Where is economics on the political spectrum?

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.“):

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:

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.

Conclusion

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?

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  • dpf

    Umm does that not place you in the populist, totalitarian quadrant?

  • On the one I took left and right go left to right, while totalitarian to liberal go from top to bottom 😛 So I’m in the populist-liberal quadrant

    I couldn’t get the danged labels to copy over 🙂

  • CPW

    Given the pejorative connotations of the term “neo-liberal”, I’m always surprised as how mild the actual policy prescription is. There’s nothing in there that rules out highish rate of taxation (provided they’re still broad-based) and generous social welfare programs. You could easily be a “hard-left” neo-liberal – the current Labour party I think could easily be described as “moderate-left” neo-liberal.

    Nevertheless, for some reason left-wing beliefs seem to be highly correlated with (at least in the blogosphere if not in reality) a rejection of many neo-liberal tenets. Without naming names, various commentators on this blog have at times suggested support for trade restrictions, industry subsidies, fiscal ill-discipline, fixed exchange rates, alternative monetary policy goals, expansive labour market regulation etc. Why is this?

  • “You could easily be a “hard-left” neo-liberal”

    Indeed, many of the founders of the neo-liberal framework in the US previously put themselves down as “left-wing”.

    “various commentators on this blog have at times suggested support for … (insert various trash policies)”

    I suggest that this has more to do with their rejection of liberalism itself – some of these commentators truly believe that individuals are less able to recognise their own preferences than the government is.

    However, to be generous, for some of the policies it is possible that some of the commentators believe that these policies are required to overcome institutional barriers to individual choice – however, I don’t actually see how this view is separate from neo-liberalism (or at least social liberalism, which appears to be very similar).

  • What about Wertfreiheit?

    Economic science, in short, establishes existential laws, of the type: if
    A, then B. Mises demonstrates that this science asserts that laissez-faire
    policy leads to peace and higher standards of living for all, while statism
    leads to conflict and lower living standards. Then, Mises as a citizen chooses
    laissez-faire liberalism because he is interested in achieving these ends.

  • Some very good points. You could call me ‘far left’ and ‘neo-liberal’ So I believe in maximising economic efficiency in order to create more economic surplus to make the individuals in society happy.

    Some points of contention between me and a ‘far right’ neo-liberal would be:

    a- when does the cost of an ‘economically efficient’ policy outweigh the benefit? I.e. I believe in accounting for true costs like environmental impact, which often requires government involvement (ideally in the most efficient method possible).

    b- How should that economic surplus be distributed? A weakness (to my values) of neo-liberal economics is that it has resulted in rising inequality of wealth, even while increasing economic surplus. Personally I would want to look at ways to redistribute some of that surplus through taxation, and improve things like bargaining power for workers, to aid fairer distribution of the surplus.

    ‘Now there is a significant belief out there that economists are right-wing conservative’

    I think this is because the right has championed neo-liberal economics, and used it to justify it’s values. To the right, the work of neo-liberal economists was proof that the proper way for an economy to run was ‘every man for himself, ‘ after the experiments of left wing governments from the great depression till the 80s to interfere with markets to make them ‘fairer.’

    The left has distanced itself from neo-liberalism. Labour is very neo-liberal, but it doesn’t like to say that too loud as it’s voters associate neo-liberal economics with the sense of betrayal felt over Rogernomics. A lot of left wingers see neo-liberal economics as a weapon of the right, not something that can be used by both sides.

    A personal note on this: when I took Econ 111 it was very right wing. It basically talked about the invisible hand and what happened in Adam Smith’s magical land where there was perfect competition and information. It very briefly touched on negative externalities, and gave a drop in the bucket look at competition in the real world. Basically if I had been an empty slate when I came in (and not have been most of the way through my history degree), I would have come out an ACT voter. Of course if you carry on with economics you might end up a very well-rounded economist like yourself, but at Otago, ALL commerce students must take just that one paper as part of their degree. And surprise surprise, ACT is has a lot of support amongst Otago commerce students.

    I have one more thing to talk about on this post…

  • Ok my beef…

    While your non-partisan approach to this blog is very refreshing, I find the assertion you sometimes make that economics is an objective science dubious at the least. Modern economists often make this claim, but for one thing, it’s not objective, nothing is.

    Economics is based on a whole set of cultural values and assumptions – like the assumption that all people are ‘rational,’ in a narrow sense based on the experience of western culture in the last 500 or so years. This does not discount economics at all, but I believe economics needs to be more interdisciplinary and pragmatic; it’s religious adherence to it’s own principles is restricting, and out of date.

    Economics as a discipline has never been as scientific and unified as it tries to portray itself now, either. You make a number of generalisations about ‘economics’ when you really mean ‘neo-liberal economics’- a school of economics that has only been dominant for the last 30 years (if that). e.g. ‘The entire economic discipline is focused on the individual.’ What about Marx?

