Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant or accept liability for the accuracy or usefulness of the transcripts. These are copied directly from the broadcaster's website.
The legacy of John Nevile and the philosophy -

View in ParlViewView other Segments

Andrew West: And on the Religion and Ethics Report here on RN, you’re with me, Andrew West. Religious faith has also played a major role in the life and career of the influential Australian economist, John Nevile. Professor Nevile was an adviser to the Hawke and Keating governments on unemployment, tax and housing policy. At university he was a member of the Student Christian Movement and he was later part of the Sydney Christian Economists Group. John Nevile celebrated his 80th birthday recently and the University of New South Wales held a conference in his honour. The well-known economist and writer Tim Harcourt is now the John Nevile Fellow in Economics at the Australian School of Business. He’s studied the roots of economic philosophy going all the way back to Adam Smith and we’ll discuss that in a minute.

But let’s start with the legacy of John Nevile. I asked Tim Harcourt how instrumental Nevile’s faith was in the advice that he gave Australian governments?

Tim Harcourt: John’s always said that, you know, the God he believes in, is the God who cares profoundly for the vulnerable in society. And he doesn’t believe you can divorce your religious views from how you do economics. And that was a big theme that came across in the symposium that we had for John at the university.

Andrew West: How did those religious values influence the way he did his economic research?

Tim Harcourt: Well, John always thought that economics was, to make ordinary people’s lives better; that’s what it’s for. It’s to find the answers, to find the techniques, to improve the lot of the vulnerable in society, whether it be unemployed people in Australia, Indigenous people or poor people in Africa or in Cambodia. So he saw his work he did in his church, in his community, in his expert opinions that he gave to governments, his teaching and research in economics, as completely entwined. He saw economics as really a moral philosophy, something that should have high ethics, not a mere science like you’re making the atom bomb or something like that.

Andrew West: So when you look at John Nevile’s body of work, what’s his attitude to profit for example, and to the relationship between government and the economy?

Tim Harcourt: Well, he’s always believed you need, in capitalism, businesses with incentives to make profits and to explore and to be innovative, be entrepreneurial. But he’s also believed that there can be a mutual obligation on businesses to do things in society.

He wrote a letter this year talking about supporting the Super Profits Tax in mining but also in banking, because he felt that if banks were given government guarantees during the Global Financial Crisis, when things returned to the good times, they should be required to pay super-normal profit taxes as well.

Andrew West: Is economics a science or is it a set of values? I mean, how does one define economics?

Tim Harcourt: It’s a social science. It’s about people. And your values affect the way in which you do economics. And what is funny is, a lot of economists suffer from physics envy. You know, they think we should be very mathematical, very technical and it’s got nothing to do with what we do on Sunday. For John Nevile, would be, well, you cannot divorce the two things. So when you make your assumptions about how people respond to cuts in minimum wages, how people respond to changes in welfare, changes in taxes and profits, it has to be in some ways guided by moral and, you know, ethical philosophy. And given that economics originally was…were moral philosophers as Robert Hillborough [?] says, it’s actually part of that story.

Andrew West: Let’s go then to the so-called father of modern economics, Adam Smith. Adam Smith has been claimed for decades by free marketeers, but of course it’s not so simple, because Kevin Rudd claimed Adam Smith as well, as a social democrat and as a Christian socialist I think.

Tim Harcourt: I think that’s right. Adam Smith was a moral philosopher, a clergyman; his most famous tract was The Theory of Moral Sentiments.

Andrew West: More famous than The Wealth of Nations…

Tim Harcourt: Much more famous.

Andrew West: …which economists claim is his signature work.

Tim Harcourt: Yes, I remember, you know, when I worked at the ACTU and was preparing the submission to the Living Wage Case in the Industrial Relations Commission, I put in an Adam Smith quote at the beginning, which basically said, from Adam Smith, that you should pay people a decent minimum wage so they could be active citizens in a civilised society.

Andrew West: Smith, as you say, was a very religious man. He went to Oxford, which was going to require him to take an oath of allegiance to the Anglican Church. He didn’t; he went back to Scotland and took the Presbyterian oath—signed up to the Westminster Confession of the Presbyterian Church. And he wasn’t, if you like, a soft touch. His economics did have a rather practical view. What did he say famously about the butcher and the brewer and the baker?

Tim Harcourt: Well he was always scared that they’d ban together to conspire to deceive the public. You know, he basically believed in competition and he was always concerned that people would collude. Now I would say, that’s pretty consistent with him not wanting employers to collude to drive down wages. So he believed in, you know, strong minimum wages. He believed in public goods, strong education, given his Scottish Presbyterian background, and at the same time he didn’t want businesses colluding together to deceive consumers.

Andrew West: Right. But he didn’t believe in just a welfare model though did he? I mean, he did see the butcher, the baker and the brewer as efficient models for distributing goods and services. It was as much about efficiency wasn’t it, as it was about justice?

