This is another draft entry in the glossary that I am in the process of writing. This time the subject is political economy, which is the subject of which I used to be a professor before becoming a professor of accounting practice. That fact does not mean I do not think this definition, which aims at brevity as well as breadth is right. Comments welcome.
Political economy is the study of relationships of power and the impact that they have upon the allocation of scarce resources within a society.
As an interdisciplinary social science, political economy considers how all aspects of power, including the command of wealth, the control of ideas, the impact of government and access to it, the use of legal systems and their interaction, and the prejudices and preferences of those within and between societies, have impact upon economic outcomes and the distribution of both income and wealth both within and between societies.
Political economy is as heavily influenced by sociology, politics, political science, critical accounting (see separate entry), anthropology, law and philosophy as it is economics with each being seen as providing insight into the way in which societies make economic decisions in practice.
Political economy seeks to avoid the set of standard assumptions that limit the scope of neoclassical and neoliberal economic thinking (see separate entries) that bias that discipline towards the promotion of capitalism (see separate entry) and capitalist market systems, which bias both inherit from classical economics (see separate entry).
Because political economy does not necessarily assume that optimal structures for society exist but is instead concerned with the reconciliation of the multiple claims and influences that exist on resources within an economy and how they might be reconciled it almost invariably promotes solutions that differ to those commonplace in positive economics (see separate entry) and associated neoclassical and neoliberal thinking where the achievement of a state of optimality described as equilibrium is the goal. As a consequence, political economy has a bias shared with normative economics (see separate entry) meaning that recommendations as to the way in which equitable outcomes within society can be created are the most likely focus of its work.
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‘Critical accounting’ – this reminds my why I have found this blog to be so helpful to me at least – it has given me the language to explain my problems with and feelings about things as they are. And the glossary is another step in that direction.
With regard to this entry Richard, do you (when speaking of ‘capitalism’) differentiate a good capitalist model from a bad one (say, the current deeply flawed North American-, financial warfare based iteration)?
It’s just a thought – I am aware of the fact that you’ve always to me at least advocated a mixed economy and the infusing of capitalism with green and social initiatives etc. It might not be a good outcome if your glossary was just labelled ‘anti-capitalist’ that’s all.
The capitalism entry is one still under development
Differentiation will be a key element in it
Economics delivers mechanistic answers to many question that are mathematically pleasing….. but wrong.
Political economy recognises that other factors matter and that a holistic analysis delivers superior answers.
Other entries will reinforce that point ….
“Political economy recognises that other factors matter and that a holistic analysis delivers superior answers.”
Does Clive’s point not really crystallise that ‘economics’ (classical, neoclassical, neoliberal) and ‘political economy’ is not really an argument about different things; but a single argument about the real nature of ‘economics’; that the neoliberals and their acolytes have run away with ownership of the word (just as the absurd ‘Adam Smith Insititute’ attempted to run off with Adam Smith’s name, which they seem to think they own, but merely trashed hos legacy?); as if the word, the form was the substance. But the reality is that Neoliberal economics is political, it just refuses to acknowledge it.
We could perhaps distinguish between ‘descriptive economics’ and ‘political economy’. Strictly MMT is (or should be) descriptive; i.e., a description of the processes of monetary policy that actually operate in the real world. The issue of the nature and purpose of the policies behind the process is, however essentially a matter of political economy.
This is very rough of course as a hypothesis. I am also allowing for the peculiar fact that I am not sure that the people who form the policies in economics fully understand what it is they are doing (ever, or ever have done?); there is an inevitable disjunction between policy and reality – in the real world.
I will be sharing definitions on many of these issues soon
Some parts of the glossary may also go live soon – the bugs look to be sorted and it is now down to me to add content. The process is going more quickly than I anticipated.
When I post the items noted it will be apparent that I broadly agree with you.
It was mentioned in a post on the entry for austerity whether this project is an economics dictionary or a glossary of political economy, suggesting that you are leaning towards the latter.
