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Political Economy is a term that preceded that science that we fondly call Economics. The term, as its name implied, originated because of the belief that the economy and politics could not be separated from each other. As time went by, it was evident that the both sciences were separated; economics and politics both were sciences in their own rights.
In the recent past, there have been increases in the research of the influence of politics on economics. Such research though old, appears to be ageless as the findings are quite applicable to modern age as much as to the earlier era. The difference in the modern findings lies mainly with the methods employed, and many critics have viewed the outcome as being too broad as researchers try to embrace a large amount of variables that may have affected the final conclusions one way or another.
The fact that politics has a great influence on economics can be demonstrated by the example of inflation. If there is inflation in a country, then one of the procedures that could be used is cutting the budget deficit of a country. The National Bureau of Economic Research (NBER) [1] has recognised that pure economics alone is unable to explain “complex phenomena such as different degrees of economic development, quality and types of economic policies, income distribution, and quality of government organization such as corruption, protection of property right,” among other things. Professor Alesina believed that “political institutions are important determinants of economic outcomes. In turn, the state of the economy affects political outcomes, both in the long run and in the short. Economic development affects the evolution of institutions and short run economic conditions affect political change and elections.” This then explicitly implies that there is an intrinsic interrelation between politics and the economy.
Dr.David Caploe, Chief Political Economist of EconomyWatch.com [2] noted that the renowned English Theorist and historian E.H. Carr described Political Economy as two things that are similar but not identical. He stressed that when talking about political economy we talk about two things that are very different – but must always be examined together. Politics and Economics are intrinsically and inextricably linked, and one connot be studied or talked about without studying or talking about the other. Political Economy according to Alonzo Potter [3] teaches one how to increase production by teaching us to distinguish between true and false economy. Since, he explained, that there was a time that theorists thought that in order to increase wealth individuals must hoard their property. Today we understand that in order to maximize wealth we must keep it working for us; even so, the idea of productive and unproductive expenditure is still not totally clear to many practicing economists. William Stanley Jevons’ [4] view of Political Economy is that of a science that looks at the wealth of nations; it looks at the causes that make one nation more prosperous than another. It has as its main goal the education of society in order that poor people should be as few as possible and everybody should be well compensated for work done. Professor Jevons went on further to show the difference between Political Science and the other sciences. This he believes is because the science treats wealth itself, how it treats wealth itself, what is the best way to consume it and how to take advantage of the other sciences to get it. The main adversaries of Political Economy are those people who think that one should not concentrate on wealth alone but focus on greater thing such as virtue, generousity, and affection. Professor Jevons notably explains that most of the poverty and crimes committed have been either directly or indirectly caused by mistaken charity in the past which has unwittingly caused a large cross section of people to grow up careless, improvident and idle. Therefore, instead of giving out alms we should educate people, in order that they earn their own living and have a saving as well.
The main focus of political economists was that of finding out or at least foreseeing with some level of certainty what contributed to the wealth of individuals that could be extended to societies; and could further even be extended to countries. That labour and economy made up the wealth of economies was not easily seen by great thinkers such as Adam Smith and others before his era.
John Stuart Mill in his discourse regarded Mr David Ricardo [5] as one of the few thinkers who had seen the true nature of the wealth creation by nations by means of application of scientific methods. He showed that Mr Ricardo demonstrated that a country which produced a commodity at a high cost would benefit by importing such a commodity from another country which produced the same item at a lower cost, while at the same time, the former country could export another commodity to the reciprocating country at a lower cost than the other country could product it. Mr Mill agreed that this was essentially the true nature of wealth creation for nations. He lamented the fact that previous economists and some even at his time looked at wealth creation simply as the disposal of surplus goods by a country.
The salient point though, was the fact that Mr. Ricardo clearly pointed out in his work – The Principles of Political Economy and Taxation – the exact science that measured the amounts and concepts to arrive at those amounts, as compared to the inexact and highly unscientific “if not totally false” ways in which theorists attempted to show the advantages of trade. Mr Ricardo proposed that it is not the difference in the absolute cost of production that drives the interchange of goods between countries but the difference in comparative costs.
