was working on reconstruction policy.13 After long having sought a job, when Pigou finally landed one, he wrote with continual disdain of his work and his superior, to whom he alternatively referred as “Lord Alcohol” and “Whisky Arthur,” jabs at Greenwood’s alcoholism.14 Still, he was glad of the activity. “Of course they won’t make any use of the stuff,” he wrote in October 1941, “but it’s something to do.”15 But even this did not last long. Greenwood was sacked in 1942.
The war formed a period of profound dislocation for Pigou, professionally and personally. In the most obvious, physical sense, he was kept out of his usual haunts in Cambridge by Keynes’s “collection of oddments.” He spent much of his time in his “funk-hole” in Buttermere with Ann Jackson, his long-time “formidable” housekeeper.16 There, except for the occasional visitor, he stayed sequestered, alone, and cantankerous: a “hermit crab.” In a letter to F. A. Hayek, Pigou reported the scant news from the Lakes—that a “4-engine Lancaster or something” had crashed somewhere nearby. Mostly, however, his letter sighed heavily with boredom; he was revising Public Finance, which he added, “gives me something to do.”17 Remembered in Cumbria for his spartan lifestyle and his legendary thrift, Pigou would eat, in Noel-Baker’s exaggerated account, “dead porridge and the crusts of yesterday’s toast.”18 His tendency to squirrel away food and not eat it provoked a wry letter from Noel-Baker: “It became plain that Viscount Gatesgarth [Pigou], or his housekeeper, or both, were conspiring to defraud the British people by hoarding food; and endeavouring to make a Minister of the Crown an accomplice in that dastardly manoeuvre!”19
From Buttermere, Pigou would almost beg his former students and mountaineering friends, of whom Noel-Baker was probably the closest, to pay him a visit. For even though Pigou would hardly ever express anything but professional feelings to colleagues, to his friends, he was emotive, even if proud. When he requested company, he did so with a false bravado, ostentatiously referring to himself as the “Viscount Gatesgarth” and extending invitations with formality couched in layers of wit.20 The fact remained, however, that in a preponderance of letters, he requested visits either to Cambridge or Cumbria. In mid-1943, praising Buttermere’s “fresh eggs” and “all-male life,” Pigou was asking Noel-Baker to commit to what would be his fortieth visit.21 He was imperious about receiving communiqués from Noel-Baker and other former students with whom he had stayed friends, including Tom Gaunt and the young Wilfrid Noyce, who would later be part of the first team to summit Everest.22 To secure visitors, he resorted to mock threats, especially with Noel-Baker, who as a government minister, had several other things on his mind. Still, Pigou instructed Noel-Baker that “Replies to Cambridge [are] more important than to Albania!”
It is quite certain that . . . you are doing nothing one-tenth as useful as it would be to keep in touch with the backbone of the country! Therefore in the Hitler manner I shall employ sanctions against your family. There is here a . . . Holy Roman Empire belonging to your son. Unless a letter of adequate length is received within the next few days, his name will be erased from this book and it will be permanently incorporated in the Lower Gatesgarth library!23
Pigou would only become more stringent. “RSVP,” he wrote repeatedly, underlining the command twice or three times. “Conduct of self and dancing girl [Irene, Noel-Baker’s wife] has been disgraceful,” he wrote of a lull in correspondence.24
Practically every other letter contained some dismal projection about the future of the war. “The Admiralty should get . . . [battle-ships] ready,” Pigou advised in August 1940, as Hitler would be coming.25 “I give Crete 10 days before it’s Dunkirked,” he predicted in late 1941, “do you give it 10 years?”26 Distrustful of the news, he continually questioned official reports: “Which is lying most?” he would ask.27 The pair bet on how long the war would last, with Pigou, signing his letters “Strategist,” polemically predicting the mid-1950s.28 Despite Noel-Baker’s optimism and his “series of prophecies,” all of which came true, Pigou stuck to his gloom, writing of his dissatisfaction “with the handling of the Italian and Balkan strategy: also with your propaganda policy.” Even when Operation Overlord opened a second front in Normandy, he remained skeptical. “I am inclined to fear that things are going much less well than the British public is being told,” he grumbled.29
Academic Struggles
The war itself was partly responsible for Pigou’s “blackest hours of despair,” but it also reinforced an experience of disjuncture that had little to do with the conflict.30 Professionally, Pigou was coming to the end of his tenure. The war removed him from teaching; from Cambridge; and, largely, from academic economics, many of whose practitioners were now in the employ of the state. This change was a mixed blessing. At times, it provided a distraction from his field’s slow but certain shift toward Keynesianism and away from his own centrality. In 1942, for instance, he reported with typically inflammatory language, that he had “been working like a black for George [King George VI] and Lizzie [Queen Elizabeth] via Alcohol,” on the report for Arthur Greenwood.31 Though he complained constantly about his post, when it was over, Pigou was anxious to find another position with the government if only to remain occupied.32 Out of boredom, he had dashed off Lapses from Full Employment, a quick 72-page “semi-popular book about unemployment of the same sort of grade as my little books about Socialism and Economics in Practice” and had resorted to writing articles on mountaineering, including one called “Night Life on High Hills” and sketches about popular affairs.33
