Page 39 - Global Political Economy_Understanding The International Economic Order

CHA PTER T WO
nation as a whole and on the political as important. In his highly
influential Principles of Economics (1890), Marshall substituted the
present-day term “economics” for “political economy” and greatly
restricted the domain of economic science. Following Marshall’s pre-
cept that economics was an empirical and value-free science, his disci-
ple Lionel Robbins in The Nature and Significance of Economic Sci-
ence (1932) provided the definition to which most present-day
economists subscribe: “Economics is the science which studies human
behavior as a relationship between ends and scarce means which have
alternative uses.” In more modern terminology, economics is defined
by economists as a universal science of decision-making under condi-
tions of constraint and scarcity.
At the end of the twentieth century, the term “political economy”
has come back into fashion even among economists, but there are
important differences from earlier usages; also there is considerable
controversy over the meaning of the term. For many professional
economists, especially those identified with the Chicago School, polit-
ical economy means a significant broadening of the scope or subject-
4
matter that economists study. These economists have greatly ex-
tended the social domain to which the methods or formal models
of traditional economics are applicable. The underlying assumptions
regarding motivation and the analytical tools of mainstream econom-
ics, they argue, are pertinent to the study of all (or at least almost all)
aspects of human behavior. For such Chicago School economists as
Gary Becker, Richard Posner, and Anthony Downs, the methodology
of economics—that is, methodological individualism or the rational
actor model of human behavior—is applicable to all types of human
behavior from individuals choosing a sexual partner to voters choos-
ing the American President. According to this interpretation, behavior
can be explained by the efforts of individuals to maximize, satisfy, or
optimize their self-interest.
Many economists and other social scientists enamored with eco-
nomics attempt to use the individualistic or rational-choice methodol-
ogy of economics to explain social institutions, public policy, and
other forms of social activities that have traditionally been regarded
as noneconomic in nature. Such “economic imperialism,” identified
most closely with the Chicago School, covers several scholarly areas
that include neoinstitutionalism, public-choice theory, and what
economists themselves call “political economy.” The essence of this

4
Warren J. Samuels, ed., The Chicago School of Political Economy (University Park,
Pa.: Association of Evolutionary Economists, 1976).
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