Page 38 - Global Political Economy_Understanding The International Economic Order

CHAPTER TWO
The Nature of Political Economy

HE STUDY of political economy is now very much in vogue
1
T among historians, economists, and social scientists. This interest
reflects a growing appreciation that the worlds of politics and eco-
nomics, once thought to be separate (at least as fields of academic
inquiry), do in fact importantly affect one another. The polity is much
more influenced by economic developments than many political scien-
tists have appreciated, and the economy is much more dependent
upon social and political developments than economists in general
have admitted. Recognition of the interrelationships between the two
spheres has led to increased attention from historians and social scien-
tists. I shall explore the nature of political economy and contrast it
with economics before turning to the subject of international political
economy itself.
During the last two centuries several different definitions of the
2
term “political economy” have been set forth. A brief summary of
the changes in those definitions provides insight into the nature of the
3
subject. For Adam Smith in The Wealth of Nations (1776), political
economy was a “branch of the science of a statesman or legislator”
and a guide to the prudent management of the national economy, or
as John Stuart Mill, the last major classical economist, commented,
political economy was the science that teaches a nation how to be-
come rich. These thinkers emphasized the wealth of nations, and the
term “political” was as significant as the term “economy.”
In the late nineteenth century, this broad definition of what econo-
mists study was narrowed considerably. Alfred Marshall, the father
of modern economics, turned his back on the earlier emphasis on the
1
The references to economists discussed in this section draw from the review of the
varieties of political economy in David K. Whynes, ed., What Is Political Economy?:
Eight Perspectives (Oxford: Basil Blackwell, 1984).
2
An analysis of various approaches to the subject can be found in James A. Capor-
aso and David P. Levine, Theories of Political Economy (New York: Cambridge Uni-
versity Press, 1992).
3
This discussion of the various meanings of political economy is based on Colin
Wright, “Competing Conceptions of Political Economy,” in James H. Nichols Jr. and
Colin Wright, eds., From Political Economy to Economics—And Back? (San Fran-
cisco: Institute for Contemporary Studies, 1990).
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