Stumbling and Mumbling

Author: chris dillow   |   Latest post: Wed, 12 Sep 2018, 02:30 PM


Does economics matter?

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Does economics matter? I ask because I suspect I would understand political debate better if I realized that it doesn't.

Everybody tends to over-rate the importance of their profession: it's part of deformation professionelle. Lawyers over-rate the importance of the law, artists of the arts and so on. Maybe economists do the same. Perhaps we should realize that most people who are interested in politics just aren't interested in economics.

If we adopt this perspective, a lot falls into place. It helps explain centrists' hostility to Corbyn. If you're not interested in capitalist stagnation and responses to it - Ian Austin, for example, never mentions the economy in this piece - you'll not see much to admire in Corbynism: all that will stand out are associations with ant-Semites and Stalinists, student leftist politics and a rejection of conventional Westminster methods. For such people, the enthusiasm people like me have for Corbyn and McDonnell's attempts to build an alternative to neoliberalism look as eccentric as would an actor endorsing Corbyn because of an attractive policy towards theatres.

Rightist politics also become more comprehensible once we recognise that economics doesn't matter. The strongest case for austerity and immigration controls is that these have nothing to do with economics. Like Brexit, they are instead attempts to assert that governments have control over social affairs. Their supporters just don't care about their economic consequences because other things matter more: sovereignty and an assurance that the government is on top of things.

Brexiters talking about economics are like dogs walking on their hind legs. One partly admires the gymnastic trickery, but the job is badly done and the animal's heart isn't really in it.

Of course, the right and the media do talk about "the economy." But by this they mean something very different from what I understand by it. To them, the economy is not about real people struggling to make a living. It is a reified hyper-reality, a means through which politicians try to establish credibility. This is why "the economy" has often been equated with the public finances.

You might object that the right certainly do care about economics when it comes to opposing Corbyn's call for higher taxes on the rich. I'm not so sure. Opposition to tax rises is perhaps instead like land-owners shouting at ramblers: "get orf my land". They are motivated less by fears of material loss but by the violation of (perceived) property rights.

And here's the thing. There is some justification for this denial of economics. The link between income growth and subjective (pdf) well-being is weak and even many of the worst off feel they are living comfortably. Granted, this might be a sign of adaptive expectations. But it also tells us that things other than economic growth are important: community, autonomy, physical and mental health and so on. From this perspective, perhaps it's understandable that politicians should want to offer a sense of security - as in various ways austerity, Brexit and immigration controls do - rather than higher incomes.

But, but, but. As Benjamin Friedman has shown, economics does matter. Growth makes people more open-minded and tolerant whilst stagnation makes them meaner: it's no accident that a decade of stagnation has led to a rise of reactionary populism. John Stuart Mill claimed that a stationary state of incomes provides "as much scope as ever for all kinds of mental culture, and moral and social progress". Subsequent history, however, suggests he was wrong.

It might be the case that most politically-engaged people don't care about economics. But nevertheless, economics does matter.

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