Political Economics
N. Van Droogenbroeck
Notes de cours et résumé du
syllabus Année scolaire 2022 - 2023
1
,Chapter 1 : What is Economics ?
2
,Definitions
Economics =
The study of how society uses its limited resources
Study of human behaviour as a relationship between ends and means which have
alternative uses
Study of resource allocation, distribution and consumption; capital and investment;
management of the factors of production (=capital & labour)
A social science
Deals with the production, distribution, and consumption of goods and services
The study of how people interact with each other and with their natural surroundings
in producing their livelihoods (= things you will produce in order to survive), and
how this changes over time.
Etymology? οἶκος (house) + νόμος (management)
! Economics /= Economy !
o The economy (“l’économie”) = human activities which identify, develop/exploit,
process, and trade in scarce resources.
= production, allocation, exchange, and consumption of goods and services, behaviour
of various agents engaged in economic activity.
o Economics (“la science économique”) = academic discipline dedicated to analyzing,
modeling, and describing the economy in simplified terms
! Economic /= Economical !
! Politics /= Policy !
Why is economy not an exact science?
No experimenting possible
No “best” model
The object of study = human, on which the researcher has a number of preconceived
ideas objectified study is difficult
Difficult to select between various existing theories (various conclusions and
recommendations, sometimes in opposition & domination because of balance of power
between school of thoughts instead of scientific criteria)
Social science
3
Economic History
, 1° Classical Economists (18th Century)
o Focused on economic growth and economic freedom, advocating laissez-faire (“let it
be”) ideas and belief in free competition.
o Were pragmatic liberals in terms of economic policy promoting market freedom,
while they saw the State play a (small) role in providing for the common good.
o KEY CONCEPTS: free trade, free competition, no/small State intervention
o Most popular: Adam Smith, David Ricardo, Robert Malthus, Jean Baptise Say
Adam Smith
o 18th Century Scottish philosopher & economist
o The « father of modern economics »
o The « invisible hand » : if each consumer is allowed to choose freely what to buy and
each producer is allowed to choose freely what to sell and how to produce it, the
market will settle on a product distribution and prices that are beneficial to all the
individual members of a community, and hence to the community as a whole.
the dual and competing forces of demand-side and sell-side, move the market to
price and production equilibrium
o Main concepts:
Economic Liberalism
Capitalist Economic Organisation
Private property of capital goods
Private entrepreneurs motivated by profit
Coordination of economic decisions through markets
The value of the produced goods depends on the quantity of labour
necessary to produce them
Labour division augments productivity
Unintended greater social benefits and public good brought about by
individuals acting in their own self-interest
The State must refrain from intervening in the economy
(Must nevertheless ensure: the proper development of infrastructures,
respect for private property and public order and financing of training
for the poorest.)
Foundations of Economic Liberalism
1. Economic actors are rational and pursue their own self-interest
2. The general interest results from the sum of individual interests
3. State abstentionism in the economy
4
2° Marxian Theory (19th Century)
N. Van Droogenbroeck
Notes de cours et résumé du
syllabus Année scolaire 2022 - 2023
1
,Chapter 1 : What is Economics ?
2
,Definitions
Economics =
The study of how society uses its limited resources
Study of human behaviour as a relationship between ends and means which have
alternative uses
Study of resource allocation, distribution and consumption; capital and investment;
management of the factors of production (=capital & labour)
A social science
Deals with the production, distribution, and consumption of goods and services
The study of how people interact with each other and with their natural surroundings
in producing their livelihoods (= things you will produce in order to survive), and
how this changes over time.
Etymology? οἶκος (house) + νόμος (management)
! Economics /= Economy !
o The economy (“l’économie”) = human activities which identify, develop/exploit,
process, and trade in scarce resources.
= production, allocation, exchange, and consumption of goods and services, behaviour
of various agents engaged in economic activity.
o Economics (“la science économique”) = academic discipline dedicated to analyzing,
modeling, and describing the economy in simplified terms
! Economic /= Economical !
! Politics /= Policy !
Why is economy not an exact science?
No experimenting possible
No “best” model
The object of study = human, on which the researcher has a number of preconceived
ideas objectified study is difficult
Difficult to select between various existing theories (various conclusions and
recommendations, sometimes in opposition & domination because of balance of power
between school of thoughts instead of scientific criteria)
Social science
3
Economic History
, 1° Classical Economists (18th Century)
o Focused on economic growth and economic freedom, advocating laissez-faire (“let it
be”) ideas and belief in free competition.
o Were pragmatic liberals in terms of economic policy promoting market freedom,
while they saw the State play a (small) role in providing for the common good.
o KEY CONCEPTS: free trade, free competition, no/small State intervention
o Most popular: Adam Smith, David Ricardo, Robert Malthus, Jean Baptise Say
Adam Smith
o 18th Century Scottish philosopher & economist
o The « father of modern economics »
o The « invisible hand » : if each consumer is allowed to choose freely what to buy and
each producer is allowed to choose freely what to sell and how to produce it, the
market will settle on a product distribution and prices that are beneficial to all the
individual members of a community, and hence to the community as a whole.
the dual and competing forces of demand-side and sell-side, move the market to
price and production equilibrium
o Main concepts:
Economic Liberalism
Capitalist Economic Organisation
Private property of capital goods
Private entrepreneurs motivated by profit
Coordination of economic decisions through markets
The value of the produced goods depends on the quantity of labour
necessary to produce them
Labour division augments productivity
Unintended greater social benefits and public good brought about by
individuals acting in their own self-interest
The State must refrain from intervening in the economy
(Must nevertheless ensure: the proper development of infrastructures,
respect for private property and public order and financing of training
for the poorest.)
Foundations of Economic Liberalism
1. Economic actors are rational and pursue their own self-interest
2. The general interest results from the sum of individual interests
3. State abstentionism in the economy
4
2° Marxian Theory (19th Century)
