Political economy

Political economy

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Political economy originally was the term for studying production
Production (economics)
In economics, production is the act of creating 'use' value or 'utility' that can satisfy a want or need. The act may or may not include factors of production other than labor...

, buying, and selling, and their relations with law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

, custom
Custom (law)
Custom in law is the established pattern of behavior that can be objectively verified within a particular social setting. A claim can be carried out in defense of "what has always been done and accepted by law." Customary law exists where:...

, and government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...

, as well as with the distribution
Distribution (economics)
Distribution in economics refers to the way total output, income, or wealth is distributed among individuals or among the factors of production .. In general theory and the national income and product accounts, each unit of output corresponds to a unit of income...

 of national income and wealth, including through the budget process
Budget process
A budget process refers to the process by which governments create and approve a budget, which is as follows:* The Financial Service Department prepares worksheets to assist the department head in preparation of department budget estimates...

. Political economy originated in moral philosophy. It developed in the 18th century as the study of the economies of states, polities
Polity
Polity is a form of government Aristotle developed in his search for a government that could be most easily incorporated and used by the largest amount of people groups, or states...

, hence political economy.

In the late nineteenth century, the term 'economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

' came to replace 'political economy', coinciding with publication of an influential textbook by Alfred Marshall
Alfred Marshall
Alfred Marshall was an Englishman and one of the most influential economists of his time. His book, Principles of Economics , was the dominant economic textbook in England for many years...

 in 1890. Earlier, William Stanley Jevons
William Stanley Jevons
William Stanley Jevons was a British economist and logician.Irving Fisher described his book The Theory of Political Economy as beginning the mathematical method in economics. It made the case that economics as a science concerned with quantities is necessarily mathematical...

, a proponent of mathematical methods applied to the subject, advocated 'economics' for brevity and with the hope of the term becoming "the recognised name of a science."

Today, political economy, where it is not used as a synonym for economics, may refer to very different things, including Marxian analysis, applied public-choice approaches emanating from the Chicago school and the Virginia School
Virginia school of political economy
The Virginia school of political economy is a term applied to a school of economic thought centred on universities in Virginia, most notably George Mason University, Virginia Tech, Hampden-Sydney College and the University of Virginia, and mainly focusing on public choice theory and law and...

, or simply the advice given by economists to the government or public on general economic policy
Economic policy
Economic policy refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labor market, national ownership, and many other areas of government interventions into the economy.Such policies are often...

 or on specific proposals. A rapidly-growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of policies, especially as to distributional
Distribution (economics)
Distribution in economics refers to the way total output, income, or wealth is distributed among individuals or among the factors of production .. In general theory and the national income and product accounts, each unit of output corresponds to a unit of income...

 conflicts and political institutions. It is available as an area of study in certain colleges and universities.

Etymology


Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in the nation-states. In this way, political economy expanded the emphasis of economics, which comes from the Greek oikos (meaning "home") and nomos (meaning "law" or "order"); thus political economy was meant to express the laws of production of wealth at the state level, just as economics was the ordering of the home. The phrase économie politique (translated in English as political economy) first appeared in France in 1615 with the well known book by Antoine de Montchrétien: Traité de l’economie politique. French physiocrats
Physiocrats
Physiocracy is an economic theory developed by the Physiocrats, a group of economists who believed that the wealth of nations was derived solely from the value of "land agriculture" or "land development." Their theories originated in France and were most popular during the second half of the 18th...

, Adam Smith
Adam Smith
Adam Smith was a Scottish social philosopher and a pioneer of political economy. One of the key figures of the Scottish Enlightenment, Smith is the author of The Theory of Moral Sentiments and An Inquiry into the Nature and Causes of the Wealth of Nations...

, David Ricardo
David Ricardo
David Ricardo was an English political economist, often credited with systematising economics, and was one of the most influential of the classical economists, along with Thomas Malthus, Adam Smith, and John Stuart Mill. He was also a member of Parliament, businessman, financier and speculator,...

 and German philosopher and social theorist Karl Marx
Karl Marx
Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...

 were some of the exponents of political economy. The world's first professorship in political economy was established in 1754 at the University of Naples Federico II
University of Naples Federico II
The University of Naples Federico II is a university located in Naples, Italy. It was founded in 1224 and is organized into 13 faculties. It is the world's oldest state university and one of the oldest academic institutions in continuous operation...

