Political economy lecture 1:
Disclaimer:
Political economy is not economics (no calculations or lots of graphs)
What is political economy?
How society should be ordered → how the economy should be ordered!
Intellectual property is located in NL because of tax advantages (companies like fiat, Starbucks etc.)
What political forces are behind this decisions and why is that
Housing market crisis is dependable on which factors?
• Housing prices
• Interest rates, if they go up, interest on treasure bills go up. Investors have more options.
• Central bank policy
• Inflation
• States or markets?
➔ Why did the central Bank policy used to be tied to politics but then made independent?
Part of the reason people went into real-estate bc they get a lot of return on their money
- If investors retrieve from the housing market as interest rates go up and lending money to
governments become more interesting it opens the market to the people.
General propositions:
• In order not to burden future generations with debt, the government should not run a budget
deficit (disagree)
• Economic growth is mostly achieved by allowing companies to thrive in lightly regulated, low tax
and competitive environment (disagree)
• The Amsterdam municipality should not restrict the sale of land (disagree)
Policy propositions:
• To combat the cost of living crisis the government needs to increase support for low income
families, even if that means running a budget deficit (agree)
• To limit the energy bill problems for Dutch families, the government needs to tax windfall profits
of the energy companies and put a cap on energy prices, like in Germany and UK (disagree)
• The Amsterdam municipality should make public transport free in order to limit the use of cars
in the city (disagree)
- In order to pay for this, the municipality should not sell lots of land but rather sell small pieces
for a high price
Definition of Political Economy:
1. Studies the fundamental interconnection between states, society and markets
2. Understand economic politics as a means of states to achieve their objectives (strategies for
development: Schwartz)
3. Considers today and tomorrow’s political economic relations and battles from a historical
perspective (between nations, and within nations)
The economy is inherently political (slave trade → pressure society on state → new laws for eco!
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?
,4 POLICAL ECONOMY (states vs markets):
1. Political economy I (classic political economy) Marx, Adam smith, Ricardo
The classic thinkers on state and markets, and their followers
- The classic thinkers on state and markets, and their followers.
- They considered both states and markets, integrated in one academic debate
➔ From early 20th century on, academic divide in political economy: Politics and economics
- But some remain in the footsteps of the classics: Susan strange, founding mother of political
economy.
2. Political economy II (political science of economic policies) policy fields
The political science of economic policy fields
- Political science of economic policy domains: like pensions
- Climate crisis (geopolitics)
- Government regulates the banks, more since 2008 crisis (same for insurance companies)
- Migration crisis: people look for higher wages, but there are borders, supply and demand
3. Political economy III (politics through an economics perspective)
➔ Political phenomena considered from an economics perspective
- Political phenomena considered from an economics perspective
Oikos: the family , the family’s property, a large estate of even a
village
What is economics? Nomos: Greek term for law
The way we organise society to provide our needs
What is economics?
1. The branch of knowledge concerned with the production, consumption and transfer of
wealth
2. A branch of the science of a states man or legislator with the objective of providing a
plentiful revenue or subsistence for the people (Adam smith, invisible hand, free market
economics, less state intervention, capitalism)
3. Containing the assumption of maximizing behaviour, stable preferences, and market
equilibrium, used relentlessly and unflinchingly (Gary Becker)
Economics is?
1. A domain
2. A perspective and approach to study social interaction
- Demand/supply, competitions, national behaviour, homo economicus, individualism
➔ You can apply to trade relations (tariffs, protectionism) an economic perspective on politics.
4. Political economy IV (powers in markets and business) political science (like 2)
➔ Markets and business considered from a political science perspective, why are these markets?
- Lobbying, not only domestic but also internationally
- Fairtrade: how is it allowed to thrive, is it made difficult to thrive?
- ABN AMRO-> moving into state hands and moving out
, Political economy lecture 2:
Streets gangs, mafias and markets
The roots of global capitalism -> geographic expansion of trade goes hand in hand with state
formation… but this plays out differently in different across space and time
Herman Schwartz:
• American political economist/geographer
• Political economy I: a lot of inspiration from classical political economy
• Political economy II: the political science of economic policy fields
• Political economy IV: economic history through a political science perspective
Main argument Schwartz:
➔ Place and distance (space) are crucial to understand the development of states in the global
economy
➔ Government policies are often crucial to understand if, and if so how countries and regions
develop
➔ Economic development is a battlefield between political-economic actors: government,
entrepreneurs, employees
➔ He syntheses a number of theoretical insights: von Thünen, Ricardo, Kaldor, Gerschenkron,
Verdoorn.
How to best read Schwartz:
Reading Abu Lughod, about the world system in the 13th century
China (ottoman empire, although later) compared to Europe, they transformed in to empires, and
they kept it. These made sense as they have compleet control, and in China you did not need the
nobility. In Europe state organisation changed into nation-states.
• Those who dominated the trade over land, through the middle east (until the Portuguese
build ships and could sail around Africa).
• The issue of the black death has a devastating effect on population.
• Luxury product of spices, had to go through the middle east, but Mongol empire was a
threat so you needed to get spices through another way.
Argument by Abu Lughod:
Takes 13th century as starting point (world system, world map with circles):
➔ Cultural differences are important but not sufficient explanations
➔ Internal and external explanations should be taken in to account
➔ Importance of systemic geopolitical and demographic causes (like black death)
Europe 1300-1700
• Private ate ownership (more important)
• Labour market
• Capital market, emergence
• Market for land ( land is not in hand of king, but it can be bought/sold)
• Market for goods and services
• Rules and management for the protections of property, contracts and bankruptcy
• Focus on expansions and growth (how bigger, the better you can defeat competitors)
