Political economy is the study of production and trade and their
relations with law, custom and government; and with the distribution
of national income and wealth. As a discipline, political economy
originated in moral philosophy, in the 18th century, to explore the
administration of states' wealth, with "political" signifying the
Greek word polity and "economy" signifying the Greek word "okonomie"
(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).
In the late 19th century, the term "economics" gradually began to
replace the term "political economy" with the rise of mathematical
modelling coinciding with the publication of an influential textbook
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". 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. 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.
Political economy, where it is not used as a synonym for economics,
may refer to very different things. From an academic standpoint, the
term may reference Marxian economics, applied public choice approaches
emanating from the Chicago school and the Virginia school. In common
parlance, "political economy" may simply refer to the advice given by
economists to the government or public on general economic policy or
on specific economic proposals developed by political
scientists. 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 economic policies,
especially as to distributional conflicts and political
institutions. It is available as a stand-alone area of
study in certain colleges and universities.
2 Current approaches
3 Related disciplines
4 See also
8 External links
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 of 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, 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. The French
physiocrats were the first exponents of political economy, although
the intellectual responses of Adam Smith, John Stuart Mill, David
Henry George and
Karl Marx to the physiocrats generally
receives much greater attention. The world's first
professorship in political economy was established in 1754 at the
University of Naples Federico II
University of Naples Federico II in southern Italy. The Neapolitan
Antonio Genovesi was the first tenured professor. In 1763,
Joseph von Sonnenfels
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. In its contemporary
meaning, 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 that challenge earlier economic assumptions:
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 system—capitalist, 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. Much of the political economy approach is
derived from public choice theory on the one hand and radical
political economics on the other hand, both dating from the 1960s.
Public choice theory is a microfoundations theory that is 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 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
A more recent focus has been on modeling economic policy and political
institutions as to interactions between agents and economic and
political institutions, 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 that allow
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, macroeconomic policy, the
environment, fairness and the relation of
constitutions to economic policy, theoretical and
Other important landmarks in the development of political economy
New political economy which may 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.
International political economy
International political economy (IPE) an interdisciplinary field
comprising approaches to the actions of various actors. 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,
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.
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 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, or of religion) often draws
on concepts used in Marxian critiques of capital. Such approaches
expand on neo-Marxian scholarship related to development and
underdevelopment postulated by
André Gunder Frank and Immanuel
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, have turned to more explicitly engage with the
debates, methodology and various themes within political economy
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
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
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 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,
King's College London
King's College London and the London
School of Economics.
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
Philosophy rigorously assesses and studies a set of beliefs and their
applicability to reality.
Economics 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. Marx's theories on the subject of political
economy are contained in his book Das Kapital.
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 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 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, often using it to argue political economy;
some historical works take political economy as the narrative's frame.
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. 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 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
Economic study of collective action
European Association for Evolutionary Political Economy (EAEPE)
Land value tax
Law of rent
Important publications in political economy
Perspectives on capitalism by school of thought
Political economy in anthropology
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New Political Economy
Studies in Political Economy
Wikibooks has a book on the topic of: Political Economy
Wikisource has the text of the 1905 New International Encyclopedia
article Political Economy.
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[clarification needed] of political economy
International Political Economy at Jacobs University Bremen
Global Political Economy 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 USA
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)
Measures of national income and output
Demand for money
Real business-cycle theory
Saltwater and freshwater
Modern Monetary Theory
Thomas Robert Malthus
Georg Friedrich Knapp
Wesley Clair Mitchell
John Maynard Keynes
Robert Lucas Jr.
Edward C. Prescott
Thomas J. Sargent
N. Gregory Mankiw
Publications in macroeconomics
Balance of payments
Balance of trade
Foreign exchange reserves
Import substitution industrialization
Net capital outflow
International Monetary Fund
UN Conference on
Trade and Development
World Bank Group
International Chamber of Commerce
Bilateral investment treaty
Special economic zone
Free trade (Adam Smith, The Wealth of Nations, Repeal of the Corn
Protectionism (Economic nationalism, Autarky)
Andean Community of Nations
Central American Integration System
Association of Southeast Asian Nations
Regional Comprehensive Economic Partnership
South Asian Association for Regional Cooperation
Europe, Central Asia, and North Asia
Customs Union of Belarus, Kazakhstan, and Russia
Eurasian Economic Union
European Union Customs Union
Middle East and North Africa
Arab Customs Union
Cooperation Council for the Arab States of the Gulf
East African Community
Economic and Monetary Community of Central Africa
Southern African Customs Union
West African Economic and Monetary Union
Exports by product
Aircraft & Spacecraft
Political science (international relations
Environmental (social science
History of technology
Philosophy of science (economics
Planning (land use
Science and technology studies
Science studies (historical)