Most people in Britain would run a mile if asked to participate in a debate on Politics or a debate on Economics. A minority would, if pressed, admit to being a Tory or a Socialist (a political question).
What do Tories believe in? Letting rich bastards do as they please to exploit the poor! What do Socialists believe in? Social Justice!
Now then, let us turn to Economics: Can you think of one or more sets of economic beliefs? Bloody Hell! Economists are a bunch of sad bastards who think about Money – sorta like Accountants. Do they all agree with each other? Well, getting a degree in Economics is not like joining a church. There are loads of formulas which explain stuff like prices.
Is there a connection between Politics and Economics? Whaddya mean? Do people who take one approach in Economics tend to have a characteristic political position, whereas people who take another approach have a different political position? Economics is Economics for chrissakes. What has it got to do with Politics?
This is about as sophisticated as I was ten years ago.
Politics cannot be peeled away from Economics. If you are going to take a political position or recommend a political policy it’s going to depend on your understanding of Economics, which is (statistically) likely to be practically non-existent. So, you are probably innocent of the fact that, characteristically, Economics as embraced by Socialists is wildly divergent from Economics as embraced by Tories. Left-wingers (aka Keynesians) think that stimulating demand is the answer. Libertarians and free-marketeers (including some Tories) see that encouraging Production is the solution – ie making things (creating wealth) to exchange with each other, geddit?
The tragic fact is that Left-wingers focus on poverty (and, insanely, on inequality); they look for ways to eliminate them. Free-marketeers look at mechanisms which produce wealth. They have all the Logic and all the Evidence.
I pointed out a few posts ago that Adam Smith was a moral philosopher before he was an economist, that the Scholastics of Salamanca were theologians before they were economic theorists; we should be good before we should be economically sophisticated. But, being good means behaving well towards our fellows and devising good political programmes requires us to understand stuff about human behaviour and motivation. So, willy-nilly, we are going to need to know something about Economics. We need to guard against unintended consequences.
Good grief! A new heroine! I had hitherto regarded Janet Daley as a sensible political commentator – she is much more: she is the author of this magnificent analysis – Wow! “Having won the Cold War and succeeded in settling the great ideological argument of the 20th century in favour of free-market economics, the nations of the West managed to bankrupt themselves by insisting that they could fund a lukewarm form of socialism with the proceeds of capitalism.” This is how she imagines a 22nd century Gibbon writing about the Decline and Fall of the West.
Is unmitigated gloom and despair the right response to this analysis? Gloom, yes, at least in the short term. Despair is the opposite of Hope and Hope is a virtue; so, we mustn't despair. I am profoundly gloomy about what I perceive to be the inevitable financial collapse. Relatively free markets have their bastions in some countries; I can’t stop thinking about South Korea. When the collapse comes, some somnambulists in the West will be jolted awake. Some will look around and see that the collapse has not been quite ubiquitous. They will see that, although S Korea and other bastions have been hard hit by the decline in western markets, the model for success is still there. Cheer up, then.