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Summary of all lectures of political economy (2020)
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This document contains a summary of all the lectures of the Political Economy course 2020.
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Table of contents:Lecture 1 1
Lecture 2 4
Lecture 3 10
Lecture 4 16
Lecture 5 22
Lecture 6 29
Lecture 7 36
Lecture 8 41
Lecture 9 46
Lecture 10 53
Lecture 11 65
Lecture 12 73
Lecture 13 84
Lecture 1
PROGRAM
- Political Economy as a scholarly domain: what is it all about?
- Political Economy as a course: sessions, assessments etc.
Political Economy ≠ Economics
- It is related, but not the same!!!
- No mathematics.
- Rather; the focus is on the relationship between states and markets.
- The political choices underneath the econ models that we see.
- The economic is inherently political; How do we organise the world; thus, inherently
normative.
Political Economy
1. Studies the fundamental interconnection between states and markets
main point of Schwartz: states and markets are not disconnected. one can not exist
in some form without the other,
1
, 2. Understands economic politics as a means for states to achieve their objectives;
make life in the country a bit better.
3. Considers today and tomorrows political economic relations and battles from a
historic perspective.
Economic cycles => upswings, downswings => inherent in economic development,
Econ history can answer; why are some states more likely to develop than others?
Example: The Trade War
Trade war between China and United States
A few pointers:
● Tariffs: when goods are imported into a country, states can levy taxes on these
goods. These arecalled tariffs. And make trade more costly.
○ Tarrifs are increasingly reduced; we live in an economic paradigm.
● There are more goods coming from China to the US than the other way around. So
money flows from US to China (=trade deficit). So US owes money to China. US
pays for all these goods. China holds the debt of the US.
● International trade flows influences the value of currencies (exchange rates)
● Central banks are responsible for monetary policy (in US: federal reserve)
=> It's a battle ground.
=> Economy = politics & politics = economy
=> Trade has consequence of making vulnerable!
=> The economy is inherently political.
=> And much of what is political, is directly related to the economy.
=> PE is everywhere, and everything is PE.
=> But if that is true.... How can you study this?
What is Political Economy?
- POLITICAL ECONOMY I
- The classic thinkers on state and market, and their followers
- POLITICAL ECONOMY II
- The political science of economic policy fields
- POLITICAL ECONOMY III
- Political phenomena considered from an economics perspective
- POLITICAL ECONOMY IV
- Markets and business considered from a political science perspective
POLITICAL ECONOMY I
- The classic thinkers on state and market, and their followers.
- They considered both states and markets, integrated in one academic debate
(political economy).
=> Roots of political economy can be traced back 250 years ago (Smith, Ricardo, Marx etc.)
2
,=> At first economics was only a political economy; the process of wealth of society; what
determines prosperity? inequality? etc. But, also how should state be organised; thus, how
should we organise to ensure prosperity?
The fundamental question: To what extent should the socioeconomic order be the outcome
of coordination either by the market (horizontal through market relations) or by the state
(top-down, hierarchiacal)? What is the source of wealth in nations?
Early 20th century: The Academic Divide
- Political economy was divided in economics and political economy.
=> But some remain in the footsteps of the classics (e.g. Susan Strange)
POLITICAL ECONOMY II
- The political science of economic policy domains.
- Looking at economic policy domains from a polisci perspective.
- E.g. how much regulation?
- E.g. climate change; developmental questions.
- E.g. pensions (deeply political); generational issue.
POLITICAL ECONOMY III
- Political phenomena considered from an economics perspective - kind of polecon
conducted at an economics department.
- What is economics?
- oikos = the family, the family’s property; a large estate or even a village
- nomos = greek term for law.
- the way we organize society to provide for our needs
What is economics? (some definitions)
1. “the branch of knowledge concerned with the production, consumption and transfer
of wealth.” - most authoritative source on earth; google.
2. “a branch of the science of a statesman or legislator with the twofold objective of
providing a plentiful revenue or subsistence for the people.” - Smith.
3. “Combining the assumptions of maximizing behavior, stable preferences, and market
equilibrium, used relentlessly and unflinchingly” (Gary Becker - famous economists)
(neoclassical economy => understanding econ behaviour based on certain
assumptions).
=> A lot has changed over time with the idea of economics; from Smith to Becker.
POLITICAL ECONOMY III
- Political phenomena considered from an economic perspective
- What is economics?
1. A domain
2. A perspective and approach to study social interaction
- demand/supply, competition; rational behaviour; homo economicus;
individualism
3
, - Taking an economic perspective on politics
POLITICAL ECONOMY IV
- Markets and business considered from a political science perspective.
- Power in markets amd business.
- Who wins? who loses?
- What is political economy?
=> PE III will be left mostly to the economics department. But the latter four will all be
studied.
=> Topics in polecon relate to all areas of polisci; a lot of moral philosophy going on
in with polecon thinking.
- e.g. IR and the issue of security; it involves economics (econ-security)
Political economy as a course
- PART I
- The ingredients of Political Economy (1-4)
- PART II
- Developments in Global Capitalism (5-9)
- PART III
- Real World Economics in times of crisis (10-14)
What is political economy?
Lecture 2
PROGRAM
- What is capitalism?
- Four debates that are relevant for studying capitalism
- Classical Political Economy
- The work of Adam Smith
CAPITALISM
- A specific way to organise econ activity
4
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