Sorrell on Keynes and Friedman

30 Oct

Heard in an interview on the Radio 4 Today Programme this morning, and taken from today’s WPP results release:

"the revival of Keynesian economic policy and eclipse of Friedmanite monetarism, along with state-directed capitalism, have pumped and will pump massive amounts of liquidity into the system."

I read this out in a lecture to final year PR students this morning, and I’m offering a prize for anyone who can come and explain what Sir Martin Sorrell means. No takers yet (but I’ve been busy meeting students all day so far.)

UPDATE: No one has come forward to claim the prize (one student says there were too many long words!). By the way, I did understand the point Sorrell was making and wasn’t singling this out as an example of impenetrable jargon. Just as a genuine challenge to students seeking to understand the complexities of what’s going on in the world of business.

5 Responses to “Sorrell on Keynes and Friedman”

  1. Deborah 02/11/2008 at 12:14 pm #

    You should have asked a celebrity for their views!! This is from the BBC Quote of the Week:
    “We have gone on a journey from Plato to enlightenment via Milan Kundera and we have ended up very aptly with Kerry Katona” – Will Young on modern-day celebrity at the Oxford Union
    Everyone expects the debate on modern celebrity to run and run. But nobody expects a reality talent show winner to come out with the likes of: “The clash between Plato’s objective values and the notion of individuality through enlightenment, though necessary, has created a moral and spiritual crisis for modern day society.” Lordy.

  2. Andy 03/11/2008 at 8:50 am #

    Erm… Worked in PR for 10 Years and not a clue what that means?
    I imagine it is something along the lines of “we will be ok”.
    Why can he not tell it like it is, a la Lord O’Leary of Ryanair who nailed the poor unsuspecting BBC Business reporter who interviewed him today.

  3. H 06/11/2008 at 4:11 pm #

    Psst…any of Richard’s students about?
    What he means is rather than leaving the economy alone to sort itself out, (as advocated by economist Milton Friedman), the government is now intervening in the economy by putting more ‘real’ money, (rather than that funny, invisible stocks and shares stuff), into the system via public building contracts. This was an idea put forward by economist John Maynard Keynes in order stimulate economic growth in times of depression. That combined with the government’s actions in the recent banking crisis, (giving money in order to bail out financial institutions – an example of ‘state-directed capitalism’), means there is more actual money about, (‘liquidity’) and therefore a more ‘real’ and sustainable economy.
    Just don’t tell him I told you…

  4. David Phillips 10/11/2008 at 5:21 pm #

    Sorry. Late to this thread.
    There are a number of things we can take from this. One is that it is important to have an elementary grounding in basic economics to practice effective PR.
    The second is the notion of ‘real’ money.
    Keynes came from a generation sustained by the gold standard. Or to put it another way, the ‘promise to pay’ written on bank notes in in Keynes time was underpinned by gold. The value of gold goes up when economies falter and so Keynes was safe.
    Today, the nature of real money has fewer guarantees. Its value is in the relationships central bankers have and the trust between expressed in a number of ways (including the exchange rate).
    The values of ‘real money’ is based on good management and effective PR (things like managed relationships and trust).
    Funny, invisible stocks and shares are no less tangible that funny money including real pound notes and, perhaps, the management of relationships and reputation that our currencies depend on has been handled marginally better that corporate stocks.
    The PR industry cannot be let off the hook with expressions like ‘funny’ or ‘invisible’.
    Sorrell sold out WPP’s claim to PR in evoking Keynes. The interventionist is only as good as his reputation in relationships. Keynesian economics desperately needs good public relations to work because it relies on the most fragile of all relationships – the state of trust, transparency and relationships between trading nations.
    On 11th November we might pause to think of the alternatives too.

  5. Richard Bailey 10/11/2008 at 7:37 pm #

    But gold is also only a token (it has no intrinsic value), David.
    I commented on Leverwealth but don’t know where the comment ended up: a week ago I heard historian Niall Ferguson (who has a new book out about money) say that the current problems with the banking system have stemmed from the breakdown of the traditional relationship between lender and creditor. New financial intstruments led to this becoming a mere transaction, rather than a traditional relationship. Thought you’d have liked to hear that.

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