From: Dogan Goecmen (Dogangoecmen@AOL.COM)
Date: Sat Oct 28 2006 - 05:42:04 EDT
Political Economy. The term economy originates from the ancient Greek words oikos (house) and nomos (law). Political economy as an independent discipline is a modern phenomenon, though some ideas may be traced back to Aristotle in antiquity and Thomas Aquinas in the Middle Age. It is said that Antoine de Montchrétien is the first one to use the term political economy in the title of a book. In his book Traité de l’Œeconomie politique (1615) he defines the object of political economy as the management of society. Rousseau follows this tradition in his classical essay on political economy in the French Encyclopédie from 1755. But it is with James Stuart’s book Inquiry into the Principles of Political Economy (1767) and more than so with Adam Smith’s book Inquiry into the Nature and Causes of Nations (1776) that political economy became an independent discipline to inquire the question of what is the best way of managing a society. Rousseau suggests that the grand object of political economy is to show what the best way of the administration of property in a society is. He thinks that the aim of a government is to protect property. The right to property is the most sacred right and it is even more important than freedom. But government should also not allow a division of population into the rich and the poor. It must do this not by taking away people’s property. It should also not take measures to fight against the symptoms of poverty by building hospitals for the poor for example, but by securing the citizens from becoming poor. And this can be achieved according to Rousseau only by depriving all human beings from accumulating wealth. The issues and problems Rousseau raises in his article draw more or less accurately the framework of the object of political economy. What is wealth; how does it come into existence; does the accumulation of wealth necessarily involve the division of society in to the poor and the rich; what is the best way of managing the wealth of a given society; how does the distribution of wealth takes place in capitalist society; what is the best way of the distribution of wealth; what is property; what are the forms of property? One may differentiate between various schools in political economy by looking at how they respond to these questions. There are two classical proposals to draw a demarcation line between various schools, both of which are still relevant. The first proposal concerns Smith’ s classical distinction between mercantile system and Physiocrats, as distinct from his system of political economy. The second proposal comes from Karl Marx and concerns his distinction between classical political economy and vulgar economy as distinct from his critique of political economy. Smith makes his distinction based on the question how various schools reply to the question what wealth is. Smith defines wealth in terms of annual production of a given society, produced by productive labor as distinct from unproductive labor. In this respect he differentiates between his system and mercantile system which was the dominating theory of political economy between 16th and 18th centuries in Europe. Differing from Smith’s material theory of wealth, mercantilists have a formal theory of wealth and define wealth in terms of the accumulation of precious metals and other forms of money. Smith’s distinction of his system from Pysiocrats refers to the question what the cause of wealth is. As already stated Smith points to annually employed productive labor in all areas of society. So, according to Smith productive labor as such is the cause of wealth. Differing from this assessment, Physiocrats define only one sort of labor as productive, namely that which is employed in agriculture. In Marx’ s distinction between classical political economy and vulgar economy these questions play a central role too. But his emphasis lies on whether systems of political economy are scientific or not. According to Marx classical political economy, primarily those of Smith and David Ricardo are scientific because they are interested in explaining economic phenomena. Vulgar economic thought, on the contrary, is merely interested in justifying capitalism. So, for example, James Stuart Mill is, according to Marx, a vulgar economist because, unlike classical political economy, he regards production and distribution as entirely separate spheres and thinks that distribution of wealth takes place on the market. In agreement with classical political economy, however, Marx thinks that the question of distribution of wealth is already decided in the sphere of production in the sense whether one is owner of the means of production or not. If one is the owner of the means of production (capitalist) s/he appropriates surplus value produced by laborers. From this point of view, to come to contemporary schools of political economy, Monetarism, Keynesianism and Neoclassical schools are vulgar too. Monetarism thinks that wealth is produced in the exchange process rather than in the sphere of production. Keynesianism is not so much concerned about the production of wealth. It is rather concerned about redistribution of wealth by markets and in addition by the state to correct some of the symptoms arising from the gab of the distribution of wealth between the rich and the poor. Neoclassical political economy is the critic of Monetarism and Keynesianism. It aims to combine classical political economy with some elements of Marx’s system of political economy. There is a close relationship between political economy of poverty and conceptual development of racism. Traditionally, subordinated classes and poor people (and foreign nations) are thought to be inferior races of humanity. The idea that subordinated classes and foreign people were lower classes of humankind by nature was formulated by Aristotle. He suggests, for example, that slaves are slaves by nature and people other than Greek were barbarians. Similar ideas were formulated in modern times in relation to the poor and cultures other than European. T. R. Malthus’ social Darwinist population theory, from example, may be qualified as a modern version of Aristotelian approach. Similarly, all sorts of social Darwinist approaches to poverty and international relations to justify colonialism and imperialism are seen to be racist and take for granted that there are inferior and superior people and cultures. Contemporary racist theories about society and humanity refer more to cultural differences than to nature or biology. This is to say that the relationship between contemporary racist theories and the political economy of poverty is no longer as direct as used to be. But nonetheless there is still a close connection. Theories of the clash of civilizations may be placed within the cultural racists theories. Doğan Göçmen Further Reading Meek, R. L., Economics and Ideology and other essays: studies in the development of economic thought, London, 1967. Meek, R. L., Smith, Marx, and after: ten essays in the development of economic thought, London, 1977. Stone, J. and Dennis, R. (eds.), Race and Ethnicity: Comparative and Theoretical Approaches, Blackwell Publishers, 2003. Williams, R., Social Darwinism, in: Culture and Materialism, London & New York, 2005, pp. 87-102.
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