POLITICAL ECONOMIST HISTORICAL VIEWS
Before the new theorists voiced their opinions on the causes of national wealth, the general concencus held by the society was one that modern economist hold now to be totally erroneous. The view held of the influence of consumption, is one such view that heads the table. These theorist and practical thinkers believed that in increasing consumption the wealth of nations inevitably increased as well. Most countries looked to encourage fast consumption, vast demands and rapid circulation.
It became ever so clearer to the new political thinkers that consumers were always available. The governments of the day encouraged consumption, hence they frowned on saving and unproductive consumption was promoted. “The national wealth was diminished by the very means by which it was expected to increase.”
Mill [6] and others came to realise that the focus on consumption was unwarranted. What the national economies needed was a boost in production at all level, since consumption “needed no encouragement.”
The prevelance of erroneous concepts that were accepted by a great portion of society was borne out of the appearance of some semblance of evidence. When this evidence was tested and found to be wanted it is the duty of the researchers to find out what exactly does it prove.
THE SCIENCE THAT IS POLITICAL ECONOMY
John Stuart Mill used the analogy of building housing to explain the origin of the political economist’s science. He explained that the setting up of walls around a city usually follows the erection of building and not the other way around; that of walls first, then buildings. The definition of the science of Political Economy, and by extension most sciences, nearly always not preceeded but followed the creation of the science itself. Everything from the foundation was done in a less systematic way. Man by nature was a learning creature and as bits and pieces came to the forefront they were added to give structure to poorly defined models.
When atempting to give a broad defininition of what science is, Dugald Stewart, according to Mr. Mill, stated that the first principles of all science belonged to the human mind. In other words, the foundational principles were shrouded in cloudiness and unclear definitions, as contrasted with the final conclusions and proof of theories.
In looking at the contrasting nature between an art and a science Mill noted that while science deals with facts, art is based on precepts; science is a collections of truths, art constitutes a body of rules of conduct. Science recognises a phenomenon and tries to discover its law; art proposes an end in itself, and looks for means to affect it. Rules to make a nation rich are not a science, but they are derived from science. Vilfredo Pareto [7] stated that economic science would not hesitate to use philosophy, physiology or even mathematics, whereas art would hesitate before using them since they may confuse the audience that they attempt to persuade.
Most moral science accepts and uses physical science, but physical science uses moral science for support. Political Economy on the other hand, uses both sciences to build its concepts. It continues where physical science leaves moral science which embraces complex phenomena. To illustrate this further, we see that which produces wealth are both the subject of Political Economy and physical sciences, as well as various laws that govern human behaviour; belonging to that of moral sciences.
Political Economics is based on the foundations of all physical sciences; it also asks what phenomena of mind and human behaviour are involved in the production and distribution of wealth, all in concordance with the physical sciences.
In his writings on Political Economy, J.C.L. Simonde de Sismondi noted that political economy was the name given to the science of government. The object of government is that of bringing about the ultimate happiness of men. Man by nature is a complex being, so that both moral and physical nature has to be satisfied before he could be totally satisfied. He saw the physical well-being of man as the object of political economy, and all the physical wants of man could be abtained by accumulation of wealth. The main duty of government was that of providing for its citizenry, and to discourage the repopulation of the state faster than it could provide the means of sustaining it. He added though, that wealth and population are not the only true indicators of prosperity of a state since they are only so in relation to each other. However, he believed that wealth is a blessing when it is evenly distributed; population an advantage when every man is sure of gaining an honest subsistence by his labour. But a country may be wretched, though some individuals in it are amassing colossal fortunes; and if its population, like that of China and India, are always superior to their means of subsistence.
These writings were made in the nineteenth century so it is not surprising that many of the strategies; hence the fortunes of some of these nations would have changed.
CONCLUSION
Because of the application of Political Economy, many of the great economists knew like Mr. William Stanley Jevons that “wealth could be increased by the nations that could produce it more easily and plentifully” and “each trade, town, nation must furnish what it can yield most cheaply, and other goods can be bought from the places where they can be raised more easily.”
Economists of today use the world as their experimental field and while social scientists have the luxury of correcting errors in labotaries economists whose predictions goes array would find themselves criticized or even ostracized by their colleagues, since inaccurate analyses can break nations.
