Political Economy Essay Critical Thinking Example

Original Purpose and Focus of Political Economy

Political Economy is mainly involved with wealth management in society. It also deals with the efforts put in place by man resulting to supply of their wants and satisfaction of their desires. Political Economy was initially centered on coordination of families and political households in communities. Social customs and practices at that time were given much priority in the management of a community.
Issues of moral judgments in political economy took centre stage in the past. However, such judgments are now restricted to the relations between citizens and their government. Governments in present societies play a very fundamental role in the society. They are entrusted by citizens to act in favor of public interest which is commonly called the greater good.
In the modern times there have been revolutions against governmental control in economics. Political Economy has tended to mostly look into the industrial activities of man who assumed to derive governmental power by acquiring more wealth in the society hence resulting to a class system of governance.
Political Economics conceptions in the past were mainly focused on policy making and decision making. Adam Smith played a huge role in the history of political economics as he brought out the idea that political economics was meant to show the processes and institutions that made different societies to prosper and consequently improve on their public policy.
In the 19th century there was scrutiny of the tough economic laws that governed the human societies in a manner that was independent of their free will. These laws were found to be vastly policy oriented in character and did not reflect the actual views of the different societies. There was much reliance on a specific set of social relations that were intended to have the ability to manipulate people, things and processes in the face of adversity from them. Survival and control in political economics was given much attention. There was less study into comprehending historical transformation and social changes. In the current world there have been major developments and man has experienced humongous social changes which has a resulted into rearrangement of their social structures. This clearly shows the old perspective of political economics needs to be thoroughly reformed and pay more close attention to the link between its history and its current position on social reproduction and social structure.

Comparison and Contrast of Political Economy Theories

World view embodied in the theories
Marxian Political Economy Theory
The theory mainly portrays a capitalist economy that is centered on individualism. An individual is seen to pursue his own interests in the market for his own gain. Society is grouped into classes based on their acquisition of property rights in the market. The individual is perceived to want to determine what precisely happens in the market.
According to the Marxian State theory, political agendas are connected to economic interests. When individuals establish a commonality of economic interests among them, they tend to form a class that seeks to gain political power in order to protect their interests in society. Property rights in this theory are guaranteed and protected by government which seems to serve the flamboyant wealthy class leaving out the disadvantaged in the market who become vulnerable to their oppression.
Politics is not a necessity in the daily operations of the market but the government has to ensure preservation of property rights by making them recognizable and acceptable through validation in law. There is clear distinction between the civil society and the public arena.

Neoclassical Political Economy

The theory is based on maximization of utility for man. The resources available to man are meant to be utilized in a way that would bring optimization of happiness and great satisfaction of human desires. The consumer’s utility is given much attention among the competing goods in order to create internal consistency of use of their goods by their consumer market.
The market in the economy is seen as an institution that enables individuals to derive their maximum utility as it permits free exchange. Strategies are implemented by individuals in the market to meet their goals and objectives while considering imminent changes that are likely to happen in the market. The government in this instance strives to protect economic interests for the greater good and not for a select class as it is in Capitalism.

Keynesian Political Economy Theory

The theory insists on the need for market regulation by the state. It critiques the unregulated market system that tends to be seen as enhancing production yields in the market. The theory seeks to bring out the element of government regulation of labor in the market. It portrays the idea that markets should improve the purchasing power of its consumers in order to create stability in the market.
Karl Marx’s capitalist economy theory is in conformity with this Keynesian theory on the ability of capitalist economies to sustain employment of labor and smooth production in the market. In both theories this is viewed as a difficult task in many capitalist economies.

Implications of the Theories in defining Public Interest

Marxian Political Economy Theory
The state mainly manages and protects interests and affairs of the capitalist. Public interest is deemed to be vested in upholding a certain class which usually monopolizes political power in a capitalist economy.
Social order is considered to be fundamental and is maintained in society by the government. It is highly guarded so as to prevent any losses that would occur in the event of conflict arising. Anything that undermines economic interests is to be eliminated.

Neoclassical Political Economy Theory

Highest attainment of utility by man and optimal satisfaction of human desires in a market is given much concentration. The government is mostly geared to ensuring the comfort of all its citizens in a manner that is equitable and impartial. The social structure of governance does not tend to favor one class of persons as manifested in capitalism.

Keynesian Political Economy Theory

The productive capacity of the market is seen to be undermined and underutilized. The theory seeks to promote optimal exploitation of the market while simultaneously sustaining proper market practices in the economy. It does not concentrate much on individualism but rather stability of the market is held as its primary objective.
How the Theories operationalize their World view and Implications arising out of operationalization for the role of public policy within Society

Marxian Political Economy

The surplus value in the market is taken into consideration under capitalism. There is immense bargaining between labor and capital for effective appropriation of economic surplus. The theory propounds the idea that a market economy works according to laws incorporated in the ongoing reproduction and growth of a material interdependence between persons. This is considered to create social division in labor as individuals have different expertise and skills in the market which are all needed in the market for it to thrive. The production process in the market also calls for this kind of specialization of individuals as they seek to acquire more wealth and prosperous economic interests.
It is evidently clear in this system that there is dominance of individualistic practices. The individuals in the market are free to carry out their transactions with limited regulation hence leading to over exploitation at many times which results in crisis in the market economy. The main implication is that as each day passes in this market economy there is a huge gap created between low income earners and high income earners. Low income earners will tend to feel oppressed hence creating social disharmony.

Neoclassical Political Economy

Maximum welfare of a group as a result of voluntary transactions by others is taken into account. The effects of such transactions are determined to either negatively or positively impact on the other institutions in the market. The rational choice theory comes in very handy in this system as one is expected to make the best decisions out of competing interests.
The government mostly tries to manage demand and supply in this market through fixing prices and rationing methods. Fixing prices is meant to protect the welfare of low income earners and rationing is effective in preventing supply shortfalls. This is clearly illustrated in the government regulation of gasoline power sale in an economy as this is considered to be a basic commodity.
Public goods such as roads and education which are undermined by the market are taken by the government which is tasked with the responsibility of providing such infrastructure.

Keynesian Political Economy

A connection is presumed to exist between income and expenditure of individuals. Professional investors are encouraged to put more effort to forecast changes in their basis of evaluation of markets rather than banking on the long-term investment yields. Instability in the market may be due to increased dependence on financial circulation in the economy as a source of funds to maintain financial investment and production. These cumulative movements make it difficult for financial institutions to inject money into the production and consumer market through credit facilities hence not being able to endorse the market. Demand is considered as a source of enthusiasm for investment and not the evident production costs.

References

Caporaso, J. A., & Levine, D. P. (1992). Theories of Political Economy. Cambridge, England: Cambridge University Press.