8 November 2017

Free Exchange: John Kay on the meaning of the market


John Kay was born a year before Labour leader Jeremy Corbyn. In the latest episode of Free Exchange, the CapX podcast, he tells Robert Colvile that “sometimes I look at Corbyn and I think, he thinks what I thought when I was 17. It’s just that I’ve learnt a bit since then and he hasn’t.”

Whereas the Labour leader has spent his life ploughing the furrow of far-left activism, John Kay has had a diverse and fascinating career as an economist. In the 1970s, he worked at the Institute for Fiscal Studies under its Nobel prize-winning director James Meade and alongside Mervyn King, who would go on to become governor of the Bank of England. Kay became director of the IFS in 1979 and helped to build it into arguably the UK’s most respected think tank.

Kay has written on business and economics for the Financial Times for several decades and is the author of numerous popular books on economics, business and finance, most recently Other People’s Money: Masters of the Universe or Servants of the People. 

In a world where economic debate has become less nuanced, Kay is someone who understands the genius of the market but is also alive to its shortcomings. He despairs at the caricatured greed-is-good view of the market that has become conventional wisdom. He calls this idea “both repellant to most thoughtful people and false as a description of how markets really operate”. What has been lost, he says, is an appreciation of the extent to which “our economy does depend very heavily on morality and trust relationships. It is not a matter of leaving people to do whatever they like. Nor is it about glorifying greed.”

In a wide-ranging interview, he explains why he fell in love with economics, what big banks and taxi drivers have in common, where modern finance has gone wrong,  why economists should admit there are somethings you cannot predict and the new book he is working on with his old colleague Mervyn King.

You can listen to the full episode here, or subscribe via iTunes.

Oliver Wiseman is Deputy Editor of CapX