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Political economy is the study of how
economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
systems (e.g.
markets Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...
and national economies) and
political Politics (from , ) is the set of activities that are associated with making decisions in groups, or other forms of power relations among individuals, such as the distribution of resources or status. The branch of social science that studi ...
systems (e.g. law, institutions,
government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government i ...
) are linked. Widely studied phenomena within the discipline are systems such as labour markets and financial markets, as well as phenomena such as
growth Growth may refer to: Biology * Auxology, the study of all aspects of human physical growth * Bacterial growth * Cell growth * Growth hormone, a peptide hormone that stimulates growth * Human development (biology) * Plant growth * Secondary grow ...
,
distribution Distribution may refer to: Mathematics * Distribution (mathematics), generalized functions used to formulate solutions of partial differential equations *Probability distribution, the probability of a particular value or value range of a vari ...
, inequality, and
trade Trade involves the transfer of goods and services from one person or entity to another, often in exchange for money. Economists refer to a system or network that allows trade as a market. An early form of trade, barter, saw the direct exc ...
, 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 Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
. Political economy in its modern form is considered an interdisciplinary field, drawing on theory from both political science and
modern economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyzes ...
. 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 '; 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 Anne Robert Jacques Turgot, Baron de l'Aulne ( ; ; 10 May 172718 March 1781), commonly known as Turgot, was a French economist and statesman. Originally considered a physiocrat, he is today best remembered as an early advocate for economic libe ...
(1727–1781).Steiner (2003), pp. 61–62 In the late 19th century, the term "
economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
" 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. 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".Groenwegen, Peter. (1987 008. "'political economy' and 'economics'", '' The New Palgrave: A Dictionary of Economics'', v. 3, pp. 905–906. p. 904–07./ref> Citation measurement metrics from
Google Ngram Viewer The Google Ngram Viewer or Google Books Ngram Viewer is an online search engine that charts the frequencies of any set of search strings using a yearly count of n-grams found in printed sources published between 1500 and 2019 in Google's text cor ...
indicate that use of the term "economics" began to overshadow "political economy" around roughly 1910, becoming the preferred term for the discipline by 1920. 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, although the intellectual responses of Adam Smith, John Stuart Mill, David Ricardo, Henry George and
Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
to the physiocrats generally receive much greater attention. 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 Antonio Genovesi (1 November 171322 September 1769) was an Italian writer on philosophy and political economy. Biography Son of Salvatore Genovese, a shoemaker, and Adriana Alfinito of San Mango, Antonio Genovesi was born in Castiglione, near ...
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 The East India Company College, or East India College, was an educational establishment situated at Hailey, Hertfordshire, nineteen miles north of London, founded in 1806 to train "writers" (administrators) for the Honourable East India Company ( ...
, 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

