1) Political philosophies consider three different questions:
a) How is the institution of property constructed (is property owned by individuals, the collective, an institution, or an authoritarian figure, and what are the limits on the use of that property)
b) what institution is used to determine the use of property (the market, heads of families, bureaucracy, or a dictator)
c) what claims do citizens (shareholders) have on the results of production or the profits from exchange. (Which are technically the same thing.)
Everything else is trappings. We know that incentives and the ability to calculate and plan determine the rate of innovation and effort put into work. So the more individual property rights are, the more consumption is possible at the lowest cost.
2) Economic philosophies fall into temporal categories from the short term to the long term, and advocates differer not so much on the utility of any given tactic, but on their approval or disapproval of the externalities (secondary consequences) of using the tactic. Economists then, tend to ally with political philosophies based upon those SECONDARY outcomes.
These outcomes are driven by ‘fears’. The liberal fears that the poor or less able will experience discomfort. The conservative fears that society will be made fragile and uncompetitive. If we work very hard and save then society will become hierarchical but safe. If we redistribute and only a few work hard then society will have less discomfort but more fragility. At least, that’s the theory. The left tolerates fragility and the right tolerates discomfort. It really boils down to that simple a difference.
What economists do agree upon is that stimulating demand (consumption) stimulates the economy and does it quickly. What they disagree upon is the good or bad consequences that come from stimulating the economy. The different economic strategies insert money into the economy in a range from very short to very long time frames.
And the political ideologies are biased toward these two time frames: conservative the long term and liberal the short term. In effect, the left wants the most redistribution possible right away in order to diminish the stress of the natural difference between teh classes, and think incentives are a means of coercion, and the right wants a meritocratic society where people have an incentive to be productive. (These are simply expressions of the feminine and masculine reproductive strategies. Nothing more.)
The different economic tactics below are organized from short term (liberal) to long term (conservative). Economists tend to fall into camps that PREFER one or more of the tactics.
The Economic Tactics:
a) Modern Monetarists (MMT): when necessary, just give money directly to people in order to stimulate consumption. MMT is a counter intuitive theory that is widely disputed. But the idea that we should be able to bypass the financial sector and directly credit consumer bank accounts is not a bad one. The data shows that tax incentives are not useful in the short term. (I was one of the people advocating that we just pay down consumer mortgages by 200K – it would be cheaper than letting the world economy collapse for a decade. Galbraith recommended the same thing before he died. And he and I are at opposite ends of the political spectrum.) The counter arguments are that there isn’t any way to do this today, and it’s pretty hard to not create a moral hazard, and it’s pretty hard to be equitable, because you’re effectively rewarding people who used bad judgement. FAVORED BY THE RADICAL LEFT
b) Monetary Policy: when necessary, reduce the cost of credit (interest rates) so that people are more willing to borrow money. This puts cheap money into the banking system and money works its way through consumers and business into the economy. This works well in ordinary times mostly as fine tuning, but when we are subject to shocks, like the recession, we can’t make money cheap enough that people actually will spend it. Right now, given the rate of inflation, money is effectively free to borrow. But people still aren’t lending or borrowing. There is wide consensus that monetary policy is necessary under fiat (monopoly) money. There is wide consensus that monetary policy can decrease the problems of money shortage compared to the gold standard. The criticism is that monetary policy exaggerates booms and busts. WIDESPREAD CONSENSUS OTHER THAN LIBERTARIANS
c) Fiscal Policy (Keynesians) : when necessary, the government borrows (or prints) and spends money on all sorts of programs in order to put money into the economy using the goverment’s spending network. The problem is that it does take some time to work its way into people’s hands. There are not “shovel ready’ projects available and they take time. And the real reason people object is because it finances political corruption, and the party in power tends to spend it in partisan fashion. (WHich is why the republicans won’t allow it right now.) The other reason is that people just don’t trust the government any longer. So they don’t want to reward the government. The third reason is that conservatives in particular do not want to expand the government, but contract it. FAVORED BY THE LEFT
d) Industrial Policy: the government should (as do most other countries) invest in particular industries that will create jobs and lead to a competitive advantage. INdustrial policy is usually accompanied by TRADE POLICY (import export controls and taxation). The asian countries have used these policies to their benefit. China in particular. The right and libertarians abandoned industrial policy and moved to free trade when the unions allied with the left. But industrial policy is naturally attractive to the right. For all intents and purposes, industrial policy has been abandoned in the USA. FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS.
e) Human capital policy (Education) : Education policy is the means of improving the competitive value of citizens in relation to other countries. It takes a very long time for education policy to take effect. The germans have demonstrated the best understanding of education. Although most americans would find their model invasive.
FAVORED BY THE RIGHT, FAVORED BY LIBERTARIANS, ACTIVELY UNDERMINED BY THE LEFT.
f) Strategic Policy (Military Policy): control of global trade routes, oil, and petro dollars is one of the most important reasons for the USA’s standard of living, despite the relative lack of competitiveness of it’s working classes. This is a very complex and long topic, but strategic policy IS ECONOMIC POLICY. The average american gets a pretty big return on his military expenditures. But that’s an unpleasant reality for many. Strategic policy takes a very long time to play out. But most countries engage in it. Iran for example is trying to become the core state of islamic civilization and control world oil supplies and prices, and by doing so, eliminate the discount that western citizens pay for oil.
FAVORED BY THE RIGHT, DESPISED BY LIBERTARIANS AND THE LEFT
This needs to be a book length topic but hopefully it illustrates that political philosophy and economic philosophy are two different things. But that economic philosophy is divided into specialties that correlate with the different sides of the political spectrum.
One thing is for certain: economists will talk as if they are far more certain than they are or can be. We are too inexperienced in the field of economics, and the problem is far too complex for us to be sure of what we are doing. In effect, we are running a very big experiment on humanity. It seems to be working reasonably well. But some patients are definitely harmed in the process. The most important of which is that we are expanding the population to questionable levels.
(I have a splitting headache so i will have to come back and check this for edits this later. -Cheers)