Political economy

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 18th century as the study of the economies of states (also known as polities, hence the word "political" in "political economy"). In contradistinction to the theory of the physiocrats, in which land was seen as the source of all wealth, 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. Political economists also attracted attention to the accelerating development of technology, whose role in economic and social relationships grew ever more important.

Related Topics:
18th century - Physiocrats - Labour theory of value - John Locke - Adam Smith - Karl Marx - Technology

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In the late 19th century, the term "political economy" was generally superseded by the term economics, which was used by those seeking to place the study of economy on a mathematical and axiomatic basis, rather than studying the structural relationships within production and consumption. (See marginalism, Alfred Marshall)

Related Topics:
Economics - Marginalism - Alfred Marshall

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

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• 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 and the political environment influence market behavior.
• Within political science, the term refers to modern liberal, realist marxian and constructivist theories concerning the relationship between economic and political power among states. This is also of concern to students of economic history and institutional economics.
• Economists, however, often associate the term with game theory. "International political economy" is a branch of economics that is concerned with international trade and finance, and state policies that affect international trade, such as monetary and fiscal policy.
• Others, especially anthropologists, sociologists and geographers, use the term "political economy" to refer to neo-Marxian approaches to development and underdevelopment set forth by Andre Gunder Frank and Immanuel Wallerstein.
 
Political economy: History of the term ►