Schools Of Thought In Modern Politics: Part 3: Understanding the theoretical roots of economic policy

In my final post about different schools of thought and modern politics, a central question is how do we determine whether countries are more liberal or socialist in their policies while still maintaining the academic meaning of those words, which I have already defined by analyzing the views of the people who founded these schools of thought.

Before determining which school of thought dominates the country's economic policies, we first must construct a test to determine which school it most represents.

1. Does this country have price controls? How ubiquitous are they? (Price controls are a feature of mercantilism and socialism. Liberals oppose price controls.)
2. What percentage of manufacturing does your country control? (Control of manufacturing by the government is a feature of socialism. It can be a feature of mercantilism. Liberals favor private industry in competitive markets, but generally support intervention in monopolies.)
3. Does your government protect businesses from competition? (Mercantilists and Socialists oppose the free market. Liberals favor low barriers to entry to the market.)
4. Where do parties stand on interracial issues, if interracial issues exist in your country? (Liberals are concerned about ending such inequalities, Fascists are opposed to minorities, Socialists believe the real division is between classes)
5. How much influence does the average person have in government? (This determines how much corruption there is in government, Corruption Perceptions Index is a good metric)

Some questions are not defining features of any major school of thought and only controversial in sub-branches. The regulation of monopolies has been favored by most liberal economists since Adam Smith for example, and public education was a prominent feature of John Stuart Mill's extremely liberal writings, so I have omitted such issues. These four questions aim towards the root differences in today's world.

If we were then to analyze different country's policies, and more importantly the difference between different parties domestically and international, we can get a general idea of the ideological leanings of the major world players.

In the United States, each party is ambiguous about price controls. Democrats generally push for policies which will push prices down for the poor, but this is a completely separate and very liberal mechanism. Republicans do not support price controls, so this makes them look liberal. The second question also puts both parties as liberal. The third question however is where the picture gets more complicated. A number of politicians will support reforms like minimum wages, but minimum wages have disadvantages like other price controls, which is normally seen in a surplus of labor from our basic supply and demand graph. The other word for this surplus is unemployment. Another form of price controls we frequently see is in agriculture. The government keeps the supply of food low to keep the price high enough to support farmers profit yields. This is definitely not a neoliberal policy (who would generally support no price controls) and creates inefficiencies, while there are other issues with agriculture like food security that makes it a much more complicated issue.

When it comes to having a more open or closed market, this is similarly ambiguous.
In conclusion for the series. Today's politics has seen a  rapid reduction in true socialists who would call for the collectivization of production.

When it comes to racial inequality, we start to see some divergence between parties on ethnic questions. Democrats are far more likely to support human rights legislation than the Republican party, and most Republicans view such legislation which reaches out to minorities as being "bailouts" or other disparaging terms. Fascism still has some influence in terms of immigration policy in the US and Europe, and how different regions respond to issues like police shootings which have a massive racial component.

The other major issue today which we observe with the influence of the average person in government is widely apparent with far more Democrats supporting campaign finance reform than Republicans. This is one wedge issue which paints a difference in access to government between our two parties. This wedge pits politicians who support a government which works for all and is based in liberty against politicians who exist to serve their higher-ups and are corrupt. It definitely is not a guarantee that a member of either party will fit cleanly in the organization, but is a trend which makes them clearly different from each other to close observers.

This conflict between liberty and corruption is the true ideological conflict between parties in American and European politics today. The idea of access to the economy and government for all people is a fundamental distinction between the two major parties. There is still some role for fascist vs. liberal thought in modern politics as a significant driver, but this does not extend to the questions of campaign finance and how the government spends most of its money.

Schools Of Thought In Modern Politics: Part 2: Who are the Neoliberals?

Building off my last post which defended liberalism as opposed to socialism and fascism, I want to look at the economies of Europe and determine whether their economic policies are more liberal, socialist, or mercantilist. Before I post on that, I need to clearly define the different schools of thought within liberalism by looking at the writings of the authors themselves. Keynesians are fairly easy to define, but the school of thought most misrepresented in today's political arena is that of the neoliberals of von Mises, Hayek, and Friedman and their followers.