Political economy most commonly refers to interdisciplinary studies drawing upon
economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
, sociology and political science in explaining how political institutions, the political environment, and the economic systemcapitalist, socialist, communist, or mixed—influence each other. 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; (2) international political economy, which studies the economic impacts of international relations; and (3) economic models of political or exploitative class processes. 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). Public choice theory is a
microfoundations Microfoundations are an effort to understand macroeconomic phenomena in terms of economic agents' behaviors and their interactions.Maarten Janssen (2008),Microfoundations, in ''The New Palgrave Dictionary of Economics'', 2nd ed. Research in microf ...
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. As such, economists and political scientists often associate political economy with approaches using rational-choice assumptions, especially in game theory and in examining phenomena beyond economics' standard remit, such as
government failure Government failure, in the context of public economics, is an economic inefficiency caused by a government intervention, if the inefficiency would not exist in a true free market. The costs of the government intervention are greater than the ben ...
and complex decision making in which context the term "positive political economy" is common. Other "traditional" topics include analysis of such public policy issues as economic regulation, monopoly, rent-seeking, market protection, institutional corruption and distributional politics. Empirical analysis includes the influence of elections on the choice of economic policy, determinants and forecasting models of electoral outcomes, the political business cycles, central-bank independence and the politics of excessive deficits. A rather recent focus has been put on modeling economic policy and political institutions concerning interactions between agents and
economic An economy is an area of the production, distribution and trade, as well as consumption of goods and services. In general, it is defined as a social domain that emphasize the practices, discourses, and material expressions associated with th ...
and
political institution In political science, a political system means the type of political organization that can be recognized, observed or otherwise declared by a state. It defines the process for making official government decisions. It usually comprizes the govern ...
s, including the seeming discrepancy of economic policy and economist's recommendations through the lens of transaction costs. 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. Topics have included the breakup of nations, the origins and rate of change of political institutions in relation to economic growth, development, financial markets and regulation, the importance of institutions, backwardness, reform and transition economies, the role of culture, ethnicity and gender in explaining economic outcomes, Alesina, Alberto F. (2007:3) "Political Economy," ''NBER Reporter''
pp. 1–5
Abstract-linked-footnote
version.
/ref> macroeconomic policy, the
environment Environment most often refers to: __NOTOC__ * Natural environment, all living and non-living things occurring naturally * Biophysical environment, the physical and biological factors along with their chemical interactions that affect an organism or ...
, fairness and the relation of constitutions to economic policy, theoretical and empirical. Other important landmarks in the development of political economy include: * New political economy which may treat economic ideologies as the phenomenon to explain, per the traditions of Marxian political economy. Thus,
Charles S. Maier Charles S. Maier (born February 23, 1939, in New York City) is the Leverett Saltonstall Research Professor of History at Harvard University. He teaches European and international history at Harvard. Biography Maier served as the director of the ...
suggests that a political economy approach "interrogates economic doctrines to disclose their sociological and political premises.... in sum, tregards 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. * International political economy (IPE) an interdisciplinary field comprising approaches to the actions of various actors. According to International Relations scholar Chris Brown, University of Warwick professor, Susan Strange, was "almost single-handedly responsible for creating international political economy as a field of study." In the United States, these approaches are associated with the journal '' International Organization'', which in the 1970s became the leading journal of IPE under the editorship of
Robert Keohane Robert Owen Keohane (born October 3, 1941) is an American academic working within the fields of international relations and international political economy. Following the publication of his influential book ''After Hegemony'' (1984), he has bec ...
, 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 thinkers such as Antonio Gramsci and Karl Polanyi; two major figures are Matthew Watson and Robert W. Cox. * The use of a political economy approach by anthropologists, sociologists, and geographers used in reference 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 network A social network is a social structure made up of a set of social actors (such as individuals or organizations), sets of dyadic ties, and other social interactions between actors. The social network perspective provides a set of methods fo ...
s. Because these regimes influence and are influenced by the organization of both
social Social organisms, including human(s), live collectively in interacting populations. This interaction is considered social whether they are aware of it or not, and whether the exchange is voluntary or not. Etymology The word "social" derives from ...
and
economic capital In finance, mainly for financial services firms, economic capital (ecap) is the amount of risk capital, assessed on a realistic basis, which a firm requires to cover the risks that it is running or collecting as a going concern, such as market ...
, the analysis of dimensions lacking a standard economic value (e.g. the political economy of language, of gender, or of religion) often draws on concepts used in Marxian critiques of
capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used fo ...
. Such approaches expand on neo-Marxian scholarship related to development and underdevelopment postulated by André Gunder Frank and
Immanuel Wallerstein Immanuel Maurice Wallerstein (; September 28, 1930 – August 31, 2019) was an American sociologist and economic historian. He is perhaps best known for his development of the general approach in sociology which led to the emergence of his wo ...
. * 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. * Political economy and law is a recent attempt within legal scholarship to engage explicitly with political economy literature. In the 1920s and 1930s, legal realists (e.g. Robert Hale) and intellectuals (e.g. John Commons) engaged themes related to political economy. In the second half of the 20th century, lawyers associated with the Chicago School incorporated certain intellectual traditions from economics. However, since the crisis in 2007 legal scholars especially related to
international law International law (also known as public international law and the law of nations) is the set of rules, norms, and standards generally recognized as binding between states. It establishes normative guidelines and a common conceptual framework for ...
, have turned to more explicitly engage with the debates, methodology and various themes within political economy texts. * Thomas Piketty's approach and call to action which advocated for the re-introduction of political consideration and political science knowledge more generally into the discipline of economics as a way of improving the robustness of the discipline and remedying its shortcomings, which had become clear following the
2008 financial crisis 8 (eight) is the natural number following 7 and preceding 9. In mathematics 8 is: * a composite number, its proper divisors being , , and . It is twice 4 or four times 2. * a power of two, being 2 (two cubed), and is the first number of ...
. * In 2010, the only Department of Political Economy in the United Kingdom formally established at King's College London. The rationale for this academic unit was that "the disciplines of Politics and Economics are inextricably linked", and that it was "not possible to properly understand political processes without exploring the economic context in which politics operates". * In 2012, the Sheffield Political Economy Research Institute (SPERI) was founded at The University of Sheffield by professors Tony Payne and Colin Hay. It was created as a means of combining political and economic analyses of capitalism which were viewed by the founders to be insufficient as independent disciplines in explaining the 2008 financial crisis. * In 2017, the Political Economy UK Group (abbreviated PolEconUK) was established as a research consortium in the field of political economy. It hosts an annual conference and counts among its member institutions Oxford,
Cambridge Cambridge ( ) is a university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cambridge bec ...
, King's College London, Warwick University and the London School of Economics.


