incentive we have to educate ourselves about what we are buying. In financial transactions, it is rational to spend time gathering knowledge about the options. In politics, unless you are a journalist, politician or lobbyist, it is rational to ignore the whole circus and spend one’s time more productively. ‘Voting is not a slight variation on shopping,’ says Caplan (2007: 140–41). ‘Shoppers have incentives to be rational. Voters do not.’ There is, therefore, no contradiction between being a rational actor in the market and an irrational or ignorant participant (or abstainer) in a democracy.
10 Despite this, evidence suggests that many people do not place a great value on their vote. More than a third of registered voters did not cast a ballot in the last UK general election. The fact that bad weather reduces voter turnout implies that some people think their vote is worth less than a relatively trivial opportunity cost.
Conclusion
There is no assumption in mainstream economics that people are perfectly rational and it is quite absurd to suggest that ‘neoliberal economists assume that human beings when engaging in the market place are omniscient: they can clairvoyantly foretell everything that might happen and how likely it is to occur and when’ (Murphy 2011: 37).
Economists do not see a world populated by totally irrational voters, wholly self-serving politicians and perfectly informed consumers. Selfishness, ignorance, altruism and reason are fairly evenly distributed among the population. A fool in a polling booth does not become a sage in a shopping centre and a corrupt politician does not become Francis of Assisi when he sets up a small business. The extent to which we seek out information and behave rationally depends on the incentives we are given and the costs of acting foolishly. As voters, the cost of irrationality and ignorance is practically zero. As agents in the market, the cost is much greater and we respond accordingly. ‘Assuming that all people are fully rational all the time is bad economics,’ writes Caplan (2007: 135). ‘It makes more sense to assume that people tailor their degree of rationality to the costs of error.’
Free-market economists do not assume that individuals always know what is best for them, but they do assume that individuals are better placed to know their own preferences than a distant bureaucrat. So long as we bear the consequences of our actions, the path of progress is better trod by sovereign beings pursuing their goals through voluntary cooperation than by a technocratic elite prodding us all in the same direction.
3. Economists think GDP is all that matters
‘It’s time we admitted that there’s more to life than money,’ said David Cameron in 2006, while still the leader of the parliamentary opposition, ‘and it’s time we focused not just on GDP, but on GWB – general well-being’ (BBC 2006). In this, Cameron was echoing the words of Tony Blair, who wrote in 1999: ‘Money isn’t everything. But in the past governments have seemed to forget this. Success has been measured by economic growth – GDP – alone’ (Easton 2006).
Both political leaders were tapping into a widely held belief that British society had become obsessed with increasing national income at the expense of the good life. According to this narrative, the neoliberal counter-revolution of Margaret Thatcher and Ronald Reagan had focused exclusively on the creation of wealth. In their blinkered materialism, advocates of free markets pursued money in the belief that it would make them happy. The production and consumption of goods had become the sole goal of public policy and all efforts were judged by whether they increased Gross Domestic Product.
Sometimes this obsession is put in terms of disease, addiction, religion or pathology. We are ‘addicted to growth’, according to the Centre for the Advancement of a Steady State Economy (Gardner 2011). The economist Joseph Stiglitz has urged politicians to ‘get away from GDP fetishism’ (Jolly 2009). In a reference to Alcoholics Anonymous, the campaign group Post Growth offers a twelve step programme to ‘treat our growth addiction’ (Nelson 2010) while Andrew Simms of the New Economics Foundation says that ‘the “call to prayer” of conventional economics has been the incantation of economic growth figures’ (Simms 2009). For Stephen Lacey of Climate Progress, GDP ‘is the crack-cocaine of economic indicators’ which ‘fits in perfectly with society’s single-minded obsession with growth’ (Lacey 2012). George Monbiot writes of ‘the iron god of growth to which we must bow’ (Monbiot 2013) while Oxfam’s Economic Justice Policy Officer complains about ‘the “growth at all costs” neoliberal mantra of the last 30-odd years’ (Oxfam GB 2012).
It is a powerful narrative. The only thing missing is an example of any economist or politician ever expressing support for the ‘growth at all costs’ mantra which has supposedly been the global doctrine of capitalism for several decades. Cameron and Blair both saw themselves as challenging the conventional wisdom and yet it is surprisingly difficult to track down advocates of the alleged orthodoxy. It may be that some people truly believe that GDP is the only measure of success, as Blair claimed. Perhaps they genuinely think that there is nothing more to life than money, as Cameron asserted. But if so, they have kept their thoughts to themselves. Public discussion about national income almost invariably centres on the more credible assertion that GDP is not a measure of anything other than economic output and that money does not necessarily buy you happiness.
It is doubtful whether anyone has ever viewed GDP as the be-all and end-all. Simon Kuznets, the economist who invented GDP as a measure, told the US Congress in the 1930s that ‘the welfare of a nation can … scarcely be inferred from a measure of national income as defined by the GDP’ (Faris 2009). Many years later Robert Kennedy (1968) delivered a famous speech in which he addressed the limits of gross national product:
Yet the gross national product does not allow for the health of our children, the quality of their education, or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages; the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage; neither our wisdom nor our learning; neither our compassion nor our devotion to our country; it measures everything, in short, except that which makes life worthwhile. And it tells us everything about America except why we are proud that we are Americans.
Then, as now, it was not clear to whom this rebuke was being directed. Even among economists, GDP is not seen as the only, or even necessarily the main, indicator of economic progress. Statistics pertaining to unemployment, inflation, debt, inequality, wages and the balance of trade have all preoccupied economic strategists to a lesser or greater extent in the last century. In 1944, Friedrich Hayek – a free-market economist if ever there was one – shared the consensus view when he said that ‘the conquest of unemployment’ was ‘the one aim which everybody now agrees comes in the front rank’ of economic priorities (Hayek 2001: 211). Throughout the Thatcher era, the averagely well-informed newspaper reader was more likely to have had a better idea of what the current unemployment and inflation figures were than to know the last quarter’s GDP growth rate.
A blind obsession?
Perhaps we do not need to identify a specific individual who espouses the ‘growth at all costs mantra’ for such an attitude to be the implicit doctrine of government. Politicians from Kennedy to Cameron might deny that they are smitten with GDP, but their actions may betray them. In other words, there may not literally be a temple to the god of economic growth, but our leaders pray to it all the same.
This argument does not stand up against the facts. If ‘growth at all costs’ were truly the mantra of the last thirty years, we would expect this to be reflected in policy. If society has a ‘blind obsession with growth’ (Peck 2012), as the New Economics Foundation claims, we should have seen massive deregulation, open borders immigration, huge tax cuts, looser planning laws, the abolition of subsidies and the withering away of the state. Instead, we have seen bureaucracies expand,