, Italy (then capital city of the Kingdom of Naples); the Neapolitan philosopher Antonio Genovesi
Antonio Genovesi
Antonio Genovesi was an Italian writer on philosophy and political economy.-Biography:Genovesi was born at Castiglione, near Salerno....

 was the first tenured professor; in 1763 Joseph von Sonnenfels
Joseph von Sonnenfels
Joseph von Sonnenfels was an Austrian and German jurist and novelist. He was among the leaders of the Illuminati movement in Austria, and a close friend and patron of Mozart. He is also the dedicatee of Ludwig van Beethoven's Piano Sonata No. 15, Op...

 was appointed a Political Economy chair at the University of Vienna
University of Vienna
The University of Vienna is a public university located in Vienna, Austria. It was founded by Duke Rudolph IV in 1365 and is the oldest university in the German-speaking world...

, Austria. In 1805, Thomas Malthus
Thomas Malthus
The Reverend Thomas Robert Malthus FRS was an English scholar, influential in political economy and demography. Malthus popularized the economic theory of rent....

 became England's first professor of political economy, at the East India Company College
East India Company College
The East India College was a college in Hertford Heath, Hertfordshire, England. It was founded in February 1806 as the training establishment for the British East India Company . At that time, the BEIC provided general and vocational education for young gentlemen of sixteen to eighteen years old,...

, Haileybury, Hertfordshire
Hertfordshire
Hertfordshire is a ceremonial and non-metropolitan county in the East region of England. The county town is Hertford.The county is one of the Home Counties and lies inland, bordered by Greater London , Buckinghamshire , Bedfordshire , Cambridgeshire and...

.

In the United States, political economy first was taught at the College of William and Mary
College of William and Mary
The College of William & Mary in Virginia is a public research university located in Williamsburg, Virginia, United States...

; in 1784 Adam Smith's The Wealth of Nations
The Wealth of Nations
An Inquiry into the Nature and Causes of the Wealth of Nations, generally referred to by its shortened title The Wealth of Nations, is the magnum opus of the Scottish economist and moral philosopher Adam Smith...

was a required textbook.

Glasgow University, where Smith was Professor of Logic and Moral Philosophy, changed the name of its Department of Political Economy to the Department of Economics (ostensibly to avoid confusing prospective undergraduates) in academic year 1997–1998, making the class of 1998 the last to be graduated with a Scottish Master of Arts degree in Political Economy.

Current approaches


In its contemporary meaning, political economy refers to different, but related, approaches to studying economic and political behaviours, ranging from the combination of economics with other fields to the use of different, fundamental assumptions that challenge orthodox economic assumptions:
  • Political economy most commonly refers to interdisciplinary studies drawing upon economics
    Economics
    Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

    , law
    Law
    Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

    , and political science
    Political science
    Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...

     in explaining how political institutions, the political environment, and the economic system—capitalist
    Capitalism
    Capitalism is an economic system that became dominant in the Western world following the demise of feudalism. There is no consensus on the precise definition nor on how the term should be used as a historical category...

    , socialist, mixed
    Mixed economy
    Mixed economy is an economic system in which both the state and private sector direct the economy, reflecting characteristics of both market economies and planned economies. Most mixed economies can be described as market economies with strong regulatory oversight, in addition to having a variety...

    —influence each other. "Traditional" topics include the influence of elections on the choice of economic policy, determinants of electoral outcomes, the political business cycles, central-bank independence, redistributive conflicts in fiscal policy, and the politics of delayed reforms in developing countries and of excessive deficits. From the late-1990s, the field has expanded to explore such wide-ranging topics as the origins and rate of change of political institutions, and the role of culture
    Cultural economics
    Cultural economics is the branch of economics that studies the relation of culture to economic outcomes. Here, 'culture' is defined by shared beliefs and preferences of respective groups. Programmatic issues include whether and how much culture matters as to economic outcomes and what its relation...

     in explaining economic outcomes and developments. When more narrowly construed, it analyzes such public policy as monopoly
    Monopoly
    A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...

