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Political economy originally was the term for studying production, buying and selling, and their relations with law, custom, and government. Political economy originated in moral philosophy. It developed in the 18th century as the study of the economies of states—polities, hence political economy.

In late nineteenth century, the term "political economy" was generally replaced by the term economics, used by those seeking to place the study of economy upon mathematical and axiomatic bases, rather than the structural relationships of production and consumption (cf. marginalism, William Stanley Jevons, Alfred Marshall).

Contents

History of the term

Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in the nation-states. 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, Adam Smith, David Ricardo and Karl Marx were some of the exponents of political economy. In 1805, Thomas Malthus became England's first professor of political economy, at the East India Company College, Haileybury, Hertfordshire. The world's first professorship in political economy was established in 1763 at the University of Vienna, Austria; Joseph von Sonnenfels was the first tenured professor.

In the United States, political economy first was taught at the College of William and Mary; in 1784 Adam Smith's Wealth of Nations was a required textbook.[1]

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, law, and political science in explaining how political institutions, the political environment, and the economic system—capitalist, socialist, mixed—influence each other. When narrowly construed, it refers to applied topics in economics implicating public policy, such as monopoly, market protection, government fiscal policy,[2] and rent seeking.[3]
  • Historians 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.[4]
  • "International political economy" (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, which, in the 1970s, became the leading journal of international political economy under the editorship of Robert Keohane, Peter J. Katzenstein, 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's work; two major figures are Susan Strange and Robert W. Cox.[5]
  • Economists and political scientists often associate the term with approaches using rational choice assumptions, especially game theory, in explaining phenomena beyond economics' standard remit, in which context the term "positive political economy" is common.[6]
  • Anthropologists, sociologists, and geographers, use political economy in referring to the neo-Marxian approaches to development and underdevelopment postulated by André Gunder Frank and Immanuel Wallerstein.
  • New political economy 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.[7] 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.[8]

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 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. Marx's theories on the subject of political economy are contained in his book, Das Kapital.
  • Political Science 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, Ordeshook, among others.
  • Anthropology studies political economy by studying the relationship between the world capitalist system and local cultures.
  • Psychology 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 documents change, using it to argue political economy; historical works have political economy as the narrative's frame.
  • Economics 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 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 is concerned with politico-economic processes, emphasizing space and environment.
  • Ecology 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 often uses political economy to study political and economic development.
  • Cultural Studies studies social class, production, labor, race, gender, and sex.
  • Communications 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

Notes

  1. ^ Image of "Priorities of the College of William and Mary"
  2. ^ Groenwegen (1987, p.906).
  3. ^ Anne O. Krueger, "The Political Economy of the Rent-Seeking Society," American Economic Review, 64(3), June 1974, pp.291–303
  4. ^ McCoy, Drew R. "The Elusive Republic: Political Ecocomy in Jeffersonian America", Chapel Hill, University of North Carolina, 1980.
  5. ^ Cohen, Benjamin J. (2007), ‘The transatlantic divide: Why are American and British IPE so different?’, Review of International Political Economy, Vol. 14, No. 2, May 2007
  6. ^ Alt, James E. and Kenneth Shepsle (eds.) (1990), Perspectives on Positive Political Economy (Cambridge [UK]; New York: Cambridge University Press).
  7. ^ Charles S. Mayer "In search of Stability: Explorations in Historical Political Economy", Cambridge University Press, Cambridge, 1987, pp.3–6.
  8. ^ cf: David Baker, "The political economy of fascism: Myth or reality, or myth and reality?" New Political Economy, Volume 11, Issue 2 June 2006, pp.227–250.

References

  • Groenwegen, Peter (1987). "'political economy' and 'economics'", The New Palgrave: A Dictionary of Economics, v. 3, pp. 904–07.
  • Pressman, Steven, Encyclopedia of Political Economy Routledge, 1999
  • Pressman, Steven, Interactions in Political Economy: Malvern After Ten Years Routledge, 1996
  • Winch, Donald, Riches and poverty : an intellectual history of political economy in Britain, 1750–1834 Cambridge [etc.]: Cambridge U.P., 1996.
  • Winch, Donald, "The emergence of Economics as a Science 1750–1870". In: The Fontana Economic History of Europe, Vol. 3. London: Collins/Fontana, 1973.

External links

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Political economy originally was the term for studying production, buying and selling, and their relations with law, custom, and government, as well as with a distribution of national wealth including through the budget process. Political economy originated in moral philosophy. It developed in the 18th century as the study of the economies of states, polities, hence political economy.

