Political economy draws upon sociology, economics, and political science to define how government, an economic system, and politics influence each other. It studies how economic theories like capitalism and communism function in the real world and considers how history, culture, and customs impact economic systems. Political economists examine how political forces shape global economic interactions and how economic systems are directed in a way that benefits many.

1. Political Economy
By WILL KENTON
What Is Political Economy?
Political economyisaninterdisciplinarybranchof the social sciencesthatfocusesonthe
interrelationshipsamongindividuals,governments,andpublicpolicy.
The fieldof political economyis the studyof how economictheoriessuchascapitalismorcommunism
playout inthe real world.
Those whostudypolitical economyseektounderstandhow history,culture,andcustomsimpactan
economicsystem.
Global political economystudieshowpolitical forcesshape global economicinteractions.
Political economistsstudyhoweconomictheoriessuchascapitalism, socialism,andcommunismworkin
the real world.At itsroot,any economictheoryisa methodologythatisadoptedasa meansof directing
the distributionof afinite amountof resourcesinawaythat is beneficial forthe greatestnumberof
individuals.
In a widersense,political economywasonce the commontermusedforthe fieldwe now call
economics.AdamSmith,JohnStuartMill,andJean-JacquesRousseauall usedthe termtodescribe their
theories.The briefertermeconomywassubstitutedinthe early20thcenturywiththe developmentof
more rigorousstatistical methodsforanalyzingeconomicfactors.
The term political economyisstill widelyusedtodescribe anygovernmentpolicythathasan economic
impact.
UnderstandingPolitical Economy
The study of political economymaybe approachedinanyof three ways:
1. InterdisciplinaryStudies
The interdisciplinaryapproachdrawsuponsociology,economics,andpolitical science todefinehow
governmentinstitutions,aneconomicsystem, andapolitical environmentaffectandinfluence each
other.
In thisapproach,political economyisconcernedwiththree subareas:economicmodelsof political
processesandthe linksof variousfactorsto eachother;the international political economyandthe
impactof internationalrelations,andthe role of the governmentinresource allocationforeachkindof
economicsystem.
2. NewPolitical Economy
The newpolitical economyapproachdoesnottreata political ideologyasaframeworkthatmustbe
analyzed.Rather,itisstudiedasa setof actionsandbeliefs.Itseekstomake explicitassumptionsthat
leadto political debatesaboutsocietalpreferences.

2. >Political economymaydrawuponsociology,economics,andpolitical science todefine how
government,aneconomicsystem,andpoliticsinfluenceeachother.
The newpolitical economyapproachencouragesthe discussionof areal-worldpolitical economythat is
groundedinparticularcultural,social,andhistorical details.
Thisapproach combinesthe idealsof classical political economistsandneweranalyticaladvancesinthe
fieldof economicsandpolitics.Itrejectsoldideasaboutagencies,structures, material interests,states,
and markets.
3. International Political Economy
Alsoknownasglobal political economy,thisapproachanalyzesthe linkbetweeneconomicsand
international relations.Asitstemsfromthe interdisciplinaryapproach,itdrawsfrommanyacademic
areas includingpolitical science,economics,sociology,cultural studies,andhistory.
International political economyisultimatelyconcernedwithhow political forceslikestates,individual
actors, andinstitutionsshape systemsthrough globaleconomicinteractionsandhow suchactionsaffect
political structuresandoutcomes.
AnthropologicalPerspective of Political Economy
By SierraSernau
In anthropologyPolitical Economyisthe studyof how economicsaffectculture,withamodernfocuson
the effectsof capitalism.Political Economywasdevelopedfromhistorical materialism, atheory
developedbyKarl Marx.Marx’s theoryarguesthat material goodsare the organizingforce forsociety
and the economy.FrankWilliamTaussig,aleading political economytheorist,wasamemberof The
Classical School of Political Economy,whichdevelopedfree marketeconomicsintoascience (Frank
WilliamTaussig:2015). Political Economywasdescribedbythe school as‘a materialisticinterpretation
of history’inanarticle byEdwinR. A. Seligman(Seligman:1901).Seligmanarguesthatinorderfor
humansto survive theymusthave the meanstosustainthemselvestohave lifeandeconomicshow
humanssustainthemselvestherefore one musthave economicsif one istohave life (Seligman:1901).
Marx’s theoryof historical materialismisinfluential andhasbeenappliedtomanyareasof study
includinganthropology.Marx focusesonproductionandconsumptioninsocietyandhow the twoare
interdependentoneachotherandhave a circularrelationship(Twigg:2015).Accordingto Marx as
humanswe activelyseektocreate andproduce as a way to sustainlife anditisthisdrive thatallows
economics,countriesandpeople toflourish.Free marketeconomistsagree withMarx that economics
are a drivingforce of culture,buttheyalsobelievethatfree marketsare a goodidea.Marx didnot
believethatfree marketswere goodforthe people orthattheyadvancedthe society.Political
economistscansee global capitalismasanegative force,undermininglocal marketsandlocal traditions.
Appliedtoanthropology,the interestisinhow political economycanbe appliedtonon-capitalistic
societies,howcolonialismhasaffectedeconomiesandhow ithas affected developingsocietiesasthey
transitionfroma non-capitalisticeconomytoa capitalisticeconomy.