In a letter to his niece John writes about the demise of economics
Back in the 1960s, when I decided to take up the subject, economists were living in a golden age. The world economy had experienced two decades of unprecedented growth and stability. It seemed that Keynesian policies could cure unemployment and control the business cycle. Economics had become rigorous, mathematical and professional. Econometric models made it possible not just to forecast the future of economies and industries but to change these futures. Strategic planning was in vogue in government and business. Newly independent countries needed assistance to plan the development of their economies. There were jobs for economists everywhere.
When I was at school, economics was not an option that was offered. But soon bright young economics graduates entered teaching, and attracted good students. Economics quickly became one of the most popular school subjects and university applications grew rapidly.
When I began teaching at Oxford, the most popular option was euphemistically described as the economics of developing countries: idealistic students hoped to learn how to end world poverty. But through the 1970s industrial organisation became their top choice. As jobs became harder to find, students wanted material that would help them in business.
But the stuff we taught did not do the countries it was supposed to help much good, and graduates discovered that business was not interested in the industrial economics they had learnt at university. Economics failed to match the public expectations it had created. Its prestige declined. Euphoria about government economic management evaporated with the oil shock and rising inflation and unemployment. The vogue for planning came to an end as management by numbers failed in business, in national economies, and on the battlefields of Vietnam.
The popularity of economics at school and university peaked in the 1980s. Since then, the number of British pupils taking A-level economics has fallen by almost half. The situation in universities is not so bad, partly because the big increase in students overall has kept numbers up, but the share of economics in the total has fallen rapidly. You will find it easier to get a place now than a few years ago.
When I graduated, there were opportunities for economists in universities, government and business, and most students ranked them in that order. The job market you will face will be very different. The traditional business economist has all but disappeared. Once, most large companies had a chief economist with a staff, but almost none do today. Forecasts are not valued and business economics is done, badly, by strategy people.
Almost the only firms that today employ economists are banks and securities houses. These people are not really valued for their advice: they are entertainers who perform before clients and advertise their employers’ services on breakfast television. Competition policy and privatisation created a new demand for economic expertise, to help companies deal with regulatory agencies. This created jobs in economic consulting.
Fewer good economists are attracted to government: the modern civil service marginalises technical skills. Positions within the World Bank and International Monetary Fund, once highly prized, have become less attractive as these agencies have come under attack. It is unlikely that you or anyone else in your class will be interested in an academic career. A combination of low salaries and poor morale means that for years hardly any British students have taken economics PhDs at British universities. The situation is not as bad in other countries, although it is still fairly dire. You should expect that most junior lecturers in economics at a British university will be from abroad, mainly southern Europe.
If you go ahead with economics, your class will consist mainly of boys. At every level, economics is one of the most male-dominated of academic subjects. I will write to you soon and try to explain why. With love, Uncle John