Introduction
Adler (2009) defines political economy as the combined and interacting consequences of economic and political institutions or processes, as well as the scientific study of this topic. It is a tangle of institutions and relationships in a state including political authority and linked economic endeavours. Political economy is the study of the nature of economic value and the inherent laws that govern the creation and distribution of valuable products and services. It investigates not just the mechanics of a specific structure, but also the thinking behind why a specific structure is viewed as the best by many people with varying ideas.
As a worldview, Political economy assumes a link between two separate entities, namely economics and politics, neither of which can exist in abstraction. There must be an economic and political framework that establishes the rules of involvement and defines the nature of that engagement. Political economy goes one step further by asking us to focus on a specific set of social interactions organized around power or the ability to influence other people, processes, and objects, even in the face of opposition (Hansen, 1975). Todgso defines political economy as the distillation of politics and economics. To assess the veracity or otherwise of this assertion, we will explore the many meanings of the word political economy.
Concept of Political Economy
Scholars have traced the roots of the political economy method back to seventeenth-century mercantilist views, and for others, as far back as the physiocratic epoch of the sixteenth century (Ihonvere, 1989). Political economy has various interpretations, hence there is no single univocal meaning that can be attributed to it. Several concepts of political economy have been developed over the past 400 years, including the works of Karl Marx, Adam Smith, Friedrich Engels, V.I. Lenin, and David Ricardo, among others. The term Political economy was used in this corpus of literature to refer to the circumstances of production organization in nation-states on what is now known as economics.
Political economy, according to Karl Marx, is not about the connection between commodities, prices, supply and demand. It is about individuals and their social relationships, wealth owners and how they use their riches to exploit others, and what and how is created. Political economy is defined by Adam Smith in 1776 as “an inquiry into the nature and causes of the Wealth of Nations, particularly as a branch of science of a statesman or legislator with the dual objectives of providing a plentiful revenue or subsistence for the people and supplying the state or commonwealth with revenue for public service.” In 1877, Friedrich Engels provided a standard formulation of political economy. According to him, political economy, in its broadest meaning, is the science of the law guiding the production and exchange of material means of sustenance in human society (Komlik, 2016). Political economy, according to V.I. Lenin, investigates the foundations of societal evolution. This is the mode of production for material riches. Political economy, however, investigates production solely from the standpoint of economic connections between persons involved in the production process.
In the nineteenth century, the term was broadened to refer to the various ways in which capitalist economic structures and market processes influenced and were influenced by political power at the local, national, and international levels (Adler, 2009). Recent political economists include Robert Gilpin, Stephen Krasner, Robert Keohane, and Peter Katzenstein, in addition to a more critical school inspired by Karl Polanyi, Susane Strange, and Robert W. Cox in particular. In contemporary times, political economy is defined as the study of the relationship between politics and economics using economic, legal, political, and social science theories. Political Economy also refers to many but related techniques to understanding economic and related behaviors, ranging from the merging of economics with other sciences to the application of various fundamental assumptions that question prior economic assumptions. Political Economy is classified by the Journal of Economic Literature into three subfields: the role of government and/or power relationships in resource allocation for each type of political system, international political economy, which studies the economic consequences of international relations, and economic models of political processes.
Offering a conceptual point of view, a compendium of economic terms tells us that “political economy is the science of wealth” and “deals with the social custom, practice and knowledge about how to manage resources, first the household and later the community or the state”. As a concept, political economy argues that the relationship is not external to economics and politics but the two constitute each other. The term political economy is itself the subject of considerable controversy: whereas the concept of political economy presumes that there is a mutually beneficial relation between politics and economy, the positing of a relation between the two is not self-explanatory. It creates but a theoretical space where such a relation can be spelt out. The recognition of such a relationship is a preliminary step for it is like a man who thinks he knows how to win at poker because he has noticed a connection between playing cards and getting money (Ryazanskaya, 1859).
The existence of a connection is not problematic; the problem is to understand what the connection is and how it works. The connection between politics and economy in fact has been the subject of an intensive and nuanced debate. At the heart of these debates are the different conceptions that inform the understanding of politics and economy. This understanding influences considerably the manner in which the relationship between the two fields of enquiry is conceptualized. These definitions and concepts however are of the West and thus, it is necessary for us to develop our own approach to what we understand by the phenomenon known as Political Economy.
