In Memory of Professor Ross Mackay
Ross Mackay took up employment at Bangor in 1979 in what then used to be the Department of Economics. He was head of department for a period, and he advised a parliamentary select committee dealing with Welsh matters for some years prior to devolution. He was a professor at the time of retirement in 2001. The first decade was a difficult time for an unreconstructed Keynesian, but his ideas are now starting to gain greater acceptance. Some of his ideas about the need for non-market institutions to address regional inequality are especially apposite post-Brexit.
One of his last papers, published in 2012 in collaboration with a former student, returned to a theme that he mentioned in lectures and conversations when he first arrived in Bangor. It was that problems of unemployment could not be addressed by pure supply-side policies of training and education in the communities where unemployment was very high. There was a loss of collective knowledge, an idea he argued was understood by such disparate thinkers as Keynes and Marshall, in communities suffering the blight of deep and persistent unemployment. This cannot be ameliorated simply by offering training in new skills.
Ross’ extensive knowledge of Keynesian labour economics left a valuable legacy for the University. His body of output continues to influence contemporary research here. For example, researchers from Bangor Business School and Social Sciences have recently been tracking the impact of deindustrialisation on regional labour markets, people and communities in North-West Wales, drawing on Ross’ argument that neglect of redistributive demand-side policy interventions leaves a gap that in regional communities that people struggle to bridge.
Ross Mackay remained an unapologetic Keynesian all his academic life. In an article published in 1974 in the Economic Journal, he appears sympathetic to the contribution of Nicholas Kaldor, then out of fashion with Wilson and Callaghan-led Labour, in devising the ingenious idea of a Regional Employment Premium to engineer devaluation in the distressed regions of the UK, a common currency area. He steadfastly held these views even when Keynes was out of fashion in the 1980s, when a new generation of economists became ascendant. They believed that the problems of capitalism that exercised Keynes were largely solved if restrictions on trade, including speculative finance, were reduced, and they could articulate new and more sophisticated descriptions of the economy than the models available to Keynes. In their apology to the Queen after the global financial crisis of 2008, a distinguished group of economists writing under the auspices of the British Academy put it thus: “It is difficult to recall a greater example of wishful thinking combined with hubris.” It was a difficult period for economists of Ross’ persuasion to publish, especially as Keynesian thinkers did not embrace the new methodology of deriving and testing increasingly abstract models that ignored institutional, social and historical features. He did not believe that the ‘new’ approach was successful or informative for helping to generalise about key long-term economic issues.
Like Keynes, Ross’ view of economics was steeped in economic history and the history of economic thought. He could recite Keynes chapter and verse, and he could find in David Hume and Adam Smith much to support his own view of the need to place economics in a social and historical context. In that he remained sceptical of the utilitarian theory of efficient prices in a market economy, insofar as this theory of prices derived from the Benthamite idea of an economy comprising economic agents existing in a solipsistic bubble exercising market choice, where the choice set is independent of what went on before. Labour was not like any other input (human beings are more than units of labour!)
Ross saw involuntary unemployment as the biggest curse in a capitalist economy and he emphasised that the most important aim of economic policy is to provide employment. He was optimistic, like Keynes, that capitalism could be saved from the seeds of its own destruction by appropriate kinds of market intervention. In that he approved more of Mills the utilitarian, namely, that it was the duty of society to help those that had been displaced by actions not of their own making. He certainly had no sympathy for the view of Bentham and other utilitarians, who dismissed the very idea of society by calling it a mere collection of individuals. He believed that prices, especially the prices of labour and capital needed for efficient deployment of resources, could not be obtained in that particular asocial and ahistorical context. This remained a constant refrain.
This was the basis of Ross’ critique of the European Union’s 1992 single market project, which he saw as intellectually muddled because it was informed by the market fundamentalism of the 1980s. In an article published in the Cambridge Journal of Economics in 1994, he pointed out that the single market project could not address regional imbalances simply by relying on market-determined movement of labour and capital. Non-market institutions were needed. He cited research suggesting that at least 6 per cent of EU GDP was needed to be set aside for regional transfers. In the event, the entire budget allocated to the European Commission was less than 1.5 per cent of EU GDP, and a substantial chunk of this meagre sum was set aside for agriculture.
A consequence of attempting EU integration on the cheap was that the institutions became incapable of dealing with shocks in small economies, such as Greece. There was no mechanism for automatic transfers to distressed member states. Such transfers are automatic within some countries, for instance in Germany, and almost seamless elsewhere, like in the UK, but the EU has no mechanism for transfers between member states without politically difficult negotiations. Negotiations between countries are hijacked by noisy slogans of “they’re taking our money”, to the detriment of all countries.
There are lessons for the UK, as Brexit may lead to a fractured mandate if the current automatic transfers between regions in the UK become subject to international negotiation due to the breakup of the country. If we all start playing the Leave campaign game of “they’re taking our money” within the current boundaries of the UK, the economic consequences could be further impoverishment of regions where the dispossessed have lashed out against “the establishment” by voting for Brexit. Tax transfer from London to some of these regions, including Wales, is considerable.
Ross continued to ride against the tide for much of his university career, especially in the last quarter of the 20th century. He planned from the start to retire at 60 to be able to fulfil the desire to be able to read, write and travel in the company of his wife Christine, especially to exotic corners of his country of birth, taking boat rides in Kerala, trekking in the Himalayas and indulging in his taste for mangoes. He was an aficionado of the small succulent alphonso variety which he took great delight in explaining how to eat. He also continued to be a stalwart sportsman, especially excelling at golf on the beautiful and demanding St Deiniol Bangor Golf Club – he was a great golfer. Ross will be fondly remembered by colleagues throughout the University and beyond for his kindness, generosity and good humour, as well as his intellectual passion and rigour. He was a fantastic mentor to many junior colleagues. Ross will be missed by family, friends and colleagues alike, and his academic and personal legacy will live on.
Publication date: 12 January 2017