what is political economy 
political economy is an interdisciplinary branch of the social sciences it focuses on the interrelationships of individuals governments and public policy political economists study how economic theories such as capitalism socialism and communism work in the real world any economic theory is a means of directing the distribution of a finite amount of resources in a way that benefits the greatest number of individuals these ideas can be studied both theoretically and as they are actually used public policy that is created and implemented derive from these economic theories political economists study both the underlying roots of these policies and their results investopedia zoe hansenunderstanding political economypolitical economy is a branch of social science that studies the relationship that forms between a nation s population and its government when public policy is enacted it is therefore the result of the interaction between politics and the economy and is the basis of the social science discipline 1those who research the political economy are called political economists their study generally involves the examination through a sociological political and economic lens of how public policy the political situation and political institutions impact a country s economic standing and future in a wider sense political economy was once the common term used for the field we now call economics adam smith john stuart mill and jean jacques rousseau all used the term to describe their theories 2 the shorter term economy was substituted in the early 20th century with the development of more rigorous statistical methods for analyzing economic factors 34types of political economythere are several notable types of political economies political economy may draw upon sociology economics and political science to define how government an economic system and politics influence each other history and development of political economythe roots of political economy as we know it today go back to the 18th century scholars during the period studied how wealth was distributed and administered between people some of the earlier works that examined this phenomenon include those by adam smith and john stuart mill 89but the term is probably best ascribed to the french writer and economist antoine de montchrestien he wrote a book called trait de l conomie politique in 1615 in which he examined the need for production and wealth to be distributed on an entirely larger scale not in the household as aristotle suggested the book also analyzed how economics and politics are interrelated 10smith was a scottish philosopher economist and writer who is commonly referred to as the father of economics and of the political economy he wrote about the function of a self regulating free market in his first book which was called the theory of moral sentiments 11 his most famous work an inquiry into the nature and causes of the wealth of nations or the wealth of nations for short helped shape classical economic theory it was considered the foundation for the field of study by future economists 8the englishman mill combined economics with philosophy he believed in utilitarianism that actions that lead to people s goodwill are right and that those that lead to suffering are wrong 9 in essence he believed that economic theory and philosophy were needed along with social awareness in politics to make better decisions for the good of the people some of his work including principles of political economy utilitarianism and a system of logic made him one of the most important figures in politics and economics importance of political economypolitical economy studies both how the economy affects politics and how politics affect the economy as political parties come to and leave power economic policy often changes in a country in accordance with the ideology and goals of the party in power 12political changes can impact many areas of the economy which can in turn impact elections and government policies these areas include as the economies of more countries become interconnected through globalism and international trade the politics of one country can have a strong impact on the economy of another understanding the relationship between political power and economic decisions in one country can help other countries predict how their own economies will be impacted understanding political economy can also help a country s economy become more resilient if the government leaders in power at any given moment are forward thinking they can try to put laws and policies in place that create the greatest possibility for economic stability and growth regardless of changing political power 12political economy is still a widely used term that describes any government policy that has an economic impact political economy in academiapolitical economy has become an academic discipline of its own many major institutions offer the study as part of their political science economics and sociology departments political economists conduct research to determine how public policy influences behavior productivity and trade this work helps them establish how money and power are distributed between people and different groups they may study specific fields such as law bureaucratic politics legislative behavior the intersection of government and business and regulation 14the study may be approached in any of three ways modern applications of political economymodern applications of the political economy involve the study of later philosophers and economists such as karl marx as mentioned above marx became disenchanted with capitalism as a whole he believed that individuals suffered under regimented social classes where one or more individuals controlled the greater proportion of wealth under communist theories this would be eradicated allowing everyone to live equally while the economy functions based on the ability and needs of each participant under communist regimes resources are controlled and distributed by the government 7many people confuse socialism and communism it s true there are some similarities notably that both stress bridging the gap between rich and poor and that society should relegate equilibrium among all citizens but there are inherent differences between the two while resources in a communist society are owned and controlled by the government individuals in a socialist society hold property people can still purchase goods and services under socialism while those who live in a communist society are provided with their basic necessities by the government 17