In late nineteenth century, the term "political economy" was generally replaced by the term economics, used by those seeking to place the study of economy upon mathematical and axiomatic bases, rather than the structural relationships of production and consumption (cf. marginalism, William Stanley Jevons, Alfred Marshall). Today, political economy, where it is not used as a synonym for economics,[1] may broadly refer to an interdisciplinary approach that applies economic methods to analyze how political outcomes and institutions affect economic policy.[2] It is available as an area of study in certain colleges and universities.

Contents

History of the term

Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in the nation-states. 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, Adam Smith, David Ricardo and Karl Marx were some of the exponents of political economy. In 1805, Thomas Malthus became England's first professor of political economy, at the East India Company College, Haileybury, Hertfordshire. The world's first professorship in political economy was established in 1763 at the University of Vienna, Austria; Joseph von Sonnenfels was the first tenured professor.

In the United States, political economy first was taught at the College of William and Mary; in 1784 Adam Smith's Wealth of Nations was a required textbook.[3]

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, law, and political science in explaining how political institutions, the political environment, and the economic systemcapitalist, socialist, mixed—influence each other. "Traditional" topics include the influence of elections on the choice of economic policy, determinants of electoral outcomes, the political business cycles,[4] 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 explored such wide-ranging topics as the origins and rate of change of political institutions, and the role of culture in explaining economic outcomes and developments.[2] When more narrowly construed, it analyzes such public policy as monopoly, market protection, institutional corruption,[5] and rent seeking.[6]
  • Historians 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.[7]
  • International Political Economy (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, which, in the 1970s, became the leading journal of international political economy under the editorship of Robert Keohane, Peter J. Katzenstein, 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's work; two major figures are Susan Strange and Robert W. Cox.[8]
  • Economists and political scientists often associate the term with approaches using rational choice assumptions, especially game theory and social choice theory, in explaining phenomena beyond economics' standard remit, in which context the term "positive political economy" is common.[9]
  • Anthropologists, sociologists, and geographers, use political economy in referring to the neo-Marxian approaches to development and underdevelopment postulated by André Gunder Frank and Immanuel Wallerstein.
  • New political economy 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."[10] 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.[11]
  • Guy Debord agrees: "The commodity's domination was at first exerted over the economy in an occult manner; the economy itself, the material basis of social life, remained unperceived and not understood, like the familiar which is not necessarily known. In a society where the concrete commodity is rare or unusual, money, apparently dominant, presents itself as an emissary armed with full powers who speaks in the name of an unknown force. With the industrial revolution, the division of labor in manufactures, and mass production for the world market, the commodity appears in fact as a power which comes to occupy social life. It is then that political economy takes shape, as the dominant science and the science of domination."[12]

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 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. Marx's theories on the subject of political economy are contained in his book, Das Kapital.
  • Political Science 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, Ordeshook, among others.
  • Anthropology studies political economy by studying the relationship between the world capitalist system and local cultures.
  • Psychology 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 documents change, using it to argue political economy; historical works have political economy as the narrative's frame.
  • Economics 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 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 is concerned with politico-economic processes, emphasizing space and environment.
  • Ecology 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 often uses political economy to study political and economic development.
  • Cultural Studies studies social class, production, labor, race, gender, and sex.
  • Communication 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

References

  1. ^ Groenwegen, Peter (1987 [2008]). "'political economy' and 'economics'", The New Palgrave: A Dictionary of Economics, v. 3, p. 906. [Pp. 904–07.]
  2. ^ a b Alesina, Alberto F. (2007:3) "Program Report: Political Economy," NBER Reporter OnLine.
  3. ^ Image of "Priorities of the College of William and Mary"
  4. ^ • Drazen, Allan, 2008. "political business cycles," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract.
       • Nordhaus, William D., 1989:2. "Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity, pp. 1-68.
  5. ^ Bose, Niloy, 2010. "corruption and economic growth," The New Palgrave Dictionary of Economics Online, 2nd Edition. Abstract.
  6. ^ Krueger, Anne O., 1974. "The Political Economy of the Rent-Seeking Society," American Economic Review, 64(3), pp. 291–303.
  7. ^ McCoy, Drew R. "The Elusive Republic: Political Ecocomy in Jeffersonian America", Chapel Hill, University of North Carolina, 1980.
  8. ^ Cohen, Benjamin J. (2007), ‘The transatlantic divide: Why are American and British IPE so different?’, Review of International Political Economy, Vol. 14, No. 2, May 2007
  9. ^ Alt, James E. and Kenneth Shepsle (eds.) (1990), Perspectives on Positive Political Economy (Cambridge [UK]; New York: Cambridge University Press).
  10. ^ Charles S. Mayer "In search of Stability: Explorations in Historical Political Economy", Cambridge University Press, Cambridge, 1987, pp.3–6.
  11. ^ cf: David Baker, "The political economy of fascism: Myth or reality, or myth and reality?" New Political Economy, Volume 11, Issue 2 June 2006, pp.227–250.
  12. ^ Guy Debord "The Society of the Spectacle"

