The UK Treasury does not commission official histories. The closest we have are perhaps the volumes by Dow (1964), Blackaby et al. (1978), and Britton (1991) commissioned by the National Institute for Economic and Social Research. These are supplemented by ministerial memoirs and biographies, monographs by former ministers and officials such as Edmund Dell and Douglas Wass, collections such as Howard Davies’ The Chancellors’ Tales and The Chancellors, and the “higher journalism” of well-connected writers like Samuel Brittan and William Keegan. For specific events and topics, there are the Institute of Contemporary British History's witness seminars and the Treasury Historical Memoranda produced between 1957 and 1976 before the Treasury Historical Department fell victim to the spending cuts announced alongside that year's IMF loan. That particular IMF loan provides the starting point for Aeron Davis’ unofficial “inside history.”

Davis “document[s] the part played by the Treasury in the evolution of the UK's economy” (236). The book's strengths lie in his interviews with former officials who, without sounding too Yes, Minister, generally enjoy a firmer grasp of the issues than their political masters. We get a clear sense of the contemporary Treasury view: “a set of enduring ideas, principles and practices” (245) based on balanced budgets, free trade, a belief in the market mechanism, and the importance of price stability. Bevin quipped that Gladstone “was at the Treasury from 1860 until 1930.” Gladstone appears to have returned with the IMF in 1976. A fuller explanation of why he left in the 1930s might have helped to explain why this happened. Alan Budd, source of so many great quotes in this book, has commented elsewhere that “the dole queues of the 1930s still wound their way through the corridors of the Treasury in the early 1970s.” Keynes offered solutions to that particular exam question. Indeed, in his foreword for the Dow volume, Robert Hall noted that “full employment turned out to be much more easy to achieve than most people had expected” (xv). The stagflation of the 1970s set policymakers a different exam question, although I'm not sure the Keynesians entirely failed to explain what happened as is suggested here. Treasury modelers mis-identified a large output gap in 1971 and the Heath government “filled” it with a dash-for-growth. In the event there was no large output gap, the boom got out of hand, and the successor Labour government did not have the parliamentary arithmetic to deflate until after the October 1974 election.

But what were the exam questions after the Global Financial Crisis? Davis is clear on what he dislikes about the contemporary British economy: income inequality, regional inequality, relative manufacturing decline, lower GDP per capita, and Brexit. He also knows who to blame: “I hold the Treasury (and successive governments) responsible for ushering in an economy that was so unbalanced and unequal” (209). He laments that after 2008 “there were no new economic ideas” (184). Unlike the 1930s and the 1970s, there was no new paradigm waiting in the wings (Modern Monetary Theory being essentially a re-hash of wartime policy). Maybe the post-GFC questions were too heterogeneous for any one new paradigm? Davis does not himself offer any big solutions: “coming up with inspired, original economic thinking to ‘fix’ the UK economy is beyond the scope of this book (and me personally)” (260). But he does suggest policymakers need to “improve productivity [and] infrastructure, redistribute resources across regions, take investment risks that the private sector won't [and] make considerable investments in particular sectors” (261). The need to increase productivity and the desire for better infrastructure are uncontroversial. As Paul Krugman notes, “productivity isn't everything, but in the long run, it's almost everything.” The other suggestions are more problematic. Aside from the fact that central government already redistributes resources from the more productive London and South East to the rest of the country, the history of regional policy is littered with failure. Nor do British governments have a great track record in picking sectoral winners for public investment.

The tone of the book is disappointment, with echoes of the declinist literature of the 1970s and 1980s. Jim Tomlinson characterizes declinism as “the belief that something could and should [have been] done to improve economic performance.” If the Treasury is significantly to blame for “a crumbling and discredited system” (239), what could and should it have done better? Which elements of the Treasury view are fundamentally flawed? Internationalization and free trade come in for particular criticism, particularly elite insensitivity to the consequences of unchecked immigration. But other countries have been buffeted by globalization and exhibit less regional and income inequality. What can we learn from them? There are brief nods to the USA, Germany, and China, but little more.

This is a lively book that makes excellent use of its high-profile interviews to highlight an elite view of how the British economy should be managed. I particularly liked the focus on financialization over neoliberalism. City analyst Gordon Pepper exerted greater influence than Milton Friedman (and the London Business School was more influential than Chicago). But interviews have their flaws. Memories are filtered by time. Former Permanent Secretary Peter Middleton's reflections on monetarism, like Nigel Lawson's, contrast sharply with what he said and did at the time. So the interviews might have been bolstered with archival sources, or at least with more reference to recent archive-based histories. This might have avoided straw man statements such as “historians agree that free market thinking came to trump all” (56). As Marsh and Rhodes pointed out in 1992, Thatcherism was more rhetorical than revolutionary. I might also have chosen a less theatrical title. Britain was not “bankrupt” in 1976. She borrowed from the IMF that year (for the eleventh time) to repay a central bank dollar loan taken out to support sterling after a botched devaluation, not because she was bankrupt in any meaningful sense of that word.