The field of political economy is defined by a set of questions surrounding economic modes of production and their subsequent interactions with both the social and political realm. As such, its research mandate is among the broadest in the social sciences. It impacts questions not just in the disciplines of economics and political science, but in anthropology, sociology, history, geography, and the environmental sciences as well. In their widely read introduction to the topic Balaam and Veseth declare:
International political economy is both the past and future of the social sciences. It is the past because it represents a return to the origins of the social sciences, before the study of human social behavior became fragmented into the discrete fields of economics, politics, science, sociology, history and philosophy. It is the future because, in today’s complex world, most important social problems clearly have an international or multinational aspect that is best understood through an integrated study drawing on a variety of tools and perspectives.
Indeed, until the later half of the 19th century no differentiation was made between the economic and political or social modes of analysis. The term “political economy” first gained widespread acceptance following the publication of James Steuart’s Inquiry into the Principles of Political Economy (1767). Historically three main schools of thought have in turn dominated this field of inquiry, and all remain important to this day.
The first modern approach to the topic was advanced by the mercantilist thinkers of the 17th century. The main object of these writers was to defend the national interest by building up economic resources and reserves of precious metals. Neo-mercantilist thought, which sees economic success as an important national power resource, is still present today, and is most closely linked to certain realist writers within the field of political science. Robert Gilpin’s “power transition theory” (1981), or Stephen Krasner’s “hegemonic stability theory” (1976) represent important examples of this tendency.
In the 18th century mercantilist ideas increasingly gave way to what is now often called classic economic liberalism. This school emerged from the Scottish Enlightenment, with its best-known students being David Hume and Adam Smith, who, in 1776, produced the seminal work, Wealth of Nations. Smith argued that, contrary to the claims of the mercantilists, the unregulated functioning of the markets would best promote the welfare of both the individual and the larger national community as a whole. Further, competing individual interests could be harmonized through the “invisible hand” of the market, yielding efficient social outcomes. While Smith was far from disinterested in questions of national power, it is clear that his approach assigns a much more nominal role to the government in the oversight of economic and social life. These essential insights, and the body of theory that has emerged from them, are today most closely associated with the field of economics, and its specific contributions to this multi-disciplinary research program.
The third classic approach to political economy is found in Marxism. Marx advanced his own theory of history, which allowed his students and him to assert that, far from being a basic unit of analysis, markets are, in reality, an artifact of the historic forces of production. Since the ultimate locus of change and progression in his theory of history is economic materialism, Marx was able to deny that society and the market really existed or functioned as unique, isolated spheres. Rather than free mutual exchange in perfect markets (which the liberal school claimed guaranteed efficient and beneficial outcomes), real economic life was characterized by the use of socially and materially derived power. The harmonization of interests that the classical economist predicted could not emerge, and instead the economy would be characterized by class conflict pitting workers against the capitalist class.
Marxism has traditionally been one of the most important modes for viewing and understanding political economy. The 1960s and 1970s saw a resurgence in Marxist thought as “dependency theorists” in Latin America (Dos Santos) and “word systems theorists in Europe” (Wallerstein) attempted to expand this basic theoretical framework to deal with the shifting vagaries of chronic underdevelopment in the Third World and the expanding role of transnational corporations in the global political arena.
These general approaches are sometimes referred to as “structuralism,” and are often a preferred mode of analysis for sociologists working in the area. It should also be noted that when anthropologists and geographers use the term “political economy” they are frequently referring specifically to these neoMarxist approaches to underdevelopment and globalization.
Since the division of economics, political science, and history in the late 19th century, the study of political economy (while still a radically interdisciplinary effort) has increasingly been championed and developed within political science departments. The sub-field of comparative politics has tended to focus on detailed investigations of patterns of difference between national systems in its attempt to come to terms with many of the basic problems posed by political economy.
Within the subfield of international relations another approach has been developed, often referred to as international political economy (IPE). While there is substantial overlap with the efforts of comparativists, IPE tends to focus more on systemic problems that transcend national and market boundaries, and thus call for broader methods of study, both in terms of the areas of the world that are examined and the methods that are employed. Anthropologists interested in the interaction of international economic and political forces with local social systems may find much of interest in this literature. Likewise, detailed and specific studies of the impact of global forces on local communities continue to be needed if the political economy research program is to progress.
- Balaam, D. N., & Veseth, M. (2005). Introduction to international political economy (3rd Ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
- Baldwin, D. (1985). Economic statecraft. Princeton, NJ: Princeton University Press.
- Bates, R. H. (1981). Markets and states in tropical Africa. Los Angeles: University of California Press.
- Dos Santos, T. (1970). The structure of dependence. American Economic Review, 60(May), 231-236.
- Gilpin, R. (1981). War and change in world politics. New York: Cambridge University Press.
- Krasner, S. (1976). State power and the structure of the international trading system. World Politics,
- 28(April), 317-344. Marx, K. (1992). Capital: A critique of political economy. Harmondsworth: Penguin.
- Rogowski, R. (1989). Commerce and coalitions: How trade affects domestic political alignments.
- Princeton: Princeton University Press. Smith, A. (2003). The wealth of nations. New York: Bantam Classic.
- Steuart, J. (1966). Inquiry into the principles of political economy. Chicago, IL: Chicago University Press.
- Wallerstein, I. (1974). The rise and future demise of the world capitalist system: Concepts for comparative analysis. Comparative Studies in Society and History, I6(Sept.), 387-415.