Realities of Political Economy: The Elephant in the Room

Abstract

The idea that the political landscape can be reordered in a technocratic way by means of market reform and institutional change has dominated thinking in the economic ministries and development agencies of the major Western countries since the early 1980s. It has been heavily influenced by the rational choice/public choice view of politics as a world of self-serving behaviour where vested interests accumulate wealth by mobilising political power and influence to undermine the market mechanism. This neoliberal view initially assumed that the imposition of markets and the ending of government intervention in the economy would be enough in themselves to neutralise the predatory raids on the state that defined the rent-seeking society. As this expectation evaporated, development strategy was switched from an emphasis on rolling out markets to that of building strong institutions to enforce the rule of markets, to insulate markets from the ‘ irrationalities’ of politics and to provide incentives for market-oriented behaviour. In essence, neoliberals sought to replace politics, as they saw it, with technocratic and managerial forms of authority and ‘good governance’ based on market principles and values.