I always get into trouble with economists when I claim that there is no such thing as an apolitical economics.
That economics is a branch of politics and all economic analyses have political values embedded within them – values that need to be made transparent rather than hidden in opaque models and unintelligible equations. We need to revert to that dying term – the political economy – rather than continuing the pretence that seems to appeal to so many – that economics is somehow a value-free, empirical ‘science’.
That’s all very well, or not, depending on your perspective. But how do politics and economics interact in practice?
A wonderful examination of that question can be found in Sir Vince Cable’s latest book Money and Power. The book is a multi-century review of how leading political figures – from Alexander Hamilton, through Bismarck, Margaret Thatcher and Donald Trump, dealt with the interaction between economics and politics.
From those who ‘knew’ economics to those whose focus was almost exclusively political, the book shows that economics and politics are inseparable. How ‘Almost every political question has an economic aspect and almost every economic question has a political aspect.’ as stated in one of the opening quotes from Charles P Kindleberger.
From Robert Peel’s repeal of the corn laws to break monopoly power, open up markets and feed people, to the bolstering of Lenin’s revolutionary zeal loosely based on Marx’s economics, to FDR’s New Deal, to Thatcher’s (and Reagan’s) embrace of the political philosophy of neoliberalism, to Shinzo Abe’s politics framed as Abenomics, economic theory and political philosophy constantly feed upon each other – and cause each other to change and evolve.
In practice, though, “Political leadership matters in economic policy. Policy may have its origins in economic theory…But it is politicians who put it into practice, who oversee it, who are judged by its results,” according to Cable. That is all true. Added to it might be the idea that economic theory itself has its origins in one’s fundamental political beliefs.
Economists like Karl Marx and Milton Friedman viewed the world in fundamentally different ways. They used radically different political frameworks as starting points for their economic theorising – which, in turn, shaped future political action.
As we all try to find ‘expert’ analyses that fit in with our own prejudices and world views, it is as well to accept that, particularly in the so-called ‘social sciences’, there is no such thing as value-free research and analysis. What research questions are asked, how studies are constructed, how data is interpreted, how conclusions are presented – all of these things tend to reflect the value-system and world view of the subject-matter experts concerned – in short, their politics. All worth bearing in mind when some are tempted to declaim ex cathedra about economic matters as though economic theory were comparable to the laws of gravity.
Or when some economists and business leaders continue vacuously to declare themselves ‘apolitical.’
The book is well-written and a highly enjoyable and informative read from an accomplished economist and a seasoned, successful politician. Read it.
