Political economy

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Jean-Jacques Rousseau, Discours sur l'oeconomie politique, 1758 Rousseau - Discours sur l'oeconomie politique, 1758 - 5884558.tif
Jean-Jacques Rousseau, Discours sur l'oeconomie politique, 1758

Political economy is a branch of political science and economics studying economic systems (e.g. markets and national economies) and their governance by political systems (e.g. law, institutions, and government). [1] [2] [3] [4] Widely studied phenomena within the discipline are systems such as labour markets and financial markets, as well as phenomena such as growth, distribution, inequality, and trade, and how these are shaped by institutions, laws, and government policy. Originating in the 16th century, it is the precursor to the modern discipline of economics. [5] [6] Political economy in its modern form is considered an interdisciplinary field, drawing on theory from both political science and modern economics. [4]

Contents

Political economy originated within 16th century western moral philosophy, with theoretical works exploring the administration of states' wealth; "political" signifying the Greek word polity and "economy" signifying the Greek word οἰκονομία ; household management. The earliest works of political economy are usually attributed to the British scholars Adam Smith, Thomas Malthus, and David Ricardo, although they were preceded by the work of the French physiocrats, such as François Quesnay (1694–1774) and Anne-Robert-Jacques Turgot (1727–1781). [7]

In the late 19th century, the term "economics" gradually began to replace the term "political economy" with the rise of mathematical modeling coinciding with the publication of an influential textbook by Alfred Marshall in 1890. [8] Earlier, William Stanley Jevons, 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". [9] [10] Citation measurement metrics from Google Ngram Viewer indicate that use of the term "economics" began to overshadow "political economy" around roughly 1910, becoming the preferred term for the discipline by 1920. [11] According to economist Clara Mattei, this shift was driven by the increasing consensus of classical liberalism as natural-law; and persisted despite evidence to the contrary during the First World War. [12] Today, the term "economics" usually refers to the narrow study of the economy absent other political and social considerations while the term "political economy" represents a distinct and competing approach.

Etymology

Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organized in nation-states. In that way, political economy expanded the emphasis on economics, which comes from the Greek oikos (meaning "home") and nomos (meaning "law" or "order"). Political economy was thus meant to express the laws of production of wealth at the state level, quite like economics concerns putting home to order. The phrase économie politique (translated in English to "political economy") first appeared in France in 1615 with the well-known book by Antoine de Montchrétien, Traité de l'economie politique. Other contemporary scholars attribute the roots of this study to the 13th Century Tunisian Arab Historian and Sociologist, Ibn Khaldun, for his work on making the distinction between "profit" and "sustenance", in modern political economy terms, surplus and that required for the reproduction of classes respectively. He also calls for the creation of a science to explain society and goes on to outline these ideas in his major work, the Muqaddimah . In Al-Muqaddimah Khaldun states, "Civilization and its well-being, as well as business prosperity, depend on productivity and people's efforts in all directions in their own interest and profit" – seen as a modern precursor to Classical Economic thought.

Leading on from this, the French physiocrats were the first major exponents of political economy, [13] although the intellectual responses of Adam Smith, John Stuart Mill, David Ricardo, Henry George and Karl Marx to the physiocrats generally receive much greater attention. [14] The world's first professorship in political economy was established in 1754 at the University of Naples Federico II in southern Italy. The Neapolitan philosopher Antonio Genovesi was the first tenured professor. In 1763, Joseph von Sonnenfels was appointed a Political Economy chair at the University of Vienna, Austria. Thomas Malthus, in 1805, became England's first professor of political economy, at the East India Company College, Haileybury, Hertfordshire. At present, political economy refers to different yet related approaches to studying economic and related behaviours, ranging from the combination of economics with other fields to the use of different, fundamental assumptions challenging earlier economic assumptions.

