Tuesday, August 28, 2012

Political Economics

Politics and Economics: How are the two fields related?

"Politics and economics are completely different fields," Mike said. "Economics is supply and demand. It's markets. Politics is public administration and policy-making. It's statecraft. The fields are related like everything is related to some degree, but a person is not likely to be both a competent economist and a competent politician."

"I see where you are coming from," replied Melissa. "But I have a different perspective. I look at both economics and politics as social sciences. The concept that unites the two fields is the idea of rational choice. From this perspective, economics and politics are inextricably linked! You cannot have one without the other."

How are politics and economics related? Is the relationship tangential, or integral? This question is particularly important in an election year during a down economic cycle.  What is the extent to which capitalist economic interests influence elections, policy-making, and governing?

Such a conversation as the one recalled above sparked my interest in the field of Political Economics. What do you think? How would you have answered the question? Help me gauge your interest in this topic by posting questions in the comments section below.

Meanwhile, to provide additional spark to the conversation, here are a few relevant snippets--definitions, examples, etc.--which I have recently gleaned from the Internet. Links are provided for those interested in further reading.
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 wealthPolitical economy originated in moral philosophy. It developed in the 18th century as the study of the economies of states, polities, hence the term political economy. Read more: http://en.wikipedia.org/wiki/Political_economics

The study and use of how economic theory and methods influences political ideology. Political economy is the interplay between economics, law and politics, and how institutions develop in different social and economic systems, such as capitalism, socialism and communism. Political economy analyzes how public policy is created and implemented. Read more: http://www.investopedia.com/terms/p/political-economy.asp#ixzz21b9QQgDX

Because various individuals and groups have different interests in how a country or economy is to develop, political economy as a discipline is a complex field, covering a broad array of potentially competing interests. Political economy also involves the use of game theory, since groups competing for finite resources and power must determine which courses of action will give the most beneficial results, and what the probability of those results being reached are. Read more: http://www.investopedia.com/terms/p/political-economy.asp#ixzz21b9hc9y5

Political economics is the science which deals with the natural laws governing the production and distribution of valuable goods and services. Read more: http://www.henrygeorge.org/def2.htm

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 investigating regimes of political and economic value that condition tacit aspects of sociocultural practices (for example, the pejorative use of pseudo-Spanish expressions in the US-American 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.
  • 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.
  • 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.

Read more on related disciplines: http://en.wikipedia.org/wiki/Political_economy