Political economy is understood here in its modern sense - to analyze economic choices in terms of political and ideological predilections and assess how power relations dictate particular economic structures and outcomes.
A political economy approach “interrogates economic doctrines to disclose their sociological and political premises.... in sum, [it] regards [all] economic ideas and behaviour not as frameworks for analysis, but as beliefs and actions that must themselves be explained.” Charles S. Maier In search of Stability: Explorations in Historical Political Economy, pp. 3-6.
A [radical] political economist sees [the] power structures and puts them at the forefront of his analysis; a conventional economist—who sees only a society of free, self-interested economic men interacting as equals in the marketplace—does not…. The conventional economist not only fails to take account of relations of power and authority, and so fails to grasp the most socially relevant aspects of the problem, but, by being so blind to [special] interests and so caught up in his data and his techniques; he in effect supports a system that maltreats large numbers of people. . . . John Gurley, The State of Political Economics, American Economic Review, 61, no. 2 (May 1971): 55. 61, no. 2 (May 1971): 55.)
The conventional economist's reply: "Human behaviour reveals uniformities which constitute natural laws. If these uniformities did not exist, then there would be neither social science nor political economy, and even the study of history would largely be useless. " Vilfredo Pareto: Cours d'Economie Politique (1896-7), Vol. 2, 397.
Lord Robbins (1981) interpreted political economy as the 'application of Economic Science to problems of policy.' This is the Public Choice definition of political economy. At various times, other economists nave designated this area a branch of 'economies', either normative, welfare or applied, or 'economic policy'.
The Institutionalist School: Institutionalism is an essentially normative and policy-oriented political economy. John R. Commons recognized, 'political economy' is not merely a matter of governance; it is also fundamentally a question of power, of dominance and subservience in the determination and legitimization of goals, rules and policies. From this perspective, politics and economics cannot be distinguished in terms of (overlapping) 'sectors' ft national life, 'private' and 'public', but only as alternative approaches to or ways of looking at society; and political economy implies thinking of economic activity as a power system as well as an economizing process. Among contemporary economists in the institutionalist tradition, Galbraith is perhaps pre-eminent in perceiving and examining the evolving American economy as a political and power system. e may identify four major kinds of power relations in Galbraith's writings: (1) those between business, especially large scale corporate, leadership and the general consuming and working public (and, similarly, between political leadership and the citizenry); (2) the internal power relations within the giant corporations, notably, the shift in power not only from owners to managers, but therein, from managers to the 'technostructure'; (3) the power relations between the 'planning system' and the 'market system'; and (4) the power interactions between business and government, exemplified by the 'symbiosis' between big business and the pubic bureaucracy (Galbraith, 1971; 1973; Fusfeld, 1972). Institutionalist analysis is oriented toward problem-solving, based heavily on empirical observation and inductive logic. Deductively formulated generalizations action and social practice, and derive their interest from their practical relevance (Hill, 1978, pp. 316-17) As Cochran notes (1983, pp. 3-11), this approach is deeply rooted in the institutionalist tradition. Illustrations include: Commons's concept (1961) of ideas as 'guides to action and science itself not as a body or knowledge. but as a process of attaining control. Institutionalist economic theory s essentially complementary to standard economic theory, even when economists of institutionalist persuasion offer their neo-neoclassical and neo-Keynesian colleagues few compliments (and vice versa). (John E. Elliott, 1984.)
"The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood." John Maynard Keynes - General Theory of Employment Interest and Money.
“Not wishing to be disturbed over moral issues of the political economy, Americans cling to the notion that the government is a sort of automatic machine, regulated by the balancing of competing interests.” C. Wright Mills
"To tax the community for the advantage of a class is not protection; it is plunder, and I disclaim it; but ask you to protect the rights and interests of labor generally...." Benjamin Disraeli, 1st Earl of Beaconsfield - 19th Century Conservative Prime Minister.
"A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. ... A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death." Rev. Martin L. King Jr.
Lesson of History Forgotten (Again)
"No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable." Adam Smith - Theory of Moral Sentiments.
"The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence." John Adams, in The Founders' Constitution, V.1, Ch.16, Document 15
“Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body - the producers and consumers themselves.”
“True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.”Franklin D. Roosevelt
"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness." John Kenneth Galbraith
“Only the little people pay taxes.”Fran Lebowitz