Is there a difference between economics and politics?

On the surface, the question might seem beside the point. Economics is the study of economic transactions between people and groups and politics is the practice of governing. But with a closer look, we can see that the differences are rather superficial after all and that the two are closer than most lead on.

To be sure, politics (the practice of governing) is only possible when some authority is granted over a people’s economic resources. As outlined in the chapter ‘The Costs of Transferring Wealth, all forms of government action amount to transfers of wealth. Whenever a politician, government, or activist aims to make some political action, it is always based in an economic foundation and seeks to alter the economic situation in the end.

Likewise, when one makes economic decisions, the underlying premise is that he is politically free to do so. The ability to make economic decisions is the ability to make political ones. And when one does make those economic decisions, one is making a political decision with regard to the persons and resources involved in the action.

This is a crucial concept to grasp because, as Milton Friedman eloquently posed in the open of ‘Capitalism and Freedom’, there is a sizable and fashionable contingent of thinkers and voters who believe it is possible for the government to shape the economy by whatever means without affecting the political freedoms of the participants in that economy. It is assumed that progressive income taxes can be levied, subsidies granted, and monetary policy enacted to better the economy or fiscal standing of individuals and groups without lessening their ability to behave as they see fit, speak freely, and act on their beliefs.

Ultimately, the question must be asked, if a political condition does not allow for economic liberty, can it be called free in any meaningful way?

This entry was posted in Autarchy, Economic Policy, Economic Theory, Keynesianism, Political Theory, Systems Theory. Bookmark the permalink.

4 Responses to Is there a difference between economics and politics?

  1. Claire says:

    A brilliant insight and an excellent question! And I think the answer is in the question itself. Any condition that disallows liberty, no matter the form, cannot be called free. Following that, since it is often our economic freedom that most allows us to participate in politics (via contributions, consumption, and choice of city, state, etc.), any hindrance to that economic freedom is a direct threat to our political freedom as well. The two are inherently linked.

    • Claire, thank you for your brilliant insight. And yes, I would agree that economic freedom is most necessary for us to participate in politics. As Frederick Jackson Turner put it, “Economic power secures political power.” One might add that political power secures economic power. Thanks again for your input.

  2. Dear Jaggernautcometh

    I have been reasoning in the betwix of making sense of two topics, Economics and Politics. I few years ago my intention was to acquire a Commerce degree in the School of Business. That said, I was not familiar with the theoretical language and as a result I did not do so well during exams and failed. As I result I changed to stay on the path of the business subjects I was interested in. I pursued Business and Politics International Relations (IR), into the Arts School which my University allows to acquire a Business Degree, as a double Major.

    In the last week, upon reflection and make sense of the change of direction I reason the field of Economics is more quantitative. Also my experience did not allow me to pursue Commerce as I did not passed the exams of Economics. I changed of my own accord to the area of a business degree. I enrolled to study Politics IR (parallel with business theory). I reason politics in theory can be a discipline that is quantitative also. So far as it delineate to describe its rightful place in the market when policy is successfully achieved.

    I would like to ask if I may and hope i have been clear, what do you think of my direction? As I am half way through the degree, I assess the current degree structure. I think qualitative as well as quantitative decisions are necessary in one’s career. Specifically in decision making. I reason theoretically, I could enrol in a few short courses after completing this double Major Degree in Business and Politics IR. So that I can make up for the lost skill I do not need to acquire for this current Degree structure. The short course would be subjects like ‘Economics’, ‘Quantitative Methods’ and the skill of analysis in stage one of ‘Accounting’ to develop quantitative skills. Which the double major degree structure I am enrolled currently does not require me to have. Alternatively I could leave this current degree structure and go back to Commerce and purse the theoretical quantitative units I am not familiar with.

    Yours truly
    Helen Pantazis

    • The distinctions you make are completely valid. From the perspective of a student or even a worker, economics and politics are rather different. But from a societal perspective, it all comes together under liberty. As Fr. John Courtney Murray pointed out, “The decision for economic democracy is not an economic decision. It is political. More profoundly, since the issue affects the substance of society, the decision is ultimately moral.”

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