The Wartime Institute
The outbreak of the war gave the Institute the boost that Marschak had failed to deliver. In the first instance, Henderson returned to London, where the government was building up a bureaucracy adequate to the economic and social demands of conflict, taking a number of his fellow researchers from the Oxford Economists’ Research Group with him into official service.
Second, wartime regulations placed restrictions on the movements and activities of “aliens” from hostile powers and occupied parts of Europe, residing in parts of eastern England, leading to a movement of foreign and refugee economists away from Cambridge. One arrival at the Oxford Institute in February 1940 was the Polish economist Michal Kalecki, followed in due course by other exiled economists keen to engage their professional skills in the war effort. On 31 July 1940, Oxford finally appointed a replacement for Marschak in the shape of Arthur Bowley, the retired Professor of Statistics from the London School of Economics. Bowley's appointment was only part-time, on the basis that he attended for work only four days a week, from Tuesdays to Fridays. He was responsible to a Standing Committee of the Institute that met monthly and usually included Sandie Lindsay, the Master of Balliol College, Bowley, G.D.H. Cole, David Macgregor (the Professor of Political Economy at Oxford) and Charles Hitch. Hitch had survived the call-up of economists to serve in the government because he was an American citizen and therefore exempt from service, that is until the United States entered the war in December 1941 (see OIS: UR/SI/1, File 1).Kalecki and Bowley were joined at the Institute by a research assistant, the statistician John Leonard Nicholson. Other researchers employed were Thomas Balogh and David Worswick, while in February 1941 the Austrian economist, Josef Steindl, was transferred from Balliol College.
They were joined from time to time by occasional researchers such as Kurt Rothschild, Frank Burchardt and Josef Goldmann. The staff of the Institute worked initially at the New Bodleian Library (now the Weston Library) at the bottom of Broad Street, Oxford. In September 1943, it was decided that the Institute should move to Balliol. The Institute by now had a small library, the first specialist economics library at the University, and Kalecki's wife, Adela, was appointed as a part-time librarian. Kalecki's pre-eminence was reflected in the fact that he was paid more than Bowley: In 1943, Kalecki's salary totalled £483, 6 shillings and 8 pence, while Bowley remained on a salary of £400 (see Minutes of the Meeting of the Standing Committee of the Oxford Institute of Statistics, 12 May 1944, OIS: UR/SI/1, File 2). To some extent, his generous salary reflected Kalecki's seniority as the dominant figure, ‘the inspiration of the Institute' (Steindl 1984: 245; see also Worswick 1977).Arguably, it was during the war years that the Institute enjoyed a peak in its activity and its professional standing. With little competition, since British experts were now mostly working for the government and subject to official secrecy requirements, the Institute became an important source of authoritative comment on economic policy and the financing of the war. The scarcity of independent and informed commentary on official economic policy increased still further the value of the articles that appeared in the Institute's monthly Bulletin which provided virtually the only regular critical comment on such policy. The consistency of the Institute's work was enhanced by its researchers' deference to the new economics of Kalecki.
Successive issues of the Bulletin, and then the collection (edited by Nicholson) of its most important articles, published in 1947 under the title Studies in War Economics, confirm the outstanding quality of the Institute’s work and Kalecki’s leading position among its researchers: His name appears more than that of any other author (see Oxford University Institute of Statistics 1947).
The Studies in War Economics grouped the most important articles under the following headings: “Economic Mobilization and General Controls”, including controls on money and foreign exchange; “War Finance”, consisting mostly of Kalecki’s comments on successive government budgets during the war, and the question of government debt; “Consumer’s Rationing and Price Controls”, of which four out of twelve articles were by Kalecki; “Wages and National Income”, made up of four articles, of which three were written by Nicholson and one by Kalecki; “Consumption and Prices”, of which three out of eight articles were by Goldmann; “Industrial Organisation”, seven articles of which three were by Balogh and three by Worswick; and finally “War Contracts and Efficiency”, with an article by Steindl, two by Kalecki and two by Worswick.A notable absence from Nicholson’s selection are a handful of papers discussing the plans put forward by Keynes and Harry Dexter White for clearing international payments after the war, and famously discussed at the Bretton Woods Conference in July 1944. On publication of the two plans, the Oxford Institute of Statistics put out a special Supplement of its Bulletin on “New Plans for International Trade”, dated 7 August 1943. The introduction, “Lessons of the Past” by an anonymous “Editor” summarises precisely the way in which the Institute addressed its technical work to a wider public. The rationale for the Supplement was given as follows:
The subject matter of international trade and finance is of a highly technical nature and discussions of these problems tend, therefore, to be confined to “experts”, city circles and businessmen. It is, of course, appropriate that the efforts to come to a satisfactory plan should be left to the experts of the Allied Nations whenever technical details are concerned. It is important, however, that a wider circle than the mere experts should understand the general issues involved and help to shape the line along which agreement should be sought by the experts.
For, although questions of social security and full employment would appear to affect the life of the average citizen more immediately and fundamentally, there can be no doubt that his welfare and standard of living will be greatly influenced by the sort of international order or disorder in the economic relations between States which will emerge after the war (“Lessons of the Past” 1943: 3).The Supplement represented contributions from members of the Joint Committee of Nuffield College and the Oxford Institute of Statistics. The longest contribution was an article by Ernst (“Fritz”) Schumacher summarising the key mechanisms of the plans proposed by Keynes and White (see Schumacher 1943a). As the author of an earlier paper on multilateral clearing (Schumacher 1943b), he was well qualified to summarise Keynes's and White's proposals.[26] Schumacher considered that both plans were inadequate to provide the liquidity necessary to maintain multilateralism and this brought with it the danger that individual governments would revert to rationing foreign exchange or bilateralism, that is, settlements between central banks on a net basis, which would impart deflationary pressure throughout the world. In another paper, written with Kalecki, Schumacher put forward a plan to remedy the defects in both the Keynes and White plans to make them more supportive of development efforts in the less industrialised countries, and more supportive of industrial countries, like the UK, that found themselves with chronic deficits (Kalecki and Schumacher 1943). The third contributor was Balogh, who pointed out how deflationary forces may emerge where governments are less concerned with full employment and more concerned with balanced trade (see Balogh 1943). The Bretton Woods Agreement provoked a further article by Schumacher and Balogh, criticising the absence of adequate reserve provisions and therefore the inevitable continuation of wartime controls after the conflict had ended (see Schumacher and Balogh 1944). Balogh's criticisms were a particular source of annoyance to Keynes, who was responsible for British policy at the Conference (see Skidelsky 2000: 445).
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