Why economics can save democracy

#393

Friend of Democracy,

Why do I, as an economist, run a blog about democracy?

I consider economics, at its core, to be a project for democracy and peace.

Here is why.

Economics is a theory of society that examines human interactions.

At its core, there are two ways in which one person can be helpful to another person:

- through voluntary exchange or

- through coercion.

The former is beneficial for both sides, while the latter is beneficial for only one side.

The more opportunities there are for individuals to achieve their own goals through voluntary exchange, the less likely people are to oppress and exploit others.

Economics seeks ways to enable more voluntary exchange.

For example, what rules are needed to ensure that someone who wants to sell their car not only finds a buyer, but that the sale is also satisfactory to both parties? Economics asks about the social institutions necessary for this (institutions meaning primarily rules and their enforcement), for example, the appropriate design of property rights or warranty obligations.

In other words, by helping to establish social rules so that one's own actions are not at the expense of others but always to the benefit of others (like a car purchase in which one side cannot cheat the other; but also fair cross-border trade, or a social network that protects people, promotes education, and makes violence an unattractive option), so by creating the knowledge needed to shape such a society, economics makes violence an increasingly less attractive option.

The most severe form of violence is war. This is also becoming less likely, thanks to rules between states that increase their mutual prosperity, for example, through trade.

For a few people, however, war remains attractive. For those who can use violence to maintain or expand their power. Authoritarian rulers and dictators, above all.

Economics has ideas about this, too.

It has ideas about how democracies can become so economically strong that they can develop military capabilities, making it unattractive for potentially aggressive despots to launch such an attempt. Growth for peacekeeping.

So, economics is much more than „the economy“. To me, it is the art of creating living conditions that allow all people to make the most of their lives.

See you in Democracy,

Johannes Eber