R. G. J. Burgess (1923–2002)

Ronald Burgess (1st August 1923–31st January 2002) was a British economist and adviser to think tanks and governments from the 1950s until his retirement in 1996. His book Public Revenue Without Taxation addresses the fundamentals of public finance and is one of the most important publications on this subject. He was a life member of the Royal Economic Society and a keen advocate of free and fair trade. He died at York in 2002 and was survived by a son and two daughters.

Early life and education

Burgess was born into an Irish family and grew up near the small market town of Thame in Oxfordshire. Thanks to the generosity of a family friend, he received a traditional Roman Catholic education at Worth Priory and Downside School. On leaving school he became an officer cadet with Imperial Airways at Croydon and briefly studied aeronautics under Barnes Wallis.

Military service

In 1939 he enlisted (whilst still under age) in the Middlesex Regiment and subsequently joined the Royal Irish Rifles and later the Royal Inniskillings. He was in Egypt for the first battle of Alamein in 1942 and later took part in the advance of the British Eighth Army into Italy. From 1944 to 1946, having been promoted to the rank of Major, he served as an intelligence officer to General Alexander. He was twice awarded the DSO for his courageous exploits. During the Battle of Monte Cassino in 1944 he was badly injured and it was in consequence of this that he first began to study economics.

Post-war years

Whilst recovering in a general military hospital near Rome, Ronald Burgess requested the longest book available from the library, which happened to be Das Kapital. From a study of this, and also from a reading of Winston Churchill’s publication Step by Step, he concluded that if future conflicts were to be avoided, then “at least a necessary part of the solution lay in getting the economics right”. On being discharged from hospital, he was sent down to A.F.H.Q. (Allied Force Headquarters) at the Royal Palace of Caserta, and enrolled for a course in economics at the Army Educational Centre.

By August 1945 the University at Perugia had been temporarily taken over as an Army Formation College, and Burgess was able to continue his studies of economics there. It would seem that most Cambridge economists had found their way into the Eighth Army and as a result almost all of the Economics Faculty at Perugia had been at Cambridge during the 1930s. Thus, his first formal introduction to economics was the economics of Keynes as it had been formulated at Cambridge during the years just prior to the outbreak of war. This had a significant effect on later developments.

Upon leaving the Army he spent a year in Oxford, and then took up employment in London with John Batt & Co., a long-established firm of specialist metal exchange traders and merchant bankers. He did not return to the study of aeronautics.

London, 1946 to 1966

During the late 1940s and 1950s Ronald Burgess pursued various lines of enquiry at the School of Economic Science, which at that time placed great emphasis on the work of Henry George (1839–1897), and the classical traditions of David Ricardo (1772–1823) and John Stuart Mill (1806–1873). The aim was to discover whether the theoretical approaches of classical economics and the Georgist interpretation could be combined to meet the practical needs of the day, using the published national accounts of the UK. With only a few minor exceptions, no statistical data could be found in the recent history of developed western economies to support the methodology of Georgism and its Ricardian foundations.

By the early 1950s, however, there was widespread agreement among economists that poverty and unemployment had been, or soon would be, solved by a combination of the ‘Keynesian revolution’ and a Beveridge-style welfare state. Some academics disagreed; among them, Friedrich Hayek and Colin Clark. Burgess found himself divided between these different points of view, but all seemed to agree that persistent inflation was now the unsolved problem of the time. Both Hayek and Clark, starting from quite different positions, had raised serious concerns about the level and impact of increasing central taxation, and Clark in particular had highlighted its relationship to inflation. Once more, the Georgist approach offered no useful insights; Burgess and his colleagues abandoned the Georgist model and reverted to the economics of Keynes.

In 1952 Colin Clark had returned to the UK from Australia in order to take up a position as Director of the Agricultural Economics Research Institute at Oxford. Burgess was already familiar with the statistical groundwork carried out by Colin Clark to establish the system of national accounts in the UK, and the formulation of an economic upper limit to taxation which he had developed whilst in Australia – a concept which had been given some encouragement by John Maynard Keynes.

Clark had also become familiar with the development of spatial economics whilst at Chicago University, where he had considered taking up a teaching position, and was sometimes thought to be running the Agricultural Economics Research Institute almost as an economics department with notable visiting speakers such as William Beveridge and John Hicks. The combination of spatial economics and statistical national accounting with a Keynsian theoretical background offered considerable appeal, and the Economic Study Association gradually began to form around these central concepts.

Oxford, 1967 to 1971

By 1965 the Economic Study Association (ESA) had evolved as an independent research body, and Burgess took up an offer of assistance from Colin Clark at Oxford. Clark was also an active founder member of the Institute of Economic Affairs (IEA) in London, which had been established in 1955 on the initiative of Antony Fisher, and was an influential member of its academic advisory council.

