Economists for Romney: Ideology Turns The World Around

Word is out to ignore the sentimental guff of the US presidential campaign because this one will truly be a contest of ideas. Mitt Romney is endorsed by distinguished economists (blogger economists include Greg Mankiw, John Taylor, John Cochrane). As a running mate Romney selected Paul Ryan, who has intellectual pedigree and policy-ready plans grounded in respectable theories of political economy that have not seen political light of day since the ‘turnaround’ embrace of Hayek by Thatcher and Reagan. Ryan’s message to the crowds -- “After four years of getting the runaround, America needs a turnaround”.

It seems an appropriate moment to generalise about the political transmission mechanism for ideas. Ideas themselves -- even their confluence on industrial revolution scale in science, economic product and process, and social science -- do not make things happen on a big scale. For that is needed intermittent ideology, a mechanism for simplifying, congealing, spreading ideas to single generations of populations.

Ideology, not ideas, turns the world around:

I have read that Paul Ryan is or was a libertarian who as a youth may have inhaled the turgid fiction of Ayn Rand. Libertarianism won’t win this election because it fails some of the crucial tests of workable ideology. To see why this is so we need only revisit the writings of an Austrian economist popular among American right-wingers -- Ludwig von Mises -- and also America’s distinguished economic sociologist -- Talcott Parsons.

If nothing else it will be useful to repeat their explanations of the importance of ideology. Yet I aim to pull from their writing a lesson or two about the character of a good ideology.

I choose these two writers rather than others:
1. Mises, though not the most agreeable and persuasive purveyor of political economy (personally I do not enjoy his tone and nor do I accept the entirety of his argument) is a darling of libertarians and was respected by two theorists I respect -- Weber and Hayek;
2. Parsons (I do enjoy) was the preeminent American conservative sociologist of the 20th century.

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Ideology has a bad name because of its association with propaganda, also because the politicised intellectual adopted ‘ideological’ as a term of abuse -- a pejorative adjective adorning whatever allegedly dangerous, deforming, delusional, and distorting or deceptive idea lies at the opposing end from ‘your’ spectrum, especially ideas one decides are morally repugnant, extreme, plain loony. Mises thought the opposite. Compromise and moderation and even scientific rationality are necessary for every successful ideology.

Mises in ‘Human Action’ in favour of fair ideology and against monetary cranks:

“Man is directed by ideologies. He chooses ends and means under the influence of ideologies. The might of an ideology is either direct or indirect. It is direct when the actor is convinced that the content of the ideology is correct and serves his own interests. It is indirect when the actor rejects the content of the ideology as false but is adjusting his actions to the fact that this ideology is endorsed by other people ...

For all parties committed to pursuit of the people’s welfare and thus approving social cooperation, questions of social organisation and the conduct of social action are ideological issues. They are technical problems with regard to which arrangement is possible. No party would wittingly prefer social disintegration, anarchy, and a return to primitive barbarism to a solution which must be bought at the price of the sacrifice of some ideological points …

All ideologies acknowledge the importance of social cooperation. They thus place themselves upon a common ground. They are separated from one another by problems of means and ways ... Society is a product of human action. Human action is directed by ideologies. Thus society and any concrete order of social affairs are an outcome of ideologies.”

So, just don’t go calling the other side lunatics or devils. Fight the error of their logic or of their means for achieving common ends like peace and prosperity. In the present context two noteworthy examples of ideological content are offered by Mises:

“What separates the free traders from the nationalists is not ends, but the means recommended for attainment of the ends common to both”. Each side wants to secure their nation's welfare. Liberal free traders believe the interests all of nations harmonise as do the various strata of individuals within the nation. Interventionist nationalists tend to stress the irreconcilable conflicts between the interests of nations, while accepting that the interests of citizens within the nation are harmonious. At least they agree about something.

Mises would advise the ideological Paul Ryan to focus his attack on the “ideological errors by economists” who are “monetary cranks”. Since the crisis, cranks have dominated discourse on economic ideology. It is vital to articulate alternative views at the peak level of politics in ways that persuade public opinion to turn decisively against it. “Democratic majorities may err and destroy our civilisation”. Ideology can prevent that.

