WHAT IS POLITICAL ECONOMY?

Abstract

The objectives of the article are the illustrations to understand what is Political Economy (PE.), how it is useful, why it should study PE. PE is not marxism to which many ones misunderstand. However, Marxism is a branch of PE. Data and information are collected from books, articles, and experiences of the authors to which finished the studies in both neoclassical economics and political economy. PE originated in France in 1615 when Antoine de Montchre’tien wrote the “Traicté de l' économie Politique”. Later, it has made the progress in England. Two well-known books have emerged. The first is “The Wealth of Nations” of Adam Smith, in 1776; Political economy in Smith’s thought is a branch of the science of statesman. The second is “Das Kapital” of Karl Marx, in 1867; it was the marxist political economy. Up to 1890, Alfred Marshall wrote the “Principle of Economics”. Since then, Economics has become the technical term of the economic academy. This illustrates that PE has a long development in comparison to neoclassical economics. It may differentiate PE and neoclassical economics according to their dominant purposes; the political economy is a science of statesman who wishes to generate revenue for all people and the state; economics is a science of the firm that wants to generate profit. Since the 1970s, international trade has increased its importance; bringing about the “International Political Economy” which studies the struggle for power and wealth. Moreover, in the 1980s, there was new progress of PE; that is the New Political Economy. Hence, PE is the field of study about “An Interaction of power between classes and groups of people using social institutions, state power, and market forces to provide and share, compete and struggle for power and wealth.