Parallels of mainstream political theory and mainstream economic theory

Jun 08, 2024

Mainstream economic theory is a pseudoscience masquerading as genuine social science. Built on unrealistic fictional illogical irrational assumptions and legitimized by complex mathematical modelling - mainstream economic theory offers no solutions to real world economic problems. Political and economic system are intertwined and man made. And mainstream political theory is on similar track of intellectual bankruptcy just like mainstream economic theory. Let’s generalize some of the common themes in two arenas.

Rational choice theory vs Rational electorate theory

Rational choice theory is an important element of mainstream economic theory. The consumers are maximum optimizing agent who identify their needs, have the capacity to judge/analyze/measure various products in market and thus make best possible decisions of their consumption. In extreme form of rationality, there’s a school of thought of rational expectations which extends the acumen of economic agents to foresee the future as well, thus making them omniscient in their decision making.

The narrative of Rational choice theory is critical in mainstream economic theory because it establishes that the decisions taken in market economy are in best interest of economic agents and balanced by forces of demand & supply. If you try to make assumption that economic agents are ignorant and biased, and are manipulated and conditioned by corporations into making particular decisions on consumption (which are often in contrast to consumer’s best interest), the mainstream theory will lose some of its appeal as the best system.

In real world, the consumers don’t have the capacity to be omniscient maximum optimizing agents to analyze all goods & services and to take best possible decisions in self interest. The Business schools, marketing firms and the giant corporations know this very well. However, the macroeconomists have hard time comprehending this. Consumers are biased, uninformed, imitative and predictable. They can be conditioned, manipulated and exploited.

Rational electorate theory is a critical feature of Mainstream political theory. The electorate are considered to be rational, informed, logical and responsible social agents. They understand national issues, economic challenges, social problems, foreign affairs etc reasonably well. The electorate also understand political parties, politicians and their policies in various arenas - economy, geopolitics, trade, environment etc. Based on the extensive political knowledge, the electorate makes best voting decisions to chose politicians & parties which will be most beneficial to society.

However, reality is that electorate are mostly uninformed and irrational. People vote on populist sentiments and emotions, not on objective political understanding and reason. The irrationality of 3rd world electorate is abundantly on display where they vote on basis of religion, god and cultural nonsense. But the irrationality of masses of so called developed western world is now also increasingly on display as they vote for madmen like Donald Trump, getting duped by slogans of ‘Make America great again’ etc. Similarly, the rise of racist ultra right parties in Europe demonstrates decline of intellect of masses in western society.

Sovereign consumer vs Sovereign electorate

In mainstream economic theory, the consumer is professed as a sovereign with power to exercise his (or her) rational choice freely. The consumer makes the market, decides winners and losers with their sovereign decisions. The firms are subservient to consumer sovereignty. But this is far from reality.

Firstly, there really are no free markets anymore. Much of the markets are captured by monopolies and oligopolies which fixes the market - they decide what to innovate, what to produce, what to sell, how to sell it and at what prices. The consumers don’t have much say in monopolistic/oligopolistic markets because of two reasons. Firstly as mentioned above, rational choice theory is a bunk. Secondly, the power of consumer and his capacity to make free choice shrinks significantly in monopoly markets. They don’t have alternatives in such markets.

In mainstream political theory, the sovereign electorate is another critical feature. It’s professed that citizens are free to make political choices of politicians, parties and political ideas. The citizens are the sovereign electorate, the controllers of political system who exercise power over national government. The citizens are in charge of political system of state.

This again is far from reality. Firstly, the political field of a country is very narrow and is ruled by old established parties. In developed nations, there are two or three major parties in national politics. In fragmented developing nations, there can be many parties but only few have the clout on national scale. These parties are funded by various plutocrats, oligarchs and special interests. In fact, the old existing political parties have strong monopoly over national political discourse. Unless you are financed by some plutocrat and invited into club of established conventional political parties, you cannot enter political process. This is similar to economy where monopoly corporation drives out smaller and weaker firms.