Pigou continued to spar with Keynes, but by now he was tilting at windmills. His Employment and Equilibrium (1941) was largely passed over as economists had other, more pressing concerns at the time it was released.34 When Kaldor reviewed the work with a light hand in The Economic Journal, Pigou responded in great length, picking apart small objections.35 The book was actually quite modern in the exposition of its macroeconomic model; its methodology was “almost ideal” in the opinion of Paul Samuelson, who reviewed the book for the American Economic Review.36 But despite it being “one of the most important books of recent years,” in that it responded to Keynes by using Keynes’s own “poetry,” it was also “‘classical,’” a word that connoted a bygone era.37 Abba Lerner was even more explicit. By focusing the better part of his analysis on stable conditions and assuming long-term full employment, Lerner contended, Pigou demonstrated an “excessive loyalty to his school, his teachers, and their methods.”38
Yet Pigou soldiered on with his defense of the classical approach. He resolutely titled a 1943 piece responding to the American Keynesian Alvin Hansen “The Classical Stationary State” at a time when the designation “classical” was fast becoming synonymous with “old” and when economists were increasingly interested in dynamics.39 In it, he continued to uphold the well-worn position that even in the midst of a depression, if wages dropped sufficiently, the economy would return to a stable equilibrium. The article, which provoked a quick and definitive dismissal from Michał Kalecki, however, did achieve some subsequent fame for introducing what Don Patinkin would subsequently dub the “Pigou Effect,” the idea that in times of falling prices, cash holdings would become worth more, causing an upswing in demand that could restore equilibrium conditions.40
The most substantive economic debate in which Pigou engaged during the war only further demonstrated the extent to which the field was changing around him. The debate concerned a core bulwark of Pigovian welfare economics: the concept of national income. In his works on welfare, Pigou had adopted and expanded Marshall’s notion of the “national dividend,” a term meaning national aggregate earnings, as an explanatory metric. In so doing, he had established himself as one of its seminal theoreticians and had helped pave the way for the modern conception of the gross domestic product (GDP), a topic that attracted ever more attention throughout the 1930s and 1940s.41 For Pigou, though national income was necessarily measured in money, its value was rooted in “objective services, some of which were embodied in commodities, while others are rendered direct”—in other words, in the real economy.42 In his major works, he relied on a concept of national income as a proxy measure for wellbeing, and because of the importance of his works on welfare, he had a significant influence on the burgeoning field of national income accounting. National Income and Outlay (1937), one of the first comprehensive books on modern national accounting, by the Cambridge statistician Colin Clark, began with an extended quote from Pigou:
“Generally speaking,” writes Professor Pigou in the Economics of Welfare, “economic causes act upon the economic welfare of any country, not directly, but through the making and using of that objective counter-part of economic welfare which economists call the national dividend or national income.”43
Clark was thus explicit about his field’s debt to Pigou. Indeed, the first chapter was essentially a defense of the latter’s ethically oriented approach to economics and an explanation of how national income measurements—“conceived in real, but measured in money terms”—fit into a Pigovian program.44
But in 1940, Pigou’s conception of national income was fundamentally challenged by F. A. Hayek, who, along with the rest of the LSE, had decamped for the war to Peterhouse, Cambridge, just a few blocks down Trumpington Street from King’s College. One of the Austrian economists who had a profound impact on Lionel Robbins, Hayek had been based at the LSE since the early 1930s. Unlike Robbins, Hayek was formally schooled in philosophy and sociology, and his work was ideologically explicit. For him, choice and individual agency were the ultimate defenses against the horrific authoritarian regimes that had engulfed his native Austria and the rest of continental Europe. But, Hayek held, agency was good for people in a more tangible way; free markets were simply better at improving societal wellbeing than any central planning board. Hayek argued that such planners were unable to capture all the information ordinarily held by individuals scattered throughout the economy. Without perfect information—not only information about preferences but also what Hayek would later call “knowledge of the particular circumstances of time and place”—central planners would inevitably fail in their task of distributing resources effectively.45 In this way, how individuals understood and used information was of key importance to economic prosperity. In The Pure Theory of Capital (1940), Hayek argued that even real physical capital, a core concept in income accounting, was subject to interpretive flexibility; its meaning varied even for the same person in different temporal contexts.46 When calculating income, it would therefore be useless to account for “maintaining capital intact,” a Marshallian concept of replacing physical productive capital (like factory components that had been worn out with use) so that the stock of physical capital remained undepleted. For Hayek, maintaining real capital in a physical sense meant nothing: it was how the entrepreneur thought of the capital that mattered with respect to its value.
