This is a very comprehensive and structured summary of the course Political Economy (2023/2024). It includes all readings and all lectures notes. At the end I've also added for each lecture some essay questions with answers to practice (AI generated, but all based on the notes of the lectures). I ...
Table of contents
Week 1
Reading materials p. 1
Lectures p. 8
Week 2
Reading materials p. 26
Political Lectures p. 30
Week 3
Economy Reading materials
Lectures
p. 36
p. 40
23/24 Week 4
Reading materials p. 51
Lectures p. 56
Week 5
Reading materials p. 77
Lectures p. 80
Week 6
Reading materials p. 97
Lectures p. 99
Practice Questions p. 116
The political economy of economic policy - Frieden
This article discusses the intersection of politics and economics in policymaking, using the
example of the COVID-19 pandemic as a case study. It highlights how political
considerations often influence policy responses, even in the face of urgent crises. The article
also explores how various interests, such as special interest groups and voters, shape
economic policies, and it emphasizes the importance of understanding the political feasibility
of policy initiatives, even if they may not align with ideal economic recommendations.
Ultimately, it underscores the complex relationship between politics and economics in
shaping government decisions and policies.
• Various interests
• Difficulties with worldwide cooperation
1
, • National interests → no worldwide cooperation → everyone worse off
• How does politics keep governments from making better policy?
• Political economy: political forces influence the economy, and vice versa.
o Governments try to pump up the economy before the elections.
o Economic conditions have a powerful impact on elections.
• A basic economic principle is that any policy that is good for society as a whole can
be made to be good for everyone in society, even if the policy creates winners and
losers. It requires only that the winners be taxed just a bit to compensate the losers—
and everyone is better off. → Self-interest.
• Concentrated interests (e.g. industries) often have more political influence than
diffuse interests (general societal interests).
(e.g. sugar producers work hard to influence politicians).
Politics is the way society adjudicates among conflicting interests (who has more at
stake?).
• Institutions help make sense of general interests in society. These institutions,
including social, political, electoral, and legislative, play a key role in how economic
policies are shaped and enacted.
• Evaluate economic implications of policy initiatives and political feasibility → better
to structure policies with political realities in mind.
The reach of political economy - Barry
Political economy, different definitions:
• The science of managing nation’s resources as to generate wealth.
• How the ownership of means of production influenced historical processes.
• The methodology of economics applied to the analysis of political behaviour and
institutions → a family of approaches
1. How do institutions affect behaviour?
> Legislatures are fertile ground for exploring institutional choice
2. The revelation and aggregation of information
> Focus on voters
3. Evolutionary models of human and political behaviour
> PE now at the convergence of two paradigms: utility maximisation and evolutionary
fitness.
> Concept of survival and equilibrium
> PE is pushing the envelope of hyper-rationality, but also trying to incorporate
elements of emotions and irrationality.
2
, 4. The spread of PE to new areas of research
Institutions can be studied at 3 different levels:
• Studying their effects
• Study the implications of different forms of institutions.
• Study how institutions are structured, and why some institutions survive and others do
not.
Committee gatekeeping authority on legislative choice or Party gatekeeping authority on
legislative choice:
Idea that parties hold the power to keep issues within their jurisdiction, from coming
up for a vote.
What is Political Economy? - Stilwell
• What problems does political economy address?
• What questions does it ask?
• On what analytic foundations does it build?
Individual concerns vs. collective concerns.
How these issues have been addressed have been strongly influenced by ‘neoclassical
economics’ theory (stresses the beneficial effects of competitive markets as a means of
allocating economic resources, with the role of the government as addition → capitalist
economy is a stable, self-equilibrating system). This has given rise to particular policy
prescriptions, e.g. liberalisation of trade).
Alternative: modern political economy - deals with current issues. It has an interdisciplinary
character, and a direct engagement with big issues. Draws from other disciplines, leading to a
more holistic approach to social science.
Political economic questions:
• What is happening?
• Why? - requires analysis of the drivers of change
• Who gains and who loses?
• Does it matter?
3
, • If so, what can be done and by whom? - remedial policies and strategies. We are
active participants, and our effectiveness depends on how we address the strategic
questions of what can be done.
Contributory conceptual currents:
• Classical political economy: analyzes how economic surplus is produced, expanded,
and distributed, central to understanding growth.
• Marxist economics: highlights the exploitation of labor as the source of economic
surplus in capitalism. Class conflict drives potential radical economic change.
Globalization is seen as capitalism's way of overcoming national growth constraints.
• Institutional economics: Emphasizes economic evolution and advocates state
intervention to reduce inequality and instability in free-market capitalism.
• Keynesian economics: explains why capitalism can't ensure full employment,
highlighting the inherent instability of a monetary economy. Though inconsistent, its
insights into long-term productive capacity and policies remain valuable.
• Neoclassical economics: possible source of contributions to the modern political
economist’s tool kit.
• Modern political economy: seeks a practical, value-driven approach to real political-
economic issues, studying the economy from a social science perspective, adding
complexity.
Conclusion
In PE a dualism exists: continuity comes from building on the existing stock of economic
knowledge, but change comes through adapting and extending it to deal with the evolving
political economic problems and new challenges.
• Emphasis on the connections between economic problems, social structures, and
political processes.
• PE draws from different conceptual currents
• Neoclassical economic analysis needs to be carefully considered because of its major
influence on orthodox economic theory and government policies. The challenge for
PE is to go beyond critique to the formulation of effective alternatives.
Ch. 6 Capitalism - Stilwell
> What systems of economic organisation are possible?
> What is special about capitalism?
> What are the common features of capitalist economies?
4
, Economic activity can be organised in different ways - other than capitalism:
• Communally - how fruits of combined economic effort can be distributed and
organised communally.
• Slavery - using force. Has had a big role in the economic development of many
countries.
• Feudalism - coercive elements, but core principle is mutual obligations.
• Capitalism - key source of class power is control over capital. Financial
considerations dominate.
• Socialism - application of more consistently collectivist principles. Nature of
economic activity determined by a planning process.
Defining capitalism
Elements in capitalist system
These systematic characteristics make it possible to analyse capitalism in general,
notwithstanding significant national varieties of capitalism in practice.
5
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