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Pound and pence Samuel Brittan Financial Times 29/04/06 The Route of all Evil: The Political Economy of Ezra Pound by Meghnad Desai Faber & Faber £14.99, 154 pages Economists have usually been terrified of sticking their necks out on literary matters and literary figures have in their turn often despised the whole activity of getting and spending or analysing money. One great exception was the modernist poet Ezra Pound (1885-1972), a flamboyant American, who came to England in 1908 after several personal and career snubs in his native land. More than half the 464 pages of Pound's Selected Prose were, however, taken up by economic argumentation, and his epic Cantos are not short of economic references. The personal slights he had suffered in his home country made him believe that modern finance capitalism had no use for creative artists, and this hostility was deepened by interwar unemployment. It did not take long for him to join the ranks of monetary heretics, those who regarded the role of the monetary system as anything but benign and were called "monetary cranks" by the orthodox. Pound's guiding star was Major C.H. Douglas, who believed that he had found a fatal flaw which doomed any market system to permanent underproduction through lack of purchasing power, but which could be repaired by the issue of "social credits". Pound's own emphasis was on the iniquity of interest, just as the Bible and the Koran condemned interest as "usury". His venom was directed mainly against bankers and Jews whom he regarded as basically identical. Spurred by the neglect of his economic doctrines by the western political establishment, Pound moved towards fascism. He became virulently anti-Semitic. He settled in Rapallo in 1924 and returned to America only in 1939 on a visit financed by the Mussolini government. Pound broadcast anti-Allied propaganda from Italy in the second world war and only escaped execution as a traitor after a concerted attempt by his admirers to establish that he had been insane. After 12 years in hospital he was declared unfit to stand trial and released in 1958. The study of Pound has for too long been a preserve of literary critics. Now at long last we have a critical examination of his economic ideas. It is by Lord Desai, a mild sort of heretic himself who has written sympathetically about Karl Marx, but who, whether he admits it or not, is now a mainstream economist. Desai establishes that there was no necessary connection between Pound's fascism or anti-Semitism and his economic heresies and, indeed, that the danger of underproduction could be solved in a democratic community. Desai explains that the apparent mystery of effective demand, ie the question of whether spending will be sufficient, was solved by 1936 when Keynes's General Theory, with its doctrine of excessive saving - ie under-spending - appeared. Moreover Roosevelt's "New Deal" did lead the way out of the US depression; and the UK, under the influence of Neville Chamberlain's cheap money policy, was one of the earliest countries to begin to spend its own way out of unemployment. But by then Pound had written off anything coming from the political and academic classes of these two countries and was beginning to enter a world of his own. At the same time his poetry became more and more obscure, although always containing some moving lyrical passages. There are two questions that Desai does not fully answer. First, what if anything, was Pound's personal contribution to the arguments of the monetary heretics? Second, although the author gives tantalising hints that Pound's ideas might have some relevance to such contemporary issues as globalisation and the working of the IMF, Desai leaves at least one reader wondering how the connection works. As far as the economics is concerned, the crux of the matter is contained in a Pound quotation on the back of the dust jacket: "I personally know of no social evil that cannot be cured, or very largely cured, economically." By "economically" Pound means unorthodox monetary manipulation of one kind or another. The opposite view comes from John Stuart Mill who wrote: "There cannot in short be intrinsically a more insignificant thing in the economy of society than money... it only exerts a distinct and independent influence of its own when it gets out of order." Mill is the closer to being right, although much vigilance is required on the part of people like Alan Greenspan's successors to make sure that money does not "get out of order".
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