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Lecture Summary - Foundations of Political Economy - International Studies
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All lectures of Foundations of Political Economy in the first year of International Studies summarized.
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Foundations of Political Economy notes – Marnix van BokhorstLecture 1: What is political economy?
Why this course?
- Economics as a perspective is alone inadequate
- Foundations of political economy are social
Goals week 1:
- Differentiate notions of economy, economies & economics
- Summarize foundational assumptions of political economy
- Explain key elements of economies
- The bumper sticker point: ‘’Economy’’ not an abstraction but a central feature of life.
- Political economy enhances our understandings
Questioning the notion of economy and study of economics
Some understandings of ‘’economic’’ and economics
- The study what’s ‘economic’/economical – Efficient use of resources with alternate
uses, trade offs
- The study of rational choice? – A theory of human behavior and motivations –
universally applicable -> ‘economic’ and ‘non-economic’ issues
- The study of the economy… But what is an economy?
Economies
- A complex of the activities involving
- Production
- Distribution
- Exchange and
- Consumption of…
- Goods and services
What is an economy for?
- Provision of subsistence needs?
- Creation of profit, wealth?
- Production of goods, services?
- Social betterment?
Who and what is involved in an economy?
- Actors (people, organizations)
- Institutions (rules) (vital to an economy)
- Organizational techniques (E: how are businesses organized?)
- Technologies (what tools are used to transform nature?)
- Interests (vital) -> Who benefits from organizing an economy in a particular way?
, All of the attributes above affect
- Production, accumulation of value
- Allocation, distribution of value
- Welfare, inequality outcomes
- Implications for environment
- Relation to politics
Forms of Economy
- E’s:
- Hunter/Gatherer
- Communal
- Slaveholder
- Feudal
- Market
- Socialist (economies after every one)
Dimensions of variation between these economies
- Divisions of labor, ownership among groups
- Property rights: social relations, class relations
- Mechanisms of economic coordination
- Cooperation, competition
- Power relations (who rules?)
- Ultimate aims (Interests) (the goals of an economy)
Bernstein’s four questions (applicable to any economy)
1. Who owns what?
- Property rights, their origins and attributes
2. Who does what?
- Division of labour, division of labor in society
3. Who gets what?
- Income/rent, who profits, who loses, zero sum?
4. What to they do with it?
- Consumption (redistribution)
Questions about economies
- Where do economies come from? (E: where did capitalism originate?)
- Are some kinds of economies more ‘’natural’’ than others?
- What variety of economy is desired and why?
What is political economy?
- Neoclassical economics as the prevailing perspective
- Enormously influential (useful insights, e: people respond to incentives)
- Flaws and limitations of economics as a discipline: how bad are they? (obsession with
mythical representation of the market)
,Fundamental assumption of inseparability and how political economy differs.
Political Economy departure point:
- Rejects study of economy independent of politics, society. Politics and society can
NOT be ignored when studying the economy.
- Attention to social and political foundations of economies (politics, markets, class,
gender, ethnicity, and ‘’race’’.
- Embrace of multi-disciplinary, post-disciplinary approaches (Economics, sociology,
politics, etc.)
Distinctive elements of political economy
- Direct engagement with contemporary issues of vital importance
- Diverse schools, living traditions of thought
- Interrogating of perceptions viewing from different perspectives
- Normative and prescriptive aspects our understandings of the social world shape
politics
What does PE address?
- Issues of vital importance for individuals and collectives
- Economies and economic aspects of social life
- Social relations within which they occur
- Power/politics, culture, historical moments, places
Finally, political economy is personal
- Variable conditions and circumstances
- Determinants of opportunities.. of life chances
- Understanding, explaining lives and times, even our own
Lecture 2: Understanding Capitalism
Goals:
- 1 What is capitalism?
- 2 How to study capitalism?
- 3 Assessing capitalism’s performance
- 1 Distinguishing features of capitalism form of economy
- 2 Ways of studying capitalism
- 3 Ways of evaluating capitalism’s performance
Capitalism is a distinctive form of economy and, in key respects, a political practice
1. What is capitalism?
- A term widely used, often misunderstood
- Recap of what economy is: A complex of activities involving production, distribution,
exchange and consumption of goods and services
, - But also: Economies are configurations of: Institutions, actors, organizational
techniques, technology and (sometimes) innovations and interests (who benefits?)
- What is an economy for?: E: material provision of subsistence needs? Social
betterment? Creation of profit? Wealth?
What is a market? ‘’Anywhere supply and demand meet’’
- Relations founded on voluntary exchange, markets ‘’since the caves’’. (E: a local
market on Sunday on the Grote Markt.)
Market as an amenity embedded in particular setting
- In a market economy, government plays dominant, preponderant role.. ( a
supporting role) (E: providing institutions, legal structures, infrastructure, etc.)
Capitalism features market economy + specific ‘rules of the game’ (will be discussed over
this course)
Understanding Capitalism
- Capitalism is a form of economy
- In which employers…using privately owned capital goods… hire wage labor… to
produce commodities… for the purpose of profit + role of the state, ideology and
tendency towards expansion
- Capitalism is a way of instituting an economy (a way of doing an economy)
- Capitalism is a social construct
Essential features of capitalism
- Production for the market
- Production occurs in privately owned enterprises
- Owners of enterprises hire wage laborers
- A form of economy but also a social construct
- Role of state, legitimizing ideas
Additional features
- Central social relation is capital (those with capital) and labor (those without capital)
and it is asymmetric
- Decentralized mechanism of economic coordination
Individuals, firms engage in bargaining, voluntary exchange
Uncoordinated micro-interactions -> macro-coordination (‘invisble-hand’)
- Market for labor, capital, land, goods and services
- Competitive drive for profits-> innovation -> capital accumulation (aka economic
growth) (competitiveness is vital to capitalism)
Lower productions costs, increase productivity, market share, profit
Relentless drive for profits generates capitalism’s dynamism, volatility. (constant
changes)
‘’Capitalism doesn’t care’’… but only up to a point
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