Balogh's Life
Curiously, apart from those who met him—all of whom have stories about him—few people today know much about Thomas, later Lord, Balogh. Born in Budapest on 2 November 1905 (only a street away from Nicky Kaldor),[93] he attended a gymnasium, a ‘classical grammar school’, as he called it, that had been founded by his great-uncle.[94] (Nicky attended the same school two years later.) While his family appears to have been reasonably well off—his father was a civil servant and the family had a governess—Balogh was conscious from an early age of the damage of inflation.
The ‘adolescent trauma’, he said, ‘was not unemployment and crisis, but impoverishment and loss of class status as a result of monetary chaos’. With the Austro-Hungarian Empire in final decline, the presence of poverty or the threat of poverty was ubiquitous. He spoke of even the privileged carrying, rather than wearing their shoes, so that they would not become worn out too quickly.As a result, when Balogh left school, he was conscious of the need to earn his living and so ‘instead of studying physics I worked at a bank and read economics’. He attended Budapest University. His thesis on the German inflation of 1921—1923 earned him a fellowship to study in Berlin in 1927—1928 which he combined with work for the Reichsbank. He found in Berlin a ‘freedom of manners and thought and sex not to be paralleled for thirty years’. For him ‘the sense of liberation from the constrictive conventionality of Budapest was inebriating’.
Subsequently, he won a Rockefeller Fellowship to Harvard (1928-1930). While in the USA he managed to do research for the Federal Reserve, but part of his Fellowship was spent in London and part in Paris (working for the Banque de France). During a visit to London, he sent Keynes a letter of introduction provided for him by Schumpeter.
Amongst Balogh’s jottings, he records that in June 1930, ‘Keynes invited me to lunch. Kingsley Martin was the other guest. Keynes had spent the morning at the Macmillan Committee. After lunch he asked me to stay on’. Three months later, Keynes published in the Economic Journal the first article that Balogh had written in English, namely “The Import of Gold into France” (Balogh 1930a).1931 found Balogh working for the League of Nations. He had hoped to take up a combined academic and banking career in Germany, but the financial crisis and Hitler's dramatic success in the September 1930 federal election had closed that option. He found himself forced to move to England, temporarily unemployed until Keynes assisted him to obtain a job. This was in the City under O.T. “Foxy” Falk, Keynes's successor as Treasury Representative at Versailles, and one of the few people whom Balogh continued to admire throughout his life.
Thus, by the age of 26, Balogh had worked for the central banks of the USA, France and Germany. However, neither then, nor later, did he work for the Bank of England. By the early 1940s, by which time he had taken a post at the Institute of Economics and Statistics at Oxford, he had become such a critic of the Bank that it is rumoured that they tried, unsuccessfully, to prevent him being appointed to a Lectureship at Balliol in 1940. Indeed, he was not elected to a fellowship until 1945 when the then Master, A.D. (Sandy) Lindsay, backed him strongly. He remained connected with Balliol for the rest of his life, first as a Tutorial Fellow from 1945 to 1968, then as a Senior Research Fellow from 1968 to 1973 and, finally, as an Emeritus Fellow until his death. Throughout this period, he also held a University appointment, being elected, in 1960, to a Readership in Economics.
Balogh, alongside his full-time teaching and research at Oxford, either advised or worked in every Labour administration from 1945 to 1979. Indeed, during the Attlee government, he advised almost all of the economics ministers.
Not that this was always to his liking. Many years later, he spoke of working for ‘buffoons like Shinwell, whose brain I was for ten years'. However, during this time, a much more fruitful relationship was developing with Harold Wilson. Balogh had met Wilson as early as 1937 when Wilson, then only 21, became a Lecturer in Economics at New College, Oxford, and he acted as an unofficial adviser when Wilson was President of the Board of Trade (1947-1951). When the Labour Party went into opposition in the 1950s, and especially when Wilson became Shadow Chancellor and then Leader of the Opposition, they continued to work closely. As a result of his work on development economics, Balogh travelled extensively, but, when not abroad, he would see Wilson about once a week, sometimes more. He not only provided Wilson with a stream of briefs, but also peppered all parts of the Labour Party with his views via phone calls, letters and articles. He was particularly close friends with Aneurin Bevan, Dick Crossman, Barbara Castle and Peter Shore and his ties were strengthened through his membership (from 1943 to 1964) of the Labour Party's Economic and Financial Committee.Balogh married twice. The first, in 1945, was to Penelope Gatty (nee Tower), a psychotherapist and the widow of Oliver Gatty, a Fellow of Balliol. This marriage was dissolved in 1970 and the same year he married Catherine Storr (nee Cole), a psychologist and a well-known author of children’s books.
