John Maynard Keynes beauty contest financial Theory in relation to the Current electoral processes in the Western Hemisphere!!

 

For those of us working in the field of Economics, or those whose interests lie in this area, it is inevitable that we have encountered the economic theories and ideas of John Maynard Keynes. In fact, many more people have been influenced by his theories without even knowing it!

J.M. Keynes was an English economist, mathematician, university professor, and author, known as the creator of the Keynesian school of thought in Economic Science. Through his works, primarily The Economic Consequences of the Peace (1919) and The General Theory of Employment, Interest, and Money (1936), he profoundly influenced the course of global economics.

The significance of his work is so vast that just mentioning his first book is enough to understand its impact. In it, he scientifically explained why the war reparations imposed on Germany after World War I would lead to the repetition of war, this time on a larger scale. Had world leaders read and understood Keynes, we might have avoided the catastrophic destruction caused by World War II, including the immense loss of life and material devastation.

In his second major work, The General Theory of Employment, Interest, and Money, Keynes used the "beauty contest" as a metaphor to explain how financial markets and stock exchanges function. In this contest, rather than choosing the most attractive face from a set of photographs, participants were asked to predict which face others would find most attractive. The winners were those who correctly anticipated the majority's choice. Keynes used this metaphor to explain how markets are often driven by the psychology of the crowd and speculation, rather than by the actual economic performance of companies.

Transferring this analogy to the political realm, we begin to see how electoral processes in Greece – and elsewhere – often resemble a political "beauty contest." Voters do not always choose the candidate whose policies align with their own values, but rather the one they believe has the highest chances of winning the majority. This tendency to follow the majority creates psychological mechanisms that influence election outcomes, ultimately shaping the political landscape.

The "second-order thinking" that Keynes described does not only apply to economic factors but also to democratic processes. In elections, whether national, regional, municipal, or even union-based, voters often choose candidates based on who they think the majority will choose, rather than on a rational evaluation of the candidates' political programs. This raises important questions about how psychological factors influence voting behavior and how they often override fundamental ideological values.

Although this is not a topic often discussed, it is clear that, much like in financial markets, political success often depends not on political ideologies or the practical abilities of the candidates, but on their ability to align with the perceived desires or expectations of the majority. This means that political "beauty contests" are more about winning the popularity game than about rational, ideological choices based on the public good.

In the end, as with any contest, the winner is not always the best or most capable, but rather the one who best predicts what the majority believes and adapts to it. Ultimately, political "beauty contests," as described by Keynes, are more a game of impressions than a serious analysis of political programs.