Political Economy
Political Economy
by Branko Horvat,University of Zagreb
Economic Science was first called political economy by an unimportant mercantilist writer, Montchretien de Watteville, in 1615 (Traicte de l'oeconomie politique). The wod 'economy' dates back to ancient Greeks for whom it meant principles of household management. Montchretien argued that 'the science of wealth acquisition is common to the state as well as the family' and therefore added the adjective 'political'.
The term had not been accepted immediately, and it was only in 1767 that it reappeared in the Inquiry into the Principles of Political Economy by James Steuart, the last precursor of classical economists. With the advent of classical economics, the term came into general use and remained so throughout the entire ninteenth century. It meant economics as it had just emerged as one of the social social sciences. English and French authors vacillated between Staatewirtshaft, Nationalokonomie or Volkswirtshaft, Politische Okonomie and Sozialokonomie.
Like any new discipline, political economy included both theoretical principles and practical politics, scientific proofs and political advocacies; it was a combination of science, philosophy and art. In his "Wealth of Nations" Adam Smith wrote: 'Political economy, considered as a branch of the science of a statesman or legislator, proposes two distinct objects: first, to provide a plentiful revenue or subsistence for the people . . . and secondly, to supply the state . . . with a revenue sufficient for the public services.' Principles of Political Economy with some of their Applications to Social Philosophy by J. S. Mill reflects similar ideas.Like many other sciences in the nineteenth century, political economy passed through a process of catharsis: it gradually liberated itself from the political and ideological baggage, the concepts used became more rigorously defined, the analysis and proofs imitated procedures in exact sciences, and art (which advises, prescribes and directs) was separated from science (which observes, describes and explains). Commenting a century later (1874) on Smith's definition, Leon Walras observed that 'to say that the object of political economy is to provide a plentiful revenue . . . is like saying that the object of geometry is to build strong houses . . . '.
This development proceeded in two different directions: towards pure economic theory unrelated to social relations, and towards social economics stressing production relations as the main task of analysis. the former is (very conditionally) denoted as bourgeoisie economics, the later (equally conditionally) as Marxist economics. Both were equally critical of inherited doctrines, but from different perspectives. Bourgeoisie economists took capitalism as an established social order (as data exogenously given) and tried to develop economic science by reducing the immense complexity of social phenomena to some manageable proportions. Marx and the socialists, on the other hand, questioned the established social order itself (and treated production relations as endogenous variables).
Nasau Senior (An Outline of Political Economy, 1836) was probably the first to stress explicitly the abstract and hypothetical character of economic theory and to distinguish theoretical economics from policy advice useful for the statesman. J. B. Say provided the definition of political economy in the title of his book Traite d'economie politiqe, ou simple exposition de la maniere dont se forment, se distribuent et se consomment le richesses. While Smith's definition referd to an art, 'from Say's definition it would seem that the production, distribution and consumption of the wealth take place, if not spontaneously, at least in the manner somehow independent of the will of man' which means treating political economy as a 'natural science'. Marx also talks of natural laws in economics, though, unlike Say, he also subsumes production relations under the governance of these laws. Although the econometricians - as Schumpeter calls them - of the seventeenth and eighteenth century, Petty, Boisguillebert, Cantillon and Quesnay, tried to measure economic phenomena, it was only Cournot who successfully introduced mathematics into economics. And 'a science becomes really developed only when it can use mathematics (Marx). The marginalist revolution of the 1870s gave the purification tendencies full swing. In the last great work under the title of political economy - Manuale di economia politica by Pareto, 1906 - the author scorns 'literary economists and metaphysicians' and defines his discipline by enumerating its three component parts: the study of tastes, the study of obstacles and the study of the way in which these two elements combine to reach equilibrium. This type of reasoning led to the most popular definition of economics in the in the first of the two intellectual traditions: economics as the study of the allocation of scarce resources among competing uses. starting from this definition, it is logical to conclude, as L. Robins did, that 'the generalizations of the theory of value are applicable to the behaviour isolated man or the executive authority of a communist society as they are to the behaviour of men in an exchange economy' (An Essay on the Nature and Significance of Economic Science, 1932). Economics has thus become the applied praxiology (study of rational behaviour). Most of what goes for the contemporary economic theory is in fact not theory but analysis. the difference between the two consists in economic analysis being identically true: if the rules of logic are observed, the conclusion follow with certainty and cannot be refuted. Economic theory, like any other theory, cannot be proved but can be refuted. As a result of these developments, political economy disappeared from the titles of economic treatises and also from western and encyclopaedias.