Pigou was stirred by The Pure Theory, a copy of which Hayek had given him. His marginalia shows he was paying close attention, especially to chapter 22, which dealt with maintaining capital intact.47 At the chapter’s end, Pigou scrawled a question about Hayek’s theory of both real capital and real income: “how [was it] measured”?48 He posed this challenge to Hayek in article in Economica in 1941, defending the old physical conception of capital maintenance as a useful measurement tool.49 Pigou defended what J. R. Hicks would later call the “Materialist” or “volume” understanding of real capital on grounds of practicability of measurement. “Surely,” he wrote, “it is proper for economists . . . while admitting that perfect definitions cannot be found, to try to make them as little imperfect as they can.”50 Hayek again disagreed, stressing that values, even of real capital, were fundamentally psychological rather than material. “In a changing world, where different people, and even the same people at different times, will possess different knowledge, there can be no objective standards,” he wrote, not even those rooted in seemingly unchanging physical objects.51
The stakes of this debate were high for both Pigou and Hayek. For Hayek, it was about keeping the ultimate locus of economic and market power located squarely in the minds of individual actors.52 For Pigou, it was about holding onto a material and measurable conception of real capital—one that was rooted in the physical and tangible, terms in which he had long thought, terms in which Marshall had thought, and terms on which he had never been questioned.53 But it should be noted that Hayek and Pigou’s dueling notions of capital bore a striking implication for the usefulness or feasibility of state involvement in the market. Hayek’s understanding implied that the only arbiter of value was the free market, in which the internal beliefs and valuations of individuals became manifest. In contrast, Pigou’s materialist conception provided the wartime government, in the midst of readopting the planning functions developed in the Great War, with useable metrics for evaluating and managing economic performance.54
Now, however, these metrics were scrutinized, especially by the people who had questioned Pigou’s status as a scientist. Writing in response to the debate, John Hicks granted that even though in practice statisticians would have to rely on materialist Pigovian conceptions of capital, Hayek was ultimately right—that individual perceptions and understandings of market actors were of final importance. The fact that Hicks, by then the new face of welfare economics, “came down mainly on Hayek’s side” was indicative of a turn against the solid groundings that undergirded Pigou’s work.55 It was wrong—and more importantly, practicably useless—Pigou thought, to conceive of material capital as fundamentally changing in real value simply, as Hicks would later write, “by the mere admission of new information.”56 But this understanding was exactly what Hicks and Hayek maintained. They turned away from the concrete and moved toward a theory less connected to everyday physical experience or practical use, notably by agencies of the state. From Pigou’s perspective, this meant that even the most fundamental physical realities were being replaced with nebulous concepts. Of course, many economists agreed with Pigou—applied economists found it impossible to actually account for national income by using the flexible Hayekian concepts, and Hicks himself noted that they were not “usable in practice”—but the debate itself suggested the dawning of a new age characterized by dramatically different economic thinking.57 Pigou had long been among the most abstract of economic theorists, but he now found some of his own bedrock assumptions, even about what was concrete, significantly less stable than they had been a few years before.