Approaches to Understanding Political Economy
There are different ways and approaches in which the phenomenon political economy can be understand in order to test the validity of the statement made by Todgso in 1982 that political economy is nothing more than the distillate between politics and economy. This can be done through the elemental and the functional approach (Sofela, 2016).
The Elemental Approach
The elemental approach asks two basic questions: What is Political Economy? What constitutes it? The elemental theory is divided into six main approaches: Historical, Etymological, Behavioural, Functional, Configuratory (Brewery, Fusionist and Bedroom Analysis) and the Gang up theory.
The Historical Approach
The historical approach to political economy can also be described as the chronological approach as it examines the historical development of political economy from the perspective of history. Historians have employed political economy to explore the ways in which persons and groups with similar economic interests have utilized politics to effect changes beneficial to their interest in the past (McCoy, 2012). The historical approach emphasizes the age differences between politics and economy by determining who is older among the both of them (politics and economy). From the historical perspective, during the early system of civilization, culture segment is the sub structure and lower stratum of every society while the economy segment is the structure and middle stratum of every society. Politics however occupies the super structure and upper stratum of every society. Thus, it can be said that economy precedes politics in every society.
Politics it is said, meddles into the affairs of culture and economy in order to sort out the problems which arose from culture and economy. Politics is the first one to go in every society because there is no solid superstructure in every society. As one structure phased out, another would emerge but the people still engage in economic activities to their advantage. However, culture does not equally die even though the various political structure went into extinction with the emergence of new ones. Hence, the historical approach simply connotes that economy takes the second place in the chronology of the three phenomena (culture, economy and politics). Perhaps, if the historical perspective is to be taken into consideration, the term “political economy” would have been named “economic politics” but because of the power that bestrides the corridors of the political structure, politics have been having a great deal of influence on the economy hence political economy remains the usual trend. The historicists believe that politics is a child borne out of necessity due to the need for economy management. In other words, political economy is the state coming together in the management of the home to better the lives of the citizens.
The Etymological Approach
The Etymological Approach draws a similarity between politics and economy in its view of the origin of political economy. It asks the question “what is political economy”. Originally, political economy meant the study of the conditions under which production or consumption within limited parameters was organised in nation-states. 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 can thus be understood as the study of how a country -the public household- is managed or governed taking into account both political and economic factors. In other words, what economy is in a family, political economy is in a state.
The word economy drawn from two Greek words house and law, which together signify the management or arrangement of the material part of household or domestic affairs, meaning in its most common sense the avoidance of waste. We economise money or time or strength or material when we so arrange to accomplish a result with the smallest expenditure. In a wider sense, its meaning is that of a system or arrangement or adaptation of means to ends or of parts to a whole. Thus, we speak of the economy of the solar systems, the economy of the vegetable or animal kingdoms or in short, of the economy of anything which involves or suggests the adaptation of means to ends, the coordination of parts in a whole. As there is an economy of individual affairs, an economy of the household, an economy of the farm or workshop or railway, each concerned with the adaptation in these spheres of means to an end, by which waste is avoided and the largest results obtained with the least expenditure, so there is an economy of communities, of the societies in which civilized men live an economy which has special relation to the adaptation or system by which material wants are satisfied, or to the production and distribution of wealth.
The word political means relating to the body of citizens or state, the body politic, to things coming within the scope and action of the commonwealth or government to public policy. Political Economy therefore is a particular kind of economy. In the literal meaning of the words, it is that kind of economy which has relation to the community or state, to the social whole rather than to individuals. In the earliest period of the civilization of man, every man managed his household, which is the economy. It was because of the disagreement that often occurred during economic activities that necessitated that somebody had to come and settle the disputes, thereby, the politics meddled into the affairs of man, meaning that the public comes to the private. Political Economy is also known as Public Economy.
The Behavioural Approach
The Behavioural Approach thinks that there is a mere interface between politics and economy in a state. To the behaviourist, the interface between politics and economy is very ephemeral, that is very skin deep and you should not take it very seriously. In most behavioural arenas, politics and economics go hand in glove. Politicians work with wealthy patrons and influential barons of trade or industry each influencing the other.
