Contemporary Political Economy
A
brief Introduction
Political Economy is the discipline
that studies, in simplistic definition, the political arrangement of economy,
its structure and the development. The contemporary political economy is the
study of the political arrangement of the neoliberal economy in a historical
perspective. It studies the allocation of economic resources and all the other
activities associated with it. In the words of Frederick Engels[1],
“Political economy, in the widest sense, is the
science of the laws governing the production and exchange of the material means
of subsistence in human society... Political economy is therefore essentially a historical science. It deals with material which
is historical, that is, constantly changing."[2] Political Economy thus designates to the
science that explains the historical development in economic terms. With the
erosion of theological explanations of the developments in the phenomenal world
and banishment of God as source of validity of political authority and religion
as its ideology, the new explanations became imperative. The task of inventing
new source validity of the embryonic modern nation state was undertaken by 17th
century liberal political theorists and the task of explanation of the new,
market based economy by 18th century liberal Political Economists,
though its roots goes back to John Lock’s theory of property. In Marxist
parlance, it refers to the works of certain writers that deal with the
appropriation, accumulation and distribution of the economic surplus and
associated issues of production, prices, wages and the political arrangement to
promote accumulation. This primarily refers to the works of Adam Smith and
Ricardo and others. This term came into wide circulation with some Scottish
intellectuals, carrying on the basis of teacher-student succession, created a
corpus of work consisting of the laws of economic development that individually
and collectively they called as Political Economy and subsequent establishment
by Adam Smith, the Dept. of Political Economy at Glasgow University, followed
by many universities in Europe and America. Prominent among the group are
Francis Hutcheson; Adam Ferguson; David Hume; Adam Smith; John Millar; Lord
Kames.
These Political Economists
explained the development of human history in terms changes in the mode of
survival in every stage of development that is generally known as 4-stage
theory. Hunting; gathering; agriculture and commerce were identified. Adam
Smith was most influential among them, who does not so much emphasize the four
stage theory but by its implication, he linked the liberty with commerce, whose
growths were mutually interdependent. At the early stage of industrial
revolution he realized the advantages of industrial based on division of labor
and explained historical developments as inadvertent consequences of profit
making activities. The 4-stage theory in the hands of Marx and Engels
became the historical materialism that explains the history in terms of the
changes in the economic development of the society, the modes of production and
the division of the society into classes and the struggle between them.
The liberal political
economy emphasized upon the need of the development commerce unhindered by
state in order to enhance the wealth of nation, a euphemism for the
wealth of the mercantile capitalist class, which has taken the form of the
deceptive notion of GDP today. Under the Laissez-faire state the unregulated
economy based on anarchic production and exchange based on private profit
reached to the verge of collapse by late 1920s leading to the general crisis of
capitalism, known as the great depression. Capitalism has great knack
for restoration by adoption and adaptation to the new situation. It responded
to the calls of the likes of Herald Laski, who wanted to take over the market
otherwise it would take over the state. And the way out was sought in
transformation of the non-interventionist laissez-fair state into
intervening welfare state on the lines of Keynesian theory of mixed
economy with state on the driving seat and creation of the huge public sector
on peoples’ money that saw tremendous economic growth.
By 1980s when the
capitalist classes and their political representatives realized that the
welfare institutions have played their historic roles and hence be dismantled
and the task of privatization (liberalization) of public sector institutions
and the process began in England and USA under the regimes of Margret Thatcher and Ronald Reagan respectively.
A new word disinvestment made inroads in dictionary and Thatcherism, a
new concept in political science. With the demise of USSR as an alternative
model of state controlled economic development, the Thatcherism was
forced on all the countries in the name of globalization through international
financial institution like World Bank and IMF by the ‘liberalized’ capital on
its way to become global by losing its geo-centricity either in terms of
its source or its investment. The new globalized economic order’s need, that
is, the expansion and hegemony of the imperialist global capital is not a
laissez-fair or welfare state but a “partner in the development” that simply
means assisting it in its process of, in David Harvey’s words “accumulation by
dispossession. The need of this neoliberal economy is neither Adam Smith nor
Keynes but neoliberal economists, being fulfilled by groups of World Bank
sponsored group of economists, who deceptively call themselves, New
Political Economy, whose task is to provide defense, explanation and
strategies of globalization, i.e. enforcement of Structural Adjustment
Programs (SAP).
In nutshell the study of
this course, Contemporary Political Economy is involves the process,
concepts and the theories of the rise and growth of capitalism from liberal to
its neoliberal stage via welfare stage and those of its alternative, socialism.
Ish Mishra
04.01.2017
[1]
Frederick Engels was a lifelong personal and companion of Karl Marx and the
co-author of Communist Manifesto and A Contribution towards a
Critique of Political Economy and many leaflets and booklets with him was a
tall activist intellectual in his own right.
[2]
Frederick Engels, Outlines of Critique of Political Economy written in
1843 and first published in 1844 in Deutsch-Französische Jahrbücher,1844
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