Current approaches

Robert Keohane, international relations theorist Keohane small.jpg
Robert Keohane, international relations theorist

Political economy most commonly refers to interdisciplinary studies drawing upon economics, sociology and political science in explaining how political institutions, the political environment, and the economic systemcapitalist, socialist, communist, or mixed—influence each other. [15] The Journal of Economic Literature classification codes associate political economy with three sub-areas: (1) the role of government and/or class and power relationships in resource allocation for each type of economic system; [16] (2) international political economy, which studies the economic impacts of international relations; [17] and (3) economic models of political or exploitative class processes. [18] Within the field of political science, there is generally a distinction between international political economy (studied by international relations scholars) and comparative political economy (studied by comparative politics scholars). [1]

Public choice theory is a microfoundations theory closely intertwined with political economy. Both approaches model voters, politicians and bureaucrats as behaving in mainly self-interested ways, in contrast to a view, ascribed to earlier mainstream economists, of government officials trying to maximize individual utilities from some kind of social welfare function. [19] As such, economists and political scientists often associate political economy with approaches using rational-choice assumptions, [20] especially in game theory [21] and in examining phenomena beyond economics' standard remit, such as government failure and complex decision making in which context the term "positive political economy" is common. [22] Other "traditional" topics include analysis of such public policy issues as economic regulation, [23] monopoly, rent-seeking, market protection, [24] institutional corruption [25] and distributional politics. [26] Empirical analysis includes the influence of elections on the choice of economic policy, determinants and forecasting models of electoral outcomes, the political business cycles, [27] central-bank independence and the politics of excessive deficits. [28] An interesting example would be the publication in 1954 of the first manual of Political Economy in the Soviet Union, edited by Lev Gatovsky, which mixed the classsic theoretical approach of the time with the soviet political discourse. [29]

Susan Strange, international relations scholar Professor Susan Strange, c1980.jpg
Susan Strange, international relations scholar

A rather recent focus has been put on modeling economic policy and political institutions concerning interactions between agents and economic and political institutions, [30] including the seeming discrepancy of economic policy and economist's recommendations through the lens of transaction costs. [31] From the mid-1990s, the field has expanded, in part aided by new cross-national data sets allowing tests of hypotheses on comparative economic systems and institutions. [32] Topics have included the breakup of nations, [33] the origins and rate of change of political institutions in relation to economic growth, [34] development, [35] financial markets and regulation, [36] the importance of institutions, [37] backwardness, [38] reform [39] and transition economies, [40] the role of culture, ethnicity and gender in explaining economic outcomes, [41] macroeconomic policy, [42] the environment, [43] fairness [44] and the relation of constitutions to economic policy, theoretical [45] and empirical. [46]

Other important landmarks in the development of political economy include:

Because political economy is not a unified discipline, there are studies using the term that overlap in subject matter, but have radically different perspectives: [58]

