Preparation for FPE Lecture Feb 5, 2020
Political economy: the contest of economic ideas ; “The Personal is Political Economic”
Economics to understand the economic system, but not for personal wealth
Economics to understand the world especially in turbulent times for greater social outcome
The economic context: risk and uncertainty
Boundaries across the globe are being eroded and companies seem to be powerful even
facing governments
Issues
o Governments need money and thus higher taxes, but cannot
o Work is increasingly insecure
o More service sector employees
o More unemployment
o Gender equality in jobs and inequality in household tasks
o More and more economic inequality, domestically and internationally
o Environmental issues
o Economic crises
PE to analyse issues and find solutions
We are constantly engaged in economic decisions
Micro decisions: Macro outcomes
Individual choices influenced by larger economic forces, but the larger economic forces are
influenced by simple individual choices
In PE the bigger picture is seen and analysed to reveal the forces that drive personal
decisions
Three trilogies
three ways of how economic activity can be organised
o market: free
o central and coordinating: state
o community: provides for its members
these three way of organisation coexist in all societies
tension exists and there are many variations
o e.g. choice between market and government
spatial scales at which economic activity can be organised
1
, o nation/state; world; locality
local and national coordination is often attempted
global market is becoming more and more relevant as there is more and more reliance on
trade and as there are more int´l institutions
space is relevant, as all economic activity takes place in space and time
the three levels are often attempted to be balanced
relationship between different fields of intuitions/entities that influence each other:
society, economy and ecology
o all the three fields influence/depend on each other
these connections are the focus of PE and their balance
different issues arise from the three factors not being balanced
attention to social choices drawn by these three trilogies: different issues and trade-offs
illustrated by PE
Conclusion
everyone participates in PE, but we have the chance of agency within it
o thus able to make choices for the future
we need to explore and learn from PE to see capabilities and limitations of markets as means
for economic activity and to find appropriate economic roles for government and society
and find means for future economic progress and also find new methods for economic
stability, security and equity
need to look at larger patterns
A genealogy of the field from Adam Smith to the mid-twentieth century (Menz) in Comparative PE pp
1-5
2
, Comparative PE at heart of political science: about distribution among countries, people, …
regarding development, wealth, …
Comparative PE concerns itself with the wealth of nations
o Concerned with creation of wealth and opportunity as well as labour markets,
finance etc.
o Focus also on institutions, such as education, mobility, … and their influence on
wealth
o Also concerns itself with why and how citizens are involved in the economy
o Another focus: normative political choices
o Also: political and religious culture as elements in explaining as well
E.g. welfare state in DE, UK and USA differently also due to religion
Due to globalisation governments are less independent and have smaller margins for action
o International/Global PE is crucial for comparative PE nationally, as governments and
economies are strongly interlinked
Comparative PE is about very turbulent aspects that are relevant to everyday lives
o Also crucial in understanding policies
Debates and issues along the history of PE are dealt with in the book
Bandelj and Sowers “What is Economy?” in Economy and state As Sociological Perspective
Economy from Greek for ecos (household) and nomos (act), thus economy as the principles
of maintaining a household
Focus on states or even beyond, global
Higher GDP in the USA, but also less vacation than elsewhere in the west, however other
countries with even less homework
Many acts of our daily lives are economic
Usually focus on exchange of goods and services on legal markets, but many things outside
of markets, e.g. households, are relevant to the economy too
State choices are thus relevant e.g. in determining whether work of inmates in prisons is
economic, which influences wages strongly due to the minimum wage
o Other choices: informal economy exists only outside of the formal one because of
state regulations determining the formal economy
o The definition of what is illegal here makes the difference and can also drive the
economy
o The state decides which commodities can be produced and traded on the formal
market
Different indicators of economy such as GDP used to determine a country´s stage in
development: not a judgement, rather for statistical convenience!
o However, these indicators do not reflect the economic development of a country
perfectly, thus caution is necessary
o Desired economic goals are politically and socially defined and not normative!
FPE Lecture Feb 5, 2020
Why this course?
Economics in Sem 1
Relation between economy and politics studied
Goal: understand the contemporary world and get a more sociological perspective on
economics
3
, Explanatory approaches in political economy (PE) for new insights into many fields of
interest
Later: GPE and Area Economy
Rather critical and richer approach to economics
Lecturer: research focus on east Asia
What is …?
