Although in reality economic interaction does not stop at political borders, the macroeconomist views the economy through the prism of national accounts statistics. Those perfectly correspond to areas of political control.
Second, the political mind in general tends to struggle with the concept of the decentralized market order in which common goals are absent and in which a multitude of individual plans and aspirations are being coordinated spontaneously through market prices. The problem for the politician is that this system does not need politics. The market economy is indeed the very antithesis of politics, which depends on the existence of common goals, common values, and a common strategy.
The politician must establish an agenda that unites people behind specific overarching purposes that all can share and identify with. Sociologically, it is tribal and closer to earlier and more primative forms of human cooperation, like the hierarchically structured family or clan, rather than the decentralized contractual society.
But the macroeconomic concept of large units, of collectives that can be juxtaposed against one another, is much more appealing to political thinking, in particular if one can use this concept to formulate collective goals, like the need for a larger national product (GDP), increased levels of consumption or investment, a reduction in unemployment or a “socially beneficial” inflation rate.
The decentalized complexity and spontaneous order of the market, with its multitude of plans, suddenly disappears and is replaced with a few statistical aggregates that can be monitored, to which targets can be assigned, and that can be manipulated for “the greater public good.”
The concept of aggregate demand is closely linked, albeit not identical to, another feature of the Keynesian framework that appeals to the state bureaucracy, and that is the antipathy toward saving. The peculiar idea that recessions are caused by too much saving and lack of consumption is hardly an invention of Keynes and his followers. It has, indeed, a very long tradition in economic folklore. Not surprisingly, it appeals to politicians who see it as a suitable excuse to run budget deficits and thus extend their control over economic resources beyond their take from taxation.
If we understand the market economy as a tool for economic cooperation then no single goal exists and the voluntary cooperation of private property owners is always preferable to any state directive. But, in abandoning this view of the market economy and in defining a set of statistical aggregates as not only indicators but also as politically desirable outcomes, the modern macroeconomist has laid the intellectual groundwork for the state-directed economy.
Paper Money Collapse