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: * Politics studies power relations and their relationship to achieving desired ends. *
Philosophy Philosophy (from , ) is the systematized study of general and fundamental questions, such as those about existence, reason, knowledge, values, mind, and language. Such questions are often posed as problems to be studied or resolved. ...
rigorously assesses and studies a set of beliefs and their applicability to reality. *
Economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics anal ...
studies the distribution of resources so that the material wants of a society are satisfied; enhance societal well-being. * 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 Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist, critic of political economy, and socialist revolutionary. His best-known titles are the 1848 ...
. Marx's theories on the subject of political economy are contained in his book ''
Das Kapital ''Das Kapital'', also known as ''Capital: A Critique of Political Economy'' or sometimes simply ''Capital'' (german: Das Kapital. Kritik der politischen Ökonomie, link=no, ; 1867–1883), is a foundational theoretical text in materialist phi ...
''. * Anthropology 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 expressions in the U.S. 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. *
Archaeology Archaeology or archeology is the scientific study of human activity through the recovery and analysis of material culture. The archaeological record consists of artifacts, architecture, biofacts or ecofacts, sites, and cultural landsc ...
attempts to reconstruct past political economies by examining the material evidence for administrative strategies to control and mobilize resources. This evidence may include architecture, animal remains, evidence for craft workshops, evidence for feasting and ritual, evidence for the import or export of prestige goods, or evidence for food storage. *
Psychology Psychology is the science, scientific study of mind and behavior. Psychology includes the study of consciousness, conscious and Unconscious mind, unconscious phenomena, including feelings and thoughts. It is an academic discipline of immens ...
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. * Geography studies political economy within the wider geographical studies of human-environment interactions wherein economic actions of humans transform the natural environment. Apart from these, attempts have been made to develop a geographical political economy that prioritises commodity production and "spatialities" of capitalism. * History documents change, often using it to argue political economy; some historical works take political economy as the narrative's frame. *
Ecology Ecology () is the study of the relationships between living organisms, including humans, and their physical environment. Ecology considers organisms at the individual, population, community, ecosystem, and biosphere level. Ecology overl ...
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. Additionally and more recently, ecological theory has been used to examine economic systems as similar systems of interacting species (e.g., firms). * Cultural studies examines social class, production, labor, race, gender and sex. *
Communications Communication (from la, communicare, meaning "to share" or "to be in relation with") is usually defined as the transmission of information. The term may also refer to the message communicated through such transmissions or the field of inquir ...
examines the institutional aspects of media and telecommunication systems. As the area of study focusing on aspects of human communication, it pays particular attention to the relationships between owners, labor, consumers, advertisers, structures of production and the state and the power relationships embedded in these relationships.