Pigou’s academic alienation peaked with his mandatory retirement from teaching in 1943 upon turning 65. As a fellow of King’s, Pigou would remain at the college for the rest of his life, but his years as a professor had come to an end. The board of electors unanimously chose Keynes as his successor to the Chair of Political Economy, but Keynes, swamped with war work, was “unable to accept” because of “other demands on his time.”58 The post therefore went to Robertson, who returned from London to assume his new responsibilities. Pigou had battled Keynes for influence at Cambridge for nearly a decade and a half, but ultimately, when Keynes was offered the position that Pigou so valued, Keynes was too busy with tasks in London he considered more important to take it up. It was a cruel irony and a bittersweet victory that Robertson, Pigou’s former ally at Cambridge, came back to the economics faculty only by default.
For his part, the retired professor was left with little to do. Writing to Noel-Baker in advance of his retirement, he noted: “It doesn’t seem proper that a viscount should do absolutely nil while the war is on. . . . Obviously the thing one would be most competent for would be some sort of investigation on economic stuff. . . . But there might be something else useful. Do you know of anything?”59 As time went on, Pigou became ever more serious. The following month, he returned to the issue. “Now about my job. This is a genuine enquiry. I don’t want to be completely idle while there is all this rank about man-power, and there must be something that I am competent to do. . . . Therefore I am enquiring of you whether . . . you have acquired sufficient status to do a little nepotism.”60
Noel-Baker was no nepotist. Instead of providing a job, he suggested that Pigou address himself to a different audience, one to which Pigou had already begun to turn: the general public. For Noel-Baker, the wartime optimist and purposeful reformer, was already thinking ahead to a time after the war. He replied, noting that after the war, Britain would need to make major changes in its economic policies. “There is admirable opportunity for making them,” he wrote, “but the opportunity will only be taken if public opinion is instructed.”61 Moreover, he told Pigou, “It must be instructed by people like you.” He ribbingly suggested that his friend write a “weekly article for the [popular, inexpensive, and generally conservative] Daily Mail or the Daily Express, at £50 a time” and that Pigou become an “economic commentator at £15:15 for the B.B.C.” Tongue-in-cheek, Noel-Baker added, “in general, you should no longer give yourself, as in the last, to the acquisition of filthy lucre, but should set yourself a new ideal—namely, GOOD WORKS.”62 The response was a skillful deflection from providing the requested government post. It was, however, also a declaration of hope for a future in which people were instructed, not just directed.
Pigou’s immediate reaction was to have none of it. As Noel-Baker had “done no nepotism with George and Lizzie,” he would go “to Harrow to do a trial trip teaching a bit.”63 Unable to continue working as a scientist at a university, Pigou turned instinctively to a public school. Cast out of the faculty of economics and politics at Cambridge, the natural fallback was Harrow. Yet Noel-Baker’s words gradually sank in, especially after the war. Even later that year, Pigou agreed to fill in for Keynes, then in Washington on government business, “to broadcast [on the BBC] a talk about whether we shall be poorer after the war (an idiotic subject).”64 This is not to say that Pigou had yet embraced a new audience. As late as the middle part of 1943, he was still concerned with getting his ideas to the people already in power. Writing in April to Keynes, he enclosed a “rough” version of a plan for “conscription wealth”—a new version of a capital levy—“to pay off a large chunk of the war debt” with the hopes that Keynes would “put it in to someone at the Treasury.”65 When Keynes responded politely, but negatively, Pigou tried to save face by turning to the public. In his next letter to Keynes, he wrote that he was “thinking of printing this as an article for some paper,” and criticized the channels through which he had originally hoped to contribute.66 Royal commissions and other forms of bureaucracy, he asserted, were “highly artificial,” merely “buzzing in a bottle.”67
Thus, even after his semi-popular books of the late 1930s, the public was still a forum of last resort for Pigou. He turned to this audience only after being rebuffed as an academic and passed over as an advisor to politicians and bureaucrats. In this way, his decision to address the public was neither a genuine admission of its value in effecting change nor a statement of his renewed faith in humanity. Indeed, throughout the 1940s, despite his increasingly sanguine public face, Pigou privately maintained that “the limit is that the human race is a tick, and that, as I have long maintained, the only possible solution is the substitution for it of Lobsters.”68
During the war, it was not the public, but the country’s leaders who were the subject of Pigou’s thoughts. This preoccupation was manifested by the constant stream of insults he hurled at them in his private letters. They were “rat-faced,” and engaged in unfailing “claptrappery.”69 Political hacks had merely “petty souls,” political organization was a “morass of muddle.”70 From the 1930s onward, specific politicians acquired Pigovian nicknames. There was, of course, Pigou’s employer, Lord Alcohol, but also “Shifty” [Emanuel Shinwell]; “The Great Big Rat” [Clement Attlee]; “The Great White Chief” [Churchill]; “Fat little Morrie” [Herbert Morrison]; “The Welsh Vulgarian” or “Anaemia,” [Aneurin Bevan]; and “Our Hugh,” [Dalton], whom Pigou described as “a first-class tick.”71