This entry, or an adaptation of it, might make a good introduction to the glossary as a whole, as it ‘sets the scene’, so to speak, of what the glossary is aiming to do and why it is different to what has gone before.
It is definitely about political economy
I was writing the introduction this morning….
Style comment: last paragraph:
“… instead concerned with [[the reconciliation of]] the multiple claims and influences that exist on resources within an economy and how they might be reconciled …”
Reads better without the duplication of “reconciliation / reconciled”, as indicated in the quote above.
The words tell their own story.
Economics writ small is literally about the management of the household (the Greek οἶκος) and by extension about individual economic actors – individuals, businesses, etc – which we might call today microeconomics. For a century or more it has been dominated by academics who have tried to emulate physics and mathematics, to create a grand theory of everything from the ground up, attempting to generalise from simple but often unrealistic axioms and laws. Save within a narrow compass, they have largely failed.
Political economic is economy writ large – about the management of the entire polis (the Greek πόλις) – which we might call today macroeconomics. It is very much a social science rather than a physical science, and needs to include politics and sociology and anthropology and psychology because ultimately it is grounded on the complexity of what people are actually like and how groups of people behave in reality, and in the main they do not all follow abstract theoretical laws.
Agreed
Entries on other aspects of this issue are in preparation
Interestingly, you develop the all enveloping ‘Polis’ into an approach to ‘economics’ that is multi-disciplinary, something neoliberal economics denies for a spurious sense of pseudo-scientific indifference (in spite of the fact that almost all the leading neoliberals, from Hayek on wallow in political ediology – but little else).
I am a great believer in multi-disciplinarity; bring down the silos! The silo-disciples fear being invaded by intellectual superficiality; but the bigger problem is typically their application of their narrow disciplainary methodologies in ignorance of other disciplines which quite easily would illuminate the error; or alternatively, a different perspective from another discipline may lead to new illumination of their subject; and real discovery (over arid scholarship).
ediology?! Ideology, of course.
I like your new word
I am sure I could find a use for it…..
As someone who has never really thought about this before (though I had noticed you describe yourself as a political economist) I found the definition to be so wide-ranging that I still feel unclear about what it means.
For a comparison I tried Google, and the definition at the top was something I could relate to even if it is somewhat less than the full story: “Political economists study how economic theories such as capitalism, socialism, and communism work in the real world”. (To be fair there were a couple of other sentences incorporating points you make).
I disagree with that definition
I think most political economists would
That is why I am writing my own glossary
How would you like me to refine what I have said?
OK, a challenge. My trouble is that as far as I had a definition at all in my own mind, it ran something like “the study of all the things Richard Murphy writes about”. But that won’t work for an external-facing glossary.
An attempt, somewhat following the lead of that Google hit (looking again, it was Investopaedia which no doubt sees economics from a very particular angle):
“Political economy is the study of how economic policies and ideas work in the real world where they are subject to politicians, social structures, and human behaviour”.
I admit that doesn’t work for me
Sorry…..
Google is quoting from Investorpedia:
https://www.investopedia.com/terms/p/political-economy.asp
“What Is Political Economy?
Political economy is an interdisciplinary branch of the social sciences. It focuses on the interrelationships among individuals, governments, and public policy.
Political economists study how economic theories such as capitalism, socialism, and communism work in the real world.”
As it happens, It seems to me the first two sentences (which you omitted) are much more definitional than the third, and the whole is the start of a much longer piece.
Lower down we have:
“What Does Political Economy Mean?
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.
What Is the Primary Concern of Political Economy?
The main concern of political economy is to determine the relationship between governments and individuals, and how public policy affects society. This is done through the study of sociology, politics, and economics.”
Not much to disagree with there, and pretty much aligned with what Richard has said, I’d suggest.
Sort of
But I focus on power
That does not feature in investopedia