The Marxist tradition uses the following definition: political economy is the science of the laws governing the production, exchange and distribution of material means for living in the human society (Engels, Anti-Duhring, 1878). Since the condition under with people produce and exchange are different in different epochs, there must be different political economies. Political economy is basically an historical science. Marx's chief work, Das Kapital. Kritik der Politischen Oekonomie (1867), was a critique of bourgeoisie society and was intended to 'discover the law of economic development' of the society. In an earlier work he links political economy with the dominant class in a particular society and draws attention to the 'blind laws of demand and supply, of which consists the political economy of bourgeoisie, and social production governed by social forecast, of which consists the political economy of the working class' (1864). Political economists of of Marxist persuasion start from the observation that means of production together with appropriately skilled labour power make up the forces of production. the latter, together with the corresponding relations of production, determine modes of production which represent the proper subject of study for political economy. Marxist economics has preserved the term and the approach, but have not contributed much to the development of political economy after the master's death. After the Second World War, the emergence of many new nations, substantial political and social changes, and widening gaps in economic development made the usefulness of pure economic theory rather than questionable. Models that implied Western Homo economicus proved inapplicable in many parts of the world and, increasingly so, in the West itself. The interest in political economy was revived. the subject was reintroduced into curricula, and studies bearing the title began to reappear. The current tendency is to bridge the gap between the two strands of thought: the most sophisticated analytical techniques ae applied to analyse social relations. the term 'political economy' came to denote that part of economic theory which deals with the functioning of entire socioeconomic systems. In a somewhat looser sense it is also used to denote political-economic doctrines or comprehensiveness sets of economic policies such as liberal, conservative and radical. The increasing exactness of economics and the development of other social sciences make it possible to extend the tasks of political economy from merely explaining the functioning of economic systems to the design of basically new economic systems. In order to achieve this, an attempt has been made to integrate economic and political theory into one single theory of political economy.
References
Horvat, B. (1982), Political Economy of Socialism, New York
Nasau Senior (An Outline of Political Economy, 1836) was probably the first to stress explicitly the abstract and hypothetical character of economic theory and to distinguish theoretical economics from policy advice useful for the statesman. J. B. Say provided the definition of political economy in the title of his book Traite d'economie politiqe, ou simple exposition de la maniere dont se forment, se distribuent et se consomment le richesses. While Smith's definition referd to an art, 'from Say's definition it would seem that the production, distribution and consumption of the wealth take place, if not spontaneously, at least in the manner somehow independent of the will of man' which means treating political economy as a 'natural science'. Marx also talks of natural laws in economics, though, unlike Say, he also subsumes production relations under the governance of these laws. Although the econometricians - as Schumpeter calls them - of the seventeenth and eighteenth century, Petty, Boisguillebert, Cantillon and Quesnay, tried to measure economic phenomena, it was only Cournot who successfully introduced mathematics into economics. And 'a science becomes really developed only when it can use mathematics (Marx). The marginalist revolution of the 1870s gave the purification tendencies full swing. In the last great work under the title of political economy - Manuale di economia politica by Pareto, 1906 - the author scorns 'literary economists and metaphysicians' and defines his discipline by enumerating its three component parts: the study of tastes, the study of obstacles and the study of the way in which these two elements combine to reach equilibrium. This type of reasoning led to the most popular definition of economics in the in the first of the two intellectual traditions: economics as the study of the allocation of scarce resources among competing uses. starting from this definition, it is logical to conclude, as L. Robins did, that 'the generalizations of the theory of value are applicable to the behaviour isolated man or the executive authority of a communist society as they are to the behaviour of men in an exchange economy' (An Essay on the Nature and Significance of Economic Science, 1932). Economics has thus become the applied praxiology (study of rational behaviour). Most of what goes for the contemporary economic theory is in fact not theory but analysis. the difference between the two consists in economic analysis being identically true: if the rules of logic are observed, the conclusion follow with certainty and cannot be refuted. Economic theory, like any other theory, cannot be proved but can be refuted. As a result of these developments, political economy disappeared from the titles of economic treatises and also from western and encyclopaedias.
The Marxist tradition uses the following definition: political economy is the science of the laws governing the production, exchange and distribution of material means for living in the human society (Engels, Anti-Duhring, 1878). Since the condition under with people produce and exchange are different in different epochs, there must be different political economies. Political economy is basically an historical science. Marx's chief work, Das Kapital. Kritik der Politischen Oekonomie (1867), was a critique of bourgeoisie society and was intended to 'discover the law of economic development' of the society. In an earlier work he links political economy with the dominant class in a particular society and draws attention to the 'blind laws of demand and supply, of which consists the political economy of bourgeoisie, and social production governed by social forecast, of which consists the political economy of the working class' (1864). Political economists of of Marxist persuasion start from the observation that means of production together with appropriately skilled labour power make up the forces of production. the latter, together with the corresponding relations of production, determine modes of production which represent the proper subject of study for political economy. Marxist economics has preserved the term and the approach, but have not contributed much to the development of political economy after the master's death. After the Second World War, the emergence of many new nations, substantial political and social changes, and widening gaps in economic development made the usefulness of pure economic theory rather than questionable. Models that implied Western Homo economicus proved inapplicable in many parts of the world and, increasingly so, in the West itself. The interest in political economy was revived. the subject was reintroduced into curricula, and studies bearing the title began to reappear. The current tendency is to bridge the gap between the two strands of thought: the most sophisticated analytical techniques ae applied to analyse social relations. the term 'political economy' came to denote that part of economic theory which deals with the functioning of entire socioeconomic systems. In a somewhat looser sense it is also used to denote political-economic doctrines or comprehensiveness sets of economic policies such as liberal, conservative and radical. The increasing exactness of economics and the development of other social sciences make it possible to extend the tasks of political economy from merely explaining the functioning of economic systems to the design of basically new economic systems. In order to achieve this, an attempt has been made to integrate economic and political theory into one single theory of political economy.
Horvat, B. (1982), Political Economy of Socialism, New York
.jpg)
Comments
Post a Comment