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Political Economy Lecture Notes
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These are some compact and systematic lecture notes that have gotten me to receive a 8.2 on the final assignment of the course political economy.
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mnha.orgiPE Notes
,Hoorcollege 1
political economy is not about economics as it is usually considered to be
:
we will be able to understand the essentials of a market, how it works and how it is governed
it… 1. studies the fundamental interconnection between states and marktets
2. understands economic politics as a means for states to achieve their objectives
3. considers today and tomorrows political economic relations and battles from a historic perspective
the financial crisis from 2008 was an eyeopener for people to start studying political economics more
the classic thinkers on state and markets considered both states and markets integrated in one academic debate
in the early 20th century the academic divide split political economics into politics and economics
political economy I, political economy II is about the political science of economic policy domains
political economy III has political phenomena considered from an economics perspective
‘economics is the branch of knowledge concerned with the production, consumption and transfer of wealth’
or ‘a branch of the science of a statesman or legislator with the objective of
providing a plateful revenue or subsistence for the people’ (Adam Smith)
or ‘combining the assumptions of maximising behaviour, stable preference and market equilibrium.
used relentlessly and unflinchingly’ (Gary Becker)
so economics is a domain and a perspective and approach to study social interaction
political economy IV looks at markets and business considered from a political science perspective
together political economy I, II, III, and IV create the course of political economy in the political science
Hoorcollege 2
what is capitalism? a concept that describes the dominant political economic activities and relations
in a social scientific manner
it is model / ideal type which is hard to describe and may never fully ve realised
it is a concept that invites a debate on the positive and negative aspects of economic actions and activities
a minimal definition private property (cf stilwell)
labor market
capital market
market for land
markets for goods and services
rules and regulations for the protection of property rights, contracts
focus on growth and expansion
so typically when all these aspects are present in a society, it is a capitalist society
there are still contemporary examples of non-capitalist economic systems
societies in the amazon and a planned economy where the state owns all means of production (north korea)
there are many states that declared themselves socialist states at some point in history
there are four debates 1. what is capitalism
2. capitalism or capitalisms?
3. capitalism: lover or hate it
4. what will capitalism bring us for the future
, debate 1: what is capitalism?
it has markets and institutions that facilitate markets and focus on growth and expansion
but other elements like political color of public institutions? ideology? norms and values?
some say these elements are just as important, others would say these do not matter
debate 2: capitalism or capitalisms?
historically there are different kinds like merchant capitalism, industrial capitalism, financial capitalism
geographically capitalism in western europe and north america are different from capitalism in asia etc.
there is a wide variety in capitalist society with different institutions, foals and strategies
liberal market vs coordinated market economies
does globalisation mean a convergence to one dominant variety of capitalism
debate 3: capitalism, love it or hate it
there is an increasing conversation on how capitalism could go together with ‘people and planet’
capitalism as a system has proven to be pretty good at improving the standerd of living
capitalism creates more economic welfare but often happens at the expense of working class
there is also a political debate because of the emergence of monopolies, there is no such thing as a free market
debate 4: what will capitalism bring us for the future
some say it it like a linear development going up, or it has ups and down
capitalism is developing and changing all the time
political economy emerged in the 17th century
classical political economy developed together with the market economy itself
in those days mercantilism used to be the dominant organising principle
stimulate export in order to gain wealth and also trade: east indies trade, baltic trade
promote government regulation of a nations economy: high tariffs, monopolies, state sponsored
.
key ingredients are free trade, division of labor, market forces and market protection
adam smith observed this system and thought many thoughts
criticaster of the power of big business
pessimistic on the moral consequences of markets
actors in markets often deliberately nogwatdalsjya
he is a proponent of free trade, ambivalent on morals and practice of markets
example of a broader and crucial theme in this course: theories and perspectives themselves become political
adam smith is not just about free trade and free markets as much as possible
in wealth of nations, smith argued against mercantilism, he supported specialisation
division of labor is limited by the size of the market
international division of labor specialisation increase in productivity
adam smith already shows concerns of the cognitive and intellectual implications of division of labor
his idea was very close to the concept of alienation of workers which comes back in marx
he was concerned with the system of social control, the market mechanism was an elegant way
this means the market was not something that liberates people, but rather a way to stimulate people
so the market mechanism was a way to pursue self-interest in a social rather than anti-social manner
none of the economic actors should be able to manipulate the prices of products, his ideal is atomistic competition
effective competition goes through invisible hand which leads to an effcient use of labor and capital
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