Most other issues are not wedge issues between Marxists and Liberals as competing ideologies in their policies.  When it comes to the regulation of monopolies classical liberals are unified about the necessity to prevent one company from having too much power. Even Friedrich Hayek (who is one of the most libertarian economists out there) agreed that social insurance and public health are important services of the government. (Road to Serfdom, chapter 9) Milton Friedman also saw a role for the government and envisioned the Earned Income Tax Credit, the largest transfer of wealth to the poor in America. ¹ Clearly, government intervention is not opposed by even the Austrian or Chicago Schools of thought. The Austrian and Chicago schools definitely supported less direct government intervention than Keynesians and are not the same, but their support of negative income taxes and transfers of wealth from the rich to the poor are antithetical to the modern conservative movement across the world. They advised the conservative parties in their respective countries as well, and deeply influenced the policies of their governments. The politicians then selectively listened to the parts of their arguments they liked and discarded the rest. To emphasize this point, Milton Friedman used Hong Kong, a territory with public education and single-payer health care, as a preeminent example of free market capitalism. Reading their writings and looking at the policies of the conservative parties across the world I see a lot of disconnect and selective listening.

The closest you get in 20th century thought to her radical nature is Ludwig von Mises who influenced politicians but has few true followers in economics who didn't distort what they actually said. Many people claim that Friedman and Hayek follow him, but reading their writings, Mises was more radical than these Austrian School thinkers for multiple reasons. First of all, Mises has little to no interest in fighting income inequality, contrary to Hayek and Friedman who wrote extensively on this point.

Then how do you categorize the current right-wing in America and Europe which has become radicalized over the last 30 years to the point of making Hayek look like an ardent Keynesian? If you look at who is behind the funding of the political campaigns of both parties on Open Secrets you find it is large businesses which are attempting to benefit themselves at the expense of others. Economic thought has never endorsed such an opinion, and is widely credited from economists ranging from Smith to Hayek to Mills to Keynes as being a gross misunderstanding of how the economy works. In economics we observe that the expenditure of one person is the income of another. This is about as close to an absolute truth as you can get within the field. The individuals who fund political campaigns behind this radical ideology are far more in line with Ayn Rand's view of the world which now dominates parties across the world, the Republican Party in America, Conservative Party in Britain, CDU in Germany, Liberal Party in Australia, and Conservatives in Canada. The denial of global warming and idea that we are not connected to one another is contrary to everything economics has ever learned and delusional. It is the ideology of Ayn Rand, who had little to no understanding of economics, and proposed that we are separate from everyone around us. This idea is opposed to all serious economic thought left or right in the world, and there is no evidence for it.

The leaders of this movement who are put forward by these monied interests took some ideas from Hayek and Friedman with little to no understanding of economic theory and then twisted their ideas to fit their own ends. We saw the erosion of the public sector in both Britain and the United States by politicians who do not understand the way the economy is connected into a radical form from popular books that were written by these laissez-faire economists. They took the parts which vindicated government intervention from their non-academic works and then ran with it to an extreme that none of them ever fully advocated in their scholarly works. We see the rise of people like the Koch brothers who fund these organizations to destroy all state intervention and are not liberal in their economic thought at all. These people are simply corrupt and do not closely fit in any modern Western philosophical tradition, unless if you counted objectivism as a philosophical tradition in which case they fit almost perfectly. The closest form of thought they are to is mercantilism because they support policies which improve their businesses but hurt others, support trade when beneficial to themselves in the short run while at all other times oppose trade through legal barriers such as extensively long copyright and patent periods. All of these policies have been demonstrated to be detrimental to the economy in the long run. This is why I am convinced the people these individuals listen to are not economists but the people who pay their campaign funds.

So, in conclusion, the modern Republican Party is not a neoliberal party but an objectivist party. One finds very selective following of the advice of Friedman and Hayek but the most influential individual in them who they did not selectively listen to is Ayn Rand, and the monied interests today who take her writings to heart.

