Friday, September 17, 2010

A Business vs. a Political View of the World

I'm not going to pretend this observation is particularly enlightening (and has probably been said in more sophisticated terms) even by the low standards of blogging but its been bouncing around in my head the last couple of days and I'm hoping to get it out of there and into text and hopefully have it stay there.

An economic view does have the possibility of being a complex and carefully nuanced view of the world that can take into account the limiting nature of its ceteris paribus assumptions.  This is not the view I'm writing about.  What I have in mind is when the economic worldview gets expressed in mass political terms and specifically in terms emphasizing the role of business or the individual in the economy.  This becomes not so much an economist's view as a business man's.  To be successful in business, one must first of all learn about the world as it is and learn how to take maximum benefit of the world as it is found.  It is a maximizing view that generally views the world as the ceteris paribus part against which the real action happens.  In this view, there is very little that can be changed to make the world different, change can only happen within an existing framework to more easily allow maximization to happen, any change to this framework will fail and only pushes us towards a temporarily lower equilibrium.  Change is seen as occurring but it is change through technology or in individual relations, change in the broader system or culture against which action occurs is largely invisible.

A political view focuses on how to change those ceteris paribus assumptions that form the background of the business man's view.  It generally holds constant what the business man is regarding as changeable for efficiency, business will make do under any change in the social structures against which it operates and reach maximum efficiency eventually, it isn't something to worry about.  In this framework, reality is composed of the social reality against which economic and personal interactions occur, changing the social structures allow for a new set of possibilities for these economic and personal interactions and can close off old possibilities that had largely negative consequences.  People are highly adaptable, there is no particular reason to worry about how business or individuals will react to changes in social and political structures, they'll always manage to do their best.

Both these perspectives have a lot of truth to them and emphasize different levels of analysis.  The business view recognizes change and maximization takes time and effort.  They look mostly to the individual and to small organizations and see the limitless untapped possibilities in the current system.  Even the current system's flaws look like opportunities from this viewpoint, these flaws allow individuals to seek their own advancement by being aware of them when others may not be.  What it fails to see is that a change in social and political structure opens up a new set of possibilities that may be far better than what came before.  It is essentially conservative because any change in existing social structures disrupts previous relationships that were critical to the success of individuals and organizations within the current system.  The ability of change to create new possibilities is seen as wishful thinking and impractical.

The political view places emphasis on broader social forces and systems.  It views how people interact with each other as something that is changeable, not a constant against which to makes plans.  They see the new possibilities that are opened up by social and political change and the ability of these changes to eliminate the flaws in the current society.  What they fail to take into account is that this change will disrupt existing arrangments and that it can take a very long time to adapt to the new situation.  There will also always be unexpected consequences of change that will virtually always make it more costly than was seen at first.  The social disruption caused by change can potentially block the potential benefits from ever materializing, it takes a great deal of effort for a new equilibrium to be reached in a new context.

Both of these views are essentially correct within their own domain, it is recognizing the importance of the other domain as well where both are weak.  Both tendencies must exist for a society to thrive.  The political view is constantly working to expand the horizons within which the business driven view is operating.  The business view is constantly trying to make the reality created by the political view actually work in practice.  Both allow for the other view to exist while simultaneously working at cross purposes, the political view constantly upsets the plans of the business view while the business view constantly seeks to block the dreams of the political view while trying to become more purely what the previous political view wanted us to become.  This tension drives society forward in a workable manner.  If things sway too far to one side or the other, we get either sclerosis or chaos.

Of course, this is just one way of describing people's worldviews and has its own limited domain.  However, with the importance of the economy in most people's thinking today these two contrasting worldviews do seem to include a significant portion of the debate and not one that is perfectly captured by the modern left and right.

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