Retirement

David retired from the Directorship of the National Institute in 1982 and moved back to Oxford with Sylvia. They bought a house at 25 Beechcroft Road in Summertown, North Oxford, where Sylvia created a third beautiful garden behind the house (the other two were at 62A High Street, Oxford, and at 7 Highmore Road, Blackheath, in London).

David turned down offers of teaching, noting that, ‘I marveled at the con­fidence with which I had been prepared to teach a wide range of subjects a mere twenty years earlier' (Worswick quoted in Artis 2003: 521). One excit­ing opportunity came when he was made President of the Royal Economic Society. Among many other tasks, this involved organising a major interna­tional conference to recognise the centenary of the birth of John Maynard Keynes on 5 June 1883. The conference was held at King's College, Cambridge, in July 1983 and was attended by distinguished economists from all over the world. It came at a time when Keynes's macroeconomic ideas were under attack by Conservative policy makers with monetarist convictions in the UK and the US. So the large gathering of Keynesian economists created a particu­larly exhilarating atmosphere.

Many of the papers addressed the microfoundations of Keynes's theories, in particular by trying to explain the Walrasian and monetarist theories that predict that less than full employment is a disequilibrium circumstance which will disappear in the medium to long run. In his writing, David did not explicitly present or discuss the mathematical models supporting such argu­ments. The empirical evidence against them was perhaps enough for him.

In that centenary year of 1983, I organised a “Keynes Day” at Drew University in Madison, New Jersey, where I was Associate Professor of Economics. The event took place in the Great Hall at Drew on 11 November. I had noticed that no celebration or even mention of Keynes was occurring in the US to mark the centenary of Keynes's birth. I invited my father to give the keynote lecture and a prominent post-Keynesian (American) economist, Paul Davidson from Rutgers University, to give the second lecture in the morning. After lunch, there was a panel discussion among the following economists: Lorie Tarshis, a former pupil of Keynes, who still possessed the class notes he had taken during Keynes's lectures in Cambridge, Robert Solow from MIT, Orley Ashenfelter from Princeton University and Leonard Silk, the economics editor of The New York Times.

David's talk addressed the ‘practical results' of Keynes's theories. He first drew attention to Keynes's pre-Second World War approaches to economic issues. Keynes's book, Economic Consequences of the Peace (Keynes 1919 [1971]), warned that the harsh reparations imposed on the defeated Germany and its allies after the First World War would result in depression and political backlash in those countries. This, in fact, occurred and also led to the rise of fascism.

David then turned to Keynes's post-war influence and, for the American audience he was addressing, emphasised the impact of the Bretton Woods Agreement of 1944 which set the terms of international exchange for a quar­ter of a century. Bretton Woods led to unprecedented growth and full employ­ment in the advanced countries for twenty years after the war, the so-called Golden Age. At Bretton Woods, Keynes was the negotiator for Britain and Harry Dexter White represented the US. In the end, Keynes's ideas for an international central back and currency to be used by the bank were not adopted. Instead, White's more modest plan was put in place. The gold stan­dard was abolished and currencies were to be tied to the dollar at fixed exchange rates; the dollar was then exchangeable for gold at $35 an ounce. The fixed rates could be readjusted if a country's trade became too unbal­anced. The IMF and the World Bank were formed to monitor trade and pro­mote borrowing and lending between countries. However, Bretton Woods collapsed at the beginning of the 1970s and exchange rates were allowed to float freely. As noted, prices began to rise and the goal of full employment was not met. Rather, inflation control became the number one policy objective.

In his talk during the afternoon panel discussion, Robert Solow pointed out that Keynes's macroeconomic model delineating the relationship between aggregate economic variables such as national income, consumption, invest­ment, savings, employment and so on led to an outpouring of attempts to measure them. The new field of econometrics was then used to test the rela­tionships between these variables in the context of Keynes's structure of the economy. Empirical measures of the consumption function, the causes of investment and other relationships then burgeoned.

David's scholarly writing continued apace after his retirement. In 1991, partly working from an office in the National Institute, he completed his book, Unemployment: A Problem of Policy. As the title indicates, David always believed that the persistence of medium to high levels of unemployment as occurred after the Golden Age was not the result of a macroeconomic and monetary theory that required maintaining a higher rate of unemployment as the only way to dampen inflation. Adjusting demand to maintain employ­ment, accompanied by incomes policy that was needed to prevent rising wages and prices, was rejected by some economists and policy makers alike in favour of tight monetary policy and adjusting the balance of payments. In a later article entitled “Has Mass Unemployment Come to Stay?” (Worswick 1994), David concludes that

the obstacles in the way of achieving (a full employment economy) are, I think, as much moral and political as they are economic. On the domestic front, sec­tional interests of all kinds must learn to refrain from pushing to the limits of their strength for what may appear to be their sectional advantage. In the inter­national arena cooperation is necessary...but very hard to achieve... I am not so pessimistic as to give an unconditional Yes in answer to my original question. But in all honesty I have to say that I shall be agreeably surprised if we see the end of mass unemployment in the United Kingdom before the end of this cen­tury (ibid.: 21).

In 2000, the unemployment rate was 5.4% and fell in 2001, the year of David's death, to 5.1%. These figures are too high in David's moral terms compared with the Golden Age levels of below 2%. In the first decade of the twenty-first century, the unemployment rate climbed to 8.1% in 2011 due to the Great Recession. It then began to fall, standing at 4.1% in 2018, with 1.36 million people unemployed.

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