Journals

See also

Notes

  1. 1 2 Hacker, Jacob S.; Hertel-Fernandez, Alexander; Pierson, Paul; Thelen, Kathleen (2021), Hertel-Fernandez, Alexander; Hacker, Jacob S.; Thelen, Kathleen; Pierson, Paul (eds.), "The American Political Economy: A Framework and Agenda for Research", The American Political Economy: Politics, Markets, and Power, Cambridge University Press, pp. 4–5, ISBN   978-1-316-51636-2, archived from the original on 2022-05-03, retrieved 2022-06-18
  2. Bladen, Vincent (2016). An Introduction to Political Economy. University of Toronto Press. ISBN   978-1442632103. OCLC   1013947543.
  3. Mill, John Stuart, 1806–1873. (2009). Principles of political economy : with some of their applications to social philosophy. Bibliolife. ISBN   978-1116761184. OCLC   663099414.{{cite book}}: CS1 maint: multiple names: authors list (link) CS1 maint: numeric names: authors list (link)
  4. 1 2 "political economy | Britannica". www.britannica.com. Archived from the original on 2019-12-14. Retrieved 2022-05-15.
  5. "economics | Definition, History, Examples, Types, & Facts | Britannica". www.britannica.com. Archived from the original on 2015-06-15. Retrieved 2022-05-15.
  6. Weingast, Barry R.; Wittman, Donald A. (2011-07-07). "Overview Of Political Economy". The Oxford Handbook of Political Science. doi:10.1093/oxfordhb/9780199604456.013.0038. Archived from the original on 2022-05-15. Retrieved 2022-05-15.
  7. Steiner (2003), pp. 61–62
  8. Marshall, Alfred. (1890) Principles of Economics .
  9. Jevons, W. Stanley. The Theory of Political Economy, 1879, 2nd ed. p. xiv. Archived 2023-04-12 at the Wayback Machine
  10. Groenwegen, Peter. (1987 [2008]). "'political economy' and 'economics'", The New Palgrave: A Dictionary of Economics , v. 3, pp. 905–906. [Pp. 904–07.]
  11. Mark Robbins (2016) "Why we need political economy," Policy Options, Archived 2019-04-02 at the Wayback Machine
  12. Mattei, Clara. The Capital Order, 2022
  13. Bertholet, Auguste (2020-05-27). "The intellectual origins of Mirabeau". History of European Ideas. 47: 91–96. doi:10.1080/01916599.2020.1763745. ISSN   0191-6599. S2CID   219747599.
  14. "What is Political Economy?". Political Economy, Athabasca University. Archived from the original on 2022-02-07. Retrieved 2022-02-06.
  15. Weingast, Barry R., and Donald Wittman, ed., 2008. The Oxford Handbook of Political Economy. Oxford UP. Description Archived 2013-01-25 at the Wayback Machine and preview. Archived 2023-04-30 at the Wayback Machine
  16. At JEL: P as in JEL Classification Codes Guide Archived 2013-11-18 at the Wayback Machine , drilled to at each economic-system link.
    For example:
       • Brandt, Loren, and Thomas G. Rawski (2008). "Chinese economic reforms," The New Palgrave Dictionary of Economics , 2nd Edition. Abstract. Archived 2013-05-28 at the Wayback Machine
       • Helsley, Robert W. (2008). "urban political economy," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
  17. At JEL: F5 as drilled to in JEL Classification Codes Guide Archived 2013-11-18 at the Wayback Machine .
    For example:
      Gilpin, Robert (2001), Global Political Economy: Understanding the International Economic Order, Princeton. Description Archived 2013-01-22 at the Wayback Machine and ch. 1, " The New Global Economic Order" link. Archived 2013-03-09 at the Wayback Machine
       • Mitra, Devashish (2008). "trade policy, political economy of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
  18. At JEL: D72 and JEL: D74 Archived 2017-11-05 at the Wayback Machine with context for its usage in JEL Classification Codes Guide Archived 2013-11-18 at the Wayback Machine , drilled to at JEL: D7.
  19. Tullock, Gordon ([1987] 2008). "public choice," The New Palgrave Dictionary of Economics. Abstract Archived 2018-01-07 at the Wayback Machine .
      Arrow, Kenneth J. (1963). Social Choice and Individual Values , 2nd ed., ch. VIII Archived 2013-07-01 at the Wayback Machine , sect. 2, The Social Decision Process, pp. 106–08.
  20. Lohmann, Susanne (2008). "rational choice and political science," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