Yet, as in the 1920s, Pigou was not critical of government per se, but of the individual people who composed it. In his review of Hayek’s Road to Serfdom, which appeared in bookshops in 1944, he took a mild tone toward big government and central planning. Disagreeing with Hayek’s “historical thesis” that central planning necessarily led to fascism, Pigou suggested instead that fascism, as evidenced in Germany and Italy, might itself have led to central planning as a way of “directing . . . resources towards building up national power.” “Is it fair,” he asked, “to treat the means [central planning] as a cause of the end towards which it was in these cases directed?”72 In the end, the review displayed Pigou’s characteristic couched editorializing of the same sort that had appeared seven years earlier in Socialism versus Capitalism. Central planning was not an inherent evil, just a system that could be used for good or ill. As he had argued in Socialism versus Capitalism and his essay “State Action and Laisser Faire” in the 1930s, what was of key importance was not the political system but the people who wielded its power.
Reconcilings and the Public
By 1944, Pigou’s criticisms of the government had become less about ineffectual work and more about backroom maneuverings that kept Noel-Baker from positions of greater authority. Pigou found fault not with the leaders of the country as leaders, but as politicians. A great deal of this change can be attributed to the fact that his world was turning around for the better.
Throughout the war, Pigou had always found solace in the friendships he had cultivated as a mountaineer and as an academic advisor, two roles whose worlds substantially intersected. He kept up with Wilfrid Noyce, Tom Gaunt, and Claude Elliott, a former Cambridge historian, member of the Friends’ Ambulance Unit, and head master (later provost) of Eton.73 Along with Noel-Baker, these were arguably his closest friends, and they spent many holidays together before, during, and after the war in the Lake District and the Alps. The waning of Pigou’s professional star was a known fact, but it was one which was never brought up in alpinist circles, in an unspoken understanding that allowed him to maintain his status as “the Prof.” His friends both idolized and cared for him, serving as a surrogate family for a retired don without close ties to relatives. They corresponded about him in tender terms; Wilfrid Noyce wrote, for example, to Noel-Baker that he had received “cheerful letters from the Prof . . . I am astonished at how well he keeps, pray only it may go on for many more years.”74
Pigou’s fast friendships were stable and reassuring, but there were other reasons for his change of mood in late 1944 and 1945. He began to reconcile himself to his retirement, resigning his unvalued membership in the politicized British Academy in 1945. Moreover, with the Axis on its last legs, he made fewer dismal predictions about the war’s future and fewer criticisms of policy.75 As the war ended and a blitz of electoral campaigning helped Britain return to a peacetime mentality, Pigou, along with the rest of the country, took an even more active interest in political machinations.76 Approaching the June 1945 general election, he teased Noel-Baker, predicting that “O.S.” (standing for “Old Schoolmate,” Winston Churchill) would win, and lamenting that his friend, then a parliamentary secretary at the Ministry of War Transport, would be out of “an enormous salary, fine motor car, 50 gallons of petrol a month, [and] 6 dancing girls,” by which Pigou meant secretaries.77 This opinionated ribbing was one of many that Pigou would deliver in the years to follow. Once a victorious Labour Party formed a government, he bombarded Noel-Baker with questions about the cabinet, his place in it, his perks, and the behavior of “the rat,” the new Prime Minister, Clement Attlee.78
But Pigou’s interest in politics was spreading beyond backroom gossip. His post-war political commentary to Noel-Baker was voluminous and comprehensive, covering national and local elections, speeches, campaign strategies, and policies. Along with his analysis, for the first time in decades, Pigou expressed a modicum of hope. Despite the soaring popularity of “the Great White Chief,” Winston Churchill, at the end of World War II, when the time came to rebuild the country, Britons put their faith in the Labour Party. In the July 1945 election, it won a landslide victory, capturing nearly 400 seats to the Tories’ 200. Labour had stood on a platform of sweeping change outlined in its election manifesto, Let Us Face the Future.79 With a clear mandate, the new government promised to reform education and health care, to nationalize major industries, and to put the so-called Beveridge Report, a blueprint for a social safety net, into practice. Labour proposed, in short, the creation of the modern British welfare state.80 These developments excited Pigou, who was especially sympathetic to the Beveridge Report and to its architect, William Beveridge, whom he had known at least since his work for the Board of Trade during World War I.81 In 1944, Pigou had publicly “cordially welcomed” Beveridge’s suggestions for the government’s “planned outlay” to curb unemployment and the “giant social evils of Want, Disease, Squalor and Ignorance.” He did so “from the standpoint of employment, but also and not less for its more general implications” in furthering “more fair” distribution and fostering the “free development of all men’s faculties.”82
