Political Economy Definition

Research by political economists is conducted in order to determine how public policy influences behavior, productivity, and trade. Much of their study helps them establish how money and power are distributed between people and different groups. Their study generally involves the examination of how public policy, the political situation, and political institutions impact a country’s economic standing and future through a sociological, political, and economic lens.

During the early period of the Cold War, political scientists emphasized the realist, or power politics, dimension of U.S.–Soviet relations, while economists tended to focus on the Bretton Woods system of the international economy—that is, the institutions and rules that beginning in 1945 governed much of the international economy. During the Vietnam War, however, a growing decrease in the value of the U.S. dollar and large deficits for the United States in its balance of trade and payments weakened the ability of the United States to conduct and pay for the war, which thereby undermined its relationship to its North Atlantic Treaty Organization allies. Secretary of State Henry A. Kissinger found himself unable to understand the issues without the assistance of an economist. These events led to a search for a multidisciplinary approach or outlook that borrowed different theories, concepts, and ideas from political science and international relations—as well as from economics and sociology—to explain a variety of complicated international problems and issues. It did not so much result in the development of a new school of political economy as emphasize the continued relevance of the older, more-integrated type of analysis, which explicitly sought to trace the connections between political and economic factors.

It offers a detailed analysis of the EU’s participation in all major trade and investment negotiations since the 1980s and EU-internal competence debates to identify the causes behind the EU’s growing role in this policy domain. Such themes were evident in the 1990s and the early 21st century when a number of politically and economically powerful multinational corporations were accused of https://www.sextonseattle.com/ exploiting women and children in unsanitary and unsafe working conditions in their factories in developing countries. These cases and others like them were seen by some structuralists as evidence of a “race to the bottom” in which, in order to attract investment by international businesses, many developing countries relaxed or eliminated worker-protection laws and environmental standards.

Political economists attempting to understand domestic macroeconomic policy often study the influence of political institutions (e.g., legislatures, executives, and judiciaries) and the implementation of public policy by bureaucratic agencies. The influence of political and societal actors (e.g., interest groups, political parties, churches, elections, and the media) and ideologies (e.g., democracy, fascism, or communism) also is gauged. Comparative analysis also considers the extent to which international political and economic conditions increasingly blur the line between domestic and foreign policies in different countries. For example, in many countries trade policy no longer reflects strictly domestic objectives but also takes into account the trade policies of other governments and the directives of international financial institutions.

They took a secular approach, refusing to explain the distribution of wealth and power in terms of God’s will and instead appealing to political, economic, technological, natural, and social factors and the complex interactions between them. Indeed, Smith’s landmark work—An Inquiry into the Nature and Causes of the Wealth of Nations , which provided the first comprehensive system of political economy—conveys in its title the broad scope of early political economic analysis. Although the field itself was new, some of the ideas and approaches it drew upon were centuries old. It was influenced by the individualist orientation of the English political philosophers Thomas Hobbes (1588–1679) and John Locke (1632–1704), the Realpolitik of the Italian political theorist Niccolò Machiavelli (1469–1527), and the inductive method of scientific reasoning invented by the English philosopher Francis Bacon (1561–1626). As the economic crisis in Greece unfolded in 2010, Vassilis Monastiriotis undertook a programme of research on the adjustment of the Greek labour market to the crisis and to the subsequent policy reforms.

Since the 1970s, for example, the relationship between the United States and China has been replete with difficulties for both countries. China consistently has sought integration into the world economy—an effort best illustrated by its successful campaign to join the World Trade Organization —but has resisted domestic political liberalization. Likewise, China’s government has faced domestic criticism not only from supporters of democracy but also from conservative Chinese Communist Party members who oppose further economic reforms. This example reflects the complex calculus involved as governments attempt to balance both their political and their economic interests and to ensure their own survival. Alfred Marshall (1842–1924) published his textbook on the Principles of Economics, https://www.wikipedia.org/ as a distinct academic field had been essentially replaced in universities by the separate disciplines of economics, sociology, political science, and international relations. Marshall explicitly separated his subject—economics or economic science—from political economy, implicitly privileging the former over the latter, an act that reflected the general academic trend toward specialization along methodological lines.

They may do this through the study of specific fields such as law, bureaucratic politics, legislative behavior, the intersection of government and business, and regulation. He believed in utilitarianism—that actions that lead to people’s goodwill are right and that those that lead to suffering are wrong. Marxists , government efforts to manage different parts of the economy are presumed to favour the moral order of bourgeois values.

This body of research led to Dr Monastiriotis’ appointment to the Minimum Wage Committee in 2018 and influenced directly the government decision to raise the MW in Greece by 10.8% in February 2019. The main concern of political economy is to determine the relationship between governments and individuals, and how public policy affects society. The term political economy refers to a branch of social sciences that focuses on relationships between individuals, governments, and public policy. It is also used to describe the policies set by governments that affect their nations’ economies.