Secondly, the electorate is constrained to chose only among the established political parties & politicians. The agendas of political parties is not decided by sovereign electorate, it’s decided by plutocrats and special interest groups who stay behind the scenes. The electorate are then conditioned to these agendas through demagogy and propaganda. The conditioning is done through mass media, education system and political campaigns. Policies of tax cuts, deregulation, massive defense spending, corporate subsidies, bailouts, state contracts etc are the policies for benefits of giant corporations but mainstream politicians sell them to the electorate as a necessity for broader public interest.

You very well know that real thinkers, competent professionals, philosophers, people of integrity and vision just can’t enter politics. The gates of political system are closed to such people. The politicians in present system are corrupted, compromised, imbecilic, incompetent and worst anti-social elements of society. The situation is worse in 3rd world dysfunctional Democracies where the political parties are kind of organized crime groups and politicians are gangster criminals. For example, in my country India, half of elected parliamentarians have criminal record.

Capitalist economies (Free Markets) are self correcting vs Democracies are self correcting

The mainstream economic theory has professed that there should not be any interference with the markets. The markets are self regulating, self correcting, self reforming and self preserving. There’s always a campaign by corporations, wall street, special interest groups etc to oppose regulation, market supervision and oversight. The markets work best when they are not regulated, is the narrative of conservatives as well as most liberals.

But reality is otherwise. Markets are unstable, inefficient and can even be chaotic in today’s hyper-financialized economy. The inefficiency and instability of laissez-faire system has been evident since 19th century but manifested into a total collapse with 20th century great depression. Output crashed, unemployment skyrocketed, businesses failed, banks shuttered, massive poverty ensued. Markets could not self correct. So society came to realization that economy must to be regulated as well as supplemented with govt financial backing. In last several decades, variety of regulations and state intervention in economy has happened to keep things on track. Nevertheless, the markets do fail and sometimes spectacularly (like GFC). The state always comes to rescue the economy but plutocrats continue to harp about the gospels of laissez-faire.

In mainstream political theory, there’s a notion that Democracy is self correcting and self preserving. But Democracies can fail spectacularly (Trump’s victory, Brexit referendum, various populist victories in recent times) and collapse as such has happened in many 3rd world states which now run on Potemkin Democracy. In developed world, there’s some recognition that modern Democracy has to be regulated and supervised for proper functioning. Ideas on this include campaign finance reform (to tame plutocratic control over politics), prosecution and banning of anti-Democratic political parties (like Trump, Bolsanaro, Afd), conflict of interest regulations (to break revolving doors) and other checks and balances (to keep Democracy from becoming a mob rule) etc.

But safeguarding democracy has been a tall task. There has been strong resistance by political establishment against campaign for curbing corporate funding in politics and against prosecution of anti-Democratic politicians. In 3rd world Democracies, the problem is much worse with pervasiveness of Democratic argument. Any gangster, criminal and religious fanatic is free to participate in elections. The notion being that people should be allowed to exercise their Democratic rights and candidate has the right to participate in electoral process (even if he’s a known psychopathic killer).

Democracies are not self correcting and instead the opposite if they are not vigilantly guarded/regulated. The secular decline of Democratic systems in last several decades in much of the developed world shows that Democracy can be regressive. The crisis of failure of Democracy is more visible in failed 3rd world states.

Supremacy of orthodox economic theory vs Supremacy of western Democracies

Mainstream economic theory shuns other economic schools of thoughts. The shunned space has become so large that it now exists as a vast space called heterodox economic theory which comprises of diverse school of philosophies (Post Keynesians, Marxists, Institutionalists etc). Mainstream economic theory, regarded as the Orthodox theory, proclaims itself to be the best scientific depiction of economic reality, marginalizing other economic theories.

In politics, the western style Democracy or more precisely, the western sanctioned Democracy, is the dominant paradigm of mainstream political theory. Everything has to be built on it and everything else should be measured to this golden standard. However, mainstream political theory (which originates on western model) is unable to explain the destructive MAGA phenomenon, its endemic social crisis in recent decades, institutional decay and general malaise that afflicts the western world. Similarly, the mainstream economic theory is unable to explain and redress rising inequality, falling standards of living, mass poverty, endemic unemployment etc.