In sum, the platform of the elected Labour government deeply appealed to Pigou. The party proposed to intervene on behalf of the poor, and though it did not use Pigou’s language specifically, it looked to remedy a great number of external diseconomies and damaging monopolies that existed in the national economy. Moreover, the presence of administrators of the caliber of Noel-Baker and Beveridge made the implementation of such programs appear feasible. Labour’s rise to power, despite it being led by “the Rat” Attlee, reawakened Pigou’s long-dormant hope that politicians could actually effect positive change. To Noel-Baker, he expressed optimism, albeit couched in sarcasm, for the first time in years, specifically about Labour’s plan of nationalizing the coal industry.
It’s amusing that the Comrades’ first great deed is to nationalise the B[ank] of E[ngland]. . . . This is a pure fake, which will make absolutely no difference to anybody. . . . On the other hand, if you deal with Coal properly, you may really do a little good! Even Comrade Emmanuel [Shinwell, the Minister of Fuel and Power] can’t be worse than the Coal owners!83
Soon Pigou would go much further. He wrote in October 1945 in support of Attlee, claiming that his words were “discussion, not mere flapdoodle like O.S. [Churchill’s]. But no trace of prima-donna.”84
Later in the year, Pigou drafted a plan for one of Noel-Baker’s speeches, a work that, although ending on a humorous note, was for the most part a serious piece of political rhetoric and a strikingly public one at that. For Pigou, Labour’s platform was about new beginnings. After the war,
there was a case for concentrating on immediate difficulties—bombed houses, demobilisation, etc. in general restoring the status quo. This was the policy of the TORIES. . . . No time for fundamental change. The policy of the Labour party was different; and it was endorsed by the electorate (trumpets). For us no “safety first.” L’audace, toujours l’audace!85
Pigou noted that Labour was “dealing with the immediate post-war problems,” including housing, worker reinsertion, inflation, rising interest rates, and industrial disputes.86 Still, despite the importance of “immediate adjustments, compared with long-term policy, they . . . [were] secondary.” For Pigou, the nature of Labour’s long-term policy was to progressively bring about real good. Internationally, the party would work toward peace, cooperation, and disarmament, for which Noel-Baker was an outspoken campaigner and for which he would eventually earn the Nobel Peace Prize.87 Pigou, however, was more excited about the domestic agenda. Here, he wrote, “on the one hand we want, in the widest sense, efficiency, so that the national cake may be as large as possible; on the other hand we want that cake to be so distributed that a reasonable minimum share is available for all.”88
He justified Labour’s program of nationalization of industries that had a “tendency towards monopoly”—“coal, transport, electricity, etc.”—on the grounds of efficiency.89 However, Pigou wrote, growing “the national cake” in this way was “not enough. . . . We want to help the underdog to get his share (Sob-stuff about the condition of the poor; muted music) . . . there is room for a good deal of useful action; of taxes on the rich for the benefit of the poor; which the public-spirited among the rich . . . would welcome.”90
This responsible redistribution would be implemented through a slew of programs Pigou endorsed: “our social insurance policy, . . . milk in the schools, subsidies on essential foods and houses, the raising of the school-leaving age, state scholarships giving poor children similar opportunities with rich children, and so on.”91 For Pigou, hearkening back to his early work on welfare, these policies would go a long way toward removing external diseconomies and fostering economies. They were “not merely policies of redistributing the national cake.” Instead, “so far as they keep people healthier and make them more intelligent, they induce them to produce more and so make the national cake bigger.”92 Pigou was returning to the basic tenets of his welfare economics. Picking up modes of thought he had put aside decades ago, he was reinvigorated by a concern for the poor and, however caustic he was about specific politicians, re-inspired by a government that was putting words into action. After all, in the first twelve months in power, Labour passed fifty-five bills and was well on its way toward nationalizing coal, communications, and civil aviation.93
Yet in some ways, the most striking passage of Pigou’s speech draft was a short parenthetical that had little to do with actual policy. In summarizing the benefits of planning for the British economy, Pigou directed Noel-Baker to: “Make biased (!) summary of Socialism versus Capitalism and Economics of Welfare.”94 Pigou had long prickled at those who failed to grasp and honor the nuance of his theories.95 Politicians who misused his ideas in the service of a political end annoyed him even more. Now, Pigou himself was telling Noel-Baker, a member of parliament, to make a selective reading of his own work for just such a purpose. Even if his exhortation was kept out of public sight, it still constituted a remarkable change in tack, one that could only have occurred with a new conception of the government’s capacity to bring about positive change.