  21. Shubik, Martin (1981). "Game Theory Models and Methods in Political Economy," in K. Arrow and M. Intriligator, ed., Handbook of Mathematical Economics, Elsevier, v. 1, pp. 285 [ dead link ]-330.
       • _____ (1984). A Game-Theoretic Approach to Political Economy. MIT Press. Description Archived 2011-06-29 at the Wayback Machine and review extract.
       • _____ (1999). Political Economy, Oligopoly and Experimental Games: The Selected Essays of Martin Shubik, v. 1, Edward Elgar. Description Archived 2012-05-24 at the Wayback Machine and contents of Part I Archived 2023-04-30 at the Wayback Machine , Political Economy.
      Peter C. Ordeshook (1990). "The Emerging Discipline of Political Economy," ch. 1 in Perspectives on Positive Political Economy, Cambridge, pp. 9–30. Archived 2023-04-12 at the Wayback Machine
       • _____ (1986). Game Theory and Political Theory, Cambridge. Description Archived 2013-03-09 at the Wayback Machine and preview.
  22. Alt, James E.; Shepsle, Kenneth (eds.) (1990), Perspectives on Positive Political Economy (Cambridge [UK]; New York: Cambridge University Press). Description and content links Archived 2013-03-09 at the Wayback Machine and preview. Archived 2023-04-12 at the Wayback Machine
  23. Rose, N. L. (2001). "Regulation, Political Economy of," International Encyclopedia of the Social & Behavioral Sciences , pp. 12967–12970. Abstract.
  24. Krueger, Anne O. (1974). "The Political Economy of the Rent-Seeking Society," American Economic Review, 64(3), p. 291–303.
  25. • Bose, Niloy. "corruption and economic growth," The New Palgrave Dictionary of Economics Online, 2nd Edition, 2010. Abstract. Archived 2010-12-29 at the Wayback Machine
       • Rose-Ackerman, Susan (2008). "bribery," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
  26. Becker, Gary S. (1983). "A Theory of Competition among Pressure Groups for Political Influence," Quarterly Journal of Economics, 98(3), pp. 371–400. Archived 2011-05-11 at the Wayback Machine
       • Weingast, Barry R., Kenneth A. Shepsle, and Christopher Johnsen (1981). "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, 89(4), pp. 642–664. Archived 2013-05-10 at the Wayback Machine
       • Breyer, Friedrich (1994). "The Political Economy of Intergenerational Redistribution," European Journal of Political Economy, 10(1), pp. 61–84. Abstract.
      Williamson, Oliver E. (1995). "The Politics and Economics of Redistribution and Inefficiency," Greek Economic Review, December, 17, pp. 115–136, reprinted in Williamson (1996), The Mechanisms of Governance, Oxford University Press, ch. 8 Archived 2023-04-12 at the Wayback Machine , pp. 195–218.
      Krusell, Per, and José-Víctor Ríos-Rull (1999). "On the Size of U.S. Government: Political Economy in the Neoclassical Growth Model," American Economic Review, 89(5), pp. 1156–1181.
       • Galasso, Vincenzo, and Paola Profeta (2002). "The Political Economy of Social Security: A Survey," European Journal of Political Economy, 18(1), pp. 1–29. [ permanent dead link ]
  27. • Drazen, Allan (2008). "Political business cycles," The New Palgrave Dictionary of Economics , 2nd Edition. Abstract. Archived 2010-12-29 at the Wayback Machine
      Nordhaus, William D. (1989). "Alternative Approaches to the Political Business Cycle," Brookings Papers on Economic Activity, (2), pp. 1 Archived 2020-04-01 at the Wayback Machine –68.
  28. Buchanan, James M. (2008). "public debt," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
       • Alesina, Alberto, and Roberto Perotti (1995). "The Political Economy of Budget Deficits," IMF Staff Papers, 42(1), pp. 1–31.
  29. Written at Moscow. Political Economy: A Textbook issued by the Economics Institute of the Academy of Sciences of the U.S.S.R [Political Economy: A Textbook issued by the Economics Institute of the Academy of Sciences of the U.S.S.R] (in Russian) (1st ed.). Marxists Internet Archive: Economics Institute of the Academy of Sciences of the U.S.S.R (published 2014). 1954.{{cite book}}: CS1 maint: date and year (link)