The mainstream economic theory was exported to the world through doctrine of IMF, Washington consensus, Liberalization, structural adjustment etc. These doctrines did immense damage to economies of developing 3rd world nations. The mainstream political theory, built on western style Democracy is also exported by Anglo-saxon bloc to 3rd world developing nations. Either through brute military force or through diplomatic ideological expansion, the mainstream political theory (based on western style Democracy) has been implemented in many nations. The results are mixed. While some states adopted to Democratic transition with a degree of success, other states failed miserably and transformed into Potemkin Democracies; facades of Democracies covering the underlying Mafia state, gangster capitalism and plutocracy.

Mainstream economic theory and mainstream political theory - Both are performative, make-believe, instrumental systems

The various theories that builds up to mainstream economic theory are not any universal truth or even accurate depiction of economic reality. They are performative, make-believe and instrumental systems. The system functions on basis that economic agents will believe these theories and try to behave as per the prescribed roles of theory. The system is supposed to function like a theater where everybody is supposed to act their prescribed roles - the consumer, the governments, the markets, the central banks etc. The mainstream economic theory will come to fruition only when everybody acts according to it.

Governments and central banks do performative & shamanistic exercises to manage the economy. Central banks are busy managing expectations so as to guide economy in particular direction. Central banks will set certain interest rates & give forward guidance on where it wishes to see economy in near future. The markets and economic agents then start taking their positions accordingly as they believe central bank actually controls the situation. The governments especially in UK & Eurozone are busy satisfying the fictional confidence fairy by exercising austerity to please the fairy which will supposedly bring growth. The unemployed are preached to acquire more skills and raise their marginal product so they can become employable. The poverty and inequality is tolerated, even accepted, as an inevitable by-product of sacrosanct mainstream economic system.

Mainstream political theory is also mostly fictional and performative. Democracy, in theory, functions great when all political & social agents perform their theatrical roles with conviction. The electorate acts as informed, intellectual and rational actor. The politicians abides by rule of law and norms of society. The politicians compete each other with constructive ideas and sovereign electorate can chose from them for best national discourse. The elections will then bring forward the best possible governments to power. All this is unreal fantasy given all the actual complexities of society - The plutocratic control over political parties, the ignorance & irrationality of electorate, the politicians are sociopathic scoundrels, masses driven purely be sentiments and propaganda.

Both mainstream political theory and mainstream economic theory have become an instrument for power and domination of plutocrats, oligarchs and billionaires. It’s well known that there’s an ideological basis of mainstream economic theory which really is an instrumentality to maintain the power structures of existing plutocrats. The mainstream economic theory peddles ‘hopium’ that with sufficient hard work, a proletariat can also acquire wealth & climb the social ladder, a middle class petty bourgeoisie with sufficient hard work & conviction can get rich & enjoy the luxury of bourgeoisie class. The mainstream economic theory masquerades as system that gives sufficient opportunities for all classes to attain affluent life. In reality, the system by its very design, is heavily biased in favor of those who already have capital.

The mainstream political theory superficially appears to give power to every citizen of the country. But as i explained above, the sovereign electorate and rational electorate theory is a chimera. The political system is dominated by rotten old parties & politicians which really are fronts of special interest groups & plutocrats. The citizens are just pawns who are manipulated on sentiments & emotional appeal, demagogy and propaganda for getting votes. But the process gives the delusion to ordinary citizens that they are in control of the system, they exercise power over the state. But anyone who’s not duped by conventional wisdom of mainstream politics knows that a citizen is atomized powerless creature.

Dictatorships, autocracies & similar political systems etc are inherently destabilizing as citizens are controlled on basis of fear and force. The bourgeoisie class and politicians have learned that a better way to control the system is by selling an illusion to people of having power & control over the state. The real power however lies elsewhere. Also note that power relations are never formally taught to students of economics and political science. The political character of corporation, the control of political systems and political parties by plutocrats and oligarchs, class struggle etc; the students remain oblivious to these facts or treat them only as a minor aberration in the system.

Sanjeev’s Substack

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