Exponential: Order and Chaos in an Age of Accelerating Technology

by Azeem Azhar

But in the 1970s, everything changed. It’s a well-known story. Rich economies were assailed by a toxic combination of low growth and high inflation – known as ‘stagflation’. Waves of strikes and fuel crises eroded trust in Western governments. And, as faith in government reached a new low, voters and policymakers cast around for a new way of doing things. The scene was set for the emergence of a new school of economics, whose standard-bearer was University of Chicago professor Milton Friedman. Friedman’s belief was that markets would work better if the government got out of the way. Since the end of World War Two, Western governments had adopted a fairly interventionist approach to their economies. Until 1979, the top rate of income tax, payable on investment earnings, was 98 per cent in the UK and 70 per cent in the US. In the UK, the basic rate of tax was 33 per cent by the latter half of the 1970s. And with high taxes came hands-on government: nationalised industries, heavy regulation and interventionist industrial policy. But Friedman’s acolytes advocated a different approach.