1. Evolution of Complex Systems Lecture 13: Politics and economics – interactions Peter Andras / Bruce Charlton peter.andras@ncl.ac.ukbruce.charlton@ncl.ac.uk

2. Objectives Evolution by interaction between the systems of politics and economics Evolution by interaction between the systems of politics and economics Setting environmental selection pressures Setting environmental selection pressures Change of rules Change of rules Change of boundaries Change of boundaries Emergence of interface systems Emergence of interface systems

3. Logic of power Power: power to set rules of communications, power to distribute resources to regenerate and expand the society Power: power to set rules of communications, power to distribute resources to regenerate and expand the society Political communications: satisfy the logic of power – identity of the political system Political communications: satisfy the logic of power – identity of the political system

4. Political institutions Sets of constraints that define subsystems Sets of constraints that define subsystems Parties, Parliament, election Parties, Parliament, election

5. Political communications Everybody participates: elections Everybody participates: elections Professional political communications: professional politicians Professional political communications: professional politicians

6. Products Human communications produce quasi- permanent changes in the environment  memories of human communications Human communications produce quasi- permanent changes in the environment  memories of human communications E.g., key, ball, book E.g., key, ball, book

7. Services Temporary changes in the environment produced by human communications  memories of human communications Temporary changes in the environment produced by human communications  memories of human communications E.g., hair dressing, cloth tailoring E.g., hair dressing, cloth tailoring

8. Exchanging products and services Economic communications: communications about exchanging products and services – communications about object/service memories Economic communications: communications about exchanging products and services – communications about object/service memories Special communication rules Special communication rules

9. Money Universal exchange product Universal exchange product Simplification  expansion Simplification  expansion

10. Banks Regulate the amount of money (create or absorb money) Regulate the amount of money (create or absorb money) Modelling the economy Modelling the economy

11. Paper money Value by convention Value by convention Further simplification and expansion Further simplification and expansion Next: electronic money Next: electronic money

12. Politics and rules Politics  power  setting the rules of communications Politics  power  setting the rules of communications Among other setting the rules for economic organisations Among other setting the rules for economic organisations

13. Bell Biggest American telephone company (American Telephone and Telegraph Company – AT&T – parent company of the Bell System, 1875) Biggest American telephone company (American Telephone and Telegraph Company – AT&T – parent company of the Bell System, 1875) Practical monopoly Practical monopoly

14. Anti – monopoly legislation Power talk about monopolies Power talk about monopolies Winning power by anti – monopoly agenda Winning power by anti – monopoly agenda Translation into anti – monopoly legislation Translation into anti – monopoly legislation

15. Dividing the Bell Regional Bell companies – 1984 Regional Bell companies – 1984 Opening up of local and long distance telephone markets Opening up of local and long distance telephone markets

16. Competition in the market New political environment represented by anti – monopoly legislation New political environment represented by anti – monopoly legislation New environmental pressures  new kind of competition New environmental pressures  new kind of competition New companies emerged in the long distance market, and they won a large share of the market (e.g., Sprint, MCI, WorldCom) New companies emerged in the long distance market, and they won a large share of the market (e.g., Sprint, MCI, WorldCom)

17. Economy and people Growth: more money, more goods and services, better life Growth: more money, more goods and services, better life Stagnation and shrinking: less money, fewer products and services, lower quality and less enjoyable life Stagnation and shrinking: less money, fewer products and services, lower quality and less enjoyable life

18. Elections and economy Election time: parties formulate their economic policy to win popular support Election time: parties formulate their economic policy to win popular support Growth: the government praises itself, opposition tries to find alternative critiques (e.g., morality) Growth: the government praises itself, opposition tries to find alternative critiques (e.g., morality) Shrinking and stagnation: government comes up with new vision and promises, opposition argues that everything is wrong because of the government Shrinking and stagnation: government comes up with new vision and promises, opposition argues that everything is wrong because of the government

19. Competition of parties Economy sets the stage for the competition, setting the selection pressures (e.g., maintaining or changing current economic policies) Economy sets the stage for the competition, setting the selection pressures (e.g., maintaining or changing current economic policies) Economic selection pressures contribute to the selection of parties in their competition in the context of the political system Economic selection pressures contribute to the selection of parties in their competition in the context of the political system

20. Money and politics Ministry of finance Ministry of finance How much money is in the economy / should be in the economy ? How much money is in the economy / should be in the economy ?

21. Fiscal policy Taxation Taxation How much part of the money exchanged for other products or services should go to the government ? How much part of the money exchanged for other products or services should go to the government ?

