While political science has emerged as a distinct field which is considered to be primarily disconnected from economics.Īll the works of these economists have led to the creation of what political economics as a field of study is. Economics has come out to be more methodological, statistical and far off from moral philosophy. Later in the early 20 th century, Alfred Marshall’s approach led to the bifurcation of political economy to a distinct field of studies as economics, political science, sociology and international relations. It advocates for the common ownership of the means of production without the influence of social class and the government institutions. Communism is a socio-economic and political ideology that aims to establish a classless and stateless society. This theory came to be known as “ communism”. In the mid-19 th century, communist economist and philosopher Karl Marx presented an analysis of political economy which was majorly based on the social class. It says that a country should produce goods which it can make at a lesser cost than others and import those which other nations can generate more profitably.
The output generated by a free economy is always greater than that of a state-regulated economy.įurther, in the 19 th century, David Ricardo, an English political economist forwarded the notion of comparative advantage. He argued that individuals are motivated to act in accordance with their own interests but in doing so, the outcome is automatically in the best interest of the society as a whole. The famous concept of the invisible hand was given by Smith in his book “ An Inquiry into the Nature and Causes of the Wealth of Nations” (1776). Political economists like Adam Smith emphasized that free markets possess the ability to maximize the resources of the country rather than a strict state regulation on production and consumption. Political economy developed majorly as a reaction to mercantilism during the mid-18 th century. Mercantilists also believed that state action is necessary to optimize the stock of assets of a country. It is an economic system advocating the idea of maximizing exports and minimizing imports for the economic prosperity of the nation. Political economy as an academic discipline dates back to the span from 16 th to 18 th century, during the period of mercantilism. Political economics helps us to understand the formulation and execution of public policies and their effect on the economy as well as the social systems.
Thus, political economy is the study of how to manage a state taking into account its political, economic and social characteristics Here, the state is the household of the citizens. The term ‘Political economy’ itself is derived from Greek words polis meaning “city” or the state and oikonomos which means “housekeeper” or the one who manages a household. It borrows ideas and theories from political science, economics and sociology. Political economy is the branch of social science that analyses the correlation between the state, markets and society.