political economy

political economy In the strict sense, an influential body of writings on economic questions associated principally with the French and English Enlightenment of the eighteenth century, and which culminated in the economic theories associated with Adam Smith. However, because the nineteenth-century classical economists who built on Smith's ideas continued to refer to their work as political economy, some vagueness and broadening of the use of the term occurs in social science literature. It is, in fact, in the broad sense rather than the narrow sense that classical sociology is widely viewed as a critique of political economy.

Early political economy resulted from the combined influence of the following: the progressive substitution of rationalism and science for the religious modes of thought in philosophy, and the attempted application of empirical methods to moral and social questions; the rise of capitalist industrialism and the need to give an intellectual and ideological account of the emergent economic order; hostility to the so-called mercantilist policies still being pursued by governments and which attributed the prosperity of states to a favourable balance of foreign trade. Though political economy was never a unified doctrine, its characteristic outlook stemmed from attempts to show that surpluses of value originate from production, in particular from productive labour, rather than trade as such. For the Physiocrats (and to some extent perhaps Smith himself), agriculture is the only source of surplus, but political economy from Smith onward also recognized the importance of manufacture and the overall organization of productive activities through the division of labour. This, they argued, should not be hampered by mercantilist efforts to control prices, wages, and money. Indeed, money is a mere symbol of value, not its source.

Though Smith's famous treatise in support of free-market exchange. The Wealth of Nations (1776), is taken as the beginning of the modern discipline of economics, he and his distinguished contemporaries of the Scottish Enlightenment (such as Adam Ferguson) also wrote about a wide range of social, moral, and historical issues, much of which can be viewed as early sociology. However, the sociological element implied a more holistic view of society than did the economic doctrines. The latter are sharply individualistic, and in stressing the role of self-interest as the basis of co-operative order, contain in embryo form some key elements of what has since come to be known as rational exchange theory. But the later separation of economics from other disciplines would have been wholly alien to early political economy. This separation owes much to the fact that the so-called classical economists of the next generation, notably David Ricardo and his disciples among the nineteenth-century English utilitarians, began to abstract the economic ideas from the rest and to formalize them—a process which has continued ever since. Despite their many divergences in outlook and purpose, Karl Marx, Max Weber, Émile Durkheim, and the other founders of sociology shared a conviction that the abstraction of the economic from other aspects of social life ignored crucial questions about the nature of modernity and capitalist production itself.

So-called radical political economy is a term associated with the renaissance of Marxist thought in the 1960s. Hostile to functionalist-dominated academic sociology and economics in the United States and Britain, it sought to transcend the (from its points of view) ideological disciplinary divisions in social science, by developing a common basis in a resurgent historical materialism.See also NEO-CLASSICAL ECONOMICS.