The monetary crank suggests a method for making everybody prosperous by monetary measures. His plans are illusory. However, they are the consistent application of a monetary ideology entirely approved by contemporary public opinion and espoused by the policies of almost all governments …. Public opinion in the capitalist countries favours the policy of cheap money. The masses are misled by the assertions of the pseudo-experts that cheap money can make them prosperous at no expense whatever. They do not realise that investment can be expanded only to the extent that more capital is accumulated by saving. They are deceived by the fairy tales of monetary cranks.

If men are not prepared to save more by cutting down their current consumption, the means for a substantial expansion of investment are lacking. These means cannot be provided by printing banknotes and credit on the bank books. It is a common phenomenon that the individual in his capacity as a voter virtually contradicts his conduct on the market.”

Instead of government stimulated credit expansion and reckless spending, a viewpoint for which is subsidised to the hilt in universities, Mises would restate arguments for the price mechanism and the market mechanism as an ideology which urgently needs reviving, both in new ways and old ways. Perhaps I am reading between the lines with rosy glasses, but it's the view I like to see being articulated by Economists For Romney.

Parsons emphasises neutral ideology in a variety of his works:

Here is a conservative passage to rehabilitate ideology --
“Ideology serves as the cognitive legitimation of patterns of value orientation … An ideology rationalises value-selections, it gives reasons why one direction of choice rather than its alternative should be selected, why it is right and proper that this should be so.”

If, as Parsons says, “the battle for men’s minds” is ideological what then is the “positive function of ideology”? It can be a defence mechanism protecting symbols, norms, interests. But Parsons says ideology is also the “educational mechanism” that reconciles a social value with practical “procedural mechanisms or procedural innovations” that generate consensus about the acceptable means to achieve common ends. It is through ideology that social actors perceive, intuit, legitimise, and give “cognitive validity” to values.

Parsons indicates that as a society modernises, the ideological system becomes systematically integrated with science. The role of the social scientist is to uncover and challenge the cognitive distortions in ideologies -- “the ultimate authority for the validity of any ideological tenet as a cognitive proposition must be scientific authority”. It is the task of social science to uncover and challenge “cognitive distortions” in ideologies.

Paul Ryan will be thinking about how to make the ideological content radical yet neutral. Radical to appeal to public’s recognition of need for change, but neutral in the sense of a plan that does not frighten voters. An Austrian libertarian’s thoughts won’t do for the content of Republican convention speeches. Parsons offers provocative advice for deciding on means to the ideological end. Toward the end of WW2 Parsons discussed positive ideological propaganda in countries which had been defeated. Today one hears economic crisis being likened to conditions of war economy in endorsements of Keynesian monetary quackery, but little if anything about the crisis and war equivalence for propaganda.

Parsons asks we do not regard propaganda as derogatory. The objection to it could be that “propaganda ‘fooling’ or ‘working on’ people is incompatible with our basic values -- the public must be taken fully into the government’s confidence and treated as responsible adults”. In a country where many people do not vote or are chronically indebted and do not understand economic laws of action, that nice thought of treating responsible adults looks over-sensitive. Parsons compares it to abolishing medical practice on grounds that “it is incompatible with human dignity of a sick person to submit to being helped by someone more competent than himself”, or abolishing education on grounds that students should “stand on their own feet”. Politics takes on many tasks that are unnecessary or undesirable, but supplying ideological information is one of its basic aggregative functions.

“Propaganda is oriented to influencing large numbers in such a way that its effectiveness will lead to an appreciable alteration of the social system … It is a technique which can be used in the service of any goal”.

Propaganda is an appeal to people to change their attitudes in one/two of three ways:
1. revolutionise (e.g. convert people to new or unfamiliar or forgotten ideas)
2. disrupt (e.g., undermine attachments to an existing institutional system)
3. reinforce (e.g. attitudes worth preserving, commitments to institutional patterns).

At root is a message about the value of political leadership, which requires, in a functioning democracy, that leaders demonstrate competence. “Deliberate propaganda is only an extension of the general use of power of government. It is not whether it should be used but HOW which is the problem for serious discussion”.

Parsons argued that effective propaganda requires simple correct ideas about economic regulations and political-legal procedures that are not only fully understandable by ordinary people but also motivate votes for leaders who prove their competence.

