Political Economy

Question 1

What is a political economy?

Answer 1

• Politics and economics are interrelated
• A single discipline
• Explored implications for politics and society (Smith & Ricardo, Marx & Engels
• Political science is an offshoot/outgrowth of political economy

Question 2

Approaches to a political economy

Answer 2

• State-centric
• Classical and neo-classical
• Marxist

Question 3

Approaches to a political economy - state centric

Answer 3

• Markets are not neutral, they are created by society and open to adjustment
• State formation inspired state intervention in markets
• Mercantilism, protectionism, developmental states (neo-mercantilism)

Question 4

Approaches to a political economy - classical

Answer 4

For Adam Smith, markets are:

• Natural, spontaneous
• Inclined towards efficiency and equilibrium
• Great communicators
• Best left largely alone (laissez faire)
• The basis for a new science of society

Question 5

Approaches to a political economy - neo-classical

Answer 5

Economics becomes:

• A mathematical science
• Much less political
• Clearly distinct from political science
• Eager to offer “market man” as general model

Question 6

Approaches to a political economy - marxist

Answer 6

Capitalism is:

• Exploitative
• Internally contradictory
• Prone to revolution by a class-conscious proletariat
• Proletariat = the gravedigger for capitalism

Question 7

Marx - succession of economic systems

Answer 7

1) Primitive communism
2) Slave society
3) Feudalism
4) Capitalism
5) Communism

BUT, capitalism has not been replaced by communism

Question 8

Capitalism - Heywood’s definition

Answer 8

• Mainly private ownership
• Markets and prices
• Wage-based labour market
• Pursuit of self-interest and profit maximization

Question 9

Varieties of capitalism

Answer 9

• Enterprise capitalism (liberal)
• Social capitalism (conservatism)
• State capitalism (neo-mercantilist)

Question 10

Varieties of capitalism - enterprise capitalism

Answer 10

• Small state
• Labour flexibility
• Sum: self-regulating market
• e.g. USA

Question 11

Varieties of capitalism - social capitalism

Answer 11

• Free market
• Society protected against market effects
• Social partnership
• Sum: social market
• e.g. Germany

Question 12

Varieties of capitalism - state capitalism

Answer 12

• State directs social partners
• State picks the winners
• Sum: state replaces market in some respects
• e.g. Japan, China, Russia