This is not to say that Pigou changed his mind about politics. Throughout the six turbulent postwar years of the Labour government, he repeatedly expressed his distaste for politics and individual politicians. He complained about “the wretched Hugh [Dalton]” and Labour Party strategist Harold Laski and plotted about “bumping off” Ernest Bevin with “a box of poisoned chocolates for X-mas” as “his figure makes it certain he will eat them.”96 He expressed “sadistic amusement” when Dalton, then the Chancellor of the Exchequer, had to step down in late 1947 for leaking a budget secret after making a careless comment about changes in the tax code. “Frightful bad luck,” Noel-Baker responded to Pigou’s glee, “but some people would think that he had been very lucky to escape so long!”97 Briefed continuously by Noel-Baker about the cabinet’s byzantine machinations, Pigou still maintained, “practically all politics are tricks on the make of the very blackest dogs. The moment they find anybody who’ll do anything in the public interest their one idea is to exploit and swindle him! The only way to get proper treatment,” he advised, “is to kick them repeatedly in the pants.”98 Members of the Labour Party, in particular, engaged in “appalling vulgarities and gaucheries.”99 An upper-middle class Liberal from a rapidly fading era, Pigou decried the savageries of the masses and instructed Noel-Baker to be a “gent.”100 Noel-Baker needed to stand out from a new class of politicians that comprised “tricks and arrivistes.”101
However, Pigou laced his recriminations about Labour politics with hope of a future molded by a Labour government. “The Comrades should not be merely a section to boost themselves,” he wrote, “but a political party looking to the interest of the country as a whole.”102 Labour politicians were still, in his view, politicians—arrogant, stupid, and ignorant—but unlike their immediate predecessors, they could accomplish dramatic changes to the benefit of the whole country.
Increasingly, Pigou felt himself personally invested in that project of change. When speaking about the effects of one of Noel-Baker’s speeches, he wrote of himself and the country together, holding that “we will be absolutely [lost] if at the conference you try to out-do Shifty [Shinwell] on his own muck-heap.”103 Describing a shift of influence in the party leadership, Pigou’s tone was one of an insider, someone committed to the party’s project. “It’s a disgrace to the party,” he wrote, “and it shows that it loves . . . tricks.”104 His hope had been rekindled. After so many years, a group in government had finally agreed not only to initiate sweeping economic reforms—to engage with the economy as active administrators along early Pigovian lines—but also had been elected with a mandate to carry out such policies.
Labour’s promise relit in Pigou the spark that had animated his writings during the 1900s and 1910s. In this way, Pigou himself represented an unlikely through-line from the Liberal Party of the late nineteenth century to the postwar Labour Party. But Labour was different from the Government House that Pigou envisioned in his earlier works. It was not that Labour’s leadership was much less rarefied than that of other more established parties—though some like Aneurin Bevan and Ernest Bevin came from working class backgrounds, many others (including Attlee, Dalton, and Noel-Baker) hailed from the upper-middle class and were products of elite education. The difference was that the party sought not only to help the downtrodden but also to represent them. Everyday people were not merely mechanical entities whose wants were to be satisfied, but living, breathing agents whose desires, feelings, and sensitivities were to be taken seriously.
