[OPE-L] political economy

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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