Shades of Brown

Hot on the heels of Tony Blair and Peter Mandelson, former PM Gordon Brown has released a book: "Beyond the Crash". No chance to read it just yet, but there are two fascinating reviews of it that are well worth a peek: one by Anatole Kaletsky in The Times (behind the paywall; sorry!) and the other by Joseph Stiglitz in the FT, reproduced on Slate.

The reviewers agree that there's almost no gossip or settling of scores (and probably, therefore, no sales either). They agree that Brown's initiative to recapitalise the UK's banks in October 2008 really did stop the world from falling into a severe economic depression. What's more interesting, though, is the way that each reviewer seems to have found support within the book for his own views of the future of finance.

Earlier this year Kaletsky published an agonizingly dull tome called "Capitalism 4.0", so it's no surprise that he thinks Brown supports his (Kaletsky's) "let the banks be" line:

He (Brown) argues, in my view correctly, that curbing financial innovation is no panacea, even with hindsight. While Tories and Liberals indulge in a populist witch-hunt against greedy bankers, Brown courageously acknowledges the vital importance of finance: “Even now there can be no return to high levels of employment and growth without harnessing finance’s creative energies to allocate resources and risk so effectively that it spurs and speeds economic growth. We must never forget that credit and the need for securitisation, too, are at the heart of a modern financial system. It should not just be tolerated as a necessary evil, but nurtured as one of the keys that unlocks opportunity.”

Stiglitz doesn't read Brown that way, to put it mildly. Here are two brief quotes from his review:

He (Brown) grasped immediately that the problem was not just one of liquidity but of a weakness in the financial sector built on years of mismanagement, lax regulation and reckless speculation. He also saw early on that unless a government recapitalisation was accompanied by requirements that banks continue lending to businesses, the crisis in the financial sector would spread to the broader economy.

"We needed to overturn 30 years of policymaking," Brown writes. No cash without government involvement became his mantra and he tried to persuade the Americans and the Europeans to his way of thinking.

And later:

Brown is outraged by the bankers' excessive risk-taking, their pursuit of greed. I can only surmise that had he looked more carefully at America's banks' predatory lending practices and the abuses in the credit card systems, how the financial system preyed on the least educated and financially unsophisticated, he would be even more outraged.

This last comment goes beyond a review or even editorialising on Stiglitz's part: it's more like "what Brown would have written if he was as smart as me". Still, that's a useful reminder that every worthwhile review tells us at least as much about the reviewer as it does about the book in question. I may just have to read the book for myself to decide whether Kaletsky or Stiglitz is interpreting Brown's views accurately. To my surprise, I'm almost looking forward to it.