Political economy approach in the study of comparative politics

Political economy, branch of social science that studies the relationships between individuals and society and between markets and the state, using a diverse set of tools and methods drawn largely from economics, political science, and sociology. The term political economy is derived from the Greek polis, meaning “city” or “state,” and oikonomos, meaning “one who manages a household or estate.” Political economy thus can be understood as the study of how a country— the public’s household—is managed or governed, taking into account both political and economic factors.

Political economy is a very old subject of intellectual inquiry but a relatively young academic discipline. The analysis of political economy (in terms of the nature of state and market relations), both in practical terms and as moral philosophy, has been traced to Greek philosophers such as Plato and Aristotle as well as to the Scholastics and those who propounded a philosophy based on natural law. A critical development in the intellectual inquiry of political economy was the prominence in the 16th to the18th century of the mercantilist school, which called for a strong role for the state in economic regulation.

The writings of the Scottish economist Sir James Steuart, 4th Baronet Denham, whose Inquiry into the Principles of Political Economy (1767) is considered the first systematic work in English on economics, and the policies of Jean-Baptiste Colbert (1619–83), controller general to Louis XIV of France, epitomize mercantilism in theory and in practice, respectively.

Political economy emerged as a 18th century, largely as a reaction to mercantilism, when the Scottish philosophers Adam Smith (1723–90) and David Hume (1711–76) and the French economist François Quesnay (1694–1774) began to approach this study in systematic rather than piecemeal terms. They took a secular approach, refusing to explain the distribution of wealth and power in terms of God’s will and instead appealing to political, economic, technological, natural, and social factors and the complex interactions between them. Indeed, Smith’s landmark work— An Inquiry into the Nature and Causes of the Wealth of Nations (1776), which provided the first comprehensive system of political economy—conveys in its title the broad scope of early political economic analysis. Although the field itself was new, some of the ideas and approaches it drew upon were centuries old. It was influenced by the individualist orientation of the English political philosophers Thomas Hobbes (1588–1679) and John Locke (1632–1704), the Realpolitik of the Italian political theorist Niccolò Machiavelli (1469–1527), and the inductive method of scientific reasoning invented by the English philosopher Francis Bacon (1561–1626). Many works by political economists in the 18th century emphasized the role of individuals over that of the state and generally attacked mercantilism. This is perhaps best illustrated by Smith’s famous notion of the “invisible hand,” in which he argued that state policies often were less effective in advancing social welfare than were the self-interested acts of individuals. Individuals intend to advance only their own welfare, Smith asserted, but in so doing they also advance the interests of society as if they were guided by an invisible hand. Arguments such as these gave credence to individual-centred analysis and policies to counter the state-centred theories.

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