External links

Further reading

  • Pressman, Steven, Encyclopedia of Political Economy Routledge, 1999
  • Pressman, Steven, Interactions in Political Economy: Malvern After Ten Years Routledge, 1996
  • Winch, Donald, Riches and Poverty : An Intellectual History of Political Economy in Britain, 1750–1834 Cambridge [etc.]: Cambridge U.P., 1996.
  • Weingast, Barry R., and Donald Wittman, ed., 2008. The Oxford Handbook of Political Economy. Oxford UP. Preview.
  • Winch, Donald, "The Emergence of Economics as a Science, 1750–1870." In: The Fontana Economic History of Europe, Vol. 3. London: Collins/Fontana, 1973.

Simple English

Political economy was the original term for the study of production, the acts of buying and selling, and their relationships to laws, customs and government.

It developed in the 17th century as the study of the economies of states which placed the theory of property in the theory of government.[1] Some political economists proposed the labour theory of value (first introduced by John Locke, developed by Adam Smith and later Karl Marx), according to which labour is the real source of value. Many political economists also looked at the accelerating development of technology, whose role in economic and social relationships grew ever more important.

In late 19th century, the term "political economy" was generally replaced by the term economics, which was used by those seeking to place the study of economy on a mathematical basis, rather than studying the relationships within production and consumption.

In the present, political economy means a variety of different, but related, approaches to studying economic and political behavior, which range from combining economics with other fields, to using different fundamental assumptions which challenge those of orthodox economics:

  • Political economy is most commonly used to refer to interdisciplinary studies that draw on economics, law and political science in order to understand how political institutions, the political environment and capitalism influence each other.
  • Within political science, the term refers to modern liberal, realist, Marxian, and constructivist theories concerning the relationship between economic and political power among and within states. This is also of concern to students of economic history and institutional economics.

Contents

Disciplines which relate to political economy

Because political economy is not a unified discipline, there are a variety of studies that use the term which have overlapping subject matter, but radically different viewpoints.

Sociology is the study of the effects of involvement in society on individuals as members groups, and how this changes their ability to function. Many sociologists begin from a framework of production determining relationship drawn from Karl Marx.

Anthropology often studies political economy by studying the relationship between the world capitalist system and local cultures.

Psychology is frequently the fulcrum around which political economy centers, in that it deals with decision making, not as being a black box whose effects are seen only in price decisions, but as being a source of study, and therefore the assumptions in a model of political economy.

History since it documents change over time, is often used as a means of arguing in political economy, and often historical works have a framework of political economy which they assume or argue as the basis for the narrative structure.

Economics, because it studies activity and price relationships and the effects of scarcity, grew out of political economy. It is often used in political economy to argue policy effects and study the results of actions, and it is often in opposition to political economy, in that many, if not most, practicing economists see political economy as being a hindrance to the operation of economic forces. From the point of view of political economy, economics is a branch of the entire study, and economics has, at its basis, a theory of political economy which should be open to examination.

Law since it concerns the creation of policy, or the mediation of policy ends through political acts which have specific individual results, is seen, in political economy, as both political capital and social infrastructure, on one hand - and as the result of the sociology of a society on the other.

Constitutional economics is the academic sub-discipline of economics and constitutionalism. It is often described as "the economic analysis of constitutional law." Constitutional economics tries to explain the selection of different constitutional rules "limiting the choices and activities of economic and political agencies." This is different from the approach of traditional economics.[2] Also, constitutional economics studies how well economic decisions of the state agree with the existing constitutional economic rights of its citizens."[3] For example, proper distribution of economic and financial resources of the state is a big question for every nation. Constitutional economics helps finding a legal mechanism to solve this problem.

Ecology is often involved in political economy, because human activity is one of the single largest effects on the environment, and because it is the suitability of the environment for human beings which is one of the central concerns of most human beings. The ecological effects of economic activity on the environment have spurred the creation of a great deal of research studying means of changing the incentives balance of the market economy. This work is particularly controversial in its interaction with economics, since it questions the fundamental econometric assumptions of market economics and their basic validity.

References

  1. John Locke, Second Treatise of Government, edited by C.B. Macpherson, Cambridge, 1980
  2. Ludwig Van den Hauwe, 2005. "Constitutional Economics II," The Elgar Companion to Law and Economics, pp. [http://books.google.com/books?hl=en&lr=&id=EtguKoWHUHYC&oi=fnd&pg=PA223&=fals 223-24.
  3. Peter Barenboim, Constitutional Economics and the Bank of Russia, Fordham Journal of Corporate and Financial Law, 7(1), 2001, p. 160.

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