Political Economy: Definition, Theories, Global Impact and Analysis

This essay provides an outline and explanation of political economy, defining it as the relationship between a nation's population and its government in policy enactment, and as a branch of social science resulting from the interaction between politics and economics. It identifies three types of political economy: free market, command, and mixed, and emphasizes the interdisciplinary nature of the field, considering factors like history, culture, and customs. The essay discusses the importance of understanding production, trade, and their relations with law, government, and custom, as well as the distribution of national income and wealth. It highlights the contributions of Adam Smith and distinguishes between classical and modern political economy, noting the focus on market dynamics, policy implications, and the shaping factors of politics like equality and democracy. The essay concludes that a deeper understanding of political economy is crucial for strategic decision-making in market practices.

Outline and explain what we
mean by political economy

TABLE OF CONTENTS
Explaining political economy.....................................................................................................3
REFERENCES................................................................................................................................5

Explaining political economy
Political economy indicates the relationship between nation's population and its government
when any public policy is enacted. In addition to this, it can be identified that political economy
is branch of social science. It is basically result of interaction between politics & economy by
following social science discipline. There are three types of Political Economy (PE) which are
completely distinct from each other that comprises free market, command and mixed. In the
other words it can be interpreted that PC is studying how economies theories like capitalism and
socialism operates in real market. It concentrates on having interdisciplinary branch which
explains inter relationship among government, public policy and government (What is Political
Economy? 2021). This particular concept gives emphasis on analyzing how factors like history,
culture, customs, etc. impact an economic system. There are several political economy in the
globe which shape international economic interactions.
The outline of PE can be understood by studying production and trade & their relations
with law, government and custom with the distribution of national income & wealth. The main
objective of providing opportunity to understand & develop h knowledge of global political &
economic issues. It is one of the wide concept which provides insights regarding greater
application and understand ability of h global politics, economies, culture and regions, etc.
politics is formal & informal ways through which cooperation occurs in a society (Albert and
Hahnel, 2021.). It is the dimension of using any active information to notify policy and
programming. The most important fundamental of political economy is to focus on having
significant processing which can allow understanding crucial components such as market &
property so that higher depth insights to evaluate economy can become possible.
There are two theories which involves classical and modern political economy that can
give insights to obtain proper structure for having crucial information related with forces of
supply and demand like tariffs, quotas and non tariff regulatory barriers. Adam Smith is
considered to be father of PE who has given earlier comprehensive account of society market
following decentralized system. In addition to this, it has been specified that there is efficient
allocation of resources and prices coordination which obtains in competitive economy. Classical
political economy studies that the economy is at full employment all the time and there is
flexibility of prices and wages (Koch and Buch-Hansen,2021). In this it is suggested that there
should be cut down of taxes for the purpose to stimulate economy as can incline aggregated

demand. Modern PE articulates that there is main aim to understand concepts that have shaped
factors of politics like equality, n individuality, democracy, justice, etc. On the basis of this, it
can be interpreted that PE is one of the crucial topic which is required to be taken into
consideration for having deeper details regarding market practices in turn formulation of proper
decision can become possible. On the basis of this it can be identified that PE is one of the
significant concept which contribute in formulating strategic decision.

REFERENCES
Books and Journals
Albert, M. and Hahnel, R., 2021. The political economy of participatory economics. Princeton
University Press.
Koch, M. and Buch-Hansen, H., 2021. In search of a political economy of the postgrowth
era. Globalizations. 18(7). pp.1219-1229.
Online
What is Political Economy?. 2021. [Online]. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/economics/political-
economy/>.