The Functional Approach
The Functional Approach is that which look at Political Economy from its function, on what it does to the society, what government does with politics to the economy in a society. Political Economy is the study of the relationship between individuals and society and more specifically, the relationship between citizens and states. Political Economists are concerned with the allocation of scarce resources in a world of infinite wants and needs. In order to allocate these resources, politics are used within a state to provide for the people. Political Economy shows how society develops from lower to higher stages, how the entire course of historical development prepares the objective necessity for the destruction of one society into the establishment of another e.g. from socialism to capitalism. Political Economy is the study of how the relationship between politics and economics shape the balance of freedom and equality. States uses several institutions to achieve their economic growth. It focuses on the interaction between economic policies and outcomes, and political institutions broadly defined.
Critical to any economy are markets- the interaction between the forces of supply and demand, or how goods and services are exchanged. Another critical component of any economy is property- the ownership of those goods and services. All states provide some measure of public goods- those goods and service that no one person or organization can own. One basic way states seek to control the economy is through the creation and management of money. To manage money, states may rely on a central bank, a state institution that controls the flow of money and how much it costs to borrow money in that economy. A central bank tries to reduce both inflation and deflation. The connection between economics and politics is clearly visible. Economic production sustains human life which for most people is the most important concern in life. The prestige of democratic government, its rise and fall usually depends on its economic performance.
The Configuratory Approach
The Configuratory Approach which is the opposite of the Behavioural Approach deals with the fact that Political Economy emanates from an enduring, solid as well as permanent union between politics and economy. This union is said to be irreversible. This fits together with the assertion of Todgso in 1982 in his brewery theory and Sofela in his fusionist theory. According to Todgso, Political Economy can be explained within the framework of an ideology which sees Political Economy as a distillate between Politics and Economy to produce Political Economy. It connotes the mixture and coming together of both politics and economics, the product of which is permanent and irreversible. Consider the mixture of bournvita and hot water that will produce tea. After the production of tea, the constituent part that is, bournvita and hot water cannot be separated or reversed.
According to Sofela, Political Economy can be viewed as a marriage between politics and economics. The economy includes the market, health and resources which is the mother, and politics which includes state and power is the father. This fusionist theory illustrates what is known as the bedroom analysis of a copulation which occurs between the father and the mother thereby resulting in the production of a child which is Political Economy. Economy is concerned with the production and consumption of resources in the state. The marriage with politics meant that society gave up its rights to politics. The economy’s identity was therefore swelled up by the public (state). One significant aspect of this theory is that just as the outcome (child) of the marriage between father and mother is irreversible, so other is the outcome (Political Economy) of the conjugal relationship between politics and economics.
Sofela is also of the view that Political Economy is a procedural gang up of economists and politicians within the institutional framework of the state to appropriate or misappropriate in worst situations, the commonwealth resources for their own benefits at the expense and to the detriment of the masses. The political and economic actors in using the state situate themselves as the nucleus of an amorphous group of others in the society to give their entity a corporate outlook. Through elections, the politicians derive legitimacy while the economists co-opt labour, businessmen, traders to derive their legitimacy for their own existence and actions. The polity thus becomes an integral part of the scheme that is called Political Economy.
Other Interpretations of Political Economy
Political Economy is a term used for studying production and trade, and their relations with law, custom and government, as well as with the distribution of national income and wealth. It is the study of how economic theory and methods influences political ideology. It analyses how public policy is created and implemented. It is the intersection of economics and politics. Economics is concerned with studying and influencing the economy. Politics is the theory and practice of influencing people through the exercise of power e.g. governments, elections and political parties. Political Economy therefore is the study of how individuals relate to the state and in turn, how the states in the world relate to each other using a diverse set of tools and methods drawn largely from economics, political science and sociology.
Conclusion
Having done an analysis of the various approaches in understanding Political Economy, the statement made by Todgso in 1982 that Political Economy is nothing more than the distillate of politics and economics can be said to be valid. This is because politics and economics share an intimate relationship. To separate either in analysis will be unfair as it will dismiss the interdependency between both schools of thought. Thus, in issues pertaining to Political Economy, there is a fusion between politics and economics to obtain the most thorough and holistic understanding of both spheres. It is common now for economists to recognize that purely economic forces cannot explain complex phenomena such as different degrees of economic development, quality and types of economic policies, income distribution and quality of government organizations such as corruption. Political institutions are important determinants of these economic outcomes. In turn, the state of the economy affects political outcomes both in the long and short run. Economic development affects the evolution of institutions and short run economic conditions, affects political change and elections. Therefore, just as it is unfair to separate a child from its parent, so also, it will be unfair and unjust to separate Political Economy from its parent (politics and economics).
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