    , market protection
    Protectionism
    Protectionism is the economic policy of restraining trade between states through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations designed to allow "fair competition" between imports and goods and services produced domestically.This...

    , institutional corruption, and rent-seeking. A more classical-liberal approach that dates from the 1970s that denotes 'public-choice' theory type approaches which question the benevolence of social planners to maximize the utility of a representative individual and instead stress how political forces affect the choice of policies that may not be so benevolent,
  • Historian
    Historian
    A historian is a person who studies and writes about the past and is regarded as an authority on it. Historians are concerned with the continuous, methodical narrative and research of past events as relating to the human race; as well as the study of all history in time. If the individual is...

    s have employed political economy to explore the ways in the past that persons and groups with common economic interests have used politics to effect changes beneficial to their interests.
  • International Political Economy
    International political economy
    International political economy , also known as global political economy, is an academic discipline within the social sciences that analyzes international relations in combination with political economy. As an interdisciplinary field it draws on many distinct academic schools, most notably ...

     (IPE) is an interdisciplinary field comprising approaches to international trade and finance, and state policies affecting international trade, i.e. monetary and fiscal policies. In the U.S., these approaches are associated with the journal International Organization
    International Organization
    International Organization is a peer-reviewed academic journal that covers the entire field of international affairs. Subject areas include: foreign policies, international relations, international and comparative political economy, security policies, environmental disputes and resolutions,...

    , which, in the 1970s, became the leading journal of international political economy under the editorship of Robert Keohane
    Robert Keohane
    Robert O. Keohane is an American academic, who, following the publication of his influential book After Hegemony , became widely associated with the theory of neoliberal institutionalism in international relations...

    , Peter J. Katzenstein
    Peter J. Katzenstein
    Peter Katzenstein is the Walter S. Carpenter, Jr. Professor of International Studies at Cornell University. He was educated in his native Germany. Katzenstein has received degrees from the London School of Economics, Swarthmore College, as well as a Ph.D. from Harvard University...

    , and Stephen Krasner. They are also associated with the journal The Review of International Political Economy. There also is a more critical school of IPE, inspired by Karl Polanyi
    Karl Polanyi
    Karl Paul Polanyi was a Hungarian philosopher, political economist and economic anthropologist known for his opposition to traditional economic thought and his book The Great Transformation...

    's work; two major figures are Susan Strange
    Susan Strange
    Susan Strange was a British academic who was influential in the field of International Political Economy. Her most important publications include Casino Capitalism, Mad Money, States and Markets and The Retreat of the State : The Diffusion of Power in the World Economy.For a quarter of a century,...

     and Robert W. Cox.
  • Economists and political scientists often associate the term with approaches using rational choice
    Rational choice theory
    Rational choice theory, also known as choice theory or rational action theory, is a framework for understanding and often formally modeling social and economic behavior. It is the main theoretical paradigm in the currently-dominant school of microeconomics...

     assumptions, especially game theory
    Game theory
    Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...

     and social choice theory
    Social choice theory
    Social choice theory is a theoretical framework for measuring individual interests, values, or welfares as an aggregate towards collective decision. A non-theoretical example of a collective decision is passing a set of laws under a constitution. Social choice theory dates from Condorcet's...

    , in explaining phenomena beyond economics' standard remit, in which context the term "positive political economy" is common.
  • Anthropologists, sociologists, and geographers use political economy in referring to the regimes of politics or economic values that emerge primarily at the level of states or regional governance, but also within smaller social groups and social networks. Because these regimes influence and are influenced by the organization of both social and economic capital, the analysis of dimensions lacking a standard economic value (e.g., the political economy of language, of gender, of religion) often draw on the concepts used in Marxian critiques of capital
    Capitalist mode of production
    In Marx's critique of political economy, the capitalist mode of production is the production system of capitalist societies, which began in Europe in the 16th century, grew rapidly in Western Europe from the end of the 18th century, and later extended to most of the world...

