Although it can be argued that there are no set boundaries to what Political Economy (PE) is (Watson, 2005, p.1), it can be inferred simply from its name that PE is a field which deals with the relationships between the spheres of politics and economics. These two concepts can be seen as being linked. However, interconnectedness does not necessarily mean analytical concurrence and the field of PE does not always regard the interconnectedness as an axiom. Moreover, the field of PE is often presented as International Political Economy. Thus, a central question of PE is: Should Political Economy make analytical distinctions between the spheres of politics and economics and the national and international dimensions of a State?
First, this paper will argue that the spheres of politics and economics have major impacts on each other. Although their logics might be interpreted as conflicting, state and market actually go hand in hand, and the world cannot be explained without reference to one without the other. Second, despite the fact that neo-classical economists state that the market is at its best when it is free and self-regulating; there is no such thing as a self-regulating market. Market relations are politically and socially constructed; thus, state and market should not be analytically distinct. Thirdly, this assignment claims that analytical distinctions should be made between national and international dimensions of a state. Despite widespread discourse about globalization, transnational market relations and the decline of the nation-state, this essay will show that the Westphalian state is still an important actor and that national and international dimensions of a state are still distinct. Impacts of State and Market on each other, the perpetual tug of war To understand how the fields of politics and economics should not be analytically distinct this work will assess whether or not State and Market affect each other. …show more content…
Marx saw policy attempts to change the course of History as "inevitably fruitless and vain" (Barber, 1991, p. 141). Indeed, classical Marxist readings show that the reproduction of capital cannot be governed (Gamble, 1999, p. 141). As capital always seeks an environment that prone to cost reduction, any political manoeuvring will be useless, and competition for cost reduction will always prevail. In this way, the state cannot have any lasting impact on the Market so the spheres of politics and economics can exist outside of each other.
Nevertheless, this view of the relationship between state and market is only a contemporary reading of the capitalist system and PE can transcend capitalism. It is then useful to combine the spheres of politics and economics. If we take Marx 's concept of a socialist State, Roemer 's idea of a political transfer of capital from private to public ownership, or Linklater 's universal society (Gamble, 1999, p.132), it is impossible to conceive politics and economics as analytically distinct. Moreover, it can be argued that economic growth is linked to what political regime is in place. Przeworski and Limongi show how Democracy or Dictatorship stimulate or undermine economic growth (1993), and Acemoglu et al. show how Democracy produces growth (2004). As political regime and the market are related, PE cannot make analytical distinctions between politics and economics without undermining its analysis. Also, Marx 's view of capital as ungovernable is erroneous. According to Marx, capital is ungovernable because of its stimulation of competition. If a capitalist decides not to accumulate capital or encourage growth, his or her enterprise will fail, and another will take over. It is not the capitalist who is at fault, but the nature of capital itself. This competition, however, is controllable. First of all, the complexity of human behaviour and the fact that we are not simply rational, utility-maximizing individuals gives man the power to resist the force …show more content…
Indeed, state and market have different internal logics and competing interests. The state views its territorial boundaries as a necessity to its existence and autonomy, while the market tends to promote the breaking down of barriers to economic exchange (Gilpin, 1987, p.11). It is then challenging to conceive how state and market could be analytically related. However, we can move beyond the "tug-of-war" of the state-market dichotomy (Underhill, 2000, p. 820) and instead, view them as a single ensemble of governance, a state-market condominium (Underhill, 2000, p.821), where governance operates trough state and market. The spheres of politics and economics should not be analytically distinct as they are in fact one and the
First, this paper will argue that the spheres of politics and economics have major impacts on each other. Although their logics might be interpreted as conflicting, state and market actually go hand in hand, and the world cannot be explained without reference to one without the other. Second, despite the fact that neo-classical economists state that the market is at its best when it is free and self-regulating; there is no such thing as a self-regulating market. Market relations are politically and socially constructed; thus, state and market should not be analytically distinct. Thirdly, this assignment claims that analytical distinctions should be made between national and international dimensions of a state. Despite widespread discourse about globalization, transnational market relations and the decline of the nation-state, this essay will show that the Westphalian state is still an important actor and that national and international dimensions of a state are still distinct. Impacts of State and Market on each other, the perpetual tug of war To understand how the fields of politics and economics should not be analytically distinct this work will assess whether or not State and Market affect each other. …show more content…
Marx saw policy attempts to change the course of History as "inevitably fruitless and vain" (Barber, 1991, p. 141). Indeed, classical Marxist readings show that the reproduction of capital cannot be governed (Gamble, 1999, p. 141). As capital always seeks an environment that prone to cost reduction, any political manoeuvring will be useless, and competition for cost reduction will always prevail. In this way, the state cannot have any lasting impact on the Market so the spheres of politics and economics can exist outside of each other.
Nevertheless, this view of the relationship between state and market is only a contemporary reading of the capitalist system and PE can transcend capitalism. It is then useful to combine the spheres of politics and economics. If we take Marx 's concept of a socialist State, Roemer 's idea of a political transfer of capital from private to public ownership, or Linklater 's universal society (Gamble, 1999, p.132), it is impossible to conceive politics and economics as analytically distinct. Moreover, it can be argued that economic growth is linked to what political regime is in place. Przeworski and Limongi show how Democracy or Dictatorship stimulate or undermine economic growth (1993), and Acemoglu et al. show how Democracy produces growth (2004). As political regime and the market are related, PE cannot make analytical distinctions between politics and economics without undermining its analysis. Also, Marx 's view of capital as ungovernable is erroneous. According to Marx, capital is ungovernable because of its stimulation of competition. If a capitalist decides not to accumulate capital or encourage growth, his or her enterprise will fail, and another will take over. It is not the capitalist who is at fault, but the nature of capital itself. This competition, however, is controllable. First of all, the complexity of human behaviour and the fact that we are not simply rational, utility-maximizing individuals gives man the power to resist the force …show more content…
Indeed, state and market have different internal logics and competing interests. The state views its territorial boundaries as a necessity to its existence and autonomy, while the market tends to promote the breaking down of barriers to economic exchange (Gilpin, 1987, p.11). It is then challenging to conceive how state and market could be analytically related. However, we can move beyond the "tug-of-war" of the state-market dichotomy (Underhill, 2000, p. 820) and instead, view them as a single ensemble of governance, a state-market condominium (Underhill, 2000, p.821), where governance operates trough state and market. The spheres of politics and economics should not be analytically distinct as they are in fact one and the