Tim Harcourt: Correct. Now, he believed that you needed a safety net. You needed decent minimum wages to have social foundations for which a market system could best allocate goods and services. And he was, in many ways, enraged against a lot of, you know, international monopolies and imperialism that you saw with empires carving up the world in terms of trade as well. And so part of his philosophy in The Wealth of Nations was to basically free up the world for trade and not have it, you know, being carved up by the great empires with tariffs and restrictions, with imperial preference, which a lot of trade in the world was undertaken in those days.

Andrew West: Is there a continuous philosophical line from Adam Smith, to Friedrich Hayek to Milton Friedman as some suggest?

Tim Harcourt: Well, von Hayek and Milton Friedman don’t really approach economics from ethical or religious bases. I mean, their belief is, markets work best. And Milton Friedman said the only corporate social responsibility a firm should have, is to make a profit. So he actually didn’t believe in a lot of these, you know, be nice to people type things. He said, just make a profit and everything will look after itself. And von Hayek’s basic issue was, he didn’t want planned economies or communism or fascism controlling things. So his belief was in, you know, markets allocating in the best way and also being best for democracy. But I would probably say they’re more political philosophers—more than moral philosophers, which is more the Adam Smith tradition.

Andrew West: But have they lost a moral foundation to their work? I mean, if you’ve got an attitude that economics is really just a very exact science, it’s mathematical, it can all be worked out in some algebraic formula, do you lose a moral basis for it?

Tim Harcourt: Oh, I think you forget it. Or you don’t have time for it, which is one of the dangers that economics teaching has.

Andrew West: You’re called the airport economist. It’s the title of a book that you wrote not so long ago. It’s very much an identity that you have now, the airport economist. Of course the term airport economist was really coined by people like Milton Friedman wasn’t it? They were, kind of, fly-in, fly-out economists.

Tim Harcourt: It was coined at him as a term of abuse in fact. When he came to Australia to advise the Whitlam government on, you know, fighting inflation first and cutting the money supply and cutting wages and so on. He’d just come from Chile and they said, well Professor Friedman, you must have been in Australia a long time to have this analytical framework. And he said, no, I’ve just arrived; because he had his press conference at Sydney Airport. So a lot of people called him an airport economist and during the Asian financial crisis when people from the IMF were flying around giving advice to Indonesia, and giving them documents saying, this is our advice for Malaysia, oops, because someone had forgot to check the spell check, they were called airport economists too. I’m just a…I’m pretty upfront about it.

Andrew West: But the point about Milton Friedman and the airport economist cult—and you brought it out in that story: well, how long have you been in Australia, no, I’ve just arrived—part of that story is about this idea that economic theory can be applied anywhere regardless of local conditions.

Tim Harcourt: That’s right and Jeffrey Sachs was accused of it too when he went to Bolivia and so on. I think, at the end of the day, however good your economic models are, you have to understand the social, religious, cultural institutions of the country in which you’re operating. And, you know, it can take a lifetime to work out Australia, let alone Mongolia or Kazakhstan or anywhere else I’ve been to recently.

So I think, one of the great books, Why Nations Fail, that’s just come out of MIT, actually goes even further to my, sort of, airport economist treatise which actually says that, institutions really matter. So Argentina and Australia can be the richest countries in the world 100 years ago, yet now, Argentina’s in strife and we’ve done well. What’s the difference? Our institutions.

Andrew West: Finally Tim, let’s talk a little bit about you. The last name Harcourt wasn’t originally Harcourt was it?

Tim Harcourt: No it wasn’t. My grandfather’s name was Harkowitz and he was Kopel Harkowitz. His mother wanted him to be a rabbi. He was Transylvanian and Polish descent. And he wanted to get into the Bondi Surf Club. And he couldn’t get in as Kopel Harkowitz, so he changed it to Ken Harcourt and his words: he went from the Goldbergs to the Icebergs. And we’re Harcourt ever since.

Andrew West: And your father, a very famous economist, Geoffrey Harcourt, he was part of an interesting group of people who were essentially Jewish Methodists. Now how did this come about?

Tim Harcourt: You can’t have drink and you can’t have pork. Well, a lot of Jews who didn’t have strong Jewish religion, even though they had Jewish culture, were often quite attracted to the non-conformist Methodist type traditions because of social justice, because of non-fundamentalism. My dad used to call himself the only Jewish Methodist in Adelaide, which confused people. And when I fill out my census form I put, Jewish Methodist. And because my daughter’s Chinese Buddhist…and so I don’t know what…I don’t know what they do with my census form.

Andrew West: I don’t think…I don’t think they’d take your census form seriously.

Tim Harcourt thank you very much for being on the program.

Tim Harcourt: Great to be with you.

Andrew West: All of today’s stories are available to podcast, or download at our homepage on the RN website where you can leave a comment or follow us on Twitter.

Now on Tuesday night at 8 o’clock on ABC1 there’ll be a special program from the Compass team. In, Churches on Trial, Geraldine Doogue will look at the history of child sex abuse in the Australian churches. That’s next Tuesday night at 8 o’clock, ABC1.

Thanks this week to producer Mark Franklin and technical producer Paul Gough. I hope you’ve enjoyed the Religion and Ethics Report. Please join us next week.