I was asked recently what I thought the difference between economics and political economy was.
I explained that in my opinion when an economist stands in front of a car they think:
How can we make this thing work with the tools that we have got?
A political economist standing in the same position thinks something quite different. They ask four questions. The first is:
Do we need a means of transport?
Then they ask:
Is this the best means of transport available to us?
After which they muse on:
How can we improve on that best option?
Befoe finally considering:
What new tools might we need to achieve these goals?
Economists and political economists are very different indeed in that case.
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Yes and its interesting how ‘political economy’ was the original name for this particular field of thought and inquiry. That’s what it was called back in the days of Adam Smith, Marx, Ricardo and John Stuart Mill. Then, as the 20th Century approached it became ‘economics’. That narrowed the field of inquiry, and the tendency shifted in such a way that the dominant paradigm was assumed rather than queried and your first two questions were pushed into the background.
With the Cold War, the dominance of the US and the Rand Corporation saw the emergence of a technocratic and ideologically compliant version of economics. That’s when your third question was largely removed from the equation.
Neo-classical dogmas and methods suited the technocratic toy models. Even Keynes was reduced to a set of graphs and formulas.
Thankfully, the GFC, stagnation, intolerable inequality and environmental crises have ensured that this version of economics no longer has any real momentum.
It does have inertia though, massive inertia and it will be a quite while yet before we’re finally rid of it.
Inertia! For sure. Isn’t the endurance of the neo-liberal economic model a fine example of Bacon’s alleged experiment with the chickens in the snow, which he alleged carried on running after being decapitated? The original “headless chickens”
Good analogy. The crisis-prone financial markets also remind me of headless chickens, a sort of, self-decapitating version.
So, are you saying that you are a political economist or an ‘traditional’ economist?
I am a political economist
In the section Political Economy which Rousseau wrote for the philosophes’ Encyclopedia he wrote to distinguish between private or domestic economy on the one hand and political or general economy on the other.
He writes “Even if, between state and family, the relationship were as close as several authors claim, it would not therefore follow that the rules of conduct which are suited to the one society would be appropriate for the other. They differ too greatly in size for them to be administered in the same way…”
James Steuart in his 1767 An Inquiry into the Principles of Political Economy wrote “what oeconomy is in a family, political oeconomy is in a state with these essential differences…that a family may be formed when and how a family pleases…states are found formed, and the oeconomy of these depends upon a thousand circumstances”. A thousand!
From these pre-Smith authors one sees how crucial the idea of “political” economy is (why the distinction is so important) and how utterly bereft of any intellectual merit it is to compare the the nation’s economy to a credit card. The shame of that comparison should follow the economist/politican making it around for the rest of their lives.
Then it is perhaps our civic duty to ensure that it does follow them around for the rest of their lives (or as long as it takes for the lesson to be learnt). I know that both Richard and Jeremy aren’t inclined toward negativity, which is to entirely to their credit.
Nonetheless, I still think that the odd bit of well-targeted nose-rubbing can serve as a healthy deterrent. The architects of the GFC have hidden under the radar for a while and quietly excused themselves for the crime of the century. If they were the architects of a bridge or building that collapsed, and destroyed the lives of a great many people, they wouldn’t have gotten away with it.
yes-the standard “we’re living beyond our means” trope that always gets ‘sicked up’ just about sums up the level of most politicians notions-in realitiy we are “living without knowing our means”.
As remove the adjective ‘political’ and you are left with economy as metaphysics which is what we’ve got now.
BBC and main newspapers really gunning for Corbyn with a vengeance as the deadline creeps up-I think they know, at least subconsciously, that this is the last chance to change the narrative before the motorway of neo-liberalism takes us to the horizon.
Surely a political economist would ask a lot more questions about who owned the car and the tools? I understand political economy analysis as being all about how power and resources are distributed and contested in different contexts? It can also be applied to knowledge and discourse to explain how and why some policy models are reproduced and others dismissed though arguably power analysis is more nuanced. Foucault would have had a field day analysing what is taking place at the moment – how economists are positioning themselves with respect to PQE and how the media tried to frame Corbyn’s ideas as ‘mad’ and dangerous.
A political economist ( R Murphy ), a moral philosopher ( Adam Smith ) and a refugee are all looking at a car for the first time.
The meister wonders “Do we really need this thing?”
Smith considers the question “Will it set people free?”
The refugee thinks “I could live in that”
http://www.3spoken.co.uk/2013/03/uk-borrowed-foreign-currency-from-imf.html?m=1
Myths debunked. This will inevitability come up. Along with “UK is just like Greece despite the fact it issues its own currency.”
I am really impressed with your analysis. In the past intellectuals like you would have been given your own TV series to explain these concepts. Sadly the neo-liberal takeover of broadcasting means that this does not happen now. Hopefully that will change when Jeremy Corbyn is in power.
In this context it is important to remember John Ruskin who wrote in 1860 that the businessman may know how to count his profits and losses but knows very little about the role of polity and society in helping him realise those transactions and who keeps the bank. He wrote this in ‘Unto This Last’ which is a classic treatise on political economy and has an excellent definition of true wealth. It’s free on the net.
Equally ‘democracy’ means ‘everyone’ having a vote in how things are run. Representative democracy – which is what we now have – used to be known as ‘aristocracy’. It arose because aristocrats used to send representatives to parliament because they couldn’t always leave their estates. Representative democracy only became known as democracy in the later part of the 19th C. .
True democracy is now known as ‘direct democracy’. The american constitution was set up precisley to prevent democracy from taking place Graeber has written some very interesting background to this in The Democracy Project.