Schools Of Thought In Modern Politics: Part 1: Defining and understanding the modern schools

A question I have been wondering for a while now is how to defend liberalism in a logical way vs. the two other major modern schools of thought which are fascism and communism. the major schools I am going to analyze are liberalism. socialism/communism, fascism, and mercantilism because all four have substantial influence in modern politics.

First, definitions. I am trying to make these the most basic possible, and each of these schools are very diverse, but each idea has basic tenants in common which unite them, primarily the idea of who the primary actor of society is which is a fundamental assertion of all of these major schools of political thought and an easy way of discerning between competing branches.

Liberalism is going to be understood as being focused on the individual as the primary actor in history and is focused on expanding individual rights. Different liberals will interpret this differently (Mill's utilitarianism and Rawls' Justice as Fairness for example) but they all agree on those basic tenants. Liberal economics proposes a system which emphasizes individual liberty balanced with a role for the state (which almost all liberals from Adam Smith to John Maynard Keynes base it on to different levels). The solution to economic justice then is a system where people are able to trade freely (with some exceptions) and social justice where you cannot be restrained from doing actions which do not harm others. In this way almost all liberals focus on justice more than freedom. Most liberals also are not primarily opposed to government intervention. Liberals going back as far as Adam Smith advocated for government intervention in the maintenance of monopolies, and 70 years later Mill argued for public education and other public services which were become more important as capital grew in importance and the labor theory of value was insufficient to explain economic growth (as it mostly was during Smith's time). Liberalism is like a ninja (as one of my teachers likes to say) in that it has substantially evolved over time, but liberals continue to agree with who the primary actor of society is and generally that we should work with market forces and have a generally free market.

Marx is focused on economic classes as the primary drivers of history and history is seen by him as being a conflict between the bourgeois and proletariat. The bourgeois take advantage of the proletariat and the solution is for the proletariat to supplant the bourgeois and create a dictatorship of the proletariat. Marxism must be understood as an evolution of the economy through various stages beyond the current form of capitalism.

1. The economy would be centrally controlled by this dictatorship of the proletariat. the example used by Joseph Weydemeyer is that of Oliver Cromwell in England (who as any Irishman knows was far from benign) and the French leadership which succeeded the French Revolution in 1791 (also known as the Reign of Terror). As a sidenote, next time you are constructing a school of thought, don't use the Reign of Terror as an example of what your theory will recreate, however briefly. The states where the proletariat take over the means of production then should expand their rule to spread the dictatorship of the proletariat to other nations.
2. As society progresses (according to Marxist thought) the dictatorship will then turn into a society where everyone is completely equal in their ownership of the means of production in what Marx called a socialist society. socialism is a society where the means of production are owned directly through the people jointly or indirectly through a government, where all decisions will ultimately be made by the workers.
3. As the socialism progresses all people will become equal and then the society will evolve into a communist society. This communist society is where everyone will have equal ownership over the means of production and there will be no government and no social classes. In the countries where the dictatorship of the proletariat has been established it has failed to progress to a completely communist society in all of the places which have attempted it. The transition will now be complete and everyone will be equal.

Fascists view races as the primary drivers of history and history is the struggle between ethnicities. The way to make peace is make your ethnic group the most superior of all which is the philosophical background to the classic fascist states of history. Race is a socially constructed phenomenon based on how power relates to people's heritage. A system where all ethnic groups are equal, such as Bavarians and Berliners are politically equal, would then be of the same race, while a system where Bavarians and Berliners are fighting between each other would have the Bavarian Race and Berliner Race. Race is in this way completely unnatural and a fully social construction. The way we see the history of the Irish in America for instance confirms this interpretation. Any time you hear a politician make an argument against an ethnic group or argue that people from different ethnic groups cannot cooperate their argument has its roots in fascism.

