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.