  30. Timothy, Besley (2007). Principled Agents?: The Political Economy of Good Government, Oxford. Description. Archived 2013-05-10 at the Wayback Machine
       • _____ and Torsten Persson (2008). "political institutions, economic approaches to," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
      North, Douglass C. (1986). "The New Institutional Economics," Journal of Institutional and Theoretical Economics, 142(1), pp. 230–237.
       • _____ (1990). Institutions, Institutional Change and Economic Performance, in the Political Economy of Institutions and Decisions series. Cambridge. Description Archived 2013-03-09 at the Wayback Machine and preview. Archived 2023-04-30 at the Wayback Machine
      Ostrom, Elinor (1990). Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press. Description Archived 2013-03-09 at the Wayback Machine and preview links. Archived 2023-04-12 at the Wayback Machine ISBN   9780521405997.
       • _____ (2010). "Beyond Markets and States: Polycentric Governance of Complex Economic Systems," American Economic Review, 100(3), pp. 641–672 Archived 2013-11-05 at the Wayback Machine .
  31. Dixit, Avinash (1996). The Making of Economic Policy: A Transaction Cost Politics Perspective. MIT Press. Description Archived 2017-11-17 at the Wayback Machine and chapter-preview links. Archived 2023-04-30 at the Wayback Machine Review-excerpt link Archived 2018-12-15 at the Wayback Machine .
  32. Beck, Thorsten et al. (2001). "New Tools in Comparative Political Economy: The Database of Political Institutions," World Bank Economic Review,15(1), pp. 165–176.
  33. Bolton, Patrick, and Gérard Roland (1997). "The Breakup of Nations: A Political Economy Analysis," Quarterly Journal of Economics, 112(4), pp. 1057–1090. Archived 2012-04-01 at the Wayback Machine
  34. Alesina, Alberto, and Roberto Perotti (1994). "The Political Economy of Growth: A Critical Survey of the Recent Literature," World Bank Economic Review, 8(3), pp. 351–371. Archived 2011-11-17 at the Wayback Machine
  35. Keefer, Philip (2004). "What Does Political Economy Tell Us about Economic Development and Vice Versa?" Annual Review of Political Science, 7, pp. 247–272. PDF. Archived 2023-04-12 at the Wayback Machine
  36. Perotti, Enrico (2014). "The Political Economy of Finance", in "Capitalism and Society" Vol. 9, No. 1, Article 1
  37. "Chang, H. J. (2002). Breaking the Mould – An Institutionalist Political Economy Alternative to the Neo-Liberal Theory of the Market and State", in "Cambridge Journal of Economics", 26(5), Archived 2019-10-31 at the Wayback Machine
  38. Acemoglu, Daron, and James A. Robinson (2006). "Economic Backwardness in Political Perspective," American Political Science Review, 100(1), pp. 115–131 Archived 2012-05-27 at the Wayback Machine .
  39. • Mukand, Sharun W. (2008). "policy reform, political economy of," The New Palgrave Dictionary of Economics, 2nd Edition. Abstract. Archived 2013-05-22 at the Wayback Machine
      Sturzenegger, Federico, and Mariano Tommasi (1998). The Polítical Economy of Reform, MIT Press. Description Archived 2012-10-11 at the Wayback Machine and chapter-preview links.
  40. Roland, Gérard (2002), "The Political Economy of Transition," Journal of Economic Perspectives, 16(1), pp. 29–50. Archived 2021-05-01 at the Wayback Machine
       • _____ (2000). Transition and Economics: Politics, Markets, and Firms, MIT Press. Description Archived 2018-04-16 at the Wayback Machine and preview. Archived 2023-04-12 at the Wayback Machine
       • Manor, James (1999). The Political Economy of Democratic Decentralization, The World Bank. ISBN   9780821344705. Description.
  41. Alesina, Alberto F. (2007:3) "Political Economy," NBER Reporter, pp. 1–5 Archived 2011-06-11 at the Wayback Machine . Abstract-linked-footnotes version. Archived 2017-02-06 at the Wayback Machine
  42. Drazen, Allan (2000). Political Economy in Macroeconomics, Princeton. Description Archived 2010-10-22 at the Wayback Machine & ch. 1-preview link. Archived 2010-12-07 at the Wayback Machine , and review extract.
