Capitalist conspiracies?

By Eric Crampton 27/08/2012

Bill Kaye-Blake at Groping Towards Bethlehem builds on Thomas Lumley’s post on conspiracy theories and their correlation with beliefs about economics. Bill writes:

A conspiracy theory is all about (a) power and (b) ‘truth’. The theory explains that someone with power wants to control the situation. They want to keep us from knowing what’s really going on, or destroy a challenger, or consolidate their power. That is, there is a motivation for the conspiracy; otherwise, why bother going to the trouble? Whether you are talking about ‘Paul is dead’, the international banking cabal, the assassinations of Marilyn Monroe and Vince Foster, Area 51, or WTC7, the key motivation is power.

Against this power, the conspiracy theory wields the truth. The believer sees specific patterns and congruences that are arcane but visible to those who ‘know’. This truth does two things. It holds out the possibility of an alternative world: if only the truth were widely acknowledged, then existing power relationships would be reversed. It is, if you wish, the dream of Carnival. Secondly, it provides an explanation for why the world isn’t as it should naturally be. The conspiracy is preventing the world from achieving its rightful equilibrium. If only people had understood the real meaning in Abbey Road, we would not have had Wings.

I agree with Lumley that if a person tends to believe conspiracy theories, they would tend to believe economic theories that suggest powerful people are preventing the market from operating properly. Since they already think that the world is not as it should be, then those beliefs would spill over into the economic sphere.

But two further things come to mind. First, what are their other economic beliefs? In the US, at least, they have quite a list of potential beliefs/theories from which to choose. How common are these? There’s some distance between thinking that the government has put too many regulations on businesses and consumers because politics gets in the way of sane economic policy, and thinking that Bernanke is the Rothschilds’ lapdog.

The second thing is more of a worry. How do other people, those who don’t believe the conspiracy theories, see free-market economic? The mixed economy model — some public, some private — has been extraordinarily successful, compared to the alternatives. That’s not to say it doesn’t have its problems. But in terms of widespread prosperity, heath, and welfare, it sure beats feudalism, various forms of totalitarianism, hunting and gathering — pretty much everything else. A key element of the mixed economy is voluntary transactions based on market prices, or, y’know, free market economics. What do most people think about price-setting and willingness to pay? And how does that spill into thoughts about labour markets, asset sales, and property prices?

Do they believe that supply and demand forces affect prices and quantities (subject, of course, to all the usual caveats)? Do they think that people respond sensibly to incentives? What do they think about allocation of scarce resources?

Maybe we shouldn’t be so worried about the economic opinions of a few conspiracy theorists; maybe it’s the economics of the majority that we should be studying.

I’ll point Bill to Bryan Caplan’s work on what Americans believe about economics and to my own work on New Zealand data.

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