Economics and Politics


International Institute for Strategic Leadership

Economics can be seen as the study of the creation of wealth.

Politics can be seen as the study of the distribution of wealth.

“The first lesson of economics is scarcity:

there is never enough of anything to fully satisfy all those who want it.

The first lesson of politics is to disregard the first lesson of economics.”

Economist, Dr Thomas Sowell

Economic Substructure and Political Superstructure
(Karl Marx)

Wall Street (NYSE)

Capitol Hill

Economic and Political


Economic/Political Typology:

US/UK Liberal Market Economy Political Parties

Economic/Political Typology

Stable and Unstable Forms

One can observe that the quadrants represent four theoretical political/economic forms

(communism, fascism, social anarchy and libertarian anarchy)

which are empirically unstable and therefore relatively rare.

Two political/economic forms appear to be stable: socialism and capitalism.

Within the political economy these are coordinated and liberal market economies.

Tradeoff Frontier

There also appears to be a trade-off frontier

which indicates that extreme moves on the frontier require tradeoffs.

For example, if the extreme left and extreme right desire more bottom-up rule,

they must sacrifice their polar positions and end-up together in general anarchy.

This is what appears to have happened in the 2016 US presidential election when

Bernie Sanders supporters voted for Donald Trump over Hilary Clinton (or abstained).

It is ironic to note however that they did not get the anarchy they wanted,

but a form of dictatorship instead.

This Economic/Political typology is defined in its most simple form by two orthogonal axes.

Horizontal Axis

This defines the “what?” ideological policy of values.

The focus can be either on the collective seeking equality

or on the individual seeking hierarchy.

As it is the horizontal axis, it is logically referred to by the Left and the Right.

Note that historically, the distinction of the political Left and the political Right

came from the French Revolution,

where the Left represented revolution from the monarchy who were secular,

and the Right represented loyalist conservatives and who were religious.

Vertical Axis

This defines the “how?” of goal-setting and decision-making.

As it is the vertical axis, it is logically referred to as either top-down or bottom-up.

Examples of top-down can range from monarchy to dictatorship to strong central state.

Examples of bottom-up include pure democracy.

Emergence of the Authoritarian Ideologues

Around about 2016, both the Left and the Right became more extreme ideologically

and authoritarian in suppressing free speech of their dissenters,

bending the traditional Left Right continuum towards each other,

leaving the traditional Left and the Right to appear more moderate and centrist.

Capitalism: An economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.” Oxford English Dictionary

Conservatism: 1) Commitment to traditional values and ideas with opposition to change or innovation.  2) The holding of political views that favour free enterprise, private ownership, and socially conservative ideas.” Oxford English Dictionary

Liberalism: (in a political context) favouring individual liberty, free trade, and moderate political and social reform.” Oxford English Dictionary

Socialism: A political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” Oxford English Dictionary

Communism: A theory or system of social organization in which all property is owned by the community and each person contributes and receives according to their ability and needs.” Oxford English Dictionary

"The economic anarchy of capitalist society as it exists today is, in my opinion, the real source of the evil. We see before us a huge community of producers the members of which are unceasingly striving to deprive each other of the fruits of their collective labor... I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals."Albert Einstein

"Liberalism is not Socialism, and never will be. There is a great gulf fixed. It is not a gulf of method, it is a gulf of principle ... Socialism seeks to pull down wealth; Liberalism seeks to raise up poverty. Socialism would destroy private interests; Liberalism would preserve private interests in the only way in which they can be safely and justly preserved, namely by reconciling them with public right. Socialism would kill enterprise; Liberalism would rescue enterprise from the trammels of privilege and preference ... Socialism exalts the rule; Liberalism exalts the man. Socialism attacks capital; Liberalism attacks monopoly." Winston Churchill

Capitalism (and Liberalism) v Socialism (and Communism)

Capitalism (right-leaning, bottom-up) is largely an economic construct.

Conservatism and Liberalism (low tax, small-government) are largely political constructs.

Integral Capitalism (left-leaning, top-down) is largely an economic construct.

Socialism and Communism (high tax, big-government) are largely political constructs.

In a capitalist democracy,

individuals can have unequal financial power, but equal political power;

(financial power is concentrated, political power is distributed).

In a capitalist plutocracy,

financial power equals political power;

(financial power and political power are concentrated).

In a communist democracy,

financial power equals political power;

(financial power and political power are distributed).