Political Economy Definition

The types of a political economy include socialism , capitalism (where private owners control a nation’s industry and trade for profit), and communism (the theory where all property is publicly-owned and everyone works based on their own needs and strengths). Political economy is a branch of social science that studies the relationship that forms between a nation’s population and its government when public policy is enacted. It is, therefore, the result of the interaction between politics and the economy and is the basis of the social science discipline.

“neoliberalism,” which became the cornerstone of economic policy in the United States under President Ronald Reagan (1981–89) and in the United Kingdom under Prime Minister Margaret Thatcher (1979–90). Led by the American economist Milton Friedman and other proponents of monetarism , neoliberals and others argued that the state should once again limit its role in the economy by selling off national industries and promoting free trade. Supporters of this approach, which influenced the policies of international financial institutions and governments throughout the world, maintained that free markets would generate continued prosperity. As many analyses by political economists have revealed, in actual government decision making there is often a tension between economic and political objectives.

Issues can be viewed from several different theoretical perspectives, including the mercantilist, liberal, and structuralist (Marxist or neo-Marxist) perspectives. In essence, he believed that economic theory and philosophy were needed, along with social awareness in politics in order to make better decisions for the good of the people. Some of his work, including “Principles of Political Economy,” “Utilitarianism,” and A System of Logic” led him to become one of the most important figures in politics and economics. Opponents of neoliberalism have argued that the theory overlooks too many of the negative social and political consequences of free markets, including the creation of large disparities of wealth and damage to the environment.

Structuralist ideas are rooted in Marxist analysis and focus on how the dominant economic structures of society affect (i.e., exploit) class interests and relations. Each of these perspectives is often applied to problems at several different levels of analysis that point to complex root causes of conflict traced to human nature , national interests , and the structure of the international system . For example, analysis of U.S. policy regarding migrants from Mexico must take into consideration patterns of trade and investment between the two countries https://www.wikipedia.org/ and the domestic interests on both sides of the border. Similarly, domestic and international interests are linked by trade, finance, and other factors in the case of financial crises in developing countries such as Thailand and Argentina. The distinction between foreign and domestic becomes as uncertain as the distinction between economics and politics in a world where foreign economic crises affect domestic political and economic interests through trade and financial linkages or through changes in security arrangements or migrant flows.

Creating the European monetary union between diverse and unequal nation states is arguably one of the biggest social experiments in history. This book offers an explanation of how the euro experiment came about and was sustained despite a severe crisis, and provides a comparison with the monetary-financial history of the US. Analytic approaches to international https://www.sextonseattle.com/ tend to vary with the problem being examined.

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.

Some of the characteristics or themes of a political economy include the distribution of wealth, how goods and services are produced, who owns property and other resources, who profits from production, supply and demand, and how public policy and government interaction impact society. Political economy is an interdisciplinary branch of the social sciences that focuses on the interrelationships among individuals, governments, and public policy. Friedrich List (1789–1846) developed a more-systematic analysis of mercantilism that contrasted his national system of political economy with what he termed Smith’s “cosmopolitical” system, which treated issues as if national borders and interests did not exist. In the mid-19th century communist historian and economist Karl Marx (1818–83) proposed a class-based analysis of political economy that culminated in his massive treatise Das Kapital, the first volume of which was published in 1867. The EU in the Global Investment Regime provides an accessible introduction to international investment policy and seeks to explain how the EU became an actor in the global structure.