    . Such approaches expand on neo-Marxian scholarship related to development
    Economic development
    Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...

     and underdevelopment
    Underdevelopment
    Underdevelopment is a term often used to refer to economic underdevelopment, symptoms of which include lack of access to job opportunities, health care, drinkable water, food, education and housing...

     postulated by André Gunder Frank
    Andre Gunder Frank
    Andre Gunder Frank was a German-American economic historian and sociologist who promoted "dependency theory" after 1970 and "World Systems Theory" after 1984...

     and Immanuel Wallerstein
    Immanuel Wallerstein
    Immanuel Maurice Wallerstein is a US sociologist, historical social scientist, and world-systems analyst...

    .
  • New political economy
    New political economy
    New political economy students treat economic ideologies as the phenomenon to be explained. Thus, Charles S. Maier suggests that a political economy approach: interrogates economic doctrines to disclose their sociological and political premises....in sum, [it] regards economic ideas and behavior...

     students treat economic ideologies as the phenomenon to explain, per the traditions of Marxian political economy. Thus, Charles S. Maier suggests that a political economy approach: "interrogates economic doctrines to disclose their sociological and political premises....in sum, [it] regards economic ideas and behavior not as frameworks for analysis, but as beliefs and actions that must themselves be explained." This approach informs Andrew Gamble's The Free Economy and the Strong State (Palgrave Macmillan, 1988), and Colin Hay's The Political Economy of New Labour (Manchester University Press, 1999). It also informs much work published in New Political Economy an international journal founded by Sheffield University scholars in 1996.

Education


Countries offering education in political economy are Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

, Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...

, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...

 and the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

 among others.

Related disciplines


Because political economy is not a unified discipline, there are studies using the term that overlap in subject matter, but have radically different perspectives:
  • Sociology
    Sociology
    Sociology is the study of society. It is a social science—a term with which it is sometimes synonymous—which uses various methods of empirical investigation and critical analysis to develop a body of knowledge about human social activity...

     studies the effects of persons' involvement in society as members of groups, and how that changes their ability to function. Many sociologists start from a perspective of production-determining relation from Karl Marx
    Karl Marx
    Karl Heinrich Marx was a German philosopher, economist, sociologist, historian, journalist, and revolutionary socialist. His ideas played a significant role in the development of social science and the socialist political movement...

    . Marx's theories on the subject of political economy are contained in his book, Das Kapital
    Das Kapital
    Das Kapital, Kritik der politischen Ökonomie , by Karl Marx, is a critical analysis of capitalism as political economy, meant to reveal the economic laws of the capitalist mode of production, and how it was the precursor of the socialist mode of production.- Themes :In Capital: Critique of...

    .
  • Political Science
    Political science
    Political Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...

     focuses on the interaction between institutions and human behavior, the way in which the former shapes choices and how the latter change institutional frameworks. Along with economics, it has made the best works in the field by authors like Shepsle, Ostrom
    Elinor Ostrom
    Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...

    , Ordeshook, among others.
  • Anthropology
    Anthropology
    Anthropology is the study of humanity. It has origins in the humanities, the natural sciences, and the social sciences. The term "anthropology" is from the Greek anthrōpos , "man", understood to mean mankind or humanity, and -logia , "discourse" or "study", and was first used in 1501 by German...

     studies political economy by investigating regimes of political and economic value that condition tacit aspects of sociocultural practices (e.g., the pejorative use of pseudo-Spanish
    Mock Spanish
    Mock Spanish is a term sometimes used to describe a variety of usages common in some otherwise monolingual Anglo-American circles. The term has been popularized by anthropologist-linguist Jane H. Hill of the University of Arizona, most recognizably in relation to the catchphrase, "Hasta la vista,...

     expressions in the US-American entertainment media) by means of broader historical, political, and sociological processes; analyses of structural features of transnational processes focus on the interactions between the world capitalist system and local cultures.
  • Psychology
    Psychology
    Psychology is the study of the mind and behavior. Its immediate goal is to understand individuals and groups by both establishing general principles and researching specific cases. For many, the ultimate goal of psychology is to benefit society...

     is the fulcrum on which political economy exerts its force in studying decision-making (not only in prices), but as the field of study whose assumptions model political economy.
  • History
    History
    History is the discovery, collection, organization, and presentation of information about past events. History can also mean the period of time after writing was invented. Scholars who write about history are called historians...

