From The Art and Popular Culture Encyclopedia
Political economy originally was the term for studying production, buying and selling, and their relations with law, custom, and government, as well as with the distribution of national income and 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 the late nineteenth century, the term 'economics' came to replace 'political economy', coinciding with 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."
Today, political economy, where it is not used as a synonym for economics, may refer to very different things, including Marxian analysis, applied public-choice approaches emanating from the Chicago school and the Virginia School, or simply the advice given by economists to the government or public on general economic policy or on specific proposals. A rapidly-growing mainstream literature from the 1970s has expanded beyond the model of economic policy in which planners maximize utility of a representative individual toward examining how political forces affect the choice of policies, especially as to distributional conflicts and political institutions. It is available as an area of study in certain colleges and universities.
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.
- Economic study of collective action
- Constitutional economics
- Public choice theory
- Economic system
- Economic ideology
- Institutional economics
- Important publications in political economy
- Perspectives on Capitalism
- Social Capital