Throughout the 1960s, successive UK governments sought to control inflation by various forms of prices and incomes policies. In early 1968, the Economic Study Association was able to publish its first Research Paper, arguing against these policies on largely empirical grounds. It was produced by Ronald Burgess and a group of ESA members, and finalised under the direction of Colin Clark, with practical support and encouragement from Antony Fisher at the Institute of Economic Affairs.

A second ESA Research Paper dealt with the question of local government finance. It was published in 1970 in response to the report of a Royal Commission, which proposed radical changes to the existing system. The ESA paper argued against the proposals of the Commission, and offered alternative recommendations using the concept of economic potential as developed by Colin Clark and his colleagues at the Agricultural Economics Research Institute.

Colin Clark returned to Australia in 1969. He continued to publish extensively, and contributed further papers to the IEA in London. The direct support which Colin Clark had been able to provide to Ronald Burgess and the ESA inevitably came to an end at this point, but through the IEA, arrangements were made with Professor Jack Wiseman at the University of York, and the programme of research, study and publication was able to continue.

York, 1971 to 1976

The University of York was established in 1963. The Institute of Social and Economic Research (ISER) was set up in 1964 by Jack Wiseman and Alan Peacock, with Wiseman as its founding Director. A specialist research group for public finance was quickly set up. Peacock and Wiseman were both members of the advisory council of the IEA, and in 1961 they had published a landmark survey of the growth of public expenditure in the UK for the period from 1890 up to 1955.

By 1971, rapidly rising unemployment was once again a topical issue. The Daily Telegraph published a number of feature articles by Burgess, and there were exchanges of correspondence with the office of the Prime Minister, Edward Heath, the Treasury advisors, and Sir John Eden who was then Secretary of State for Industry, but this did not bear fruit.

With practical assistance from Jack Wiseman, however, Burgess was now able to publish a third Research Paper, in 1973, on the relationship between the level of public expenditure and the rate of inflation. A fourth Research Paper, produced in 1976, brought together some significant conclusions. It was now possible to put forward empirical data in support of Clark’s concept of an economic upper limit to taxation, and also to show that there were strong statistical relationships between gross pay, taxes on employment, and the rate of unemployment. There was also evidence to suggest that disposable net profits were largely determined by the level of taxation, and that there was a further, negative relationship between disposable net profits and the rate of unemployment. To establish these relationships required the use of the appropriate national accounting measures previously explored by Colin Clark. The main policy implication to be derived from these findings was that government fiscal policy was a major determinant of both inflation and unemployment, as well as the net profits and capital investment of industry.

Later work, 1976 to 1996

ESA researches moved on to the need for a theoretical basis to support the statistical relationships that had been established. This effort was based upon a return to the aggregate supply and demand analysis of Keynes, modified to show the effects of taxation.

Since 1974, Ronald Burgess had provided several contributions to the Centre for Policy Studies at the request of Sir Keith Joseph, and in early 1979, Joseph wrote to Burgess with a request for proposals on taxation, output and employment. It was widely anticipated that Keith Joseph might become Chancellor of the Exchequer in the near future. The final paper was delivered on the day of the 1979 General Election. In the event, Sir Keith Joseph did not become Chancellor but was appointed as Secretary of State for Industry. He was, however a member of the Cabinet Economic Committee, and was able to put forward the arguments advanced by Burgess. (An unexpected outcome of these conversations was the realisation that Sir Keith Joseph had also been present at the Battle of Monte Cassino, and that he and Ronald Burgess knew each other’s radio call-signs.)

There followed some months of exchanges and discussions with the permanent advisory service, but by this time Sir Keith was out of favour with the powerful monetarist faction in the Thatcher government. The discussions came to an end with a memo from the Treasury to the Cabinet Economic Committee stating that whilst the advisors accepted the arguments in principle, they could not make any recommendation, as the Treasury model was weak on the supply side. Monetarist thinking had become established, and offered the government a more convincing policy recommendation.

This turn of events gave rise to a series of ESA research seminars aimed at developing the theoretical basis for economic stability. It would then be possible to return to the original challenge of a more fundamental reform of the principles of public finance. From 1980 onwards Burgess concentrated on research seminars and public speaking, culminating in the publication of Public Revenue Without Taxation in 1993.

Major contribution to economics

As can be seen from his published work, the major contribution of Ronald Burgess to economic thought is the establishment of an alternative principle of public finance, based on a development of the economics of Keynes and natural to a fully developed trading economy, in which the need for arbitrary taxation does not arise. The implications are far-reaching indeed. When taxation is progressively reduced, the market price of public goods and services rises to cover their cost of production. In a normal trading economy there is no moral or economic basis for taxation.

As Keynes observed in the Preface to the General Theory: “The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.”

Sources: (i) ESA records; (ii) IEA publications; (iii) University of Oxford; (iv) University of York; (v) A life of Colin Clark by George Peters, 2001 (Research Professor in Agricultural Economics, University of Oxford); (vi) Colin Clark: Queensland’s greatest economist by Alex Millmow, 2015 (Senior Lecturer in Economics, Federation University, Australia).