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The wrong explanation

3 September 2014 By Edward Hadas

Many people think politics is really a branch of economics. When the United States invaded Iraq in 1991, the common cry was that it was all about oil. On the same thinking, rich countries were indifferent to the brutal civil war in the Democratic Republic of the Congo – which has cost 5.4 million lives, according to the International Rescue Committee – because the economic stakes were too low to matter. This economic reductionism goes on in developed countries too. Pundits and pollsters argue that elections are won and lost above all else on the economy.

Such ideas can be traced back to the philosopher Karl Marx. He believed that material considerations motivated everything people do, including how they are governed. In modern surveys, people routinely say that the desire for better jobs or higher incomes is not what drives their voting behaviour. On Marx’s view, these respondents are either lying, or in denial. They may not realise that economic discontents and aspirations drive their action – and all of history.

Followers of this dialectic should be disconcerted by current events. Only a die-hard Trotskyite could see economic issues behind the conflicts in Ukraine and Iraq.

Economic explanations are inapplicable to the strategy of Vladimir Putin, even if the president of Russia is trying to reconstruct the glory of the supposedly Marxist Soviet Union. Putin treats narrow economic motivations with disdain. His creeping invasions are not cheap, the occupied areas are mostly in dire economic straits, and retaliatory sanctions will create economic hardship for all of Russia.

For Putin, power is clearly more important than prosperity. His propaganda machine is trying to persuade the Russian people to think the same way. That creates a good test for the neo-Marxist reading of history. Russia is sufficiently rich and large to tough out widespread foreign hostility, especially with some help from China and other sympathetic governments. However, tight sanctions will make the Russian people poorer. Will they put up with the required economic sacrifices, or will they eventually prefer greater prosperity to national pride?

The Western governments which are relying on sanctions hope that economic logic will prevail, that struggling Russians will eventually force Putin to change his ways or leave his office. These politicians are thinking in domestic terms. They see their own voters as hugely sensitive to even relatively small economic setbacks and assume Russians will also put pocketbooks before principles, especially Putin’s principles.

The situation in Iraq also defies economic determinism. It may be possible to find economic explanations. But Islamic State, the ultra-radical group which now controls large portions of the country and neighbouring Syria, puts its fanatic ideology before the mundane issue of helping residents live a comfortable life. The group’s many regional opponents also treat the promotion of the economy as a secondary goal, far behind religious beliefs, the protection or acquisition of political power and the glory of some people or nation.

Economic issues undoubtedly matter more in developed world politics. These countries would not be so rich without a great deal of attention to increasing production and developing technology. There is much worry about economic status – how do my wealth and income compare with my neighbour’s, how can my children retain or better my position?

Still, European and American politicians pay too much attention to economic issues, and often focus on the wrong ones. Basically, they are almost always too gloomy. In every rich country, the standard of living, even of poor people, is amazingly high by any historic standard, but that is not what the political rhetoric suggests. The economy is commonly seen as failing badly just because GDP, a deeply unreliable indicator, is not rising smartly. The exaggerated talk of immense inequality and of rapacious or cruelly austere governments practically encourages voters to feel hard done-by economically.

The almost frantic desire to provide economic goodies encourages governments to try too hard. The biggest problem is their determination to offer a welfare state that costs more than voters are willing to pay. Politicians should agree to offer only the benefits that the tax system can fund. People would be just as wealthy, but fiscal policies would be sounder and politicians would seem less dishonest.

Similarly, if the leaders were not always so desperate to get GDP up before the next election, they would invest more in infrastructure and research, which bear abundant fruit, but slowly. And if everyone calmed down about GDP growth, they could pay more attention to the labour side of the economy, where there are significant problems. Jobs are needed, but most governments are too economically exhausted by their welfare states to find the resources needed to create them.

In other words, economics is a branch of politics, not the other way round. Leaders would do well to recognise its place.


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