Page 87 - Global Political Economy_Understanding The International Economic Order

CHA PTER T HREE
other factors in determining the nature and dynamics of the world
economy.

Comparison of Economics and Political Economy
Economics is clearly a more rigorous andtheoretically advanced field
of study than are political economy and the other social sciences.
However, economics is basedon highly restrictive methodological as-
sumptions and, despite flourishing “economic imperialism,” the do-
main of formal economic analysis is quite limited. Moreover, efforts
to apply the rational choice techniques of economic analysis to the
messy worldof politics and social affairs more generally have not
achievedconsistent success. Although economic theories andmethods
are important and provide an essential foundation for the study of
political economy, they are not in themselves sufficient to explain the
nature anddynamics of the “real” world economy. This writer be-
lieves that combining the insights andtheories of economics with the
more intuitive andless rigorous techniques of history and the other
social sciences leads to a more profoundanduseful comprehension
of economic affairs than does adherence to any one field alone.
The most fundamental difference between neoclassical economics
andthe study of political economy is in the nature of the questions
askedandof the answers given. Neither is superior to the other, nor is
there any necessary conflict between the answers given by neoclassical
economists to the questions that interest them andthe answers given
by political economists to their different questions. The two subjects
complement one another, andpolitical economists of almost every
persuasion do, in fact, accept most, or at least much, of the corpus of
conventional neoclassical economics. Even though political econo-
mists frequently consider the theories of neoclassical economics to be
too limited, too abstract, and in many cases not directly relevant to
the particular questions of interest to them, insofar as they are techni-
cally competent to do so, they draw upon the accepted theories of
economics as they study many specific issues.
Economics andpolitical economy differ significantly in their view
of the role of the market in economic affairs andof the relationship
of the market to other aspects of society. Whereas neoclassical econo-
mists believe that the market is autonomous, self-regulating, andgov-
ernedby its own laws, almost all political economists assume that
markets are embedded in larger sociopolitical structures that deter-
mine to a considerable extent the role and functioning of markets in
social andpolitical affairs andthat the social, political, andcultural
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