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, “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." 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.
 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.