For a variety of reasons, Pigou also began to take them seriously. In the mid-1930s, he had turned to the public, because there was no other audience left to him. At that time, the writings he intended for the public displayed scorn for the very readers they targeted. Around the end of the war, however, Pigou’s tone changed. Several months after Noel-Baker urged him to “instruct public opinion,” he began work on a project unlike any previous one: a short, basic, introductory textbook of economics aimed not “at serious students” but at a populace increasingly bombarded with economic concepts. Pigou started work on the book in late 1944 and told Noel-Baker just after V.E. Day that he would “be pleased to hear that my great epic Income: an Introduction to Economics is now . . . with Macmillan.”105 Noel-Baker would indeed be pleased. Not only had the book kept his friend occupied, it was also an elucidating project, one that was very much in keeping with his earlier suggestion of addressing the common man.
When Income appeared in April 1946, Pigou was clear about its purpose. If members of the voting public learned the key concepts explained in the book, direct positive political outcomes would result: “their minister would not defend shutting out refugees on the ground that there are 250,000 unemployed!” Though the book was directed at the voter, Pigou also wryly recommended to Noel-Baker, “all the comrades [Labour Party members] should buy it to educate themselves.”106 They would be able to do so because the tone and content of Income was markedly different from his previous works. He had always placed a high premium on the clarity of his prose, but Income was especially lucid in its explanations and explicit in its endorsement of specific agendas. In Income, Pigou did exactly what he had recommended that Noel-Baker do in the speech draft of late 1945: he made a “biased summary” of his own corpus of work. Providing a quick overview of the central concepts of The Economics of Welfare, he explained the system of externalities and social costs before taking a clear political stand in support of the Labour government, particularly its policy of nationalization:
For technical reasons [of economy], . . . services providing water, gas, electricity, telephones, tramways and railways, and communication, cannot be run as competitive enterprises, but must in the main, in each district, function as monopolies. . . . [These industries require] great government oversight or ownership.107
Nationalization on the grounds of efficiency was by no means the most radical of Pigou’s positions in Income. Commenting on inequality of income, he noted that a distribution curve in the shape of a “cocked hat” might exist for inherited traits like height or mental faculty, but “not for income.” Bemoaning income inequality, Pigou decried that half the children in the country belonged to families whose income did not furnish them enough food, and three quarters to families whose income was unlikely to provide enough. “These very small incomes of the many,” he wrote, “stand in sharp and challenging contrast with the very large incomes enjoyed by a fortunate few.”108 A few years before, Pigou might not have drawn attention to the “challenging” nature of the contrast. Now, he conveyed his own skepticism about the morality of “one per cent of the persons aged twenty-five and over in England and Wales . . . [possessing] 55 per cent of the total property in private hands.”109
Pigou advocated leveling the playing field. He favored large death duties and called for educational reform so as to afford people of all backgrounds an equal chance of financial success.110 He recognized that “in recent times the State and the Universities have done a good deal to alter this state of things by educational grants, scholarships and so on; and they are proposing presently to do a good deal more.” Still, he wrote, “investment in expensive education is in great part concentrated on the comparatively small number of children whose parents are well-to-do. . . . The sons of rich parents even if they are practically morons are given . . . [elite] kinds of training and education.”111 For Pigou, members of the general public were functioning not just as audience members or as mere objects of aid but as deserving individuals and potential equals.
Over the following years, Pigou undertook more and more public outreach efforts. He grumblingly acquiesced in 1945 to speak at the Cockermouth Rotarian show near Buttermere. “I have been tricked by a dentist,” he claimed. “He had his drill so I didn’t dare refuse.”112 He was also asked the next year to organize an event “to publicize [the] U.N.O. [United Nations Organization] and stir the great heart of the Cambridge public,” for which he asked Noel-Baker, then part of Britain’s UN delegation, to speak.113 Throughout the late 1940s, he toyed with writing a full-length introductory economics textbook, but “found it so incredibly boring” that he “certainly couldn’t do it.”114 Instead, he penned another small popular book, this time on the theory of money.115 Between 1947 and 1957, Pigou was published thirteen times in the Times, something that had not happened once in the preceding six years. His messages were mostly technical correctives, but they demonstrated both a renewed concern with educating the public about economic matters as well as a loosening restriction on nonpartisanship, with one article implicitly crediting the Labour government with postwar economic recovery.116 Inspired by Labour and Noel-Baker, who became chair of the party in 1946, Pigou embraced a more open Britain, a democratic Britain in which political power was ultimately held by a general public to which he increasingly reached out.