Tuesday, May 20, 2008

"Neoliberal Populism"

the depoliticization of economics

I went to two intellectually stimulating lectures in a row: Yesterday Professor Mine Eder's talk on the political economic features of the AKP government in Turkey, and today a panel discussion on why economics matters. I thought they had a common point: That economic policy-making is increasingly escaping the political realm, and neoliberal economics is being elevated to an undebatable law of nature. Technocrats, who usually have an academic background, understand this law and devise policies that are compatible with it. Maybe the Economist is its holy book.

Is it because the alternatives to neoliberalism have failed? Is it because there really is one way to manage the economy well, and economics is actually a positive science? The alternatives that have been tried so far were actually lapses in thinking, mistakes that were necessary to find the right way in the end? And now we have learned from our mistakes and discovered the truth?

While I was studying economics, I thought politics was so frustrating, each group pushed for their interests and wanted to gain undeserved rents, hurting the whole economy and leading to suboptimal outcomes. So it is better to leave economic policy making to technocrats who can see the big picture and who are aware of the constraints. Who wants to think about these things, anyway, they are too complicated. We trust economists just like we trust doctors, engineers. After all, we are quite happy to devolve our decision-making powers when we visit a doctor.

Eder pointed out that in Turkey economic considerations come after religiosity and ethnicity in voting behaviour.

Hence the "neoliberal populism", a new breed in political economy. Governments cannot be true populists anymore, because their dependence on international capital markets sets boundaries on how much they can spend. So the elected governments and the people alike submit to the "rule of economics" as prescribed and defended by the technocrats. Ruling and opposition parties alike accept it as a fact of life, and if not already there, set it as a common goal to be reached. Political debates remain confined to cultural and religious issues, lifestyle choices - because everybody more or less agrees on the general direction economic policy making should take. Nobody dares (or cares to) offer an alternative.

In the Turkish case, the AKP government wants to defeat the secular elites and return the power to the people. But when workers want to take to streets to protest the Social Security Reform, the prime minister declares all of a sudden that workers should leave policy making to those who know better than them. Isn't this a new kind of elitism? While the government argues that the powers of the military and the judiciary should be curbed in the name of democracy, a group of economic institutions mushroom largely free from political influence (of course clientelistic relationships exist between the governments and the officials in these institutions, but the goal is personal benefit rather than a re-orientation of economic policy): Central Bank, Privatisation Agency, Capital Markets Agency, Energy Markets Regulatory Agency, Competition Authority... They know better than us, so we let them decide.

Aren't the cycles of IMF intervention akin to military coups? They come in when elected governments mess up. Is output legitimacy enough to justify the lack of input legitimacy?

The economics student in me knows that this is probably the best way. But I also realize that it is not that simple: the grievences in some segments of the society should not be overlooked. In fact, Martin Wolf pointed out today that usually distributive concerns, perceptions of injustice in allocation of resources and income lie behind ethnic and religious divides, civil unrest.

So maybe economic considerations do in fact affect voting behaviour. Religious and ethnic identities are magnified and become a source of division and hatred when people are not satisfied with their standards of living, when they are not well-educated, when they think they don't receive their due share of resources and power.

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