The aggregative delusion

On -Question Time- tonight, there was yet more discontent with the politicians* claiming that "the people had voted for a hung parliament". It is becoming a well-trodden but sterile debate for most non-politicians to point out that none of us voted for a hung parliament, nor did many of us hope for that outcome, while most politicians (and some associated intellectuals) point out that as a group that is exactly what we did.

In its own right, this is not an interesting debate. Both sides are obviously right. But it is a nice illustration of the two basic views of the world, and of how confused is the average person's philosophy.

The two views are the aggregative and the individualist. In their frustration at being treated as part of an amorphous mass whose combined choices the politicians regard almost as the product of a single, anthropomorphous, group-being, most people reveal themselves as fundamentally individualist.

And yet these frustrated individualists continue (mostly) to expect the inherently aggregative system of democratic politics to deliver what each of them wants (or needs), when what rationally they should expect is the messy and unsatisfactory compromise that it must inevitably deliver in practice. They continue (mostly) to prefer delivery of many things on which there are wide ranges of preferences and needs, by the aggregative agency of democratic politics rather than by the individualistic agency of voluntary exchange.

Each time politics fails inevitably to deliver a satisfactory outcome, they do not blame or even question their reliance on political delivery in general. They blame the failings of particular politicians, and delude themselves that a different set of politicians and policies will produce an aggregated approach that will somehow suit everyone well enough.

Though they face an impossible task, we need not feel sorry for the politicians, whose careers must inevitably end in failure (as Enoch Powell said) for exactly this reason. They encourage this delusion, promising that they alone will have the set of solutions that will deliver outcomes that will be best for everyone (though this is never the one set of solutions that really would be best for everyone, which is the most limited set of solutions necessary, with everything else left to the individuals). Of course, they have strong public-choice incentives to pander to this delusion, as they are unlikely to get elected without doing so, for as long as people continue to think that way. But they still have a choice - to tell the truth or not to stand - and therefore deserve no sympathy when they feed the delusion and then are hoist by their own petard.

The real question is why the vast majority of people, on all sides of the political spectrum, are prey to this almost schizophrenic (if it weren't the product of bad education rather than mental illness) delusion?

I think it relates to another question that came to mind at a school hustings during the recent election. You would think that young people would be moved by two conflicting instincts: "it's not fair" (their interventionist side, which hopes that the fairy-godmother government can magically make things fairer), and "don't try and control me" (their individualist side, which wants to be free to make its own choices and hates being told what to do). But in their political preferences, "it's not fair" dominates the thinking of the vast majority of young people. Why is the only aspect of "don't try and control me" that seems to creep into their political consciousness the social freedoms to consume what, behave as, and consort with who they like, and not the freedom for each of us to make our own economic choices? And why is it that, as they get older, those who become more economically liberal tend also to become more socially illiberal?

Whatever the root cause, it is exacerbated by our education system, and particularly our economics education, which should challenge rather than support the delusion. Early economics (political economy) was basically individualist. Though the guide to good governance that it provided was aimed at the greater good, it relied on the agency and freedom of individual action and discouraged government intervention in anything other than a few essential roles. Where aggregation was introduced (for instance in the early attempts to derive price mechanisms as the product of aggregate rather than marginal supply and demand) it tended to obfuscate and degrade the subject.

The marginalist revolution should have turned economics decisively in the individualist direction. But instead the mainstream schools turned increasingly to mathematics and aggregation. Only the Austrians maintained the individualist tradition. And the mainstream schools did their best (very successfully) to suppress by political means this individualist challenge to their aggregative delusions. The natural aggregative alliance between political paymasters and academic apologists became increasingly dominant during the twentieth century. The subject that should have provided the intellectual foundation to resist the aggregative, statist delusion became its leading apologist. Economics became anti-economics or pseudo-economics.

Sadly, we are so far gone, particularly in the UK, that we are unlikely in the current climate even to be able to take a step towards the only solution (sack most of the university economics teachers, bring in some decent Austrian economists from America, Spain and elsewhere to seed new university economics departments with proper economic principles, and get the new departments gradually to re-train our economics teachers in schools), let alone implement it in full.

It is probably necessary to wait for the economy to get much worse than it is even now, and for the failure of modern, mainstream economics to become impossible to deny even by its most devoted advocates, before there may be an opening for good, individualist economics to gain a foothold in the public's consciousness.

And that opportunity will be balanced by serious risks. The socialists will be looking to take advantage of the troubles to sell their snake oil. However ineffective and even harmful it may be, to most people it tastes sweeter at first sup than the real medicine. And there will be new varieties of bad aggregative economics claiming to be the solution to the failure of the "old" aggregative economics, in the way that monetarism came to dominate Austrian (i.e. real) economics as the dominant anti-Keynesian school as the Reagan/Thatcher revolution fizzled out.

But perhaps those of us who can see through the aggregative delusion can lay some foundations and boost the chance of success for real economics, by drawing people's attention to the contradiction between their individualist instincts when faced with a governing party of which they disapprove, and their continued preference for political provision rather than voluntary exchange.

 

• Apart from the excellent Caroline Flint - why is she not running for the leadership of the Labour Party?