Monday, September 03, 2007


A note on understanding elites

One of the tenets of economic theories, be they Marxist or Keynesian or Friedmanian or whatever, is that human beings run around making rational choices. I've seen little evidence in support of that and a great deal to contradict it, which is one reason I regard economics as more a religion than a science and the body of economists as more a priesthood than a professional association. The "common sense" insights into human behavior of my dear Grandma Fuse frequently carry the day over the insights of even the best intentioned economists.

Last week "Lenin," chief author of the blog Lenin's Tomb, wrote an interesting post occasioned by his reading of the RollingStone article "The Great Iraq Swindle," which surveys the looting of the U.S. Treasury by private companies working in Iraq. "Lenin" goes beyond that and puzzles over the capitalist rationale for the war in Afghanistan and Iraq along with its possible expansion into Iran and god knows where else. He attempts an economic analysis of it but admits his puzzlement. The behavior of the ruling classes is indeed hard to make out.

I left a comment to "Lenin's" post. Since I hate to write anyway and hate even more to waste words already written, I thought I'd pluck out and polish that comment for a brief post here.

"Lenin" asks himself,

They do not particularly require a state with diminished capacity, so why on earth would the US ruling class partake of a scheme that threatened their interests?

I did not attempt to answer that question, since many of these Simply Appalling posts, taken together, do attempt to answer it. Call it "insight-by-installment." Instead, for understanding the behavior of the ruling classes, I merely suggest under which rocks we should investigate.

This was my comment, now expanded and edited to make sense—

I very much enjoyed reading your post. But one of the problems I find with Marxist analysis is that the people who are capable of it tend to assume that the ruling classes are as intelligent as they are. As someone who has very occasionally participated in the councils of the elite, I must say that has not been my experience.

To put it more simply, the ruling classes do not always act in their own interests. Indeed, they frequently haven't a clue where their interests lie, which is not to say that they do not hold a set of beliefs about the matter. After all, many of them were shipped off to business school and/or studied economics.

They are nevertheless insulated in myriad ways from the consequences of their ineptitude.1 Many of their decisions might as well be made by a coin toss. But until such time as a massive economic collapse occurs and a different social order is established (don't hold your breath!), the rules of the game are "Heads, I win! Tails, you lose!" Even under the harsh circumstances of economic chaos, many still emerge as winners, however unjustified by their choices. (Consider, for example, the ruling classes of Iraq and Afghanistan.)

It scarcely helps that the ruling classes pay enormous sums of money for intelligence and advice. Sometimes they are merely rooked; sometimes they get what they pay for. But how are they to know? If we assume they've received good intelligence and advice, it remains that whether from hubris or inbred stupidity, the intelligence and advice they've paid for are more often than not ignored.

My point is that some puzzles may be more readily solved by looking at the sociology of the elites and at the psychology of certain key individuals than at the overarching economic consequences of their behavior, of which they remain remarkably free.

Related posts
Sad Tune of the Day (12/09/06)
A war we can't afford to win (1/24/07)
A fresh approach to capital punishment in the U.S. (2/27/07)
Economic Indicator of the Day (4/19/07)
Economic Indicator of the Day (6/6/07)



1It's always entertaining to listen to members of the elite fulminate on the bad choices of the poor and working classes and the need for them to "bear the consequences." Then they tender bromides such as "tough love" and "compassionate conservatism" to cloak their utter indifference. [back]

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