The economy and economics
o Individual behavior
o Explanation for human behavior
o There is an economic side to every behavior
o Politics shape the economy and money allocation
o Power of economy and politics
o Politics depend on the economy
The state creates the market
Economy shapes social relations and is social
Economy as feature in human life and FPE adds more depth
Economy is cultural (Max Weber and prostant views on work morale and material wealth);
slippery
Commodity: good or service that can be traded
o Produced for trade
o Can be literally anything
o Needed: institutions (political conditions, ownership, …), rawm materials, supply
networks
o Containers of social relations
o People, knowledge and skills are commodities (also their time)
PE versus the disciplines
PE as relation of economy with other fields
PE emerged from philosophy
Plurality of perspectives: less weird and distorted understanding
o Social life as embedded in social relations
o Economy in relation to culture/politics/…
o Interdependence of social aspects, plurality of aspects
o PE addresses issues of relevance to people, historical as well:
Class system
Social class
Features of economies across and within specific regions
Neoclassical economics
Prevails
Many other branches also exist, PE appreciated multiple ideas
Influential
Gives insights such as that people react to incentives
Flaws and limitations; mathematical models, environment, limits of thought and practicality
How PE differs
4
Political economy: the contest of economic ideas ; “The Personal is Political Economic”
Economics to understand the economic system, but not for personal wealth
Economics to understand the world especially in turbulent times for greater social outcome
The economic context: risk and uncertainty
Boundaries across the globe are being eroded and companies seem to be powerful even
facing governments
Issues
o Governments need money and thus higher taxes, but cannot
o Work is increasingly insecure
o More service sector employees
o More unemployment
o Gender equality in jobs and inequality in household tasks
o More and more economic inequality, domestically and internationally
o Environmental issues
o Economic crises
PE to analyse issues and find solutions
We are constantly engaged in economic decisions
Micro decisions: Macro outcomes
Individual choices influenced by larger economic forces, but the larger economic forces are
influenced by simple individual choices
In PE the bigger picture is seen and analysed to reveal the forces that drive personal
decisions
Three trilogies
three ways of how economic activity can be organised
o market: free
o central and coordinating: state
o community: provides for its members
these three way of organisation coexist in all societies
tension exists and there are many variations
o e.g. choice between market and government
spatial scales at which economic activity can be organised
1
, o nation/state; world; locality
local and national coordination is often attempted
global market is becoming more and more relevant as there is more and more reliance on
trade and as there are more int´l institutions
space is relevant, as all economic activity takes place in space and time
the three levels are often attempted to be balanced
relationship between different fields of intuitions/entities that influence each other:
society, economy and ecology
o all the three fields influence/depend on each other
these connections are the focus of PE and their balance
different issues arise from the three factors not being balanced
attention to social choices drawn by these three trilogies: different issues and trade-offs
illustrated by PE
Conclusion
everyone participates in PE, but we have the chance of agency within it
o thus able to make choices for the future
we need to explore and learn from PE to see capabilities and limitations of markets as means
for economic activity and to find appropriate economic roles for government and society
and find means for future economic progress and also find new methods for economic
stability, security and equity
need to look at larger patterns
A genealogy of the field from Adam Smith to the mid-twentieth century (Menz) in Comparative PE pp
1-5
2
, Comparative PE at heart of political science: about distribution among countries, people, …
regarding development, wealth, …
Comparative PE concerns itself with the wealth of nations
o Concerned with creation of wealth and opportunity as well as labour markets,
finance etc.
o Focus also on institutions, such as education, mobility, … and their influence on
wealth
o Also concerns itself with why and how citizens are involved in the economy
o Another focus: normative political choices
o Also: political and religious culture as elements in explaining as well
E.g. welfare state in DE, UK and USA differently also due to religion
Due to globalisation governments are less independent and have smaller margins for action
o International/Global PE is crucial for comparative PE nationally, as governments and
economies are strongly interlinked
Comparative PE is about very turbulent aspects that are relevant to everyday lives
o Also crucial in understanding policies
Debates and issues along the history of PE are dealt with in the book
Bandelj and Sowers “What is Economy?” in Economy and state As Sociological Perspective
Economy from Greek for ecos (household) and nomos (act), thus economy as the principles
of maintaining a household
Focus on states or even beyond, global
Higher GDP in the USA, but also less vacation than elsewhere in the west, however other
countries with even less homework
Many acts of our daily lives are economic
Usually focus on exchange of goods and services on legal markets, but many things outside
of markets, e.g. households, are relevant to the economy too
State choices are thus relevant e.g. in determining whether work of inmates in prisons is
economic, which influences wages strongly due to the minimum wage
o Other choices: informal economy exists only outside of the formal one because of
state regulations determining the formal economy
o The definition of what is illegal here makes the difference and can also drive the
economy
o The state decides which commodities can be produced and traded on the formal
market
Different indicators of economy such as GDP used to determine a country´s stage in
development: not a judgement, rather for statistical convenience!
o However, these indicators do not reflect the economic development of a country
perfectly, thus caution is necessary
o Desired economic goals are politically and socially defined and not normative!
FPE Lecture Feb 5, 2020
Why this course?
Economics in Sem 1
Relation between economy and politics studied
Goal: understand the contemporary world and get a more sociological perspective on
economics
3
, Explanatory approaches in political economy (PE) for new insights into many fields of
interest
Later: GPE and Area Economy
Rather critical and richer approach to economics
Lecturer: research focus on east Asia
What is …?
The economy and economics
o Individual behavior
o Explanation for human behavior
o There is an economic side to every behavior
o Politics shape the economy and money allocation
o Power of economy and politics
o Politics depend on the economy
The state creates the market
Economy shapes social relations and is social
Economy as feature in human life and FPE adds more depth
Economy is cultural (Max Weber and prostant views on work morale and material wealth);
slippery
Commodity: good or service that can be traded
o Produced for trade
o Can be literally anything
o Needed: institutions (political conditions, ownership, …), rawm materials, supply
networks
o Containers of social relations
o People, knowledge and skills are commodities (also their time)
PE versus the disciplines
PE as relation of economy with other fields
PE emerged from philosophy
Plurality of perspectives: less weird and distorted understanding
o Social life as embedded in social relations
o Economy in relation to culture/politics/…
o Interdependence of social aspects, plurality of aspects
o PE addresses issues of relevance to people, historical as well:
Class system
Social class
Features of economies across and within specific regions
Neoclassical economics
Prevails
Many other branches also exist, PE appreciated multiple ideas
Influential
Gives insights such as that people react to incentives
Flaws and limitations; mathematical models, environment, limits of thought and practicality
How PE differs
4