The fourth major school of Economic thought is that of Mercantilism. Mercantilists are all about protecting the businesses of the state from foreign and domestic competition, and believe that trade represents weakness because they argue it makes you vulnerable to invasion from the countries with which you trade. First of all, I must point out there is scant to no evidence the economy actually functions this way, and economists today almost unanimously agree that this is a way to reduce growth and increase inequality and it is really hard to get economists to agree on anything. I include Mercantilism on this list because it is the school of thought which impacts policies regarding agriculture, laws which prohibit imports in an attempt to boost domestic industry (see the protections against foreign auto manufacturers which were scrapped in the early 1990s) and rigorous multivariable research on the impacts of these policies almost universally agrees that these policies end up hurting the economy in the end. I really have nothing good to say about mercantilism, but it continues to pay an important role in economic policy around the world.

For me I am definitely a liberal. The best reason is what is when a Marxist dictatorship of the proletariat or Fascist state is established the response then is the class or race which is supplanted to then supplant the new master race (literally meaning the race of masters) or upper class. They lack balance of power which leads to a concentration which breeds corruption. There is no solution ever in these and a constant cycle of one group fighting another. Turning a dictatorship into a democracy is a long and arduous process, and it has never been done overnight.

Liberalism on the other hand doesn't have such a problem. Since we live in a world where nobody is 100% from one continent or another according to DNA evidence there is no biological background to the concept of a race except one that includes all humanities, except as a purely social construction. We are all people, so fascism makes no sense. When it comes to Marxism we see the development of Marxist states such as the Soviet Union and China see only the creation of a new bourgeois class supplanting the old bourgeois class, while most people remain proletariat.  We have no example in history where a dictatorship has ever voluntarily given up its power. There is no solution in Marxism and the classes are not natural nor inevitable.

A truly liberal world would on the other hand recognize the humanity of all people and build a world where everyone has the same political rights as everyone else. More liberal states are closer to such an ideal than others and don't see a contradiction with an upper or lower class compared to Marxist or Fascist states. If someone were to create a society where people would be unequal, they would not be following the basic overarching concept that unites all liberals, and would stop being a liberal. For me this represents a strength of liberalism which the other schools fail to succeed in. Truly liberal states (such as Scandinavia, New Zealand, Post-WWII West Germany, Pre-Thatcher Britain) have had generally liberal economic policies and saw the largest decreases in income inequality the world has ever seen. Countries which tried the central planning approach failed to reach these levels of personal freedom and material well-being which are two major factors in determining quality of life.

The final defense of liberalism must be that the economic policies of Reagan and Thatcher are not liberal. Liberal economics, if we are going to use the term as political theorists use it regards a market where firms can freely enter and exit, the government does not pick winners or losers, and everyone has a level playing field with equality of opportunity. this is what was written by Adam Smith, added onto by John Stuart Mill (who advocated for equality of education and other leveling factors) and then with John Maynard Keynes who of course advocated for government to be involved more heavily in recessions and less in times of expansion in countercyclical policy. All of these three major liberal thinkers agreed however that the government should generally be uninvolved in the day to day operation of the economy besides the basic necessities and natural monopolies, as opposed to the interventionist policies of Marxists and Mercantilists. the policies of Thatcher and Reagan (etc.) led to the reduction in private competition by favoring certain businesses over others, which is opposed to everything that the great liberal economic thinkers proposed. The policies they did which favored some businesses over others (tying into the idea of that the government should not pick winners and losers) led to a less competitive economy and is actually mercantilist, which is exactly the school of though which liberalism was founded in order to oppose. I take their actions more seriously than their words (as I do for every political leader) and given how this was their approach I must say they fit closer to the Mercantilist camp. Their policies to break public organizing is opposed to liberalism (especially the works of Mill) because it was the government intervening in the economy to regulate how workers can and cannot act to protect one class over another which was exactly the picking winners and losers liberals love to hate and mercantilists advocate.

So, in conclusion of this first installment in what has rapidly become a series of three articles, the modern Republican Party and other similar parties across the world is not a liberal party. Also, liberalism is the only major ideology in the world which does not contradict itself in major ways. Because of these reasons, we should base our economic policies on liberal ideas.