I was asked yesterday if I would mind splitting this blog into two. One part would be on economics. The other would be on politics. The argument was that most people want the economics, and not so many the politics.
I had to reply that I did not think that was possible, but because I was very anxious to deliver 50,000 words on a project last night (and did, on time, if only just) I could not elaborate. As I am taking a relatively quiet day today as reward for the effort expended, let me explain now. Not that it takes long.
I am a political economist. I actually don't think there is any other sort: those who claim otherwise are, in my opinion, simply deluding themselves and others, usually in the cause of neoliberalism. But there is a point to saying that the two are inseparable, and that if a political economist is to be honest must be so. And that is that all economics is based on assumptions. We all build models all the time in all aspects of life to help us understand things that are otherwise inexplicable, or at least, which would take too long to fathom out unless we had a model to help us.
Some of these models are backed by law: in the UK we have a model of driving on the left hand side of the road. We know full well that a model of driving on the right hand side works at least as well. But we use one where we drive on the left.
We also have models of behaviour. Most of us, but with varying degrees of accuracy, can interpret smiles and other body language. The methods we use are models - and most of the time they work for us. Practice lets us use them because the results have, usually, been good enough to permit us not to think too hard, and thinking is hard, which is why most of us would rather not do it.
In political economy the models explain how relationships of power - human and legal, in the main, but not entirely - influence the way in which society allocates resources, for better or worse.
But those models aren't fixed. And some of them could be radically changed. About 30 years ago Sweden switched from driving on the left to the tight, for example, overnight. The rules of engagement changed. And that is always possible. Just as human relationships can be altered, and have been. The political constructs that are so powerful in allocating resources - from the right to inherit, to gender stereotypes, to race - and so much more, are all open to challenge and adjustment. Sometimes that is encouraged by law. Sometimes events change our own patterns of behaviour - our heuristics alter.
But the point is that those models are all political. There is literally nothing in the economy that does not have a power relationship built into it - the tax system being a perfect example of that. It is power alone that results in income from wealth being taxed less than income from work; nothing else can explain that.
And even within modern monetary theory (MMT) the priority it places on full employment is, of course, a chosen priority. It make sense to those who use MMT. But it is a political choice.
And all these choices are interwoven. I can't, fir example, consider what full employment means without considering issues relating to gender, orientation, race, migration, class, and so on: all of them impact on the outcome of a decision to pursue full employment and who really gains from it.
In that case I can't discuss MMT without discussing politics because MMT seeks full employment.
The same is true of any other economic issue. What we decide, how we decide, how we even build the model (and this is so true of MMT) reflects political choice. In that case two blogs are impossible. Politics and economics are inseparable.
So too then are disputes. That's life.
I'd like to say I am sorry about that: I don't much like disputes either. But I can't: they come with the territory. They happen and they will happen again. Disputes are what political economy is about.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Like
I find the initial assertion a bit odd: if economics are not political, i.e. they have no real effect on people’s lives, then what’s the point?
Neoclassical economists like to claim that they are dispassionate observers
They aren’t
And that’s impossible
But that’s what they claim
I heard on TV someone describe politics as “who gets what how and when”, which kind of puts economic choices (also in a broad sense) in the centre of the frame. It makes sense that, when someone proposes an economic view, that they make all kinds of assumptions about how the economy ought to be, whilst often pretending to do otherwise. If an economic system has millions of people destitute and dying, economics can only say something about that if it is also political – whether it is OK to someone or not that this occurs, as well as why they think it occurs, goes beyond the facts of the matter to matters of morality and ethics, which are aspects of politics. Hence in the neoliberal view each person “chooses” how much or how little they have, since they can always “choose” to behave differently (I disagree profoundly with this as it ignores so many other factors). This view also hides numerous assumptions: that vast differences in economic conditions are acceptable, that the purpose of life is to acquire and consume, that everyone should be forced into this “game”, that no alternative is allowed, that one person’s “success” has no effect on another person’s possibilities to succeed – everyone can succeed. These are all taken as fundamental and unquestionable truths about human life even though they’re political statements about how people should be understood, should understand themselves, and should operate in the world. From my view it is a sickening and dehumanising description.
Back in the 1960s, Richard Lipsey’s Introduction to Positive Economics became the main introductory textbook on UK undergraduate Economics courses. Lipsey’s distinction, based on a misapplication of Karl Popper’s philosophy of science, was positive = facts = good, while normative = values = bad. What he termed normative was supposed to be excluded from study by serious economists.
Values, of course, permeated every chapter of his book. And key facts (like deficits in one sector of the economy being exactly balanced by surpluses in another) were ignored, and their significance was not recognised.