Crucially, in choosing a neutral ideological content for the ideology “the chances of successful influence do not depend mainly on the apparent ‘reasonableness’ of what is transmitted but on its relation to the [preexisting] functional equilibrium of the system”.

By that Parsons means desirable or neutral existing institutions worth maintaining. A propaganda exercise can take advantage also of a pre-existing psychological displacement toward “cultural heroes”. Effective leadership does not shun away from gimmicks. But the propagandist must enjoy demonstrable “moral prestige”, to be seen as “fair”, and for the “justice of the cause” to be self-evident.

The important message of Parsons is that cautious propaganda appeals to the rights and duties of persons or citizens and groups as such, and to impersonal patterns such as truth or freedom … the universality of such values … Expressions of values of freedom should not emphasise freedom to make profits or even, in many contexts, of trade”.

To couch reform in these terms might arouse concern among some voters. Parsons advocated propaganda that appeals to impersonal norms, secular values, science, pluralism, and equal opportunity. Although these are synonymous with market society they are neutral qualities of change. They are familiar (and popular) as simple procedural rules for blocking politicians and firms from becoming their own worst enemies.

Economists for Romney:

The advice of Parsons seems attuned to the predilection of economists supporting Romney for rules-based policy as opposed to discretionary interventions, including curbs on debt, deficit spending, and stimulus. The decision of James M. Buchanan to join the signatories is welcome, since there is no greater living theorist of impersonal modes of peak-level rules-based economic governance.

It was also Buchanan who wrote:
“A nation cannot survive with political institutions that do not face up squarely to the essential fact of scarcity: It is simply impossible to promise more to one person without reducing that which is promised to others. And it is not possible to increase consumption today, at least without an increase in saving, without having less consumption tomorrow. Scarcity is indeed a fact of life, and political institutions that do not confront this fact threaten the existence of a prosperous and free society”.

New conservative ideology of the state:

Libertarianism must be shunned by any sensible candidate because it is characterised above all else by hostility to the state and state law, even though the state is evidently the only thing able to implement their better ideas. 

Libertarians-on-the-blogs appear to believe almost anything, including personal security, can be achieved by spontaneous interpersonal ordering. Many libertarians seem not to want to vote at all, which rather excludes them from serious consideration. Ryan needs a strategy for overcoming the Ayn Rand inhalation effect. For the sake of balance he might want to talk with Francis Fukuyama, who recently wrote:

“The model for a future American conservatism has been out there for some time: a renewal of the tradition that sees the necessity of a strong if limited state, and that uses state power for the purposes of national revival. The principles it would seek to promote are private property and a competitive market economy; fiscal responsibility [one principle omitted]. But it would see the state as a facilitator rather than an enemy of these objectives … If contemporary conservatives could get over their ideological aversion to the state, they would recognise that American government is necessary and in great need of reform”.

I do not agree with Fukuyama’s odd claim that “for the past generation the ideological high ground on economic issues has been held by a libertarian right”, if only because there have been significant changes in one generation (from capitalism to cronyism?).

Nevertheless, Fukuyama is convinced of the value of ideology:

“Imagine, for a moment, an obscure scribbler today in a garret somewhere trying to outline an ideology of the future that could provide a realistic path toward a world with healthy middle-class societies and robust democracies. What would that ideology look like? … The product would be a synthesis of ideas from both the left and the right ... The ideology would be populist; the message would begin with a critique of the elites that allowed the benefit of many to be sacrificed to that of the few and a critique of money politics…”

It is not dissimilar to the compromise message heard above from Mises. Thus it would be appropriate to finish with Mises discussing the state-market relationship. “The market is supreme” because it reveals to every person how “he can best promote his own welfare as well as that of other people”. The market-price mechanism needs a small, delimited, more inexpensive, and thereby mightily strong state.

“The state, the social apparatus of coercion and compulsion, does not interfere with the market and with citizen activities directed toward the market. The state employs its power to beat people into submission solely for the prevention of actions destructive to the preservation and the smooth operation of the market economy. It protects the individual’s life, health, and property against fraudulent aggression on the part of domestic gangsters.”

See what I mean about the ‘tone’? Other people say it more nicely, but his message is right.

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