Journals

* '' Constitutional Political Economy'' * ''Economics & Politics''. * ''
European Journal of Political Economy The ''European Journal of Political Economy'' is a quarterly peer-reviewed academic journal covering research on economic phenomena, including collective decision making, political behavior, and the role of institutions. The editors-in-chief are T ...
''. * ''Latin American Perspectives'' * '' International Journal of Political Economy'' * ''Journal of Australian Political Economy''. * '' New Political Economy'' * ''
Public Choice Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science".Gordon Tullock, 9872008, "public choice," '' The New Palgrave Dictionary of Economics''. . Its content includes the ...
''. * ''
Studies in Political Economy ''Studies in Political Economy'' is a peer-reviewed academic journal covering political economy. Although an international journal, it has an emphasis on work concerning Canada. The journal publishes three times a year electronically and appears ...
''


See also

* Economic sociology * Economic study of collective action * Constitutional economics * European Association for Evolutionary Political Economy (EAEPE) * Economic ideology * Institutional economics * Land value tax * Law of rent * Important publications in political economy *
Perspectives on capitalism by school of thought Throughout modern history, a variety of perspectives on capitalism have evolved based on different schools of thought. Overview Adam Smith was one of the first influential writers on the topic with his book ''The Wealth of Nations'', which is g ...
* Political economy in anthropology * Political economy of climate change * Social model * Social capital * Socioeconomics


Notes


References

* Baran, Paul A. (1957). ''The Political Economy of Growth''. Monthly Review Press, New York. Revie
extrract.
* Commons, John R. (1934 986. ''Institutional Economics: Its Place in Political Economy'', Macmillan
Description
an
preview.
* * Leroux, Robert (2011), ''Political Economy and Liberalism in France : The Contributions of Frédéric Bastiat'', London, Routledge. * Maggi, Giovanni, and Andrés Rodríguez-Clare (2007). "A Political-Economy Theory of Trade Agreements," ''American Economic Review'', 97(4), pp
1374
��1406. * O'Hara, Phillip Anthony, ed. (1999). ''Encyclopedia of Political Economy'', 2 v. Routledge. 2003 revie
links.
* Pressman, Steven, ''Interactions in Political Economy: Malvern After Ten Years'' Routledge, 1996 * Rausser, Gordon, Swinnen, Johan, and Zusman, Pinhas (2011). ''Political Power and Economic Policy.'' Cambridge: Cambridge U.P. * Winch, Donald (1996). ''Riches and Poverty : An Intellectual History of Political Economy in Britain, 1750–1834'' Cambridge: Cambridge U.P. * Winch, Donald (1973). "The Emergence of Economics as a Science, 1750–1870." In: ''The Fontana Economic History of Europe, Vol. 3''. London: Collins/Fontana. * Quadagno, Jill., "Aging and The Life Course: An Introduction to Social Gerontology / Edition 6." Barnes & Noble, www.barnesandnoble.com/w/aging-and-the-life-course-jill-quadagno/1100262260. * F., David. "Utopia and the Critique of Political Economy." ''Journal of Australian Political Economy, Australian Political Economy Movement'', 1 Jan. 2017


External links

* NBER (U.S.) "Political Economy" working-paper abstract
links.
* VoxEU.org (Europe
"Politics and economics"
article links. * List, Friedrich
National System of Political Economy
* Carey, Henry C
Harmony of Interests
– compares American and British systems of political economy
International Political Economy at Jacobs University Bremen


at City University London
Centre for Global Political Economy
at the University of Sussex, UK
O'Neil Center for Global Markets and Freedom at the SMU Cox School of Business Dallas, TX

Institute for the study of Political Economy and Law (IPEL) at the International University College of Turin (IUC), Italy

European Centre for International Political Economy

Institute for Political Economy and Development (IPEAD)
{{DEFAULTSORT:Political Economics Schools of economic thought Economic systems Critique of political economy