Time for new thinking

Kellogg College, University of Oxford, Oxford, UK

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Globalisation, exchange rates, trade, financial crises, and inequality are the interconnected themes analysed in this issue. In his review article of Richard Florida’s book, The New Urban Crisis, Danny Dorling says:

I was shocked when I read Florida’s book and saw a new contemporary map of London in which the rich areas were labelled ‘Primarily Creative Class’, the poorer parts ‘Primarily Service Class’ and it was declared that not a single neighbourhood was now working class. Unfortunately this is how Richard Florida portrays cities and sees people. For him there are those who create and those who serve them. Reading such thoughts in 2017, it becomes clear how much they jar with the current new direction of travel – the direction in which many of us now think of economics moving worldwide. Thinking such as Florida’s was common before the 2008 crash, a disaster brought about by the creative class of overly creative financiers. Today looking down on the little people is again no longer tolerated, because of where the so-called creatives took us.

Professor Dorling argues persuasively that the world view espoused by Adam Smith in his ‘Moral Sentiments’ was appropriate to his era, and that Keynes succeeded in changing the way people viewed the economy and economic policy because the previous orthodoxy had failed – and that it had failed, through the 1929 Wall Street Crash and the Great Depression of the 1930s came to be widely acknowledged. “No return to the ‘30s” was the public mood following World War Two. Likewise, Dorling argues, the global financial crisis of 2007-8 exposed the failures both of policy (or lack of it) and of the mainstream economic thinking that had given rise to the deregulation and financialisation from the 1980s onwards, pursued by Thatcher and Reagan, and then Blair and Clinton. It is time for a change, both in policy terms and world view:

‘Gentrification, housing bubbles, growing inequality, and what we can do about it’ is the subtitle of urbanist Richard Florida’s latest book, The New Urban Crisis (Dorling 2017). It is a good example of a book whose time has passed even before it was printed. The problem with Florida’s book is that if people thought like he wished them to think, then gentrification would be acceptable, housing bubbles inevitable and growing inequality simply the manifestation of differences between people that his writing implies to be somehow natural.

As Einstein said, ‘We cannot solve our problems with the same thinking we used when we created them’. The causes of the 2007-8 global financial crisis – deregulation, a ‘greed is good’ corporate culture, growing inequality, and ‘innovation’ in financial products which aimed to obfuscate rather than support productive investment – remain largely unsolved and unresolved. And as Dorling concludes:

Florida’s book is an example of the kind of thinking that got us into this mess in the first place and understanding that thinking is a part of beginning to realize we cannot go on like this. It is a glaring example of how our moral sentiment is changing. The book jars – because it is out of time and out of place.

The same could be said of much mainstream thinking.