    Notice how at most Universities economics is an ARTS subject, not just a business subject. The people who created economics wanted to build a better, happier world, they didn’t just want to be some sort of objective science.

    Okay I’m ranting, I stayed up too late, sorry. But yeah, I really like this blog but I find the objectivity idea kind of unstable.

  • Hi, thanks for the comments guys. I will answer them in separate comments.

    “Then, Mises as a citizen chooses laissez-faire liberalism because he is interested in achieving these ends.”

    Very good, so Mises has a different interpretation of the trade-off between economic and individual freedom than I do, but he still puts a positive weight on both – sounds like the same description to me.

    Hi Tono

    Ultimately, points A and B are issues where you are not going to find an economics consensus because they rely on the value that the individual places on them. The economic model provides a stellar way of setting up the issue, but it can’t answer the questions “what is the value of the environment” and “what is the best level of redistribution”.

    “I think this is because the right has championed neo-liberal economics, and used it to justify it’s values”

    Extremely good point – I was hoping someone would say this.

    I get the impression that people are following a rule of thumb to attack “economists” rather than focusing on the actual group who tries to push policies they don’t agree with – in that sense the economics profession is a straw man, rather than the cause of the problem.

    “A personal note on this: when I took Econ 111 it was very right wing”

    That is interesting – it is not like that at Vic. In the whole 6 week micro component there is 2 weeks on externalities, taxes, and regulation and 1 week on oligopoly. It must just depend on the economics school it seems.

  • “Modern economists often make this claim, but for one thing, it’s not objective, nothing is”

    True. But the value judgment\s we make when establishing our models are incredibly transparent (eg rationality). Now rationality is not that extreme, it merely states that individuals make choices – this is as close as I can get to an objective fact before I start to confuse myself 😛

    As a result, given rationality, I believe that the discipline is descriptive.

    “based on the experience of western culture in the last 500 or so years”

    This define the “frame” for the economic model – if I had to draw a venn diagram I would put this in the bit where the objective modeling and normative judgments collide.

    I agree that the cultural background influences the structure of society, and the rules of thumb that people follow – but it does not betray the fundamental assumption that people make choices. The fundamental economic model could also be used in describing alternative social structures – but the question then has to be “what determines the social structure we are in”.

    That is one of the goals of game theory – using individual decision making to explain the determination of social structures.

    I would also go so far as to say that economic models often don’t assume a social structure that even matches the Western world – the models are often too stripped down and abstract for that. The goal of (micro)economists is to generalise models as much as possible – this means that it is the people applying value judgments that often determine the social structure.

    “Economics as a discipline has never been as scientific and unified as it tries to portray itself now, either”

    Trueish. The discipline was not as unified as it is now, in methodological terms. There are “heterodox” schools of thought out there – but I’m not sure about calling some of them economics.

    “The entire economic discipline is focused on the individual.’ What about Marx?”

    Modern marxist theory is focused on the individual now. I do realise that the discipline used to be a lot more holistic. However, even sociologists are moving towards methodological individualism as it has become apparent that the whole is just the sum of its parts.

    Holism provides an easy way to describe things that are difficult to find using methodological individualism – however, MI allows us to explain why. This is why the focus on the individual is now so widely accepted in economics.

    “The people who created economics wanted to build a better, happier world, they didn’t just want to be some sort of objective science”

    Building the objective model is the first step in making a happier world. Economists specialise in description, something else might specialise in providing value judgments – add them together and you have policy.

    “But yeah, I really like this blog but I find the objectivity idea kind of unstable.”

    Thats cool – but I might be a hard person to sell it to 🙂

    Fundamentally, I go on about objectivity not just to defend economists – but also to remind economists that their aim is to describe, not to prescribe.

    Now when an economist goes out and says they like policy A better than B, they are not being an economist, they are being an individual and showing how they feel about things.

    I like to sell the difference between descriptive and prescriptive, not just so people stop yelling random stuff at me, but also because I want economists to be clear that once they move from descriptive to prescriptive territory they are no longer in their area of expertise – and as a result, maybe should not be as confident with what they are saying 😉

    *******

    I realise I am often prescriptive on the blog – however, I try to make it clear that I am stating my opinion. Furthermore, I try to make my assumptions as transparent as possible.

  • Stephen
  • “There are a couple of slightly outdated comparison charts”

    Very interesting, thanks for that 🙂

  • Stephen

    Should emphasise that they’re someone else’s evaluations, rather than a personal ones, so could be a bit off.

  • “Should emphasise that they’re someone else’s evaluations, rather than a personal ones, so could be a bit off.”

    Ahhh good point – that is good to know

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