Obituary: Ronald Fowler

Ronald Fowler's life as a teacher of economics, an original thinker, and a writer of scholarly texts was ended by Hitler when the Second World War drew him into the civil service and transformed a promising analyst of industry into a conscientious "public" servant. The Austrian economist Friedrich Wieser, whose theory of value as "opportunity cost", the sacrifice of alternatives, I often discussed with Fowler, indicated the real cost of the lost scholar.

He was born in 1910, and showed early promise at Bancroft's School that led him to the London School of Economics, where he was taught by the influential liberal school of Professors Lionel (later Lord) Robbins, (Sir) Arnold Plant, (Sir) John Hicks and others. He graduated (with honours) in 1931, was awarded a Cassel Travelling Scholarship, named after the industrialist benefactor of scholarship Sir Ernest Cassel, and appointed Lecturer in Commerce in 1932, a post he filled until 1940 when he was recruited into the wartime Central Statistical Office.

At the LSE he had taken to research that yielded new insights on the pricing system of the market. His book on The Depreciation of Capital in 1934 was preceded by correspondence in 1932-33 on an idea being developed by his student friend, Ronald Coase, another Cassel Travelling Scholar, whose classic article "The Nature of the Firm" in the 1937 LSE journal, Economica, eventually revolutionised economic thinking on the structure of industry. Fowler's book showed that although the economic system of competing firms was, as Adam Smith showed in 1776, co-ordinated by the pricing system, it was the "transaction costs" of deals between firms that explained why it was preferable to replace it only within firms by internal allocation of resources.

This theory was so radical that economists underrated it for many years. But together with another historic Coase article in 1961 on "The Problem of Social Cost", published in the University of Chicago Journal of Law and Economics, it formed the basis of the award to Coase in 1991 of the Nobel Prize in Economic Sciences. In his writings, as in his recent book On Economics and Economists (University of Chicago Press, 1994), Coase generously acknowledged the intellectual co-operation of the early 1930s from his student friend and colleague.

Fowler also collaborated fruitfully with Coase and another LSE colleague, (Sir) Ronald Edwards, Chairman of the Electricity Council, in the work of the Accounting Research Association on how the figures assembled for the balance sheets of companies could be used for economic research as a guide to the opportunity cost of resources used in production.

Fowler and Coase also worked on research which revealed that, in deciding future output, producers did not, as economists had supposed, assume that prices would remain unchanged. If they did, output would fluctuate. In pig production they found that when prices were unusually high, producers expected them to fall, and when unusually low they were expected to rise. Fluctuations in prices would level out outputs. Fowler applied the analysis to the production of steel in an article published in the United States in the Quarterly Journal of Economics.

From 1937 until military service I shared Fowler's room when I was appointed to the LSE Research Staff. I was awed to find that he had as neighbours the intellectual giant Friedrich Hayek and the distinguished refugee from Cambridge, Professor D.H. Robertson, who had moved after differences with the Keynesians. After the war Fowler and I lived near each other in west Kent. He was godfather to our first son.

Fowler also applied his analytical mind to Whitehall. He was at the Central Statistical Office from 1940 to 1950, at the Ministry of Labour as Director of Statistics and Under- Secretary from 1950 to 1968 and then Director of Statistical Research until 1972. On retirement he was Consultant to the Prices Division of Statistics Canada in Ottawa 1971-72.

His varied researches produced a published paper on "The Duration of Unemployment" in 1968 and two papers on "Problems of Index Number Construction" in 1970 and 1973. His consultancies led to articles in British and American economic and statistical journals. Fowler seemed to indicate that the change from the executive to the research post followed a difference of opinion with a Minister.

Down the years there was much we discussed since we lived near each other. My efforts to persuade him to write for the Institute of Economic Affairs on general inferences for government policy-making, without divulging confidences, were invariably met by references to the Official Secrets Act. It is a gap in our knowledge of the working of government that the claims of politicians are not corrected by impartial advisers.

He was an upright Englishman with rigorous standards that would not allow him to speak of his anxieties about government activities and policies under both political parties. We shall never know how much his "public" services in Whitehall prevented him from benefiting the real public by academic scholarship.

Ronald Fowler lived quietly in his modest home in Kent with Brenda, his wife since 1937. She came also from a family which produced a distinguished economist, Dr Vera Smith, who married the Swiss economist Professor Friedrich Lutz. They were childless but enjoyed friendship.

Arthur Seldon

Ronald Frederick Fowler, economist: born 21 April 1910; CBE 1950; Sir Ernest Cassel Travelling Scholar 1929-30; Assistant, later Lecturer in Commerce, London School of Economics 1932-40; Central Statistical Office 1940-50; Director of Statistics and Under-Secretary, Ministry of Labour 1950-68; Director of Statistical Research, Department of Employment 1968- 72; Consultant, Prices Division, Statistics Canada, Ottawa 1971-72; Statistical Consultant, Prices Commission 1973-77; married 1937 Brenda Smith; died 5 January 1997.

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