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What is Political Economy?

Posted by Centre for Poverty Analysis (CEPA)

19 Feb 2016

Some of CEPA’s researchers, Aftab Lall, Nadhiya Najab, and Prashanthi Jayasekara, followed a short course on social science research at the Social Scientists’ Association in Colombo. The class covers the evolution of social science research, and the philosophies that have shaped modern understandings of truth and reality. The course has helped them to reflect on what they do as researchers, and why they do so. This short blog series put together with the assistance of Anna Bassett-Boynton will follow their experiences in class, and share the knowledge they gain.

Week two: What is Political Economy?

The Political Economy approach attempts to explain and understand the following: how and why does social change occur? What are its outcomes/consequences? And finally, which groups benefit, and why?

Sri Lankan Marxist anthropologist Newton Gunasinghe in his work argued that a Political Economy approach would help us go beyond the descriptive to understand how and why. In village studies, for example, this approach investigates areas of political power and economic wealth (or the lack thereof) in the village, and why these exist in the way they do. A Political Economy approach urges  the researcher  to explore how a particular phenomenon  is connected to political and economic shifts taking place at a regional, national or global level. This ultimately gives us a deeper and more contextualised understanding of the social phenomena we seek to understand. In a nutshell this approach to research attempts to go beyond surface level descriptions.

Looking into the origins of Political Economy, we follow a historical shift in questioning social phenomena. When the Church ruled over the state, religion was used to explain both natural and social phenomena. Droughts, floods, famines, poverty, inequality and disease were explained as an act of God. Out of this vacuum of questioning, philosophy emerged as a critique of religion. Questioning these explanations through reason and logic, philosophers provided a powerful critique of religious belief systems. For example, the philosopher Immanuel Kant proposed that logic and reason is the foundation of morality, not God. Some philosophers deeply threatened the religious establishment, and were mercilessly persecuted.

Political economists found the abstract nature of philosophical arguments problematic. They challenged philosophers on the grounds that to understand social phenomena, attention must be paid to both the material world and relations between social groups. According to Political Economists, society differentiates not only in terms of different individuals and social groups, but also in terms of institutions such as the state; laws and the power relations between groups. Political Economy initially studied the relations of production, trade and consumption within national borders. As it evolved, it defined itself as an ‘interaction between political institutions, social environments and the economic system’ that worked across local, regional, national and global levels. It stressed being perceptive towards changes of society and its institutions.

The first recognised Political Economy analysis was carried out by one of the founders of Classical Economics, Adam Smith. His seminal work  An Inquiry into the Nature and Causes of The Wealth of Nations examines the political and economic reasons why certain nations were able to accumulate great wealth, and the social impacts of this. Smith viewed the economy as a sphere of society distinct from the state, and argued that the economy works best when it is self regulated and without interference from government.

The classical economist is preoccupied with how to expand and accumulate capital. This is realised through the interaction between division of labour (occupational specialization), and growth of markets (expansion of trade) that spurs wealth (capital accumulation). The state, too, has a role in this. However, it is primarily limited to the role of a night watchman that interferes only in cases of gross violation of norms. An example of this 'watchman state' is the American bail out after the 2008 crash. The state is encouraged to promote free trade across national and international borders.

Karl Marx and Friedrich Engels countered the classical school of political economy. The Marxist school of Political Economy shifted from looking at socio-economic and political change from a lens of mechanical materialism (change caused by outside/external forces), to a lens of historical materialism where change is caused by internal forces or contradictions.

Marx unpacked the ideas of the political economists; tracing the genealogy of different ideas of capital. Trough historical analysis, he identified the emergence of capitalism to understand why industrialisation and accumulation of capital took shape in certain locations and not in others. Marx established that human society was not always capitalist. His work unpacked why modes of production, such as those of hunter gatherers, didn’t remain as they were, and how and why did they change. He wrote that the shift towards a capitalist society occurs based upon changes in the mode or production i.e. – capital, labour, tools and technology. Essential to maintaining capitalism is not just technological changes, but a disenfranchised people forced out of their lands to serve as the working class, or what Marx referred to as the Proletariat. Marx also went on to highlight that class struggle is not limited to the working class against the rich, but a struggle of the elite against the poor as well. In the Marxist framework it is through class struggle that society is able to evolve. Further, power according to Marx was not limited to economic power, but included political power as well.

Feminist Political Economy emerged in reaction to Marxism, critiquing class as a core category of identity. It suggested that class alone is an insufficient lens through which to understand the social world, and built upon a Marxist framework by working in gender, age, caste, and other social categories. Feminism is founded on three principal pillars. First, that patriarchy: privilege, power and property are in the hands of men. Second, that the production of goods and services and the production of life are one integrated whole. Finally, that gender is a socially constructed norm, and roles derive from this socially constructed masculine and feminine identity, not physical internal traits.

Feminist Political Economy identifies power relations in the production sphere, meaning waged work, and social reproduction spheres, meaning within the household. It argues that social reproduction is economic; and waged household labour should be recognised as such. This school of thought radically shifted our understanding on the linkages between the domestic sphere (household), the community, (multiple households), market (economic relations), the state (political sphere), and international relations nested in global capitalism. For instance, Feminists raised the question of how it is that men are able to work the hours they do. They are able to work outside the home because of the work being done by the women in the domestic sphere, work that goes unrecognised due to the lack of monetary value. The key insight of Feminist Political Economy is that social, political and economic processes/relations are influenced by gender. Feminism goes on to assert that gender inequalities are influenced by social, political and economic relations across classes, and that gender identities are also influenced by other social identities such as race, ability, sexuality, and national origin.

Neoliberal Political Economy is contemporary approach to political economy, a competing narrative against feminism. The neoliberal approach applies neo-classical economics to the study of politics. The neo-classical school views politics as a problem that distorts or interferes with the market. Neoliberalism, therefore ushers in the subordination of the state to the market. In Political Economic terms it makes the political sphere complementary and subservient to the economic sphere. The state is made to operate to suit the needs and interests of the ‘capitalist’ agenda.

Finally, a Global Political Economy lens allows us to understand inter-state relations and international economics. It looks at the interaction between international politics on economic relations and economic relations on global politics beyond national borders. This view also comes across as a critique—in this case of International relations, which it claims has too narrow a focus on law, politics, and diplomatic history. Global Political Economy focuses on the following: North–South relations, international trade, international finance, multi-national corporations, imperialism, and globalisation.

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