The political economy theory (PET) known as an amalgamation of different social and economic sciences. He not only interprets the economy as a means of circulating money, but also researches its dynamic relationship between government, citizens and politicians. Political scientists and economists explore how defined economic systems (called capitalism, liberalism, communism, etc.) implemented in real economies. Considering any theory in this field, they operate similarly as a system that exchanges limited resources with each other which can take forms of borrowing, lending, investing, etc.
Context of PET
In a more general sense, the discipline now known as economics was historically more often referred to as political economy (PE). In the late 1900s, as existing statistical techniques for studying economic problems became more comprehensive, the word “economics” began to be used in place of longer-term economics.
The exploration and management of survival in social life is one definition for this purpose, but a considerably broader and more ambitious term is the study of PE. In this context, “control” refers directly to the internal structure of individual and group members, while “survival” refers to the mechanisms by which individuals and groups generate what is necessary for them to reproduce. The social structuring of interactions within a society is an essential component of control mechanisms, which usually makes them political. Survival mechanisms are economic since they involve creating what is necessary for a society to reproduce. The strength of this description is that it allows political economy to include not only all activities involving humans but also, to some extent, all procedures involving biological matter.
Constituents of PE theory
Within the realm of theory, political economy can be broken down into two distinct subfields: classical PET and modern PET. The writings of thinkers like Karl Marx, Adam Smith and Machiavelli are dissected and analyzed in the realm of classical EP. Otherwise, the study of modern PE focuses on the writings of contemporary philosophers, political scientists, and economists such as Milton Freidman, John Maynard Keynes, and Friedrich Hayek.
The study of political economy theory draws on game theory because it involves multiple parties competing for limited resources and power to determine which policies would yield the most beneficial outcomes. Moreover, it is linked to the ability of the economy to achieve the objectives that have been set.
What varieties of PET are there?
Socialism, Capitalism, and communism are the three distinct varieties of political economy. Socialism asserts that all production and wealth should be regulated and distributed by society, while capitalism and communism argue that private owners should control a nation’s industry and commerce for profit (the theory that all property belongs to the state and everyone works according to their own needs). and strengths).
The study of political economy theory mainly focuses on the following three main areas:
An interdisciplinary approach
A political economy is an approach to studying economics, sociology and political science from the perspective of an interdisciplinary approach. The aim of this approach is to understand how economic systems, political organizations and the environment influence and affect each other. The study of economic models of political procedures, international political economy and its influence on international relations, and the allocation of resources in various economic systems are the three areas that fall within the scope of interdisciplinary research.
The new PET
The new field of political economy views economic policies not as a framework that needs to be evaluated, but rather as a belief or action that should be further addressed. It brings together the principles of traditional economic thought with contemporary developments in the fields of politics and economics. The strategy rejects outdated assumptions about the agencies and interests of governments and markets, and its main objective is to promote political dialogues on the aspirations and needs of society.
The theory of international political economy
This area of research, often called global political economy, studies the link between economics and international relations. It uses concepts from the social and political sciences as well as economics. The study of international political economy focuses on how nations and organizations use economic relationships on a global scale to influence political systems.
In conclusion, political economists are particularly interested in the profits and losses that result from the adoption of a particular policy. They can determine which groups support the program and which organizations oppose it based on this information. In addition to this, they study how people could improve their usefulness by getting involved in political activities.