"the mundane economic issues that wear people down and cause them to rise up"

Via Economist's View, from Joseph E. Stiglitz: The End of Neoliberalism and the Rebirth of History. The opening paragraphs:

At the end of the Cold War, political scientist Francis Fukuyama wrote a celebrated essay called “The End of History?” Communism’s collapse, he argued, would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies. Many people agreed.

Today, as we face a retreat from the rules-based, liberal global order, with autocratic rulers and demagogues leading countries that contain well over half the world’s population, Fukuyama’s idea seems quaint and naive. But it reinforced the neoliberal economic doctrine that has prevailed for the last 40 years.

The credibility of neoliberalism’s faith in unfettered markets as the surest road to shared prosperity is on life-support these days. And well it should be. The simultaneous waning of confidence in neoliberalism and in democracy is no coincidence or mere correlation. Neoliberalism has undermined democracy for 40 years.

At that point, I was sayin GO, JOE!

Myself, I'm not comfortable pointing the finger at a large group of economists that I would prefer to have on my side. Other than that, though, Stiglitz is right: The economy has undermined democracy.

The economy drives politics, always. People almost always have that backwards.


There was no greater economist than Maynard Keynes, but there was one wise enough to warn of the potential excesses of Keynesian economics. Hayek, in The Road to Serfdom:

So long as we can freely dispose over our income and all our possessions, economic loss will always deprive us only of what we regard as the least important of the desires we were able to satisfy. A "merely" economic loss is thus one whose effect we can still make fall on our less important needs, while when we say that the value of something we have lost is much greater than its economic value, or that it cannot even be estimated in economic terms, this means that we must bear the loss where it falls. And similarly with an economic gain. Economic changes, in other words, usually affect only the fringe, the "margin," of our needs... This makes many people believe that anything which, like economic planning, affects only our economic interests cannot seriously interfere with the more basic values of life.

This, however, is an erroneous conclusion.

Economic planning would not affect merely those of our marginal needs that we have in mind when we speak contemptuously about the merely economic. It would, in effect, mean that we as individuals should no longer be allowed to decide what we regard as marginal.

The essence of his argument: Economic issues are not matters of secondary importance. They are more significant than they seem -- more significant, even, than political issues. The economy drives everything. If the economy goes to shit, everything goes to shit.


If Hayek can't convince you, maybe Hayward can: Gene Hayward, a high school economics teacher. His students, he says,

want to believe the "Brave Heart" fight for freedom mantra version of events. I show them examples of the mundane economic issues that wear people down and cause them to rise up. The rebellion usually morphs into a cry for freedom and liberty and blah, blah, blah, but it was born of price instability.

Or maybe this guy. Of him, Time magazine said:

Keynes feared inflation, and warned that "there is no subtler, no surer means of overturning the existing basis of a society than to debauch the currency."

Neoliberalism, Stiglitz said. Economic Control and Totalitarianism, Hayek said. Rebellion, Hayward said. Overturning society, Keynes said. Troubling political issues, deeply entangled with economic troubles. As noted by Stiglitz, Hayek, Hayward, and Keynes. And me.

The economy drives politics.

(If you want to say politics drives the economy, fine. But don't forget it also works in the other direction. What was it Stiglitz said? He said it's "no coincidence or mere correlation. Neoliberalism has undermined democracy...")