     documents change, using it to argue political economy; historical works have political economy as the narrative's frame.
  • Economics
    Economics
    Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

     focuses on markets by leaving the political—governments, states, legal frameworks—as givens. Economics dropped the adjective political in the 19th century, but works backwards, by describing "The Ideal Market", urging governments to formulate policy and law to approach said ideal. Economists and political economists often disagree on what is preeminent in developing production, market, and political structure theories.
  • Law
    Law
    Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...

     concerns the creation of policy and its mediation via political actions that have specific results, it deals with political economy as political capital and as social infrastructure—and the sociological results of one society upon another.
  • Human Geography
    Human geography
    Human geography is one of the two major sub-fields of the discipline of geography. Human geography is the study of the world, its people, communities, and cultures. Human geography differs from physical geography mainly in that it has a greater focus on studying human activities and is more...

     is concerned with politico-economic processes, emphasizing space and environment.
  • Ecology
    Ecology
    Ecology is the scientific study of the relations that living organisms have with respect to each other and their natural environment. Variables of interest to ecologists include the composition, distribution, amount , number, and changing states of organisms within and among ecosystems...

     deals with political economy, because human activity has the greatest effect upon the environment, its central concern being the environment's suitability for human activity. The ecological effects of economic activity spur research upon changing market economy incentives.
  • International Relations
    International relations
    International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...

     often uses political economy to study political and economic development.
  • Cultural Studies
    Cultural studies
    Cultural studies is an academic field grounded in critical theory and literary criticism. It generally concerns the political nature of contemporary culture, as well as its historical foundations, conflicts, and defining traits. It is, to this extent, largely distinguished from cultural...

     studies social class, production, labor, race, gender, and sex.
  • Communication
    Communication
    Communication is the activity of conveying meaningful information. Communication requires a sender, a message, and an intended recipient, although the receiver need not be present or aware of the sender's intent to communicate at the time of communication; thus communication can occur across vast...

     examines the institutional aspects of media and telecommuncation systems, with particular attention to the historical relationships between owners, labor, consumers, advertisers, and the state.

See also

  • Economic study of collective action
    Collective action
    Collective action is the pursuit of a goal or set of goals by more than one person. It is a term which has formulations and theories in many areas of the social sciences.-In sociology:...

  • Constitutional economics
    Constitutional economics
    Constitutional economics is a research program in economics and constitutionalism that has been described as extending beyond the definition of 'the economic analysis of constitutional law' in explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the...

  • Public choice theory
    Public choice theory
    In economics, public choice theory is the use of modern economic tools to study problems that traditionally are in the province of political science...

  • EAEPE
  • Economic system
    Economic system
    An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...

  • Economic ideology
    Economic ideology
    An economic ideology distinguishes itself from economic theory in being normative rather than just explanatory in its approach. It expresses a perspective on the way an economy should be run and to what end, whereas the aim of economic theories is to create accurate explanatory models...

  • Institutional economics
    Institutional economics
    Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen's instinct-oriented dichotomy between technology on the one side and the "ceremonial" sphere of society on the...

  • Important publications in political economy
  • Perspectives on Capitalism
    Perspectives on capitalism
    Throughout modern history, a variety of influential perspectives on capitalism have shaped modern economic thought. Adam Smith was one of the first influential writers on the topic, with his book The Wealth of Nations, which is generally considered to be the start of classical economics which...

  • Social model
    Social Model
    A social, or socioeconomic, model, is the value system associated with the structure of a nation's political economy. There are no set rules that define a social model, only loose definitions characterized by certain attributes.-Taxation:...

  • Social Capital
    Social capital
    Social capital is a sociological concept, which refers to connections within and between social networks. The concept of social capital highlights the value of social relations and the role of cooperation and confidence to get collective or economic results. The term social capital is frequently...


Journals



  • Public Choice
  • Review of Radical Political Economics
    Review of Radical Political Economics
    The Review of Radical Political Economics is the quarterly journal of the Union for Radical Political Economics www.URPE.org. Launched in 1968, it is a leading venue for scholarly articles on radical political economics, including Marxist, feminist, lnstitutional, ecological, and post-Keynesian...

  • Studies in Political Economy


External links