The whole post is worth reading here.

Here is an excerpt:

My hunch is that the next big conceptual move for political economy is to take identity seriously. The task for political economists now is to integrate identity into our theoretical architectures as a conceptual primitive rather than as a nuisance, a behavioral distraction, or as merely a consequence of something else.

[If you are reading this and pounding the table, saying “I’ve been doing this for years,” please bear with me. I recognize that scholarship on identity and political economy has a long history. I am proposing that we need to do it more, and rather differently.]

What would this look like? Take, for example, the literature about preferences for economic integration. One view holds that people’s preferences are a function of their economic interests: in the simplest Stolper-Samuelson world, low skill workers in advanced economies should oppose trade, and high skill workers should favor it. In a world in which ideas are foundational, individuals favor trade because they have learned (or come to believe in) a cosmopolitan worldview in which trade is good—they possess a causal belief about what trade does. In a world in which identity matters, people oppose trade because they are part of a community that opposes trade.

The first thing to observe about this identity-based explanation is how vacuous it seems. “One does X because one is an X-doer” is infinitely generative claim, but that is because it is nearly tautological. Here is a more pointed way to think about identity in political economy. When people search for information about what they should do, how do they go about it? One view is that they consider costs and benefits, although not necessarily in a materialist or egoistic way. Another view is that they consider their existing beliefs about how the world works, and then try to apply them by analogy. The third is that they look for cues among the beliefs and actions of people whom they consider to be like them. That third possibility is an argument for identity in political economy.

A possible avenue for methodological advancement here would be to treat identity as encompassing a non-transactional political relationship between principals and agents, but with a lot more emphasis on what elites do. Materialist models of politics focus on what politicians give voters. Including identity would simply expand the scope of rewards to include identity affirmation as a central part of the principal-agent relationship (most current works relegate identity to the world of residual psychic benefits of having a co-ethnic or co-partisan in power).

One logical implication of this conceptualization is that elites (agents of voters) have loads of arbitrage opportunities under identity politics — and will likely under-provide populist promises of public goods and services.

By peddling identity politics, populist politicians can shirk on the delivery of real material benefits for their supporters; which implies further upward redistribution. Politicians will grant their voters honor and respect (by, for example, turning a blind eye to racists and other “anti-PC” movements) and do little else in terms of pro-poor policies.

In short, elites stand to gain the most in a world of identity politics.