Where is economics on the political spectrum?
Posted August 12, 2008on:
There seems to be a lot of discussion surrounding economists position on the political spectrum. My answer to this would be that economists are not a political group or a club so economists themselves will be spread over the political spectrum.
However, I have to admit that the process used when discussing economic issues does lend itself (or suits people would already think like it) to a specific way of thinking. As a result, I’m going to discuss where I THINK my own views stand using the definitions of wikipedia. As I am not a political scientist this discussion will be quite useless – so if any political experts would like to help me out in figuring out where my views lie, please give it a go in the comments section.
Ok here we go.
Now to start with I constantly get told that all economists are “neo-liberal” – as a result I thought I would look that up first. Wikipedia states that the policies are (although I would note that the Wikipedia article is fairly based, especially with plain wrong statements such as “Arguments that stress the economic benefits of unfettered markets, in line with neoliberalism, first began to appear with Adam Smith‘s (1776) Wealth of Nations and David Hume‘s writings on commerce.“):
- Fiscal policy discipline;
- Redirection of public spending from subsidies (“especially indiscriminate subsidies”) toward broad-based provision of key pro-growth, pro-poor services like primary education, primary health care and infrastructure investment;
- Tax reform – broadening the tax base and adopting moderate marginal tax rates;
- Interest rates that are market determined and positive (but moderate) in real terms;
- Competitive exchange rates;
- Trade liberalization – liberalization of imports, with particular emphasis on elimination of quantitative restrictions (licensing, etc.); any trade protection to be provided by law and relatively uniform tariffs;
- Liberalization of inward foreign direct investment;
- Privatization of state enterprises;
- Deregulation – abolition of regulations that impede market entry or restrict competition, except for those justified on safety, environmental and consumer protection grounds, and prudent oversight of financial institutions; and,
- Legal security for property rights.
As a set of outcomes these don’t seem to bad (although privatisation should be a means to an end – rather than an end in itself). But, even though many of these outcomes are desirable, I would hope that the means of achieving these outcomes is taken into consideration when valuing them.
However, there are some bits missing. What about welfare policy? What about externalities? What about foreign policy (outside of trade). Now don’t get me wrong – I have a lot of sympathy for this neo-liberal set of policies (as a set of targets). But for a political mandate it seems a bit scant. I get the impression that being “neo-liberal” is not by itself an entire political position – you need to add some other bits.
On that note I move over to the social liberalism tag. Wikipedia states that their policy aims are:
- An economy consisting mainly of private enterprise, but with government owned or subsidized programs of education, healthcare, child care etc for all citizens.
- Regulatory bodies over private enterprise in the interests of workers, consumers and fair competition.
- Free trade. (not supporting a laissez-faire free market)
- A basic system of social security.
- A moderate level of taxation.
- Environmental protection laws (although not always to the extent advocated by Greens).
- Fairly open stances toward immigration and multiculturalism stemming from social liberal tendency to be civic nationalists (as opposed to ethnic nationalists).
- A secular and progressive social policy, including support for comprehensive sex education, gay and lesbian rights, universal health care, reproductive rights, abortion, stem cell research, abolition of capital punishment and (sometimes) euthanasia.
- A belief in the existence of victimless crimes (e.g. drug use and prostitution) and many social liberals call for the decriminalization or outright legalization of these practices.
- Decentralized decision-making.
- Internationalism. (Oppose extreme and aggressive nationalism)
- (In Europe) A federal European Union.
- A foreign policy supporting the promotion of democracy, the protection of human rights and where possible, effective multilateralism.
- As well as human rights, social liberals also support social rights, civil rights and civil liberties.
Now, this appears to by fairly similar to neo-liberalism (although more vague) in economic terms. However, it also provides a general context for dealing with externalities, viewing nationhood, and a system of social security.
This view is incredibly vague, I but think it captures the area where a lot of economists sit. Fundamentally, economists are almost all methodological individualists – so we are moved to believe that individuals are able to make better choices for themselves than government could make for them. However, as individuals impact on each other, as the government allows co-ordination, and as the initial distribution of resources may be “unfair”, economists still believe in a role for government – the size of this role depends on the value judgments of the individual economist.
According to the Nolan Chart social liberalism is centre-liberal, my own Nolan Chart is here:
So I’m in this general area – which I think makes sense for an economist.
Now there is a significant belief out there that economists are right-wing conservative, believing in “economic freedom” (what a random term) but not “individual freedom”. All I can say to that is, what the hell.
The entire economic discipline is focused on the individual, and how the social good is merely the sum of the net happiness of individuals. Why would economists ever support externality taxes if “economic freedom” was more important to them.
Now different value judgments by different economists will imply that we have different beliefs surrounding the trade-off between economic and individual freedom – however, that does not mean that economists want to restrict one of these freedoms, they are just realistically admitting that a trade-off exists.
I have prattled on about the general way I read these political philosophies, and concluded that, in some sense, most economists would fall into the social liberial group – which appears sufficiently vague to capture a large range of value judgments. What do you guys think?