I hated Lipsey
Not personally, of course, I never met him
I hated his book
I remember having to buy it for my “A” level course. It’s still on the bookcase next to my desk, but not been opened for several years.
Don’t touch it – it’s dangerous!
Jo
Richard is absolutely right on this subject. You cannot separate economics from politics.
Even if your read about Neo-lib Public Choice Theory – where everything from public services to politician’s relationships with voters is critiqued – you’d see the glaring hypocrisy and double standards when you consider (say) how the mega rich increasingly use their under taxed wealth to increase their influence for their own self interest and also help perpetuate bad Governments and subvert democracy in the bargain.
Look at the amount of donors to, say, our Tory party and who they are and ask yourself ‘Cui bono’? (Who benefits?). One of the Tory donors stands to get a multi million pound pay out because he is expecting BREXIT to ruin British companies – and who delivered BREXIT?
Can I recommend a book – ‘Democracy in Chains’ by Nancy MacLean?
The Neo-libs present a wealthy elite as the ‘natural order’ of society and do not see any other competing claims as rational as they see themselves, preferring to see these as subjective and normative (value based interpretations) and therefore not scientifically credible.
Not only is it just an intellectual form of self aggrandisement , it is also an abuse of language as well as being the worst case of subjectivity I’ve ever seen. That is to say that it comes with it own forms of inherent bias and values and is no better than the other points of view it claims lack objectivity.
Neo-liberalism to me attempts to white wash human nature and negate our knowledge of it. One its proponents – von Hayek – when asked about altruism when he had created his model of ‘rational economic man’ admitted that he had not even included it in his model, yet we know it exists. That is bad science.
Neo-liberalism is pure snake oil and if you want a meatier read seek out ‘Debunking Economics’ by Steve Keen which also considers Neo-liberalism’s offences against math, statistics and money.
Excellent book
Seconded – good podcasts too
Yes, with you on all of that I think. My initial comment was in response to the initial proposition posed to Richard (“The argument was that most people want the economics, and not so many the politics.”) rather than Richard’s response – I appreciate I could have been far more explicit!
I think many economists want to be scientists, specifically physicists, or mathematicians. They want to discover beautiful equations that express immutable “laws” of nature, which can be combined to build up a Grand Theory of economic science. (For all their successes, physicists struggle to do that very thing to explain at a fundamental level either quantum mechanics, or gravity, or both together.)
For economics, it seems to me that approach misses the inherent uncertainties and the intrinsic human element. In some respects economics is like philosophy or history – stories that we tell to try to explain the world, none of which is objective. In others it is like psychology, which to be fair can be the subject of scientific experiment but often resembles “just so” stories.
(I would not describe the choice to require people in one country to drive uniformly either on the left or the right side of the road as a model. It is not a conceptual representation of the world. It has no explanatory or illustrative power. It is a convention. But that doesn’t detract from your main point, which is that economics – particularly at the macro level – is inherently political because it is about human relationships, and all human relationships are political.)
Andrew says:
“I think many economists want to be scientists, specifically physicists, or mathematicians. They want to discover beautiful equations that express immutable “laws” of nature, which can be combined to build up a Grand Theory of economic science.”
Many seem to be quickly beguiled by elegantly simple ideas that work very imperfectly….. the ‘invisible hand of the market’ is a favourite, and the immutable fantasy that supply and demand will (even seek to) create a balanced economy. From time to time it seems that many economists are happier with fairy tales than with anything approaching science. Some have found that the key to ‘professional’ preferment is to clothe elitist urges, to control and dominate and get rich, in the deceptive guise of rationality.
At bottom it’s all about politics. To coin a phrase: for the many or the few.
As long as there is the huge gap in income and wealth in a society, and a society that ostensibly believes in “democracy”, then politics will drive the economics and vice versa, unless we descend into a complete dictatorship which present trends as you have frequently pointed out are continued under the Tories or even as it did under a New Labour government.
Whereas not all politics is ecomonic, all of economics is political.
And all economists are political.
Agreed
Looking at the discussion above as a follower of this blog for only a few weeks, there is one thing that I can’t quite resolve. Apologies if I am naive about this.
Clearly almost anything you have an opinion about – economics very definitely in this category – is going to be influenced by your values, which in turn will be reflected in your politics. But at the same time I can’t work out whether you could follow Modern Monetary Theory but still believe in Conservative policies (or generally right wing policies, the current Conservative government makes coherent policy had to identify).
Or in other words, while economics and politics are clearly intertwined, does that also hold true for the underlying theoretical framework?
You could
Hi Richard
As politics and economics are both utterly concerned with the distribution of resources (human, financial and material) and the development of one is dependent on the assumptions of then other, then how can they not be utterly interlinked?