My father painted two portraits at King’s College Cambridge: EM Forster and AC Pigou. He enjoyed the company of both men during sittings, and took me to meet Forster when I was a teenager. He walked me across the grass court from his rooms to the famous chapel opposite. “You can do this (diagonal) because you are with me” Forster confided. Impressionable, I was impressed. Pigou was not such a famous figure. That ought to change.
These past few days, economic and trade stability is being boule-versed by a bull in a china shop. If the current neoliberal ‘norms’ do not reassert after Trump’s self-inflicted chaos, maybe a new paradigm will emerge, and if that is better attuned to the Anthropocene in which we now live, then Pigou’s name will be as much on our lips as his pupil and (friendly) sparring partner Keynes. For Pigouvian economics take account of negative externalities (external costs incurred by third parties that are not included in the market price).
For externalities read side effects. Without academic economic guidance through Pigouvian and climate change mitigation / adaptation theory, this blog will not “rush in…”, only noting that tobacco and sugar taxes are both Pigouvian interventions, to which add fat, congestion, environment, plastic, noise… and carbon. Likewise, positive externalities (ie public benefits gained by society not included in the market price) are addressed by Pigouvian subsidies – for education, defence, R &D, (flu/COVID vaccines…) etc.: I would add active travel.
In reading around matters Pigouvian I discovered a Pigou Club. The list of members are disparate, to say the least: inter alia, Anne Applebaum, Jack Black, Leo DiCaprio, Bill Gates, Al Gore, Alan Greenspan, Elon Musk, Ralf Nader, Bernie Sanders, Joseph Stiglitz, and Neil Young! I wouldn’t join a club that would have me as a member, of course (as if!) – and the date of inception is 2007, so it seems to be in abeyance. However the convenor, Prof Greg Mankiw of Harvard, is an active blogger and clearly still a staunch Pigouvian¹.
If the neoliberalism and globalisation of the past 50 years are propelling us towards more and worse climate-biosphere chaos, then it is an apple cart that needs to be upset. Trump’s protectionist, nationalist, climate-denialist attack could not be more incoherent and inappropriate if it had tried, but the cards (apples?) have been flung in the air. When they have settled/succumbed to gravity, a more rational regime of taxes tariffs levies and duties (dual meaning there) could emerge, based on recognising the negative externalities of rising CO2, pollution, habitat loss, etc.: the poly-crisis we have to face. I am emboldened into this hopeful conclusion after attending a conference last week at the RGS with keynote speeches from Profs Peter Frankopan and Mike Berners-Lee, who both plucked a similar optimism out of our current difficulties. The future is Pigouvian!
The day after the conference I made a curation ride of Cycle Orbital: Spin-off 1 and Spoke 1N, Stansted Mountfitchet to Crew’s Hill, Enfield. In the middle of Wormley Wood, about 20 miles from central London, this post appeared. I’m familiar with them as they crop up on tracks or beside roads all over CyOrb’s system at the same radius. They are Coal Posts, and mark a tariff boundary around London within which a coal tax was levied. The levy helped the City of London raise funds for orphans, public works such as sewerage, and construction (eg Blackfriars Bridge, the Old Bailey). Usually marked ACT 24 & 25 VIC Cap 42, 260 were erected in regnal years 24 and 25 of Queen Victoria’s reign (1850’s), and helped administer the levy until it was abolished 30 years later. There still remain 220: enigmatic sentinels with both Pigouvian and Trumpian connotations.
Forster’s portrait used to be in senior common rooms – understandably, as it is anything but formal, and well suited to a relaxed private setting. Latterly, as part of a display of Bloomsbury Group figures, he has been hung in Hall beside Pigou, who has always cast a benign gaze, formally robed, across the students dining below him. I hope they continue to rub shoulders.
¹ Mankiw is cited as a leading supporter of carbon taxes in carbontax.org
Portrait of AC Pigou by EH Nelson, 1948. Reproduced by kind permission of the Provost and Fellows of King’s College Cambridge.
© Martin Nelson 14 April 2025
Paul Taylor says:
There are not many outside Harrow School and Cambridge academics who will be able to recount the story of Arthur Pigou. Like Agatha Christie amongst Golden Age crime writers, Keynes rather overshadows the rest; which is a shame.
Peter Fanning says:
Lovely piece of history. Thank you