However, the bare facts of Balogh’s life convey little of the man. The titles of his main books, and still more so those of his articles, listed in the bibliography, indicate something of his range of interests, but even these do not display the power of his intelligence nor the trenchancy of his personality. As June Morris has well described, his deep engagement with economic policy captures only a fraction of Balogh’s interests. He was deeply interested in history, art and science, especially applied science.[95] Balogh also had multiple affairs, including an especially intense one with Iris Murdoch.
He was fascinated by people’s psychology and sexuality and saw few boundaries between this and their political and economic views, asserting to Roger Opie,[96] that as I, Andrew Graham, had an attractive wife, I was bound to be in favour of expansionist policies!Allied to his intellect was an uncanny ability to absorb ideas, information and gossip about everything. Wilfred Beckerman recalls Balogh arriving in Athens when Beckerman was economic adviser to the Greek government and within an hour Balogh knew more than Beckerman did about everything going on in Greece. Even Keynes, coming to London from Cambridge, is reputed to have used Balogh to find out what was what. Balogh was also constantly on the attack, especially against the Establishment and against what he regarded as stupidity and injustice. For him, everything and everybody was black or white and he was loved and hated in equal measure.
A particular object of attack, in addition to his many criticisms of all traditional “schools” of economics, was the British Civil Service. His 1959 essay “The Apotheosis of the Dilettante”—was a blistering assault on what he regarded as the amateurishness of most civil servants and hence, according to Balogh, the incompetence of their advice.
Yet, Thomas Balogh’s economic and political interests were never confined to the UK. In 1955, he and Dudley Seers wrote a report for Dom Mintoff, the Prime Minister of Malta. From that time onwards, as he states:
I rarely spent university vacations and sabbatical leaves at home. The Governments of Jamaica, British Guiana, Mauritius, India, Greece and various United Nations agencies, especially the Food and Agriculture Organization, the Special Fund, and the Latin American Economic Commission, as well as the Organization for European Economic Co-operation and the Organization for American States gave me opportunities to work on problems of stunted development.
His advice was constantly sought at the highest levels.
He was friends with, as well as adviser to, Michael Manley (Prime Minister of Jamaica), Jawaharlal Nehru (Prime Minister of India) and, as noted, Dom Mintoff. On one occasion when a ferry to Malta had broken down, Mintoff sent a destroyer to collect Balogh from Sicily! He was also a friend of H.C. (“Nugget”) Coombs, the first Governor of the Commonwealth Bank of Australia (CBA), later the Reserve Bank, and for the whole period 1942 to 1964, he was a consultant to the CBA, writing a regular newsletter.In 1964, Balogh was appointed Economic Adviser to the British Cabinet. In practice, he ran what was effectively the first “policy unit” in Downing Street. It was officially called the Economic Adviser's Office and was located at first in the Cabinet Office, but, following the March 1966 general election, it moved into 10 Downing Street. There was a tiny staff, at most two or three other economists at any one time. Despite the small staff,[97] the Office involved itself in the full range of economic policy. During these years, Balogh was seen not only as the eminence grise behind the Prime Minister, but also as the particular scourge of companies developing North Sea gas and, later, oil.
Indeed, at the time, he and Nicky Kaldor became the butt of the right wing “tabloids”. With Bulganin and Khrushchev in power in the Soviet Union, the two Hungarians (Balogh at No. 10 and Kaldor at the Treasury) were labelled “B and K, the terrible twins” or, sometimes, “Buda” and “Pest”—which I leave to your imagination. They were the closest of friends, sharing a flat in Gordon Square when Balogh first came to London in the early 1930s, as well as the greatest of competitors both intellectually and socially. They were also both passionately pro-British. Harold Lever tells how Tommy in one his many outbursts against the Board of Trade exclaimed, ‘Why should they always be on the side of the bloody foreigners?' (Lever 1985).
In 1968, Balogh was created a life peer and when Wilson returned to power in March 1974 he was appointed Minister of State at the Department of Energy. In 1976, he became Deputy Chairman of the British National Oil Corporation, the two successive positions thus giving him the opportunity to influence both the policy and the practice of introducing North Sea oil.
Over the whole of his very active life, Balogh travelled endlessly, carried on an enormous correspondence and remained deeply interested in how his former students were faring.[98] He produced more than fifteen books, made numerous contributions to others and wrote something in excess of a thousand articles on every aspect of political economy.
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