Why political and economical reasons plays a vital role among the people
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Adam Smith, David Ricardo, and John Stuart Mill are widely regarded as the originators of modern economics. But they called themselves political economists, and Mill’s Principles of Political Economy was the fundamental text of the discipline from its publication in 1848 until the end of the century. These early theorists could not conceive of the economic and political worlds as separate.
Two trends divided the political from the economic analysis. First, governments began to reduce their direct control over the economy. Second, different political forms emerged: Europe went from almost exclusively monarchical to increasingly representative, and highly varied, forms of government. By the early 20th century economics and political science were established as separate disciplines.
For much of the 20th century this division reigned. With the Great Depression and problems of development, the purely economic issues were daunting enough to occupy economists. By the same token, the political problems of the era—two world wars, the rise of fascism and communism—were so serious as to require separate attention.
By the 1970s, however, it was clear that the separation between the economic and political spheres was misleading. That decade saw the collapse of the Bretton Woods monetary order, two oil price shocks, and stagflation—all highlighting the fact that economic and political matters are intertwined. The economy was now high politics, and much of politics was about the economy.
Over the past 50 years, political economy has become increasingly prominent in both economics and political science, in three ways:
It analyzes how political forces affect the economy. Voters and interest groups have a powerful impact on virtually every possible economic policy. Political economists strive to identify the relevant groups and their interests, and how political institutions affect their impact on policy.
It assesses how the economy affects politics. Macroeconomic trends can boost or ruin an incumbent’s chances. At the more microeconomic level, features of the economic organization or activities of particular firms or industries can have an impact on the nature and direction of their political activity.
It uses the tools of economics to study politics. Politicians can be thought of as analogous to firms, with voters as consumers, or governments as monopoly providers of goods and services to constituent customers. Scholars model political-economic interactions in order to develop a more theoretically rigorous understanding of the underlying features driving politics.
All three methods have profoundly affected both scholars and policymakers. And political economy has a lot to offer both to analysts of how societies work and to those who would like to change society.
Explanation:
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The main concern of political economy is to determine the relationship between governments and individuals, and how public policy affects society. This is done through the study of sociology, politics, and economics.