The Office for Budget Responsibility and the Politics of Technocratic Economic Governance
This book (forthcoming, Oxford University Press) is about the politics of economic ideas, and the inevitable yet hidden politics of technocratic economic governance, explored through a focus on the Office for Budget Responsibility (OBR) – the institution designed to oversee Britain’s fiscal policy. Drawing on an in-depth qualitative analysis of official documents and interviews with nine professional Economists, the book develops the politics of economic method lens to shed new light on the judgement and discretion inherent in interpreting economic ideas in practice. This analysis reveals the OBR’s remit of objective distance from the political fray to be grounded in a false premise. Despite appeals to independent and ‘scientific’ economic expertise, there is always a politics of economic policy, embodied in how technocratic governance institutions are created, and how they choose to examine and narrate the economy. Economic models and discourses are socially constructed, reproducing and reimagining knowledge about an economy’s trajectory, and how it should be studied and managed. The book interrogates the broader backdrop against which such deliberations take place, exploring the 21st Century evolution of macroeconomic orthodoxy and the British model of capitalism. It engages three ‘once in a century’ shocks, analysing British capitalism’s uncertain trajectory as policy-makers navigated the aftermath of the Global Financial Crisis and the upheavals of Brexit and COVID. By delineating competing constructions of economic reason and showing how they underpin models of British capitalism, growth, and crisis response, the book provides an indispensable account of the politics of technocracy, and of Britain’s contemporary political economy.
Embattled Technocratic Economic Governance: The Office for Budget Responsibility from the Crash to COVID
Chapter 2 sets out the institutional and ideational context of UK economic governance since the 1990s, analysing the drivers behind the advent of fiscal rules. Designed as a technocratic means of taking politics out of fiscal policy decisions, fiscal rules supposedly reassure electorates and financial markets that the public finances are in safe government hands. Yet as this chapter introduces, there is always a multi-faceted politics of economic policy, even when it is overseen by seemingly objective rules regimes and independent expert bodies. Fiscal rules are not unassailable technical policy constraints but can and do change to accommodate different political-economic ideas and partisan political preferences. Fiscal rules are therefore social constructs, bound up in contested knowledge and narratives of the economy, and subject to manipulation by parties across the political spectrum.
UK Fiscal Politics and Macroeconomic Policy Rules Since the 1990s
The British Model of Capitalism and the Politics of Growth
Focusing on Britain, chapter 3 delves into the politics of economic growth – a perennial question of Political Economy that is often discussed in the technocratic governance sphere in dry, technical and depoliticising terms. The chapter demonstrates how different views about the most desirable model of capitalism, including about the preferred mode of state intervention in the economy, underpin economic growth debates and imply their inherently political character. It compares and contrasts four competing theories of economic growth – neo-classical, Schumpeterian, Neo-Keynesian and ‘new’ growth theory approaches – and explores their relationship with stakeholder and shareholder modes of capitalism. Charting the development of a British ‘Anglo-Liberal’ financed-based growth model, it considers how the politics of growth connects with deep-rooted anxieties about Britain’s place in the world. It also explores how dominant understandings of a stable trend growth rate have been challenged in recent years by the Brexit vote, which called for the nostalgic renewal of an economically mighty Global Britain, but led the Office for Budget Responsibility to significantly downgrade the nation’s economic prospects.
The OBR and the Politics of Technocratic Fiscal Governance
The OBR, Technocratic Economic Governance, and the Politics of Economic Forecasting
Chapter 5 explores how the Office for Budget Responsibility conducts its forecasting work in practice, highlighting the intellectual and methodological choices that go into building a narrative of Britain’s medium-term economic trajectory. While the OBR’s founding legislation forbids it from providing explicit political commentary on the British government’s economic policies, the agency’s mandated tasks of fiscal forecasting and oversight are essentially political. These duties necessarily entail the OBR taking a normative position on the principles of Political Economy and the UK economy. Such normative stances are implied in the particular assumptions, techniques and methods that the OBR employs in its economic forecasting, and in how it chooses to frame its narrative of the economy in light of the limitations of available data. These are all potential sites of contestation in a battle of economic ideas. Focusing on these sites therefore reveals the hidden politics of the technical realms in which economic ideas are implemented.
Narrating the Economy: Constructing the Crash and its Legacy
The OBR and the Politics of Forecasting Brexit Effects
Chapter 7 focuses on the practical and technical difficulties that the Office for Budget Responsibility faced when forecasting the economic effects of Britain’s decision to leave the European Union. The event’s unprecedented nature, coupled with the uncertainty surrounding the Brexit process and the difficulty disaggregating its economic impact from other historical variables all made the OBR’s forecasting work especially challenging. The acrimonious and often fallacious terms of the Brexit debate also posed difficulties for a technocratic economic governance institution seeking support for its economic narrative. Forecasting Brexit effects entailed the OBR taking a normative stance not only on the economic value of Britain’s membership of the Single European Market but also on broader factors including the nature, operation and feasibility of ‘free trade’. Demonstrating how the OBR’s judgements proved particularly contentious for advocates of a post-Brexit Global Britain, the chapter explores how radical uncertainty created the conditions for alternative, specious economic expertise to gain plausibility. It also emphasises the hidden normative foundations on which all economic forecasting is premised, and which always threaten to puncture the OBR’s epistemic authority by illuminating its technical limits.
Chapter 8 explores how the 2020 outbreak of the Covid-19 pandemic radically shifted the parameters of ‘sound’ economic policy. Situating the pandemic within Britain’s broader recent history of intersecting economic shocks – including the Global Financial Crisis (GFC) and Brexit – the chapter uncovers how sustained crisis and uncertainty have caused the Office for Budget Responsibility to significantly rethink how it evaluates, models and forecasts the UK economy. While the GFC raised questions about the potential stabilising role of active fiscal policy, the pandemic consolidated the case in favour of large-scale state intervention, designed to stave off much worse economic outcomes. Amid Covid, the OBR eschewed assumptions of smooth cyclical adjustments in preference of economic models that gave great weight to the damaging consequences of negative spirals and ‘doom loops’, paving the way for an unprecedented government response. Showing how Covid shifted the tectonic plates of fiscal responsibility, the chapter therefore illustrates how economic thinking and forecasting practices are buffeted – and potentially transformed – by historical conjuncture, crisis, and unexpected events.
COVID Changes Everything – ‘Sound’ Economic Policy and the Historical Contingency of Economic Knowledge
Conclusion – The OBR and Technocratic Economic Governance in Hard Times
This concluding chapter recaps the book’s core themes, distilling the politics of technocratic economic governance and illuminating the value of a politics of economic method lens for exploring how economic ideas are used in practice by the experts charged with pronouncing on the economy’s health. It then considers how technocratic economic governance and economic forecasting can respond to the additional uncertainties and non-linear dynamics of the major public policy challenge of the 21st Century – the climate crisis. It also considers future challenges for the Office for Budget Responsibility (OBR), notably Britain’s recent democratic deterioration. With the dawn of ‘post-truth’ politics, the sinews linking the doctrine underpinning economic policy-making to fact, economic reason and logic have become much more elastic. This is a challenging environment for technocratic economic governance institutions to execute their mandates and render government economic policy choices more accountable. The impunity and serial lying encouraged within the British government under Boris Johnson have only made it harder for independent oversight bodies like the OBR to hold government fiscal policy accountable.