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798   26 August 2003   

But they are wrong.  The world has moved on.  Keynes was a monetarist, all of whose perceptions about "the economy" sprang from a deep-seated belief that national economies were to be governed by way of their monetary systems.  "Money" was an expression of legislative sovereignty, a matter of law, a "lever" quintessentially of Government, and the banks danced to governmental tunes.  If the domestic consumer could not sustain the merry-go-round, then Government merely had to step in to fuel demand.   And he understood, in a way nobody had understood before him, the illogical self-perpetuating nature of "the economy" - namely, that the wheels keep turning merely because other wheels are turning, and are forecast to continue turning - a perception most brilliantly captured in this great contemporary cartoon. 

But Keynes lived at a time when, following WWI, it had become clear that outright inter-state war was a phenomenon of shattering economic significance.  Government expenditure overshadowed domestic expenditure so completely that, when the peace-time economies got into difficulties in the Twenties, it seemed sensible to call in "Government" again, to solve the problem.  Government, both in the US and the UK, tried to re-establish consumer confidence, and pump a lorra money into the system, to lubricate the trading machine.  And by 1937, both in the US (under Roosevelt) and in the UK, there were signs that the Keynesian medicine was working.  Then began the European drift to WW2, so that the Great Keynesian experiment was aborted.

But the situation is now entirely different.  Nobody can now possibly think of "money management" as a primary instrument of national power - although in the UK the anti-Euro lobby are still trying to drum up images of an absurd monetary autarky.  Domestic consumption now accounts for over 70% of every nation's wealth, in the leading "western" economies - Government expenditure now accounts for less than 30%, depriving Governments of their managerial dominance.  All that matters, to the health of a modern nation-state economy, is the propensity to spend of the ordinary domestic consumer - you and me.

Is there a "global demand deficiency"?   Yes - I agree that there is. But that is simply because the majority of consumers are anxious about the future.  They watch TV, they surf the Web, they listen to George Bush and the war-mongering American media - and they are worried.  You see, Keynes never did explain the springs of consumer demand: he did not think that was necessary - he lived in a world in which so many people were "poor" that their motive for spending needed no explanation.  If you paid the people more wages, they would without question spend them, and get those plates spinning again.  The problem for Keynes was a lack of liquidity, not a want of motive.  For Keynes, the propensity to spend required no argumentation - it was given, a self-evident truth.

We now know that is not true.  The question we now face is one that John Maynard never even asked.  For given higher income, worried consumers tend to save - in case things get worse.  The wealthy Japanese, at a time when the Japanese economy desperately needs stronger domestic demand, have sat on their hands for the last ten years - and saved much more!  The weakness of the US economy is reflected in an increase in the savings ratio (never as high in America as in Europe, but everything is relative).  The Germans also have a strong propensity to save (compared, for example with the UK). 

Worried consumers do not spend.  Anxiety is bad for business.  Too much war is bad for business.  Even gung-ho American consumers are starting to get worried about the belligerence of American foreign policy, and what it will mean for their own lives - and that will strike at Bush's chances of a 2004 Presidential victory.  There is growing opposition to his re-election.

A peaceful world is within our reach.  The key weapon will not be the gun, however, but the shopping-basket.  Nor does "consumption" merely mean merely the "purchase" of material goods - there is plenty of evidence of our willingness to invest in books, travel, education, altruistic initiatives, Fairtrade, a better and healthier environment, a less pressurised life-style - these are also growth-points for the global economy. 

Am I a cock-eyed optimist?  I may be.  But I say that for all Governments, the challenge is to fashion an international order which, while accommodating the huge diversity of human kind, is nevertheless perceived as acceptably fair...

• Check out my International Optimism Agenda.

799  26 August 2003  

My analysis is quite different.  I see a fundamental divide between public service broadcasting and private profit broadcasting.  While Greg Dyke pleads with the Government to protect ITV as a bastion of "public service TV", I take the more conventional view that it is irredeemably part of the private-profit sector, and that little will be gained in the long run from trying to ride that particular tiger.  And I am not happy that the BBC has become engaged in a competitive tussle with ITV, a ratings-battle, an audience battle, an investment battle, a remuneration battle.  I believe that this dualism has been, for the last forty years, profoundly destructive of public service broadcasting.

We should not adopt the model of "competition" between the public and the private sector.   It was the Tories who brought in private profit TV in 1960, peddling the theory that competition from the corporate sector would liven up the BBC.  Indeed, my adult life started with the launch of ITV - my first paid graduate employment was with ITV in Norwich, while I was still a student at LSE.  BBC salaries immediately rocketed, "to compete with ITV" - and the BBC has ever since remained a cosy, overpaid, overstaffed, complacent, hopelessly arrogant bureaucracy.  It is said that the Birt revolution changed everything, but I have yet to find evidence of that.

I want to see two distinctive sectors, differently motivated, differently staffed, each with its own distinctive ethos, offering viewers and listeners diverse perspectives.  I wish the private profit sector well, but I suspect it will always end up like American TV - for better or for worse (after all, American TV produced the marvellous West Wing...)  

I am hopeful that, with the Government's intention to legislate next year for a new form of community interest company, we will see a huge expansion of local and regional public service broadcasting, outside the dead hand of the BBC - and outside the clutches of the private profit corporations.  Every city, every region or distinctive locality, should have its own public service broadcasting services, both TV and radio.  There are each year thousands of young graduates keen to find "ethical employment", serving their communities - this would be an ideal medium for them.

Your image of three gorillas, Greg, is misconceived.  Misconceived because the competitive model is inappropriate.  Misconceived, because ITV and Sky are but different masks of the same gorilla.  And misconceived, because the BBC has become a wholly inadequate champion of public service broadcasting - the Corporation has aped and absorbed the ways of the private profit sector, and has little sense left of its true public service vocation.

• Watch this space!  Next year, I am determined to trigger a great revival of public service broadcasting, using the new community interest company formula, throughout our great cities and their regions - will you join me?

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