"I was born in Edinburgh, Scotland in 1948, and completed my schooling and undergraduate education in that city: I am fortunate to have lived most of my life in beautiful places. I went to the University of Edinburgh to study mathematics. But, after taking a subsidiary course in economics, I decided that I wanted to be an economist. The notion that one might understand society better through the application of rigorous and logical analysis excited me – and it still does. After graduating from Edinburgh, I went to Nuffield College, Oxford. I worked there under James Mirrlees, who was in due course to win the Nobel Prize for his contributions to economic theory.
On Mirrlees’ advice, I applied for and to my astonishment got a permanent teaching post in the University of Oxford at the embarrassingly early age of 21. Oxford is a collegiate university – members of the faculty generally have both University and College appointments. This post carried with it a fellowship at St John’s College, an association which I have maintained and enjoyed ever since. Through the 1970’s I developed a conventional academic career, publishing in academic journals, and writing my first book Concentration in Modern Industry (with Leslie Hannah, an economic historian colleague). My particular interests were in public finance and industrial organisation.
But my rationale for studying economics had, from the beginning, been concerned for application. My career began to change direction when I was asked to join a group to review the structure of the British tax system. This group was established under the auspices of a newly established think tank, the Institute for Fiscal Studies, and was headed by James Meade, another economist who had achieved the ultimate distinction of a Nobel prize. Meade’s rigour was as demanding as that of Mirrlees, (both delivered it with extraordinary personal charm). But the most important effect of my experience with the Meade Committee was that I began to develop a taste for the popular exposition of economic concepts.
As a result, I moved from Oxford and joined the Institute for Fiscal Studies as its first research director. Soon after I became Director of the Institute. IFS developed into (and remains) one of Britain’s leading think tanks, respected and feared by policymakers and journalists for its fiercely independent analysis of fiscal issues.
After seven years, I decided it was time to move on. The success of IFS had been built on serious economics accompanied by a commitment to popularisation and application. If this could be done for public policy issues, could the same be done in the area of business policy? This was the thinking that led me to accept a chair at the London Business School in 1986 and, at the same time, to establish a consulting company, London Economics
Over the next few years, the application of economics to business issues became my intellectual focus. During this period, London Economics grew rapidly, largely on the back of the wave of privatisation and regulatory change in Britain in the 1980’s. By 1991, managing the company had become a major responsibility. I revised my arrangements with London Business School. My new contract was as Visiting Professor but my job as executive chairman of London Economics took the larger part of my time. London Economics grew until, by its tenth anniversary, its annual turnover exceeded £10m with offices in three continents and assignments in over sixty countries.
London Economics gave me insights into the business world. These came both through consultancy work with major corporations and first hand observation of the growth and development of a small business. Other activities have enriched my more scholarly work by broadening the experience on which it draws. I have been a director of several investment companies, and was for nine years a director of Halifax plc, one of the largest retail financial services businesses in Europe. Other tasks have included membership of the task force which began the process of reviewing the Lloyds insurance market, acting as a director of the Investors Compensation Scheme, and being a member of the steering group for the government’s review of company law.
What I write and think today is a product of a combination of this practical knowledge of the business world and an academic training in industrial economics. (Although the industrial economics of today is very different from that which I learned as a student: oddly both more relevant to business problems and more distant from them.) Some of the results of this can be found in Foundations of Corporate Success (1993) (an American version is Why Firms Succeed (1995)) and The Business of Economics (1996). And in the fortnightly column which I have written in the Financial Times since 1995.
In 1996 I was attracted by the idea of going back to Oxford to help establish a new business school there and gave up the Chairmanship of London Economics to take the Directorship of the newly created Said Business School. So I became, improbably, Professor of Management at the University of Oxford. And when, in 1997, I became the first Professor of Management to be elected a Fellow of the British Academy, it became possible to believe that the study of business was, even in Britain, achieving intellectual respectability.
The last decade was a bizarre period in which to be a business economist and never more so than in 1999 and early 2000, when the greatest speculative bubble in economic history expanded far beyond reason – and finally burst. Never were the principles of business economics so much on trial, as once serious commentators proclaimed that old principles of evaluation were redundant and the rules of business success had entirely changed. And, of course, these principles were vindicated in the end. The answer to those who shook their heads and told adherents of the old rules – like me – that they ‘just didn’t get it’ was that there was very little to get.
At the end of 1999 I became seriously ill and, although recovery from that seems to be complete, it left me with an ongoing determination not to do things that weren’t enjoyable and productive. Mostly, that has been popular writing with a serious theme. In August 2002 I completed my most substantial book so far, The Truth about Markets, which was published in the UK and Europe. You can find out more at www.thetruthaboutmarkets.com