Editorial

Does an economy respond to scientific criteria? As a jurist who deals with economics and has ruminated often on the ongoing global downturn,this is my first postulate.

 

The economist,like the physicist, can err in his assessment of nature’s laws. It’s a “technical” error that a passionate scientist overcomes by getting to the truth.

The market is in the nature of all things economic, which in turn creates a dichotomy with political power. Political power is influenced by personal passions and self-interest. A politician, meanwhile,is easy prey to demagoguery. According to this progression a “good politician” should resist populism’s temptations and instead follow the technical requisites of the marketplace that the scientist has laid out for him.

But my postulate doesn’t account for man-made institutional phenomena.The economy is supremely political, as is the law that imposes its tenets. Adam Smith and Friedrich List are politically different; Luigi Einaudi and Raffaele Mattioli argued over the stabilization of the Italian lira after World War II; Joseph Stiglitz’s opinions differ from those laid out by George Stigler’s Chicago
School; Paul Krugman in “The Conscience of a Liberal” is political; so is J.B. Taylor in “Getting Off Track: How Government Caused Action and Interventions, Prolonged, and Worsened the Financial Crisis.”

Key investment bank lobbyists and influential market players convinced the American government to ignore the basic rules of economic stability. They operated in accordance with radical market policies endorsed by technocratic ideologues. It’s hard to tell if the American government actually yielded to vested interests or merely adopted a political vision in line with that of the
Republican Party.

That’s the point, of course. I repeat: Choices are fundamentally political, whether they serve a greater whole or an elitist cadre. The American idea of reducing taxes among higher income groups (hoping to benefit the community at large and stimulate the economy) was supremely political.

In Italy, a careful analysis of privatization legislation, banking regulations and new social laws( with an emphasis on group phenomenon) suggests that rather than opening the door to the market, as was preached, something else has occurred.

Recent decisions instead preserve the tradition of the mixed economy, with one important variation: authority has acquired a corporate dimension, thus endorsing a tendency Alain Cotta generalized on in “Le corporativisme, stade ultime du capitalisme.” (“Corporatism: The Final Stage of Capitalism”). The Rule of Law makes more sense in a mixed economy. The weakening of civil law in relationship to the social compact as well as the return of business to an administrative role is inconsistent with market place operation. Asphyxiated stock markets show how little “market” there is in the world of“ finance. ”Market
choices, even those I share, are wholly political in ways that have revolutionized law and institutions. Even the choice to preserve the status quo is political.

In humanistic sciences, rationality doesn’t need to be identified in nature. It is a means that facilitates decision-making. Even politics is science, if by science we mean rational discourse. Resources are tailored to suit desired interests.
But interests are also ultimately political and to seek them requires political risk, including an uncertain future. The conversation about the future necessarily includes all those who might be affected by the decision. In a democracy, the interested party is the whole citizenry. All are involved in a debate to help persuade a majority to reach a consensus. Persuasion can be achieved through rationalism or given over to demagoguery. The quality of social debate is what gives quality to politics.

Italian institutions (electoral processes, legislative procedures, judiciary, government, party structure and mass media) are less utopian than in most democracies. Demagoguery is more likely to intervene and limit rational thinking.The deep and growing divide between the two explains why political irrationality is pitted against scientific rationalism.
But none of this justifies accepting such tactics as national policy. If politics yields to tactics, tactics become political, usually inappropriately so. Italy’s long road ahead involves redrawing institutions so that demagoguery is replaced by rational political discourse undertaken in appropriate institutional venues. This isn’t about good politicians. It’s simply good politics.

 

GUALA