  43. • Dietz, Simon, Jonathan Michie, and Christine Oughton (2011). Political Economy of the Environment An Interdisciplinary Approach, Routledge. Description Archived 2013-06-23 at the Wayback Machine and preview. Archived 2013-07-23 at the Wayback Machine
       • Banzhaf, H. Spencer, ed. (2012). The Political Economy of Environmental Justice Stanford U.P. Description and contents links. Archived 2013-01-19 at the Wayback Machine
       • Gleeson, Brendan, and Nicholas Low (1998). Justice, Society and Nature An Exploration of Political Ecology, Routledge. Description Archived 2013-05-10 at the Wayback Machine and preview. Archived 2023-04-12 at the Wayback Machine
      John S. Dryzek, 2000. Rational Ecology: Environment and Political Economy, Blackburn Press. B&N description. Archived 2013-05-17 at the Wayback Machine
       • Barry, John 2001. "Justice, Nature and Political Economy," Economy and Society, 30(3), pp. 381–394. Archived 2017-11-12 at the Wayback Machine
       • Boyce, James K. (2002). The Political Economy of the Environment, Edward Elgar. Description. Archived 2013-05-22 at the Wayback Machine
  44. • Zajac, Edward E. (1996). Political Economy of Fairness, MIT Press Description Archived 2014-03-06 at the Wayback Machine and chapter-preview links.
      Thurow, Lester C. (1980). The Zero-sum Society: Distribution and the Possibilities For Economic Change, Penguin. Description Archived 2023-04-30 at the Wayback Machine and preview. Archived 2023-04-12 at the Wayback Machine
  45. Persson, Torsten, and Guido Tabellini (2000). Political Economics: Explaining Economic Policy, MIT Press. Review extract, description and chapter-preview links. Archived 2023-04-12 at the Wayback Machine
      Laffont, Jean-Jacques (2000). Incentives and Political Economy, Oxford. Description. Archived 2013-05-10 at the Wayback Machine
       • Acemoglu, Daron (2003). "Why Not a Political Coase Theorem? Social Conflict, Commitment, and Politics," Journal of Comparative Economics, 31(4), pp. 620–652. Archived 2012-03-04 at the Wayback Machine
  46. Persson, Torsten, and Guido Tabellini (2003). The Economic Effects Of Constitutions, Munich Lectures in Economics. MIT Press. Description Archived 2013-01-15 at the Wayback Machine and preview Archived 2023-04-12 at the Wayback Machine , and review extract.
  47. Mayer, Charles S. (1987). In Search of Stability: Explorations in Historical Political Economy, Cambridge University Press, Cambridge, pp. 3–6. Description Archived 2013-03-09 at the Wayback Machine and scrollable preview. Archived 2023-04-30 at the Wayback Machine Cambridge.
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Mathematical economics is the application of mathematical methods to represent theories and analyze problems in economics. Often, these applied methods are beyond simple geometry, and may include differential and integral calculus, difference and differential equations, matrix algebra, mathematical programming, or other computational methods. Proponents of this approach claim that it allows the formulation of theoretical relationships with rigor, generality, and simplicity.

Rural economics is the study of rural economies. Rural economies include both agricultural and non-agricultural industries, so rural economics has broader concerns than agricultural economics which focus more on food systems. Rural development and finance attempt to solve larger challenges within rural economics. These economic issues are often connected to the migration from rural areas due to lack of economic activities and rural poverty. Some interventions have been very successful in some parts of the world, with rural electrification and rural tourism providing anchors for transforming economies in some rural areas. These challenges often create rural-urban income disparities.

Demographic economics or population economics is the application of economic analysis to demography, the study of human populations, including size, growth, density, distribution, and vital statistics.

Edward Emory Leamer is a professor of economics and statistics at UCLA. He is Chauncey J. Medberry Professor of Management and director of the UCLA Anderson Forecast.

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