But Why Industrial Organization—and Why the Need for Umpires to Ensure Fair Play?
Why did Vickers concentrate so much of his research upon aspects of IO? Also, what was his general attitude to issues of competition? Economics lies at the interface of many different subjects.
Two such are psychology and engineering. Engineering is key to the production of a good. Psychology helps to inform us about what causes people to buy things, and what that may do to their sense of pleasure and well-being. Economics throws its light, instead, on that moment when such goods change hands. What determines the volume of output and sales? Why are the prices what they are? How can we best understand and explain why these quantities and prices ebb and flow, and evolve over time? The answers to these questions are the basis of any economic analysis. It immediately emerges that sellers constitute a big part of the answers. Are they numerous? Knowledgeable? Observant? In cahoots with each other? Restrained by conventions, or by laws? Do they compete, and if so, when, and how?Those on the outside right of politics claim that markets are nearly always as close to perfect as it is possible to get. From their bases in Chicago, Illinois, and elsewhere, they maintain that any dispute is typically best settled by applying the principle of caveat emptor. Regulation, they declare, is rarely if ever needed. It is just one more “conspiracy in restraint of trade”. If a seller misbehaves, everyone will soon know about it, and he will not survive, and he knows that, so he will not. They conclude that no sensible seller will therefore ever act against his own interest. By contrast, those on the far left see producers as exploitative. They pay their staff much too little. They craftily con buyers into buying things they may well not need, and at exorbitant prices. Mainly because of indivisibilities of various types, they cite plenty of reasons for increasing returns. They therefore see state-run monoliths as the main solution to such problems.
For them, powerful regulators can be very useful in the wings, ever ready to police and punish those few private firms that it happens to be inconvenient to abolish.Between these two extremes, of reactionary Chicago on the one side, and Bolshevism on the other, lies a great middle ground where Vickers is to be found. The vast majority of economists are at home with him in that middle area, too. Their views might differ in some details. But what they agree upon is that markets are games where, like cricket, you definitely do need the services of an umpire. An umpire might have to intervene only quite rarely. De minimis non curat lex, they admit, though you can quibble about what constitutes minimal. But she, the umpire, has to be there to apply clear rules, to monitor, to be vigilant and to help prevent foul play. There should be a simple set of sanctions when infractions are observed. A game is a battle tamed. The umpire is in position to spot and stop chicanery and belligerence, and, above all, to ensure that all the play is fair.
Vickers' activities were to centre more and more on umpiring. The issue of umpiring figured, as we have seen, in the publications with Yarrow and others. It would feature, as we shall see below, in many of the books Vickers coedited and would be crowned with his position as Chief Umpire (Chairman) at the Office of Fair Trading (OFT) and later as Chair of the Vickers Commission. Moreover, the concepts underlying so much “foul play” would constitute the research that Vickers would continue to conduct, over many years, with Mark Armstrong. The Armstrong and Vickers partnership is the subject with which this section now concludes.
5.5