22. Monetary policy Regulation of the banks and of the amount of money present in the economy Regulation of the banks and of the amount of money present in the economy E.g., setting base interest rates, level of bank reserve E.g., setting base interest rates, level of bank reserve

23. Inflation Small – moderate: usual Small – moderate: usual Change of money evaluations of goods and services Change of money evaluations of goods and services

24. Printing money Governmental intervention to pay the bill of the government (e.g., government loans, budgetary prescriptions) Governmental intervention to pay the bill of the government (e.g., government loans, budgetary prescriptions) Germany 1920s, Brazil 1980s, Bulgaria 1990s Germany 1920s, Brazil 1980s, Bulgaria 1990s

25. Hyper inflation Rapid change of valuations of goods and services triggered by the availability of large amounts of money (e.g., money printed by the government) Rapid change of valuations of goods and services triggered by the availability of large amounts of money (e.g., money printed by the government) Unpredictable prices Unpredictable prices

26. Politics and inflation Politics  printing money Politics  printing money Communication contents inflated in economics Communication contents inflated in economics The rules of economics change in inflation The rules of economics change in inflation Interpenetration of economics by politics Interpenetration of economics by politics

27. Unequal distribution of economic resources Economic communications Economic communications Need of economic resources Need of economic resources Unequal distribution – e.g. France late 18 th century, Russia early 20 th century Unequal distribution – e.g. France late 18 th century, Russia early 20 th century

28. Topics of politics Power talk: what helps to get and keep political power Power talk: what helps to get and keep political power Inequality of economic resources – good topic Inequality of economic resources – good topic

29. Revolutionary politics Economics influences the rules of politics Economics influences the rules of politics New politics / changing politics New politics / changing politics Interpenetration of politics by economics by changing the rules of politics Interpenetration of politics by economics by changing the rules of politics

30. Communism Political system about resource distribution Political system about resource distribution Idea: general equal sharing Idea: general equal sharing After 1917 / 1947 After 1917 / 1947

31. Issues in communism Relevance of party documents Relevance of party documents Reporting according to plans Reporting according to plans

32. Economics in communism Many economic decisions are political decisions Many economic decisions are political decisions They reference frequently political documents They reference frequently political documents E.g., producing product for the deposit to keep workers working E.g., producing product for the deposit to keep workers working

33. Small economics in communism Politics takes over a large part of economics Politics takes over a large part of economics Politics determines many economic exchanges and many formerly economic communications Politics determines many economic exchanges and many formerly economic communications

34. State services Railroads, energy services, telecommunications Railroads, energy services, telecommunications

35. Operations in state economy Political logic mixed with economic logic Political logic mixed with economic logic Service should be provided at politically determined levels Service should be provided at politically determined levels Typical: large bureaucracy, deficit, low average and variance of quality Typical: large bureaucracy, deficit, low average and variance of quality

36. Economics and state economy Political objectives and economic realities Political objectives and economic realities Rules influenced by economics Rules influenced by economics

37. Privatisation Economics takes over Economics takes over Political rules loose their effect Political rules loose their effect Economic rules become more determinant Economic rules become more determinant

38. Effects of privatisation If economics works in competitive manner: short decrease of output, shedding bureaucracy, fast growth soon If economics works in competitive manner: short decrease of output, shedding bureaucracy, fast growth soon If the economics does not work in competitive manner: continual need for state support, high prices and low service quality, still too much influence of politics If the economics does not work in competitive manner: continual need for state support, high prices and low service quality, still too much influence of politics

39. Economics and privatisation Economics takes over a part of politics (a set of political communications) Economics takes over a part of politics (a set of political communications)

40. Economy and politics Money and regulation of the money Money and regulation of the money Monetary politics Monetary politics

41. Monetary politics Specialist political language Specialist political language Experts and expert MPs Experts and expert MPs Ministry of finance Ministry of finance New system growing at the interface New system growing at the interface

42. Party finances Very important to run the party Very important to run the party Payments, budget, party finances Payments, budget, party finances

43. Party economics Treasurer Treasurer Special communications and rules Special communications and rules New system emerges at the interface: party economics New system emerges at the interface: party economics

44. Summary Politics and economics Politics and economics Interpenetration and interaction: Interpenetration and interaction: Providing environmental selection pressures Providing environmental selection pressures Change of rules Change of rules Change of boundaries Change of boundaries Emerging new systems at interfaces Emerging new systems at interfaces

45. Q&A – 1 1. Is it true that the money is a form of economic communications ? 2. Is it true that the logic of economics is: is this communication leading to more or less money ? 3. Is it true that deflation is a form of economy acting on politics changing its rules ? 4. Is it true that nationalization is a way of politics acting on economics changing its boundaries ?

46. Q&A – 2 5. Is it true that revolutionary politics is the effect of the economics on politics by changing the rules of politics ? 6. Is it true that by allowing pubs to keep open after 11pm the competition in the pub/club sector of the economy is changing ? 7. Is it true that the economy is always the single major issue of opposition talks at elections ? 8. Is it true that there are several interface systems between politics and economics ?