What
is Political Economy? How does it differ from
Orthodox
Neo-Classical Economics?
Sumanasiri
Liyanage
Is political economy a branch of economics? In other
words, should it be treated as categories like international economics, labor
economics, gender economics and so on? In answering these issues, in many
occasions, ignorance supplants wisdom and knowledge. Having overheard a discussion
on the subject by some academics on the occasion of recruiting a person to
teach political economy at the University of Peradeniya, I thought, as a person
who taught political economy for more than three decades, it would be relevant
to make it clear what the term political economy actually means. When I was a
student at the University of Peradeniya, almost all my economic teachers were,
in a broad sense, political economists. However, it is necessary to mention
especially Prof. H A de S Gunasekera and Prof Budhdhadasa Hewawitharana, two
great teachers under whom I developed my world view and perspective. So, in a
way, in the sixties, the distinction between economics and political economy
was not very clear as many economists were aware that there was nothing called
pure economics. However, since 1975 onwards, there has been a paradigm shift in
economics and economic teaching. I do remember heated controversy between
‘pure’ economists and political economists at the University of Sydney. Prof.
Wheelwright wanted to introduce political economy paper at the first year level
as an alternative, not supplementary, to principles of economics paper. It was
an ideological war between economics and a critique of economics. In the late
1970s, Prof. W D Lakshman realizing that there was something lacking in the
economic degree course took an initiative in introducing a separate political
economy paper at the University of Peradeniya. After Prof Lakshman left
University of Peradeniya, I taught that course until it was dropped from the
syllabi in the 1990s.
The
‘end of history’ marked the victory for neo-liberalism in policy-making centers
as well in the centers of economic teaching and research all over the world.
The state was viewed as essentially bad. Economists have made an attempt to
make economics a ‘pure’ science. In this context, political economy had become
extinct or dying specie. Like Priory of Sion in Dan Brown’s Da Vinci Code, it
survived secretly retreating to Geography Departments in the Universities. Prof.
David Harvey, the most important and famous political economist today, began
his academic career as a geographer. Alex Calinocos and Robert Brenner came
from History while late Givonni Arrighi was a sociologist. If I put it bluntly,
today, economic departments that specialize in orthodox neo-liberal economics
cannot produce political economists. Factories that are equipped to produce
chalks cannot be converted into factories producing cheese. Of course, there
are a few exceptions like the economics departments of New School of Social
Research, Jawaharlal Nehru University and School of Oriental and African
studies. It is interesting and important to note that political economy or
heterodox economic has affinity more with history, sociology, political
science, anthropology and political geography than orthodox economics. Briefly,
political economy is not a branch of but a critique of orthodox economics.
Orthodox
and Heterodox Economics
The
method, approach and coverage of Political economy differ qualitatively from those
of orthodox economics. While the latter uses positivism as its scientific
method, the method deployed by the former is genetico-evolutionary, critical,
materialistic and dialectical. Political economy is essentially a
trans-disciplinary subject that instead of putting up boundaries breaks down
many existing ones. It posits that an economic phenomenon can be understood
only in its historical, political and social context. David Ricardo brought in
social classes and their interaction in his analysis of the process of
accumulation. J S Mill argued that the distribution of social product was
governed not by material-technological factors but social and political
factors. Karl Marx emphasized the importance of class contradictions in
understanding capitalistic system of production. As a result of modern
compartmentalization of social sciences, one may even wander how J S Mill or
Karl Marx or Max Weber can be characterized? A sociologist? An economist? A
political scientist? Political economy treats society as an integrated
totality. Hence, her/his role in understanding economic phenomena is to
deconstruct this totality treating it as a text.
To
meet the challenge posed by political economists, a change has occurred in
neo-classical economics as many neo-classists have understood that the coverage
of their discipline is too narrow. As a result a new kind of psudo-political
economy appeared in the last three or four decades. Gary Becker used
neo-classical methodology and categories in explaining marriage as a
relationship based on relative cost and benefit. In my view, this development
has nothing to do with political economy. Political economy most
commonly refers to inter-disciplinary studies drawing upon history, economics, law, sociology,
geography and political science in explaining how political institutions, power
relations, the political environment, and the economic system
influence each other.
Revival of political Economy
With the crisis of
neo-liberalism and the first great depression in the third millennium that
began in 2008 financial Krakatoa, we have been witnessing a revival political
economy all over the world. The conventional economists who spend all their
lives in researching the behavior of the economy have failed to predict the
economic crisis that began in 2008. Former French President Sarkozy publicly
announced that Anglo-Saxon model of free market had collapsed. Since all
conventional genres have failed to reveal the secrets of the crisis, analysts
look for alternative explanations in the writings of Karl Marx, J M Keynes and
Hyman Minsky to understand the collapse of the world financial system. Finally,
all the governments in advanced capitalistic countries were forced to resort to
government intervention that include pump-priming and quantitative easing that
neo-liberals criticized as a catastrophe in the heyday of neo-liberalism. Even
people like Jeffry Sachs who is famous for his infamous ‘shock doctrine’
started to criticize the pure market model as non-operative and impractical. Calling himself as a ‘clinical economist’ he
has traced the source of the economic evils faced by the USA (and other
advanced capitalistic countries) to the "free market fallacy" leading
to "Washington's retreat from public purpose"; to the "new
globalisation" which cost jobs, lowered wages, and skewed rewards to the
very rich; to social and ethnic fragmentation; and to the domination of politics by "corporate lobbies" and "spin masters of
the media", who have distracted the American people with the
"relentless drumbeat of consumerism".
We all talk about the values of inter- or trans-
disciplinary nature of social sciences, multiplicity off options and expanding
the enabling space. Nonetheless, when it comes to actual practice, many social
scientists are for defending existing narrow boundaries for multiple reasons. The
objections to political economy may come from not only this parochial mindset
but also vested interests.
The writer is
co-coordinator of Marx School, Colombo, Kandy and Negombo.
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