The name political economy has been used to describe many different things. It used to be the name for what we today consider as economics: the field that studies economic processes. Many Marxian scholars have kept on using the name, while the mainstream discipline switched from ‘political economy’ to ‘economics’. More recently, it has also been used to describe normative economics and public choice theory, which uses neoclassical assumptions to study politics and government bureaucracy. Here, however, we refer to the subfield within political science called political economy that studies the interaction and interrelatedness between politics and the economy.
Marxian approaches have always been an important inspiration for the subdiscipline of political economy. However, in the 1970s international political economy arose out of the understanding that the mainly militaristic focused realist approach within the subfield of international relations missed the importance of international economic connections and organisations. Another important branch is comparative political economy, which arose mainly out of the varieties of capitalism debate.
Currently, political economy forms a loose and diverse subdiscipline, with approaches ranging from institutional political economy to cultural (often called constructivist), feminist, neoclassical (often called rational choice), and Marxian political economy. It focuses on the shifting power relations between states and private sector companies, the institutions and ideas that shape policies and thereby also economies, and how ‘the rules of the game’ evolve and are contested both at the national and international level.
- Comparative Political Economy: States, Markets and Global Capitalism by Ben Clift, from 2014. This useful introduction into comparing political-economic systems, helps students understand the different theoretical approaches, and topics such as corporate governance, finance, states and social welfare.
- Introduction to International Political Economy by David N. Balaam & Bradford Dillman, from 2018. This accessible and brief book introduces students to the international interplay between the economic and political on topics such as trade, finance, globalization, and security.